What is AFTA ?

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AFTA
Taken from miti.gov.my

1. What is The Asean Free Trade Area (AFTA)
AFTA was established in 1992. AFTA is a collective effort by ASEAN member countries to reduce/eliminate tariffs on intra-ASEAN trade. The purpose was to develop greater trade and industrial linkages among ASEAN member countries. With a combined population of 513 million people, the establishment of the Free Trade Area among ASEAN, offers vast potential for greater economic collaboration.

2. What is the mechanism to realise AFTA?
AFTA has been realised through the Common Effective Preferential Tariff (CEPT) Scheme. Under the CEPT:

import duties among member countries will be reduced to between 0-5% by the full implementation of AFTA in 2010
elimination of quantitative restrictions (import permit, quota) & other non-tariff barriers (NTBs) among ASEAN Member countries
progressive transfer of products into the CEPT Scheme based on each ASEAN member's capacity and capability.

3. What is the Common Effective Preferential Tariff (CEPT) scheme?
CEPT is cooperative arrangement among ASEAN Member States to reduce intra-regional tariffs and remove non-tariff barriers over a 10 year period commencing 1 January 1993. Objective of the Scheme is to reduce tariffs on all manufactured goods to 0-5% by the year 2003 for the original six member states, Malaysia, Singapore, Brunei, Thailand, Philippines and Indonesia.
The new members of ASEAN, namely Vietnam, Lao PDR, Myanmar and Cambodia have been given the same 10 year flexibility to reduce tariffs from the time of their membership of ASEAN;

Vietnam will reduce tariffs to 0-5% by 2006
Laos PDR and Myanmar by 2008
Cambodia by 2010

In 2003 for the original six member states, a total of 98.8% of tariff lines are already in the inclusion list for tariff reduction, out of which 99.55%have now duties between 0-5%.

4. What products are excluded from the CEPT scheme?
Products that are excluded presently from the CEPT are listed in the Temporary Exclusion List, Sensitive and Highly Sensitive List and General Exclusion List.

5. What are the conditions for a product to be eligible for concessions under the CEPT?
For a product to be eligible for CEPT concession it must have at least 40% of its contents originating from any ASEAN members State. The 40% local content refers to both single and cumulative contents.

6. What need to be done to export under CEPT?
To benefit from the lower tariff rates, exporters will need to:

Establish the tariff classification of product
Product classification is normally in accordance with the Harmonized Commodity Description and Ceiling System (HS). The related agency in determining HS Code is the Malaysia Royal Custom Department. Contact details as follows:

Malaysia Royal Custom Department
Block 2G1B, Ministry of Finance Complex,
Precinct 2, Federal Government Administrative Center
62596 Putrajaya, Malaysia.

Tel.: 03-88822100
Fax :03-88895901

E-mail : kastam@customs.gov.my
Website: http://www.customs.gov.my
Check the product coverage
The exporter must check, whether the goods are included under the inclusion list of Malaysia and the importing ASEAN countries.

To determine if product is eligible, the exporter can refer to:
Comply with Rules of Origin
The CEPT Scheme has set a local content requirement of 40% for a product to be considered as originating from ASEAN Members States. The local content requirements have to be met by the exporters.

7. How do exporters apply for CEPT scheme?
The claim for CEPT tariff concession must be supported by appropriate documentary evidence as to origin of product and consignment. Form D is a certificate that is accepted as evidence of origin by all ASEAN member states to obtain CEPT scheme. In Malaysia the certifying authority for CEPT Form D is the Trade Services Division of the Ministry of International Trade and Industry (MITI). This service is also provided at MITI branch Offices in Penang, Ipoh, Kota Bharu, Johor Bahru, Kuantan, Kuching and Kota Kinabalu.

Application Procedure:

Step 1 : Registration
Exporters are required to submit CEPT Application Form to Trade Services Division of MITI or MITI's branch offices. The form can be obtained at:

MITI's Service Counter,
Trade Services Division, Ground Floor,
Ministry of International Trade and Industry (MITI),
Block 10, Jalan Duta
50622 Kuala Lumpur

OR

MITI's branch offices
Exporters who qualify for the CEPT Scheme will be given an approval letter by MITI.

Step 2 : Endorsement of CEPT Form D
Form D is only valid for tariff concession if it has been endorsed by MITI. Form D can be purchased from all Federation of Malaysian Manufacturers (FMM) branches throughout the country as follows:

FMM Head Offices
Wisma FMM,
No. 3, Persiaran Dagang,
PJU9, Bandar Sri Damansara,
52200, Kuala Lumpur.

Tel: 03-6276 1211
Fax: 03-6274 1266/7288

E-mail: webmaster@fmm.org.my
Website: http://www.fmm.org.my

Exporters must submit the following documents with CEPT Form D to MITI for endorsement:

Step 3 : To Export
Exporters must attach the endorsed form D together with Customs Form 2 (K2), Invoice, Bill of Lading (BL) and Packing List and other relevant documents with the shipment.

8. Where to seek advice on CEPT?
For further information on CEPT, exporters can contact MITI's Service Counter at:

Ground Floor,
Ministry of International Trade and Industry (MITI),
Block 10, Government Offices Complex,
Jalan Duta,
50622 Kuala Lumpur

Tel: 03 - 6203 4830 / 03 - 6203 4814
Fax: 03 - 6201 3012
Website: http://www.miti.gov.my

MITI's Branch Offices:

Ipoh (05 - 241 7751)
Penang (04 - 262 5133)
Kuantan (09 - 513 0851)
Kota Bharu (09 - 748 3457)
Johor Bharu (07 - 224 4639)
Kota Kinabalu (088 - 236 758)
Kuching (082 - 257 164)

For further clarifications please contact MATRADE at:
Export Support & Client Services Unit
Ground Floor, Wisma PKNS
Jalan Raja Laut
50350 Kuala Lumpur.

Tel : 03 - 2692 8122
Fax : 03 - 2694 5380
E-mail : info@matrade.gov.my