ASEAN Members’ Foreign Business Laws Dr. Prapanpong Khumon School of Law prapanpong_khu@utcc.ac.th

ASEAN Statistics © Prapanpong Khumon

GDP per Capita in ASEAN compared with other regions source: International Monetary Fund 2012 © Prapanpong Khumon

GDP in ASEAN 5,116 USD 9,941 USD Source: ASEAN Statistics: Key Indicator 2012 © Prapanpong Khumon

ASEAN’S FDI Inflow 2013 Countries Income ($) 2007 2012 Change% Singapore 46,972 56,651 21% Indonesia 6,928 19,853 187% Malaysia 8,595 10,074 17% Thailand 11,359 8,670 -24% Vietnam 6,700 8,368 25% Philippines 2,916 2,797 Myanmar 710 2,243 216% Cambodia 867 1,557 80% Brunei 260 850 227% Laos 324 294 -9% Total 85,631 111,294 30% UNCTAD FDI Database 2013 (www.unctad/org/fdistatistics) © Prapanpong Khumon

ASEAN Services Liberalization: Impact assessment © Prapanpong Khumon

AFAS Level of Liberalization compared with other RTAs GATS NAFTA MERCOSUR US-Singapore AFAS Scope W120 Negotiation Method Positive Negative Ratcheting No Yes Transparency Requirement Freeze clause List clause No ceiling binding © Prapanpong Khumon

Thailand’s Horizontal Limitations to AFAS Market Access and National Treatment A service provider must be a company limited registered in Thailand. Boards and committees must be Thai nationals and Thai residencies. A license holder must be Thai national. Land rights are reserved for Thai nationals. Maintain measures relating to subsidies, privileges, minimum capital, tax, and nationality requirements. © Prapanpong Khumon

ASEAN Nations’ Foreign Business Laws in Comparison © Prapanpong Khumon

ASEAN Nations’ Foreign Business Laws Countries with only Investment Laws Countries with Investment Promotion Law + Foreign Business Law Cambodia (Law on the Investment 2003) Laos (The Investment Promotion 2009) Singapore (Business Reg Act and Company Act) Malaysia (Promotion of Investment Act 1968 and Company Act 1973) Vietnam (Law on Investment 2005) Brunei (Investment Incentives Order 2001) Indonesia (Investment Law 25/2007) Myanmar (Foreign Investment Law 2012) Philippines (the Omnibus Code of 1987 and Foreign Investment Act 1991) Thailand (Investment Promotion Act and Foreign Business Law 1999) © Prapanpong Khumon

Foreign Equity Participation © Prapanpong Khumon

Few businesses with req. on local share and Board nationality Brunei Countries Foreign % Conditions Cambodia Up to 100% Negative list (prohibited/ reserved / permission requirements/ JV requirements) Laos Negative list (prohibited/ reserved/ permission requirements/ JV with govt./ JV with locals) Singapore Few businesses with req. on local share and Board nationality Brunei Permission and minimum local share partn. Malaysia Positive list (JV requirements) Indonesia Negative List (prohibited/reserved/JV with locals/ local share part.) Philippines Negative list (reserved/ local share partn.) Vietnam As per liberalization commitments/ prohibited list Myanmar Negative list (reserved/ JV requirements/ JV with govt./ local share partn.) Thailand Negative list (reserved/ permission requirements) © Prapanpong Khumon

Singapore Keeping with Liberalization Service industry = 70% GDP Aim at higher value activities, new growth industries, upgrading workers’ skills, restructuring social security system\ Establishing pro-business organizations: Pro-Enterprise Panel, Smart Regulation Committee (SRC), the Economic Review Committee (ERC) SPRING Singapore (the Standards, Productivity, and Innovation Board) under Ministry of Trade and Industry to assist locals in: Innovation Standards Consumer protection © Prapanpong Khumon

Singapore Foreign Shares Policy 100% foreign shares allowed except: Legal services: Joint Law Venture (JLV) with locals required, also QFLP to permit areas for foreign law practice, but arbitration completely liberalized Broadcasting: no more than 49% foreign shares Newspaper & Printing: no more than 5% both locals and foreigners + nationality requirements for Boards Banking: ownership of foreign shares vary upon permission/ Qualifying Full Bank (QFB) up to 25 branches per a foreign bank but may impose other network restrictions and access limitations to customers Engineering & Architectural services: 100% foreign shares allowed but impose nationality restrictions and Board composition © Prapanpong Khumon

Malaysia Keeping with Liberalization Regulatory reform Laws and justice administration (new commercial courts + go digital) Foreign promotion: manufacturing, agriculture, tourism, R&D services, training, environmental Foreign Shares Policy Relaxed JV requirements since 2003 100% foreign shares allowed in computer related services, healthcare, tourism (MICE, 4 Stars hotels, tour guide within Malaysia), some transportation sectors, recreational services, leasing services © Prapanpong Khumon

Indonesia Keeping with Liberalization Challenges in domestic laws on foreign shares restrictions Foreign promotion: infrastructure, transfer of technology ind., environment, R&D, new industries, industries using local sources Foreign Shares Policy Investment law 25/2007 + Presidential Regulations: 6 lists of allowed foreign business (subject to revision every 3 years) List 1 Foreign Shares Cap (e.g., golf course 100%, direct sales 95%) List 2 JV with locals (>5%) (e.g., forestry, maritime, fisheries) List 3 Reserved for SMEs (e.g., energy in small scale, culture & tourism, community broadcasting services) List 4 Reserved for locals (e.g., film production, health) List 5 Special permission for foreigners (e.g., energy, forestry) List 6 Investment not allowed (e.g., defence, public broadcasting) © Prapanpong Khumon

Foreign Land Ownership © Prapanpong Khumon

No except investment exceeding 500,000$<800 sqm Countries Land Ownership by Foreigners Land Lease to Foreigners Cambodia No except condos yes Laos No except investment exceeding 500,000$<800 sqm Singapore Yes only within business zone or condos Brunei No except with permission from Sultan Malaysia No except with permission from Economic Planning Unit for business purpose Indonesia No Philippines No except agricultural land with size limit Vietnam Myanmar Thailand No except investment worth 40 Million THB/ condos but not exceeding 49% of the whole building © Prapanpong Khumon

The end More queries please contact: Dr. Prapanpong Khumon School of Law University of the Thai Chamber of Commerce prapanpong_khu@utcc.ac.th The end © Prapanpong Khumon