Regional Round-Up

Your Snapshot of Key Legal Developments in Asia

Issue 3 - Jul/Aug/Sep 2015


      LAO PDR


          Cambodia Industrial Development Policy 2015 - 2025

          On 6 March 2015, Cambodian government approved the Cambodian Industrial Development Policy 2015 – 2025 (the "IDP"). The IDP is adopted as a guide to promote the country’s industrial development that will help maintain sustainable and inclusive high economic growth through economic diversification, strengthening competitiveness and promotion of productivity.

          We recently issued a Client Update on this. To view the Update, click here.

          Prakas on Public Issuance of Equity Securities
          Prakas No. 005/15 SECC/P on Public Issuance of Equity Securities was adopted on 10 September 2015 to substitute Prakas No. 001/SECC/P dated 15 January 2010. The purpose of the new Prakas is to prescribe the procedure, mechanism, and approval for the issuance of equity securities in Cambodia pursuant to the Law on Issuance and Trading of Public Securities and the Sub-Decree on the implementation of the Law on Issuance and Trading of Public Securities. In contrast with Prakas No. 001/SECC/P, there have been some changes in relation to requirements of equity securities offerings, content and information in Disclosure Documents, documents attached to the application, and the fees related to the submission, registration, and extension of expiration of disclosure documents.
          Prakas on Implementation of Listing Rules
          On 10 September 2015, Prakas No. 006/15 SECC/P on Implementation of Listing Rules was issued to replace Prakas No. 004/11 SECC/P dated 3 May 2011 and Prakas No. 001/12-1 SECC/P dated 17 April 2012. These Listing Rules were adopted to determine the principles necessary for the listing process in the Cambodia Securities Exchange in accordance with the Law on Issuance and Trading of Public Securities and other relevant regulations. The following are the contents of the Listing Rules:
          • Requirements and Procedures for Listing Eligibility Review;
          • Listing Requirements and Procedures;
          • Conditions and Procedures of Official Delisting;
          • Supervision of Listed Securities; and
          • Listing Fee.
          Notification on Immoveable Property Tax Payment for 2015
          On 8 September 2015, the General Department of Taxation ("GDT") issued Notification No. 6682 GDT, which serves as a reminder about immoveable property tax payment for the year 2015. Immoveable property tax collection started at the beginning of 2015 and will end by 30 September 2015. This property tax collection is based on Article 9(2) of the Prakas No. 493 MEF.BrK, dated 19 July 2010, on Immoveable Property Tax Collection.
          Law on Associations & Non-Governmental Organization Promulgated
          On 12 August 2015, the Law on Associations and Non-Governmental Organizations ("LANG") was promulgated by virtue of Royal Kram No. NS/RK/0815/010. LANG provides for two types of associations and non-governmental organisations: (i) local association or LNGO; and (ii) international association or INGO, and also sets out the registration procedure and general compliance obligations.
          Recognition of Exclusive Rights in Mark Usage

          On 6 August 2015, the Royal Government of Cambodia issued Instructive Circular No. 07IC ("Circular") on the recognition of the exclusive rights for mark usage. The Circular requires the Ministry of Commerce ("MOC") to issue a Prakas to determine the detailed procedure on the recording and filing of power of attorney for importing goods tagged with exclusive rights.

          The Circular also provides that certain goods, such as those imported for non-commercial purposes or for the purposes of local development, as well as duty free goods, shall not be governed by the provisions on the implementation of the recording and filing of power of attorney for importing goods tagged with exclusive rights.

          River Basin Management
          On 24 July 2015, the Royal Government of Cambodia has adopted Sub-Decree No. 98 SD.BK on the management of the river basin. The competent National, Capital and Provincial Committees have been established. The policy, master plan and measures are set to achieve the effectiveness and sustainability of the development of the river basin.
          Requests for Corporation License in Road Infrastructure Sector
          On 22 July 2015, the Royal Government of Cambodia adopted Sub-Decree No. 94 SD.BK on the conditions and procedures to request for the corporation licenses in the road infrastructure sector. This Sub-Decree aims to raise the quality of the construction, renovation and conservation. The Ministry of Public Works and Transport has been mandated to issue such corporation licenses.
          Establishment of the Department of Large Taxpayers
          On 23 June 2015, the Ministry of Economy and Finance issued Prakas No. 682 MEF.P on the establishment and management of the Department of Large Taxpayers. This Prakas aims to establish the structure of the office of the Department, organize the roles and duties, and guarantee the quality and effectiveness of large tax collection.



          Government Moves on Tax Front to Encourage Greater Equity Contribution to Company Capital

          The Minister of Finance recently issued Regulation No. 169/PMK. 010/2015 (the "Regulation") on the ratio of debt to equity in a company's capital (debt-to-equity ratio  / "DER") for tax calculation purposes. This is significant as Law No. 7/1983 on Income Tax, as last amended by Law No. 36/2008, provides that interest expenses are deductible in the calculation of a company's tax liabilities.
          The Regulation, which enters into effect in fiscal year 2016, sets the DER at 4:1, meaning that interest expenses arising on borrowings incurred to provide company capital will no longer be deductible for tax purposes where such borrowings exceed 80 percent of the company's capital.

          We recently issued a Client Update on this. To view the Update, click here.

          New Legislation Makes Halal Certification Compulsory

          Law No.33 of 2014 on Hala Product Assurance makes halal certification mandatory in Indonesia for the first time. The legislation provides for the establishment of a new body, the Halal Assurance Agency (accountable to the Minister for Religious Affairs) within a period of not more than three years of the legislation’s enactment to administer certification, which is required for food and beverages, medicines, cosmetics, and chemical, biological, and genetically-engineered products that are manufactured, imported, distributed and / or traded in Indonesian.

          Halal certification was previously the responsibility of the non-governmental Indonesia Ulema Council ("MUI"). Until such time as the new agency has been established, the MUI will continue to be responsible for certification, and all halal certificates issued by the MUI theretofore will remain valid. Failure to comply with the certification requirement carries a maximum fine of up to Rp. 2 billion or a term of imprisonment of not more than five years. The certification scheme must be fully operational within five years' of the legislation’s enactment, that is, by not later than 29 September 2019.

          Damages Awards Now Enforceable Against State
          A new Ministry of Finance Regulation (No. 80/PMK.01/2015) provides an administrative framework for the enforcement of judicial and arbitral awards against the Indonesian state for the first time, at least in theory. In the past, the question of whether or not to comply with such awards was entirely at the discretion of the government. Crucially, however, the Regulation specifically excludes awards related to matters that fall within the scope of the duties and functions of government.
          Commodity Futures Transactions Exempted from Mandatory Rupiah Use
          The Indonesian Commodities Trading Supervisory Board (Bappeti) has issued a new regulation (No. No. 104/BAPPEBTI/SE/07/2015) that expressly exempts commodity futures trading from the provisions of Bank Indonesia’s controversial Regulation 17/3/PBI/2015 (requiring the mandatory use of rupiah in payment transactions).
          New Small Claims Procedure
          To better ensure the speedy administration of justice, Supreme Court Reg. No.2/2015 establishes a new small-claims procedure for tort and contract claims of less than Rp 200 million. The new procedure is greatly simplified, with the exchange of documents being confined to the plaintiff's claim and a reply from the defendant. By contrast, in regular civil proceedings, a somewhat archaic and expensive system of formalized pleading continues to be applied.

          LAO PDR

          National Assembly Passes Business Competition Law
          On 16 July 2015, the National Assembly of Laos passed the Business Competition Law in a move to ensure that competition between businesses in Laos is carried out in a fair and just manner to boost economic growth. The Law defines principles, measures and regulations that prevent unfair and unjust business competition, while promoting business competition in a fair and just manner along with protecting the legitimate rights and interests of the state, business operators and customers.

          The Law is intended to facilitate the growing integration of ASEAN as an ASEAN Economic Community in December this year.
          Lao Wholesale and Retail Sectors Now Open to Foreign Investors

          Foreign individuals and legal entities may now operate wholesale and retail businesses in Lao PDR pursuant to Decision No. 1005/MOIC on Wholesale and Retail Businesses issued on 25 May 2015 and its additional instructions (No. 0515/MOIC.DTD, 17 June 2015).  The regulations set out the conditions that must be complied with in order to engage in wholesale and retail businesses, as well the minimum capital threshold for foreign investors.

          This marks a major reform and significant liberalization of the wholesale and retail sector which has hitherto been strictly reserved for Lao citizens.


          The Laws Behind Your Touch ‘n Go: E-Money Regulations in Malaysia

          E-money is an instrument that contains monetary value paid in advance by any user like ourselves to the e-money issuer (for example, Touch 'n Go Sdn Bhd) to be able to make payments to purchase goods or services from third party merchants (such as expressways and retail outlets). E-money falls under what is known as a 'payment instrument under the Financial Services Act 2010' ("FSA"). The FSA empowers Bank Negara Malaysia ("BNM") to designate such payment instruments as a designated payment instrument ("DPI").

          Prior to 2005, only banks were allowed to issue e-money. However, now, BNM has liberalised its guidelines by allowing non-banks to also issue e-money. Further, to become an e-money issuer, issuers must follow the standards published by BNM in addition to the operational requirements of the FSA. Although regulations and guidelines are readily available to assist interested parties in the application for an e-money license, there is still little information available about BNM's decision-making process. There are also no pointers as to foreign equity restrictions, making it difficult for foreign applicants to assess the likelihood of approval.

          The increasing use of e-money raises the risk of money laundering as it provides transacting parties with an easy way to transfer financial value. These risks have of course been identified and an issuer of e-money must therefore comply with the Anti Money Laundering and Anti-Terrorism Financing Act 2001 ("AMLATFA"). Regulators should therefore be monitoring the threats posed to this twenty first century innovation and implement adequate policies to facilitate this economic change.

          The full article on this, which appeared in the 3 August 2015 issue of the Malaysian newspaper The Sun, can be accessed here.

          Proposed Amendments to the Competition Act 2010 [Act 712] and Competition Commission Act 2010 [Act 713]

          The Malaysia Competition Commission ("Commission") recently conducted an Online Public Engagement process to get feedback on the recently proposed amendments to the Competition Act 2010 and the Competition Commission Act ("CCA").  The proposed amendments have, amongst others, extended the scope of the Act so that 'enterprises" will now cover individuals and partnerships. The proposed amendments will also aim to provide consumers with greater economic benefits (e.g. proposed amendments to section 5(a) of the Act). Other than streamlining processes, there are a few significant proposed amendments which appear to provide the Commission with wider powers of enforcement. Examples of these relate to a proposal to empower the Commission to require persons to attend a private hearing before the Commission and a proposal to make it compulsory for parties to make written representations to the Commission after a proposed decision id issued by the Commission.

          Since the coming into operation of the Act on 1 January 2012, it has been amended once by carving out from the application of the Act, upstream petroleum activities in Malaysia.

          We issued a Client Update setting out the key proposed amendments to the Act and the CCA. To access the Update, click here.


          DICA Issues Announcement Requesting Companies to Notify DICA of their Status

          The Directorate of Investment and Company Administration ("DICA") issued an announcement on 24 August 2015 requiring all companies, representative offices and branches that are carrying on business in Myanmar to notify DICA of their activities in Myanmar, as it is in the process of updating its registers. The initial deadline for notification was 14 September 2015. However, DICA recently issued an announcement that this deadline would be extended to 16 October 2015. Failure to notify DICA may result in deregistration from DICA’s company register. 

          Companies, branches, and representative offices may notify DICA that they are carrying on business in Myanmar via phone, email, fax or letter. However, we would recommend that a written notification be submitted either via email (by attaching a signed cover letter to the email) or letter by hand (with an acknowledgement slip) in order to retain some form of evidence that the company, branch or representative office has complied with this requirement to notify DICA. The letter should be prepared on the relevant entity’s letterhead, and signed by one of its directors or representatives. Copies of the Certificate of Incorporation and Permit to Trade, Form 6/26 or Certificate of Registration and Form 18 (as the case may be) of the entity should also be submitted to DICA.

          Post-consultation Draft of the Myanmar Companies Law Published

          A second draft of the Myanmar Companies Law ("MCL") was made available on DICA's website ( in June 2015. This draft was published following a public consultation on the first draft which was held in March 2015. The MCL will repeal the Myanmar Companies Act 1914 ('current MCA"), and it is expected that the MCL will be enacted after the elections in November 2015.

          Key amendments in this draft MCL include a revised definition of "foreign company". Under the current MCA, companies with a  foreign shareholder holding even one share would constitute a "foreign company". It is expected that this definition will be revised such that a company would only constitute a "foreign company" if foreign interest in that company exceeds a "prescribed ownership amount". This threshold is currently the subject of deliberation amongst policy-makers. This new provision could potentially expand the types of businesses foreigners can engage in (e.g. trading, distribution) if foreigners engage in such businesses with a local party holding a majority of the shares in the company. The draft MCL also removes the requirement for foreign companies to hold a permit to trade, and abolishes the concept of par value. Further, under this draft MCL, companies will be given full legal capacity to "carry on any business and activity", and will no longer be required to exhaustively list out the objects of the company in their Memorandum and Articles of Association.

          Yangon Stock Exchanges Listing Criteria

          The Yangon Stock Exchange ("YSX") has just announced the deferment of its opening to December 2015, in order to enable the opening to take place after the elections in November 2015.

          In preparation for listing, the YSX's Board of Directors published on 15 August 2015 the preliminary listing guidelines ("Guidelines") for companies that intend to list on the yet-to-be-launched YSX. The Guidelines are meant to be "minimum requirements" for listing. It is stated in the Guidelines that each listing company will be assessed on a case-by-case basis to ensure the listing is "safe for the interests of the public".

          The Guidelines state that the applicant company must be a public company registered under the Myanmar Companies Act 1914. At present, foreign companies are not permitted to be listed. However, this restriction may potentially be lifted once the new Myanmar Companies Law is introduced.  

          Companies that are eligible for listing on the YSX must comply with several requirements, such as having a minimum of 100 shareholders and a paid-up capital of at least MMK 500 million (approximately US$415,000) on the application date. In addition, they must have a profit-generating track record for the past two years. 

          Myanmar Opens Downstream Petroleum Business for Foreign Investment

          Myanmar's Ministry of Energy announced that foreign investment will be permitted in specified circumstances for the importation, storage, distribution and sale of a wide range of petroleum products in Myanmar.  Given the current restrictions, this policy change will pave the road for liberalising of the downstream retail petroleum market in Myanmar to allow for foreign investment.

          Foreign investment will be permitted by way of a joint venture with the Myanma Petroleum Products Enterprise ("MPPE"), the Ministry of Energy-owned enterprise responsible for retail and wholesale distribution of petroleum products in Myanmar.  In addition to importation, storage, distribution and sale of specified petroleum products (excluding LPG and LNG), the joint venture will cover the rehabilitation and expansion of certain MPPE facilities ("Joint Venture Project").  The opportunity for foreign investment was announced recently by way of an invitation to tender issued by the MPPE.  The MPPE has invited bids from qualified foreign companies to form a joint venture company to undertake the Joint Venture Project.  Bidders have until 13:00 on 20 October 2015 to submit bids for the Joint Venture Project.

          We have issued a Client Update on this which covers, amongst others, the bid requirements for the Joint Venture Project. To access the Update, please click here.



          MAS Enhances Regulatory Safeguards for Investors

          The Monetary Authority of Singapore ("MAS") has announced key regulatory enhancements to safeguard investors' interests, following a public consultation in July 2014. 

          First, the current capital markets regulatory framework will be extended to non-conventional investment products, namely, precious metals buy-back arrangements and collectively-managed investment schemes.  Secondly, accredited investors will now have the option to benefit from the full range of regulatory safeguards applicable to retail investors.

          Legislative amendments to effect the above changes will be tabled in Parliament in 2016.

          We recently issued a Client Update on this. To view the Update, click here.

          Consultation on the Proposed Changes to the CCS Guidelines

          The Competition Commission of Singapore ("CCS") is consulting on proposed changes to its guidelines ("Guidelines"). The key aims of the review are to provide greater clarity and detail, and to streamline various processes. 

          The proposed changes seek to:

          • better reflect CCS’s current practice of assessing anti-competitive agreements, mergers and acquisitions, and abuses of dominance;
          • simplify and streamline the process of filing notifications to CCS for guidance or decision;
          • make the process of applying for leniency clearer and more efficient; and
          • introduce a new Fast Track procedure for appropriate cases with a view to enable CCS to more effectively and efficiently enforce the Competition Act.
          Consultation period closes on 6 November 2015. We issued a Client Update that sets out the key proposed changes to the Guidelines. To view the Update, click here.
          Handbook for Issuers Making Cross-border Offers using the ASEAN Disclosure Standards under the Streamlined Review Framework for the ASEAN Common Prospectus

          In March 2015, the Monetary Authority of Singapore ("MAS") and Singapore Exchange ("SGX") jointly signed a Memorandum of Understanding ("MOU") with the Securities Commission Malaysia and the Securities & Exchange Commission Thailand to establish a Streamlined Review Framework for the ASEAN Common Prospectus ("Framework"). The Framework, which is an initiative under the ASEAN Capital Markets Forum Implementation Plan endorsed by the ASEAN Finance Ministers, will facilitate cross-border offerings of equity securities and plain debt securities in ASEAN, and enhance ASEAN's attractiveness as a fund-raising centre. 

          Under the Framework, ASEAN issuers planning a multi-jurisdictional offering of equity or plain debt securities can expect a shorter time-to-market, and faster access to capital across signatory countries through a streamlined review process. Both Home and Host Authorities will have to complete the prospectus review process at the same time for the prospectus (which must be prepared in accordance with the ASEAN Disclosure Standards), within three to four months from the date of submission.

          On 4 September 2015, MAS and SGX jointly announced the issuance of a handbook by the participating jurisdictions to implement the Framework ("Handbook").  The Handbook provides detailed guidance on the operational aspects of the Framework, including criteria for issuers, application procedures and the review timeline.

          To access the Handbook, click here. We issued a Client Update highlighting the key features of the Handbook. To view the Update, click here.

          Organised Crime Bill Passed in Parliament

          The Organised Crime Bill was passed in Parliament on 17 August 2015. The Bill will create certain offences related to the activities of organised criminal groups ("OCG"), and provide for certain orders to be made by the courts in order to prevent and disrupt such activities.  The key provisions of the Bill include:

          • Criminalisation of OCG-related activities, including instructing a person to commit offences for an OCG, giving help to an OCG, recruitment of members and being an OCG member, enhanced penalties for those who commit crimes such as trafficking and corruption, as part of an OCG.
          • Introduction of preventive orders such as Disqualification Orders, Financial Reporting Orders and Organised Crime Prevention Orders, to constrain activities of OCGs;
          • Introduction of a non-conviction based regime to eliminate the chance for persons to profit from carrying out organised crime activities; and
          • Introduction of enhanced investigative powers for law enforcement agencies to investigate and obtain information from the Comptroller of Income Tax and the Comptroller of Goods and Services Tax.

          We issued a Client Update on the Organised Crime Act and its impact on remote gambling operations and intellectual property piracy. To access the Update, click here.

          Employment (Amendment) Bill

          The Ministry of Manpower ("MOM") had announced in 2014 that it would require employers to issue itemised  payslips and key employment terms ("KETs") in two years.  The Employment (Amendment) Bill ("Bill") puts these requirements into law. The Bill also sets up administrative penalty framework to make less severe breaches of the Employment Act ("EA") non-criminal.

          The key changes introduced by the Bill, which was passed on 17 August 2015, include the following:

          • Itemised payslips. Employers are mandated to provide itemised payslips to all their employees covered under the EA together with their salary payments.
          • Key Employment Terms. Employers are required to provide written KETs to all employees covered under the EA with continuous employment of at least 14 days with the company.   Itemised payslips and KETs provide greater clarity and assurance to employees about their regular salary components as well as their key employment terms and benefits. These will also prevent misunderstanding and minimise disputes at the workplace.
          • Administrative penalty framework. Currently, all breaches of the EA are criminal offences. The Bill sets up a framework that treats less severe breaches as "civil breaches" which attract administrative penalties. These breaches include failure to provide itemised payslips, failure to provide written KETs, and failure to keep detailed employment records.

          It is understood that MOM intends to implement the changes on 1 April 2016. However, in view of strong feedback from the smaller SMEs who will be most affected by the changes, MOM will give employers a one-year grace period, during which MOM will adopt a light-touch enforcement approach whereby employers will be assisted to meet the legislative requirements.

          We recently issued a Client Update in relation to the amendments to the EA.  To view the Update, click here.

          Patent Cooperation with Cambodia

          Patent owners in Singapore can now re-register their patents in Cambodia at its Ministry of Industry and Handicraft ('MIH"), and submit Intellectual Property Office of Singapore ("IPOS")-issued Search and Examination ("S&E") reports to MIH for the grant of Cambodia-related patent applications.  This is made possible pursuant to the Memorandum of Understanding signed by Cambodia's MIH and the IPOS.

          During the term that a patent is in force in Singapore, patent owners can re-register their Singapore patent in Cambodia by submitting a request for re-registration to the MIH. Moreover, patent applicants in Singapore who have a Cambodia-related patent application may now request IPOS to submit a copy of the (i) final S&E report issued by IPOS and (ii) final specifications of the Singapore-related patent application to MIH for the grant of the Cambodia-related patent application. To facilitate the grant of the Cambodia related patent application, the applicant may also request for the specifications of the Cambodia-related patent application to be amended accordingly to the final specifications of the Singapore-related patent application.

          We had previously featured this MOU in the January/February/March 2015 issue of the Regional Round-Up. To access the write-up, click here.



          Corporate Governance Changes under the Law on Enterprises

          The new Law on Enterprises came into effect on 1 July 2015, bringing with it numerous changes to corporate governance in Vietnam. For example, both limited liability companies and joint stock companies may now decide on their number of seals, the form, the contents, and the management and use of such seals in their charter, provided a seal sample is sent to the business registration authority for publication on the National Enterprise Registration Portal. Companies may now also have more than one legal representative in their charter, provided at least one resides in Vietnam.

          However, the law also tightens the time limit in which a limited liability company is required to pay up its charter capital. Under the former Law on Enterprises, this time limit was 36 months from the date of incorporation. This has now been shortened to 90 days, failure of which requires the company to decrease their charter capital.

          Changes to FOC Incorporation Procedures Under the Law on Investment and Law on Enterprises

          Under the former Law on Investment, investors that wish to incorporate a foreign-owned company are required to apply for and obtain an Investment Certificate, which comprises of proof of the incorporation and approval of their project. The new Law on Investment and Law on Enterprise (which came into effect on 1 July 2015) now requires a two-step procedure. Provided it is not a project of some national significance, investors generally now need to obtain (1) an Investment Registration Certificate as proof of approval of the investor's project; and (2) an Enterprise Registration Certificate, akin to an incorporation certificate, that all local and foreign corporations need to obtain.

          While the two-step process appears to complicate the incorporation procedure, the law envisages a much faster processing time for incorporation. However, as of the date of this round-up, there has been no guiding legal instrument as to how the licensing authorities would implement the new laws, thereby causing delays as the authorities are at a limbo on how to deal with applications - particularly for those that had been lodged prior to the new law's effectiveness and where there is no clear transitional procedure in place. The guiding decrees for the new laws are expected to come out soon, which will shed some light on the process.

          Relaxation of Housing Ownership Restrictions under the Law on Housing

          The widely-anticipated Law on Housing, which took effect on 1 July 2015, aims to remove the many restrictions placed on house ownership by foreigners in Vietnam. The new law now states that foreign individuals permitted to enter Vietnam and foreign-invested companies, branches and representative offices may purchase properties. The right of sub-lease, sale, inheritance, and mortgage are now attached to these properties in a similar treatment as for Vietnamese buyers. Foreigners may own up to 30% of a single apartment building or more than 250 houses in a single administrative ward, but may only own houses for a limited duration of 50 years (with a possibility of renewal upon expiration).

          However, while the law appears to be liberal in allowing any foreign individuals "permitted to enter Vietnam" to purchase properties, such sweeping permission may be narrowed in the upcoming guiding decree. This guiding decree is expected to further particularise the procedures and other provisions in the Law on Housing for which there may be ambiguity.

          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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