Common use of Calculation of Regional Value Content Clause in Contracts

Calculation of Regional Value Content. 1. For the purposes of Article 28, the formula for calculating ASEAN Value Content or RVC is as follows: (a) Direct Method ASEAN Material Cost + Direct Labour Cost + Direct Overhead Cost + Other Cost + Profit X 100% RVC = FOB Price or (b) Indirect Method RVC = FOB Price – Value of Non-originating Materials, Parts of Goods x 100% 2. For the purposes of calculating the RVC provided in paragraph 1 of this Article: (a) ASEAN Material Cost is the CIF value of originating materials, parts or goods that are acquired or self-produced by the producer in the production of the good; (b) Value of Non-Originating Materials, Parts or Goods shall be: (i) The CIF value at the time of importation of the goods or importation can be proven; or (ii) The earliest ascertained price paid for the goods of undetermined origin in the territory of the Member State where the working or processing takes place; (c) Direct labour cost shall include wages, remuneration and other employee benefits associated with the manufacturing process; (d) The calculation of direct overhead cost shall include, but is not limited to, real property items associated with the production process (insurance, factory rent and leasing, depreciation on buildings, repair and maintenance, taxes, interests on mortgage); leasing of and interest payments for plant and equipment; factory security; insurance (plant, equipment and materials used in the manufacture of the goods); utilities (energy, electricity, water and other utilities directly attributable to the production of the goods); research, development, design and engineering; dies, moulds, tooling and the depreciation, maintenance and repair of plant and equipment; royalties or licences (in connection with patented machines or processes used in the manufacture of the goods or the right to manufacture the goods); inspection and testing of materials and the goods; storage and handling in the factory; disposal of recyclable wastes; and cost elements in computing the value of raw materials, i.e. port and clearance charges and import duties paid for dutiable component; and (e) FOB price means the free-on-board value of the goods as defined in Article 25. FOB price shall be determined by adding the value of materials, production cost, profit and other costs. 3. Member States shall determine and adhere to only one (1) method of calculating the RVC. Member States shall be given the flexibility to change their calculation method provided that such change is notified to the AFTA Council at least six (6) months prior to the adoption of the new method. Any verification to the ASEAN Value Content calculation by the importing Member State shall be done on the basis of the method used by the exporting Member State. 4. In determining the ASEAN Value Content, Member States shall closely adhere to the guidelines for costing methodologies set out in Annex 5. 5. Locally-procured materials produced by established licensed manufacturers, in compliance with domestic regulations, shall be deemed to have fulfilled the origin requirement of this Agreement; locally- procured materials from other sources shall be subjected to the origin verification pursuant to Article 57 for the purpose of origin determination. 6. The value of goods under this Chapter shall be determined in accordance with the provisions of Article 57.

Calculation of Regional Value Content. 1. For the purposes of Article 285 (Not Wholly Obtained or Produced Goods), the formula for calculating ASEAN Value Content or RVC is as follows: (( a) Direct /Build-up Method ASEAN Material Cost + Direct Labour Cost + Direct Overhead Cost + Other Cost + Profit X 100% RVC = FOB Price or (( b) Indirect Method RVC = FOB Price – Value of Non/Build-originating Materials, Parts of Goods x 100%down Method 2. For the purposes of calculating the RVC provided in paragraph 1 of this Article: (a) ASEAN 1: AHKFTA Material Cost is the CIF value of originating materials, parts or goods produce that are acquired or self-produced by the producer in the production of the good; (b) ; Value of Non-Originating Materials, Parts or Goods shall be: (i) The Produce is the CIF value at the time of importation of or the goods or importation can be proven; or (ii) The earliest ascertained price paid for all non-originating materials, parts or produce that are acquired by the goods producer in the production of the good; non-originating materials include materials of undetermined origin in the territory of the Member State where the working or processing takes place; (c) origin; Direct labour cost shall include includes wages, remuneration and other employee benefits associated with the manufacturing process; (d) The calculation of direct ; Direct overhead cost shall includeincludes, but is not limited to, real property items associated with the production process (insurance, factory rent and leasing, depreciation on buildings, repair and maintenance, taxes, interests on mortgage); leasing of and interest payments for plant and equipment; factory security; insurance (plant, equipment and materials used in the manufacture of the goods); utilities (energy, electricity, water and other utilities directly attributable to the production of the goods); research, development, design and engineering; dies, moulds, tooling and the depreciation, maintenance and repair of plant and equipment; royalties or licences (in connection with patented machines or processes used in the manufacture of the goods or the right to manufacture the goods); inspection and testing of materials and the goods; storage and handling in the factory; disposal of recyclable wastes; and cost elements in computing the value of raw materials, i.e. port and clearance charges and import duties paid for dutiable component; and (e) FOB price and Other Costs are the costs incurred in placing the good in the ship or other means the free-on-board value of the goods as defined in Article 25. FOB price shall be determined by adding the value of materialstransport for export including, production costbut not limited to, profit domestic transport costs, storage and other costs. 3. Member States shall determine warehousing, port handling, brokerage fees and adhere to only one (1) method of calculating the RVC. Member States shall be given the flexibility to change their calculation method provided that such change is notified to the AFTA Council at least six (6) months prior to the adoption of the new method. Any verification to the ASEAN Value Content calculation by the importing Member State shall be done on the basis of the method used by the exporting Member State. 4. In determining the ASEAN Value Content, Member States shall closely adhere to the guidelines for costing methodologies set out in Annex 5. 5. Locally-procured materials produced by established licensed manufacturers, in compliance with domestic regulations, shall be deemed to have fulfilled the origin requirement of this Agreement; locally- procured materials from other sources shall be subjected to the origin verification pursuant to Article 57 for the purpose of origin determination. 6service charges. The value of goods under this Chapter shall be determined in accordance with the provisions Customs Valuation Agreement. The Parties shall harmonise, to the extent possible, administrative procedures and practices in the assessment of Article 57value of goods for customs purposes.