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ARBITRATION ASIA

Regional Round-Up

Your Snapshot of Key Legal Developments in Asia

Issue 4 - Oct/Nov/Dec 2015

COVER STORY

    CAMBODIA
    CHINA
    INDONESIA
    LAO PDR
    MALAYSIA
    MYANMAR
      SINGAPORE
      THAILAND

        CAMBODIA

        Sub-Decree No.149 SD.P on Publication of Graphic Health Warning Message on Tobacco Products
        In order to protect the public health, the Royal Government of Cambodia ("RGC") issued a Sub-Decree dated 22 October 2015 setting out conditions for production of tobacco products. Those conditions are as below:

        • There must be a graphic warning message on cigarette packages, and the picture must cover at least 50% of the package. The warning must be in Khmer letters, which must be at least 5% of the total size of the front and the back of the package or on all main parts of the package;
        • It must be visible, clear and its color must not fade or be erasable.
        • It must be written in white, bold, on a black background on the package and next to the warning picture.
        This Sub-Decree must be implemented 9 months after its promulgation.
        Prakas No.409/15 LVT/P on Determination of Minimum Wage for Employees in the Garment, Textile and Footwear Sector
        This Prakas, dated 8 October 2015, sets out the minimum wage for employees in the garment, textile and footwear sector for the year 2016. After the recommendation of the Labor Advisory Committee, the minimum wage has officially increased by USD5 per month. Therefore, the minimum wage is now USD140 per month.

        For workers or employees in the probation period, the minimum wage is USD135 per month and it will be increased to USD140 per month after the probation period.

        The new minimum wage must be applied from 1 January 2016.
        Prakas No.1470MEF.P on Procedure of Resolution of Tax Complaints
        The Ministry of Economy and Finance ("MEF") has issued this Prakas, dated 6 November 2015, for the purpose of determining the procedure of submission of administrative complaints from the taxpayers or agents at the General Department of Taxation ("GDT") level.

        This Prakas covers all administrative complaints against decisions or rules set out by the GDT or the units under the GDT in relation to tax determination, redetermination, tax collection, etc.

        Under this Prakas, all taxpayers have 30 working days to appeal any decision or rules issued by the GDT to the Director General of the GDT. Moreover, there are also other provisions setting out the procedure in submitting the complaints, steps to be taken and timelines in resolving such complaints.

        In the event of non-satisfaction with the resolution of the Director General of the GDT, the taxpayer may also take further action to resolve the complaint at the Tax Dispute Resolution Committee within 30 working days from the date of the decision of the Director General of the GDT.

        Circular No.08C on Lands Selling and Leasing Prohibition to Citizens of Neighboring Countries
        In order to protect the legal rights and interests of the Cambodian owners of land and the sovereignty of the country, the Prime Minister has issued a Circular, dated 17 November 2015, prohibiting Cambodian citizens from selling or leasing lands which are located near the borders of Cambodia and its neighboring countries such as Thailand, Vietnam and Laos, to the citizens of the neighboring countries.

        In this Circular, the Prime Minister has instructed as follows:

        • All citizens are prohibited from selling or leasing land located along the border area to neighboring countries’ citizens in any form.
        • Provincial governors must instruct the Cambodian citizens to terminate any lease which was entered into without any proper legal documentation within a reasonable period.
        • In the event the lease was entered into with proper legal documentation, such lease shall continue its validity until its expiration date. However, such lease must not be renewed upon the expiration date.
        Notification No.B5.015.798.SCN on Decrease of Face Value of NCD and Cessation of Provision of Fixed Deposit Services
        In this Notification dated 30 October 2015, the National Bank of Cambodia ("NBC") has decided to lower the minimum amount of Face Value of Negotiable Certificate of Deposit ("NCD") from 2 billion Khmer Riels (approx. USD500,000) to 200 million Khmer Riels (approx. USD50,000).

        Moreover, the NBC will no longer provide fixed deposit services starting from 1 November 2015.
        Notification No.9737GDT on Extension of Deadline for Tax Update of Companies under Department of Large-Taxpayer
        In accordance with this Notification dated 20 November 2015, 31 December 2015 is the extended deadline for companies or enterprises governed by the Department of Large-Taxpayer of the GDT to conduct their tax updates. The abovementioned date is the second extension for tax updates since Notification No.7487GDT dated 23 September 2015, which required the companies or enterprises to conduct their tax updates no later than 15 November 2015.

        For any company or enterprise which fails to conduct the tax updates within the extended deadline, the GDT will take action including: the invalidation any Value-Added Tax Certificate registered before 1 November 2014; prohibiting any claim for VAT input credit carried forward or requesting VAT refund; cooperating with the General Department of Customs and Excises to cease import-export activities; cooperating with the Council for the Development of Cambodia to suspend the review of request to import raw materials, machinery and equipment; and other lawful measures.

        CHINA

        Rules of Filings of Cross-Border E-Commerce Operators and Merchandise Issued
        The General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (in Chinese, 国家质量监督检验检疫总局) ("AQSIQ") promulgated the Rules of Administrating Filings of Cross-Border E-Commerce Operators and Merchandise (in Chinese, 跨境电子商务经营主体和商品备案管理工作规范) (the "Rules") on 24 November 2015. The Rules have taken effect on 1 January 2016.

        According to the Rules, cross-border e-commerce operators refer to all enterprises engaging in business in relation to cross-border e-commerce, including but not limited to cross-border merchandise distributors, providers of logistics or warehousing services, operators of cross-border e-commerce platforms and other enterprises relating to cross-border e-commerce (collectively, "        Cross-Border E-Commerce Operators").

        Pursuant to the Rules, Cross-Border E-Commerce Operators are required to file specified incorporation, business and contact information with the competent agencies of the AQSIQ through an online system. Furthermore, cross-border merchandise distributors are required to file information of relevant merchandise through an online system before such merchandise is available for purchase by customers on the e-commerce platform for the first time. In addition, the filed information will be shared and managed on a national basis, so the applicants only need to file information of the same entity or merchandise once. If there is any change of the filed information, the applicants are required to update such information accordingly.

        INDONESIA

        Government Pushes Ahead with Economic Reform Program
        The government announced a seventh package of economic reform and stimulus programs on 5 December 2015 as part of its efforts to lift the economy out of the doldrums. While the response to the series of packages from local businesses has generally been favourable, the reaction of foreign investors has been somewhat cooler, with many saying that the situation on the ground has changed little. For its part, the government says that the beneficial effects of the reforms will only really start to be felt in the second half of this year.

        The key points of the seventh package include tax breaks for selected labour-intensive industries, revision of Government Regulation No. 18/2015 on tax incentives for investment in specific sectors, faster issuance of land-title certificates and the inclusion of five more permits in the three-hour fast-track licensing program by the Investment Coordinating Board (BKPM).

        The government says that the success, or otherwise, of the reforms will be seen from next year's World Bank Ease-of-Doing-Business Report. In this year’s report, Indonesia is ranked 109th out of 189 nations, up 11 places from 2014.
        Amendment of Rules Governing Expat Employees and Corporate Officeholders
        The Ministry of Manpower (“MOM”) issued an amendment to MOM Regulation No. 16 of 2015 on the Procedure for the Utilization of Expatriate Manpower. MOM Regulation No. 35 of 2015 (“Reg. 35”), which liberalises rules governing expatriate employees and corporate officeholders, came into operation on 23 October 2015.

        The key changes introduced by Reg. 35 are as follows:

        1. Abolition of the 1:10 ratio requirement for hiring expatriates;
        2. Eliminating Expatriate Employment Permits (“IMTAs”) for non-resident expatriate directors, commissioners and those holding equivalent positions of Indonesian companies;
        3. Eliminating IMTAs for expatriates who travel to Indonesia on a short-term basis for the purposes of: (i) providing guidance and training in connection with industrial technology applications or innovations related to improvements in industrial product design and quality, and collaboration as part of efforts to market Indonesian products overseas; (i) delivering lectures; (iii) attending meetings organised by a head office or a representative office in Indonesia; (iv) competency assessment; and (v) one-off jobs.
        We issued a client update setting out the other features of Reg 35. To view the Update, click here.
        Minimum Wage Formula and Use of Rupiah to Pay Employees
        The Ministry of Manpower (“MOM”) recently issued Regulation No. 78 of 2015 (“Reg. 78”) which governs the calculation of provincial minimum wages and establishes a requirement that all employees in Indonesia be paid in rupiah.

        Reg 78 provides for a new formula to calculate provincial minimum wages, starting in 2016.  The formula is:

                New minimum wage = current minimum wages + (current minimum wage x inflation + % GDP annual increase during the year)

        The new formula should bring certainty to the calculation of minimum wages in the provinces and help create a more stable business climate.

        Another key feature of Reg. 78 is found in Article 21 which mandates employers to pay the wages of their employees in Indonesian rupiah. This does not differentiate between foreign and local employees. Reg. 78 does not provide for a transitional provision for the application of Article 21. Although the effective date of Reg. 78 is 23 October 2015, it remains to be seen whether this requirement will be applied in practice.
        Jakarta Provincial Regulation No. 230 of 2015 on the 2016 Provincial Minimum Wage
        This regulation sets the Jakarta 2016 provincial minimum wage at IDR 3.1 million per month, effective as of 1 January 2016. The new minimum wage also applies to workers who have worked for less than a year. Employers are prohibited from paying their employees less than the set minimum wage, save in certain circumstances having regard to their circumstances, financial situation, capacity, and so forth.
        Real Estate Investment Vehicles Recognised and Facilitated for First Time in Indonesia
        The Minister of Finance issued a new regulation, MOF Regulation No. 200/PMK.03/2015 (the “New Regulation”) that formally recognises, defines and affords favourable tax treatment for the first time to collective investment contracts (Kontrak Investasi Kolektif / “KIK”) focused on real estate (the Indonesian equivalent of the real estate investment trust or REIT).

        The New Regulation came into operation on 10 November 2015.

        We issued a client update summarising the key features of the New Regulation. To view the Update, click         here.
        Financial Services Authority ("OJK") Regulation No. 11/POJK.03/2015
        This Regulation, dated 24 August 2015, requires commercial banks to implement prudential principles to stimulate economic growth. The prudential principles addressed by the Regulation are carried out for: (i) the calculation of risk-based assets for credit risks using standard approached; (ii) asset quality assessment and stipulation; and (iii) capital participation for commercial banks. The Regulation came into operation on the date of its promulgation and will take effect for two years.

        LAO PDR

        Lao PDR's Constitution Amended; NA Approved New Laws, Amendments to Existing Laws
        The National Assembly (“NA”) approved the draft amendment to Lao PDR’s national constitution. The key changes relate to nationality and petition, in which the draft gives the obligation in making proposals to the president. Three new chapters which are about local people's assemblies, state auditing and the National Election Committee, and 21 articles were added in the proposed amendments to the constitution. The draft constitution has 11 chapters, and is divided into 98 articles. The right of proposing appointees to the post of Supreme People’s Prosecutor State Audit head will also be given to the president.

        The NA’s role as the highest state power holder has been preserved in the draft. Similarly, the balancing mechanism of state power has been preserved, with the NA as the overseer of government and administrative bodies and the Lao Front for National Construction as the overseer of the NA.

        Other interesting amendments relates to the rights on land and other natural resources.

        This is the second time that the constitution is being amended since its promulgation in 1991. The first amendment took place in 2003.

        Besides the amendment to the Constitution, the NA session also approved four newly drafted laws, as well as the proposed amendments to existing laws. The newly drafted laws are the Law on Provincial People’s Assembly, Law on Anti-human Trafficking, Law on National Defence, and the Law on Civil Servants and Government Employees. The amended laws are the Law on National Assembly, Law on Election of National Assembly and Provincial People’s Assembly, Law on Government, Law on Local Administration, Law on Taxation, Law on Government Investment, and the Law on State Budget.
        Laos, Australia Re-affirm Close Regional Ties
        Laos and Australia have agreed to continue their close cooperation on regional issues at high-level official talks. The bilateral consultations, the first for over six years, provided an opportunity for both countries to review the full spectrum of two-way cooperation, and to discuss Association of Southeast Asian Nations (“ASEAN”) and regional issues.

        This is an excellent chance for Laos and Australia, as two close neighbors with a long-standing friendship, to share our perspectives on regional issues. As a close partner of Laos and ASEAN’s oldest dialogue partner, Australia looks forward to working closely with Laos as ASEAN chair in 2016. Laos will have much to contribute to ASEAN’s integration agenda, as Australia enters the first year of the ASEAN Economic Community (“        AEC”). Australia is pleased to be able to support their preparations over recent months.

        Australia had reaffirmed its commitment to Laos’s socio-economic development, particularly in education and trade and business reform. Laos, on the other hand, welcomed Australia’s long-standing support over the past five decades, and discussed the future scope of existing cooperation between our police, defence and immigration departments. Both sides agreed to take action to strengthen two-way trade and investment in Laos, including through further business climate reform to attract new quality investors from Australia.

        The Australian government would continue to encourage Australian firms to consider opportunities in Laos in mining and mining services, transport and logistics, hydropower, agriculture, tourism, manufacturing and legal and financial services.

        MALAYSIA

        Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd: Standard of Proof for Fraud in Civil Claims
        Over the years, the courts have adopted three different standards of proof for fraud in civil claims: (i) the balance of probabilities albeit a balance on a higher degree depending on the seriousness of the fraud; (ii) the criminal standard of beyond reasonable doubt; and (iii) either the standard on the balance of probabilities or beyond reasonable doubt depending on the nature of the fraud. The differing standards allowed the lower courts to pick and choose which authority to follow, giving rise to judicial uncertainty. To provide the much needed clarity and certainty, the Federal Court in Sinnaiyah & Sons Sdn Bhd v Damai Setia Sdn Bhd [2015] 5 MLJ 1 ruled that when deciding on fraud allegations in a civil claim, the standard of proof to be used is that on the balance of probabilities. The Court also pointed out that to prevent floodgates of litigation, this case will have a prospective effect, i.e. it cannot be used as a springboard to set aside or review previous decisions decided on a different standard of proof.

        This decision has been long awaited, given the judicial ambiguity on this issue that was drawn out over the last thirty years. It also simplifies the current law and provides much needed clarity and certainty.

        MYANMAR

        Myanmar's Competition Law to Come into Force on 24 February 2017
        On 2 December 2015, Myanmar President Thein Sein issued Notification No 69/2015, declaring that Myanmar's Competition Law ("Competition Law") will come into force on 24 February 2017, exactly two years after the Competition Law was enacted.

        Under the Competition Law, there are four types of restricted anti-competitive behaviour: i) acts restricting competition; ii) acts resulting in monopolies; iii) unfair competitive acts; and iv) business combinations such as mergers which lead to market dominance, reducing competition in a market with few players or exceeding a prescribed market share threshold. The Competition Law also provides for the establishment of a Competition Commission as the regulatory enforcement body and any infringement under the Competition Law can attract monetary as well as criminal penalties.

        Although the new 2017 effective date lends greater certainty to Myanmar's competition regime, there is still much to be done in the lead-up. For instance, the Competition Law does not appear to distinguish between horizontal and vertical agreements, nor does the law address the concept of "relevant market"; a key concept in most competition regimes. It is also unclear how this cross-sector competition regime will interact with the sector-specific competition regimes in areas such as banking, given that there are no specific exclusions. In addition, the threshold for dominance will only be prescribed later by the Competition Commission. It is hoped that such gaps will be addressed in detail in future by way of implementing regulations to the Competition Law, which should ideally be enacted before the Competition Law comes into effect.

        PHILIPPINES

        SINGAPORE

        Conclusion of Negotiations for the Trans-Pacific Partnership - Its Impact on the ASEAN Economic Community
        5 October 2015 will go down as a date of great importance for Singapore, Malaysia, Brunei Darussalam, Vietnam and 8 other countries in the Asia-Pacific Economic Cooperation, as it marked the successful conclusion of negotiations for the Trans-Pacific Partnership ("TPP"). This brings to an end 5 long years of intense negotiations between the parties, which at various points in time, had threatened to break down.

        At its simplest, the TPP may be classified as a free trade agreement between the participating countries - Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. However, its scope and significance extends far beyond traditional trade issues, and touches on many other aspects of the law, including data protection, intellectual property and competition policy. It is for this reason that the TPP is seen as a "landmark 21st century agreement".

        We issued a client update summarising the key aspects of the TPP and the possible interaction of the TPP with the ASEAN Economic Community ("        AEC"), which was formally established on 31 December 2015. To view the Update, click here.
        ABS Issues Guidelines on Responsible Financing
        In October 2015, the Association of Banks in Singapore ("ABS") released a set of industry guidelines to enhance the implementation of responsible financing as part of Singapore banking sector's priorities to support sustainable development.  These guidelines will help achieve systematic integration of Environmental, Social and Governance ("ESG") criteria into banks' risk assessment and lending decision process. 

        In addition, banks are expected to share their vision and commitment to responsible financing in the annual reports, and publish their ESG policy framework in 12-18 months' time.   They are also to allocate resources to support the implementation of responsible financing. 

        We issued a client update on this. To view the Update, click         here.
        Guidance on Anti-Money Laundering and Countering the Financing of Terrorism Controls in Trade Finance and Correspondent Banking
        On 22 October 2015, the Monetary Authority of Singapore ("MAS") published an information paper titled "Guidance on Anti-Money Laundering and Countering the Financing of Terrorism Controls in Trade Finance and Correspondent Banking". The paper was issued after a series of inspections carried out by MAS between 2012 and September 2015 on banks' trade finance activities.

        This information paper aims to provide guidance to banks, merchant banks and finance companies on the anti-money laundering and countering the financing of terrorism controls in trade finance and correspondent banking activities.  The paper also aims to provide guidance to banks in their benchmarking against industry norms, the implementation of sound risk management practices, and the identification of control gaps.

        The information paper may be accessed         here.
        Court of Appeal Clarifies Powers over Excluded Creditors
        In the case of The Royal Bank of Scotland NV v TT International Ltd, the Singapore Court of Appeal clarified its powers over excluded creditors when sanctioning a scheme of arrangement. The court also clarified what the creditors need to be made aware of prior to being asked to vote on a proposed scheme of arrangement.  Rajah & Tann Singapore LLP successfully acted for the Respondent in this matter.

        We issued a client update on this. To view the Update, click         here.
        Punitive Damages Awarded for Breach of Contract
        In the recent case of Airtrust (Hong Kong) Ltd v PH Hydraulics & Engineering Pte Ltd, the Singapore High Court recognized that punitive damages are available for breach of contract, marking a significant step in the development of Singapore contract law. 

        The Plaintiffs in this case were successfully represented by Rajah & Tann Singapore LLP.  We issued a client update on this.  To view the Update, click         here.

        THAILAND

        Developments in Anti-Corruption Laws
        Thailand's anti-corruption laws have recently undergone legislative enhancement, expanding the scope of prohibited activities so as to close what was seen as a gap in Thailand's anti-bribery framework. Companies should thus ensure that their internal compliance measures are in place to avoid falling foul of these provisions.

        Previously, section 144 of the Criminal Code prohibited the giving of any benefit to a member of the State Legislative Assembly, the Changvad Assembly, or the Municipal Assembly to induce an act which is contrary to his functions, with a consequence of imprisonment and/or a fine. The recently amended Organic Act on Counter-Corruption (No. 3) extends this prohibition to benefits given to any State Official, Foreign State Official, or International Organisation Official. .

        The amended provision appears directed at potential bribery involving officials from foreign countries, as well as persons working in public international organisations. This serves to strengthen Thailand's statutory framework in keeping with the United Nations Convention against Corruption.

        We issued a client update on this.  To view the Update, click         here.

        VIETNAM





        Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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