Your Snapshot of Key Legal Developments in Asia
Issue 3 - Jul/Aug/Sep 2014
COVER STORY
CAMBODIA
CHINA
INDONESIA
- Geothermal Resources Act: A Boost to Indonesia's Geothermal Power Sector
- BKPM Rolls Out its Computerized Permit Application System
LAO PDR
- Multi-Stakeholders Discuss Revised Water and Water Resources Law
- Laos, Thailand in Talks to Regulate Lao Migrant Workers
MALAYSIA
- Block Exemption Order Ruling Takes Effect (Malaysian Competition Commission)
- Government May Announce Additional Zero-Rated Items Under GST
MYANMAR
SINGAPORE
- New Legal Framework to Regulate Gambling in Singapore
- Amendments to the Copyright Act to Combat Piracy
- Singapore's National Jobs Bank
- Passage of the Transboundary Haze Pollution Act
- Launch of the ASEAN CIS Framework
THAILAND
VIETNAM
CAMBODIA
Prakas No.623 MEF.P on Uncollectible Tax Debt
The Royal Government of Cambodia ("RGC") aims to strengthen its tax collection system and tax compliance, and also to prevent tax evasion by setting out rules to clearly determine the distinction between the collectable and uncollectible tax debt. This Prakas focuses on defining the characteristics of uncollectible tax debt.This Prakas allows the bearers of uncollectible tax debt to be exempted from additional taxes, interests and other fines. To be exempted, the taxpayers must fulfill the conditions set out by this Prakas, such as inability to pay tax for at least three years due to death, handicap, imprisonment, bankruptcy or disappearance.
Prakas No. 196 MLVT.P on Quota on Foreign Labour
Recently, the Ministry of Labor and Vocational Training issued a Prakas to inform owners of enterprises and establishments of the approval process for the hiring of foreign labour. All enterprises and establishments must submit a letter of request to the Ministry by the end of November each year for the approval of the Ministry to employ foreign labour for the following year. The Ministry will assess each request on a case by case basis.Generally, it is a statutory requirement that enterprises and establishments shall not employ foreign employees beyond 10% of the total number of their employees. This proportion is set out in the Cambodian Labor Law and is further emphasized in this Prakas. However, different categories of foreign employees have different maximum quotas – foreign office employees cannot make up more than 3% of the total employment, while specialised and non-specialised workers cannot make up more than 6% and 1% of employees respectively. Enterprises or establishments that require more foreign employees may also apply to the Ministry by specifying the exact reasons of such needs.
Prakas No. 962 MEF.P on determination of stamp duty tax for the transfer of ownership on immovable properties
The Ministry of Economic and Finance of Cambodia has recently issued this Prakas to set out the stamp duty tax in the event of transfer of ownership or possessory rights on immovable properties in Cambodia.
According to this Prakas, the Ministry imposes 4% of the price, which is clearly determined in the schedule of this Prakas based on location of the immovable property. However, in the event the price of the actual transaction is different from the schedule of the Prakas, the Ministry shall impose the stamp duty tax of 4% in accordance with the actual sale and purchase agreement or other documents that the parties have entered into.
CHINA
China Promulgates Further Measures to Widen the Door to Outbound Investment
On 6 September 2014, China's Ministry of Commerce ("MOFCOM") promulgated the Administrative Measures for Outbound Investment (境外投资管理办法) (the "Measures"), which took effect on 6 October 2014. The Measures widen the door to outbound investment by Chinese enterprises and relax certain approval requirements accordingly.Pursuant to the Measures, enterprises intending to invest in outbound companies involving sensitive countries, regions or industries are required to obtain the approvals from the MOFCOM or its local agency. Other than the aforesaid circumstances, outbound investors are simply required to file their outbound investment projects with the MOFCOM or its local agency. The abovementioned sensitive countries or regions include, but are not limited to, the countries that have not established diplomatic relationships with China and the countries under the United Nation's sanctions. The abovementioned sensitive industries refer to industries involving the import of products and technologies which restricted from import, and industries involving multinational interests.
In addition, the approval from the MOFCOM is no longer a precondition to the execution of transaction documents of the outbound investment, and the investors of the outbound investment are allowed to file the application with the MOFCOM or its local agency for such approval after entering into the transaction documents.
INDONESIA
Geothermal Resources Act: A Boost to Indonesia's Geothermal Power Sector
The House of Representatives passed the new Geothermal Resources Act ("2014 Act") on 26 August 2014. The 2014 Act, which is of immediate effect, gives an important boost to the geothermal energy industry as it provides that pricing will henceforth be based on economic cost, something that is of utmost importance in an industry where upfront costs can be enormous. In addition, it significantly liberalises the rules regulating the development of geothermal power projects, in particular by no longer classifying geothermal energy exploitation as a form of "mining", thus exempting it from the restrictive rules governing mining in designated forest areas. This is in marked contrast to the legislation it repeals and replaces - the Geothermal Energy Act 2003 - which specifically characterised geothermal energy exploitation as mining. The new legislation also places all authority in respect of the licensing of geothermal resources for power generation purposes in the hands of the central government, whereas previously it was shared with local government.BKPM Rolls Out its Computerized Permit Application System
As part of the ongoing rollout of a computerized permit application system at the Investment Coordinating Board ("BKPM"), the BKPM now requires every client company to create its own company folders at the BKPM website to accommodate its corporate, licensing and other relevant documents. The project is intended to facilitate paperless transactions between the BPKM and its clients, and accelerate the overall investment licensing process.Introduced in 1 September 2014, the company folder requirement applies to both domestic and foreign direct investment companies that are registered with the BKPM. Commencing 1 October 2014, the BKPM will no longer accept manual applications, filings or submissions if the client company has not created a company folder and uploaded its corporate and licensing documents onto the online filing system, known as Sistem Pelayanan Informasi dan Perizinan Investasi Secara Elekronik ("SPIPISE") (or National Single Window for Investment ("Online NSWi"). To access the website, please click here.
LAO PDR
Multi-Stakeholders Discuss Revised Water and Water Resources Law
Government officials, development partners and other involved sectors gathered on 17 September 2014 for a workshop titled "Multi-stakeholder Workshop on Revised Water and Water Resources Law". The Workshop was conducted to present the latest draft of the Water and Water Resources Law ("Law") and obtain comments from the stakeholders who are interested in working on water-related issues in Laos. The draft Law is expected to be submitted to the National Assembly for approval in December this year, according to a joint statement from the World Bank and International Finance Cooperation.The Law recognises that water is a single resource and seeks to regulate both surface and ground water. It also aims to control activities that could have important impact on water resources and river flows, such as the extraction of sand and gravel. The Law contains a number of important positive elements in terms of international practice. For example, the importance of rivers, in terms of water resources management, is clearly recognised. The scope of the Law is broad as it applies both to the use of water as well as the discharge of waste water.
The Water and Water Resources Law was adopted in October 1996 and entered into force in March 1997. It comprises 49 articles set out in 10 chapters. Following its enactment, an implementing decree was adopted by the Prime Minister in October 2001.
Laos, Thailand in Talks to Regulate Lao Migrant Workers
Lao and Thai authorities held talks in the week of 5 September 2014 in a move to regulate Lao migrant workers in Thailand.Thailand's Department of Employment has registered more than 150,000 Lao workers who did not have the required legal documents. It was also reported that many more workers have yet to be registered with the Department.
Lao authorities are expected to travel to Thailand to work with their Thai counterparts to set up a one-stop service, where illegal migrant workers can obtain legal documents.
The Lao Government recently set up temporary service centres at border checkpoints. They remained open until 24 August 2014 for the purpose of registering Lao workers who were expected to return from Thailand, after the Thai authorities took tough action to regulate foreign workers in the country.
The registration process, which compiles information on the returnees, aims to help returning workers to seek other employment opportunities.
MALAYSIA
Block Exemption Order Ruling Takes Effect (Malaysian Competition Commission)
The Malaysia Competition Commission ("MyCC") recently announced that the Competition (Block Exemption for Vessel Sharing Agreements and Voluntary Discussion Agreements) Order 2013 ("BEO") was gazetted on 4 July 2014 and has come into effect on 7 July 2014. This BEO was granted by the MyCC pursuant to an application by the Malaysian Shipowners Association, the Shipping Association of Malaysia and the Federation of Malaysia Port Operators Counsel on 16 December 2011. Although the applicants sought a 5-year block exemption and for such exemption to apply to liner shipping agreements in respect of Vessel Sharing Agreements ("VSA") and Voluntary Discussion Agreements ("VDA") entered into by liner shippers in respect of the entire transport chain including intra-modal transport services, the BEO granted is only for a 3-year duration and is more limited in scope as it applies only to transport services provided by liner operators in respect of ocean transport. The BEO therefore does not extend to the entire intra-modal transport services which would have included the carriage of goods provided by logistics providers, forwarders, depot operators, truckers and other service providers.The VSA and VDA are exempted from the anti-competitive agreement prohibition in the Competition Act 2010 subject to various conditions specified in the BEO. These include the condition that the agreement must be for a reasonable period of time and not contain any element of price fixing, or price recommendation or tariff by the parties imposed on the transport users. If there is a breach of any of the conditions specified, MyCC may cancel the BEO in respect of the agreement, and take enforcement action.
Importantly, parties to the VSA and VDA should note that the VSAs and VDAs must be lodged with MyCC for the BEO to take effect. All subsequent variations are subject to such similar lodgement requirement. Additionally, all transport users are entitled to be furnished by the parties to a VSA and VDA with information in such VSA and VDA concerning pricing or tariff of their individual services, and the structure and service level of the liner shipping services. To this end, the transport users are entitled to examine the VSA and VDA at the parties' offices in Malaysia and at a publicly available internet website.
Government May Announce Additional Zero-Rated Items Under GST
With the implementation of the Goods and Services Tax Act 2014 ("Act"), the Malaysian Government will impose a single goods and services tax ("GST") fixed at a rate of 6%. The current sales tax and service tax will be abolished and replaced with GST effective on 1 April 2015.GST is a multi-stage consumption tax which is imposed on the supply of goods and services, including supply of imported goods made in the course or furtherance of any businesses in Malaysia. Under the Act, goods and services may be charged with GST at a standard rate of 6%, zero-rated or exempted from GST. Zero-rated supply refers to goods and services acquired by businesses which are eligible for input tax credit but sold to the consumer at zero rate. The Government has published a Goods and Services Tax (Zero Rated Supplies) Order which lists out the zero-rated items; however, it is anticipated that the Government will release an additional list of zero-rated items under GST when the next Budget is announced.
Any person who makes taxable supplies in Malaysia and whose annual taxable turnover exceeds the threshold of RM500,00 is required to register under the Act, including a person who makes wholly zero-rated supplies. Where a person is not required to register under the Act but voluntarily does so, he is also considered to be a taxable person. Only a taxable person may impose and charge GST on the supply of goods and services to customers.
MYANMAR
Enactment of Environmental Conservation Rules
The Environmental Conservation Rules ("EC Rules"), which detail the environmental policy and implementation framework of the 2012 Environmental Conservation Law, were enacted on 5 June 2014. The EC rules were drafted by the Ministry of Environmental Conservation and Forestry ("MOECAF"), which also drafted the 2012 Environmental Conservation Law.According to the EC Rules, the MOECAF is authorised to specify: (a) the projects, businesses, services, or investments for which an environmental impact assessment ("EIA") must be conducted; and (b) the businesses, work sites or factories that can potentially damage the environment and that require prior permission from the relevant authorities ("Permission List"). The activities in the Permission List must be approved by the Union Government and confirmed by the Environmental Conservation Committee ("Committee"), which is chaired by the Minister of Environmental Conservation and Forestry. It is important to note that even if a project, business, service or investment does not fall under those for which an EIA must be conducted ("EIA List"), the MOECAF may still require an Initial Environmental Examination ("IEE") in order to determine whether an EIA is in fact necessary. Separately, the MOECAF, with the approval of the Committee, is authorised to prescribe: (a) the amount of liability attributable to a person or entity causing environmental damage; and (b) the amounts of contribution to be made to the Environmental Management Fund by persons or entities engaged in extraction of natural resources.
In this regard, it would be important for foreign investors to monitor any developments with respect to the finalised EIA List, given that such developments would affect whether an investor would have to prepare an IEE or EIA; an IEE or EIA is generally considered a more challenging, expensive and time-consuming process. Conceivably, the foreign investor may have to design an Environmental Management Plan as well. In this respect, it will also be interesting to see how consistent the EIA List is with the newly issued Myanmar Investment Commission ("MIC") Notification No. 50/2014, which also contains a revised list of business activities that require an EIA. It is noted that this list within MIC Notification No. 50/2014 relates primarily to: (a) "large" projects (for example, excavation of mineral resources, production of petroleum and natural gas, as well as building of petroleum factories and large dams), and (b) projects in protected areas such as places of cultural heritage, national parks, and places that are near sources of public drinking water. As such, it remains to be seen whether the EIA List and Permission List dovetails with MIC Notification No. 50/2014, given what appears to be an overlap in scope. This is especially relevant given that EIAs which accompany MIC applications are forwarded to the Environmental Conservation Department of the MOECAF for its review.
To conclude, while the enactment of the EC Rules demonstrates Myanmar's desire to ensure that investments and business activities are in compliance with international best practices with respect to environmental issues, it remains to be seen how the MOECAF would review and scrutinise such IEEs and EIAs, having regard to the capacity of the MOECAF. The MOECAF should also ensure that activities requiring such IEEs and EIAs are justified having regard to the considerations of environmental protection, and ensure that such IEEs and EIAs are not simply an additional hurdle for foreign investors to overcome as this may stunt foreign investment.
PHILIPPINES
SINGAPORE
New Legal Framework to Regulate Gambling in Singapore
The Remote Gaming Bill, introduced in Parliament on 8 September 2014, was passed on 7 October 2014. The Remote Gambling Act creates a legal framework to regulate remote gambling in Singapore. The Act governs gambling activity which is conducted not just over the Internet, but also through the telephone, interactive television, radio or any other communication technology (collectively referred to in the Act as 'remote communication'). Once the Act comes into operation, remote gambling will be rendered illegal in Singapore unless the specific exemptions apply. The provisions of the Act not only affect individuals based in Singapore, but also extend extra-territorially to cover remote gambling operators and their agents based locally and abroad.
To read more about the Remote Gambling Act, please access the firm's Update here.
Amendments to the Copyright Act to Combat Piracy
On 8 July 2014, the Singapore Parliament passed amendments to the Copyright Act to introduce new measures aimed at tackling online copyright infringement. The most significant of these new measures aim to enable content rights holders to apply directly to the courts for an injunction to block sites which "clearly and flagrantly" infringe copyright, without having to sue internet service providers.Please access our Update here for a more detailed discussion of the new measures contained in the Act.
Singapore's National Jobs Bank
From 1 August 2014, prior to making an application for an employment pass, companies in Singapore will be required to advertise the job vacancy on a new national jobs bank administered by the Workforce Development Agency for at least 14 days. This is part of the Singapore government’s effort to ensure that companies consider Singaporeans fairly for job vacancies, and put in place fair employment, hiring and staff development practices that are open, merit-based and non-discriminatory.To read more about the national jobs bank, please refer to our Update here.
Passage of the Transboundary Haze Pollution Act
The Transboundary Haze Pollution Act was passed in Parliament on 5 August 2014. It came into operation on 25 September 2014. Broadly, the Act imposes criminal and civil liability on entities directly or indirectly contributing to haze pollution in Singapore. The Act imposes both civil and criminal liability when haze levels in Singapore pass a threshold of the Pollutant Standards Index (PSI) of 101 or higher, for a lasting period of 24 hours or more. The Act covers conduct occurring both within and outside of Singapore, which is crucial in tackling the transboundary nature of the haze pollution problem.For more information on the Transboundary Haze Pollution Act, please refer to the firm's Update here.
Launch of the ASEAN CIS Framework
At the 13th ASEAN Summit in Singapore in 2007, ASEAN leaders jointly adopted the ASEAN Economic Blueprint ("Blueprint"), with the goal of establishing ASEAN as a single market and production base, with a free flow of goods, services, investments and skilled labour, and a freer flow of capital.Pursuant to the Blueprint, the ASEAN Capital Market Forum developed an implementation plan to promote the development of an integrated capital market to achieve the objectives of the Blueprint. As part of the plan, the ASEAN Collective Investment Schemes Framework was launched by securities regulators in Singapore, Malaysia and Thailand on 25 August 2014. Under this Framework, fund managers based in Singapore, Malaysia and Thailand can offer collective investment schemes constituted and authorised in their home jurisdictions directly to retail investors in the other two ASEAN countries under a streamlined authorisation process.
Please refer to the firm's Update here to read more about the ASEAN CIS Framework.
VIETNAM
Public Investment Law No. 49/2014/QH13
On 18 June 2014, the National Assembly promulgated Public Investment Law No. 49/2014/QH13 ("Public Investment Law") which governs the investment management of state capital, and takes effect from 1 January 2015. Below are some significant features:- The Public Investment Law governs the management and use of all public investment, and grants the jurisdiction to decide investment policy, as well as the associated conditions and procedures.
- It ensures synchronization throughout the whole process of program management of public investment projects, and strengthens the monitoring, evaluation, testing and inspection of public investment plans, programs and projects in accordance with international practice.
- The Public Investment Law also provides for sanctions for violations of this law.
Law on Construction No. 50/2014/QH13
On 18 June 2014, the National Assembly issued Law on Construction No. 50/2014/QH13 ("Law on Construction"), which takes effect from 1 January 2015, replacing the current Law on Construction No. 16/2003/QH11 dated 26 November 2003 Below are some significant features:
- The Law on Construction covers all construction investment activities across all stages of construction. The regulations apply to construction investment projects from all capital sources, including state capital projects.
- The Law on Construction focuses on reforming the control and quality management of construction at all steps of investment process. Notably, there are certain conditions and requirements for establishing a Professional Management Department, including a Regional Management Department and a Major Management Department.
- The Law on Construction sets forth provisions on reforming the expense management mechanism in order to strictly manage construction investment expense. It also details the procedure to apply for new building permits.
Law on Bankruptcy No. 51/2014/QH13
On 19 June 2014, Law on Bankruptcy No. 51/2014/QH13 was passed by the National Assembly ("Law on Bankruptcy"). The Law on Bankruptcy will take effect on January 01, 2015, replacing the Law on Bankruptcy No. 21/2004/QH11. Below are some of the significant features:
- The Law on Bankruptcy regulates all bankruptcy procedures, including the making of bankruptcy applications, identifying and preserving assets, restoration of business operations, and the enforcement of bankruptcy declarations.
- Creditors may submit applications for bankruptcy against debtors after 3 months from the due date of the debts. Notably, employees are entitled to submit applications against their employers for failure to pay salary and other debts after 3 months from the due date of payment.
- The district level People’s Courts will have the jurisdiction to carry out bankruptcy procedures for enterprises and cooperatives which have their head offices located in the relevant district. The provincial level People's Courts will resolve cases which involve foreign elements or multi-district issues.
- Notably, the Law on Bankruptcy sets out certain situations where the transactions of enterprises or cooperatives which are carried out within 6 months (or 18 months for transactions with related persons) before the Courts issue a decision to open bankruptcy procedures would be invalid.
Joint Circular No. 16/2014/TTLT-BTP-BTNMT-NHNN on Security Assets
On 6 June 2014, the Ministry of Justice, the Ministry of Natural Resources and Environment, and the State Bank of Vietnam issued Joint Circular No. 16/2014/TTLT-BTP-BTNMT-NHNN as guidance for dealing with security assets ("Joint Circular 16"). Joint Circular 16 takes effect from 22 July 2014.
Joint Circular 16 sets out the following new procedures for pricing security assets:
- If the obligor and obligee cannot reach agreement on the selling price of the security assets, then the obligor is entitled to appoint an agency evaluate the price of the security assets.
- If the security assets cannot be sold at the price determined by the appointed price evaluation agency, the obligee is entitled to reduce the selling price consecutively three times.
- After three consecutive reductions, if no party is interested in buying the security assets, the obligee is entitled to take over the security assets to set off the security obligation at the price offered under the third discount.
The obligee is also entitled to unilaterally request the State authorities to make amendments to the certificate of ownership over security assets if the obligor does not voluntarily sign the necessary documents to transfer ownership to the obligee.
Decision No. 37/2014/QD-TTg on State Owned Enterprises
On June 18, 2014, the Prime Minister issued Decision No. 37/2014/QD-TTg providing guidance of the Criteria and List of Classification of State-owned Enterprises ("Decision 37"), which takes effect from 6 August 2014.
Previously, after equitization, the mandated minimum rate of state capital in enterprises providing public services or regulated essential sectors was at least 50% of the charter capital. However, the mandated minimum rate has been adjusted higher in certain business sectors under Decision 37. Depending on the business sector, the required percentage of State capital now ranges from either (i) 75% and above, (ii) 65% to 75%, or (iii) 50% to 65%.
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.