Your Snapshot of Key Legal Developments in Asia
Issue 4 - Oct/Nov/Dec 2017
- Audit on Banking and Financial Institutions
- Register for National Social Security Fund
- Implementation of Reduced Withholding Tax
- Codes of Profession and Conduct for Tourist Agents
- Granting Certification of Rural Credit Institution
- A Historical Change in the Chinese Courts' Attitude Towards Recovery of Lawyers' Fees
- Newly Revised Anti-Unfair Competition Law Released
- Bank Indonesia Introduces Regulatory Sandbox to Support and Monitor Fintech
- Government Deliberating Incentive Package for Palm Oil Business Actors
- Indonesia Joins the Madrid Protocol
- Bank of Indonesia issues Regulation to Settle Trade Transactions using Baht, Ringgit
- Minimum Registered Capital Requirement for Foreign Investors in General Business Companies Abolished
- Draft Decision on the Establishment and Management of a Representative Office of Foreign Entities in Lao PDR
- Decree on the Entertainment on Location of Entertainment Places and Age of Service Users of Entertainment Places
- Draft Law on Economic Dispute Resolution (Amended)
- Draft Law on Technology Transfer
- Securities Commission Malaysia Revises Prospectus Guidelines
- Bank Negara Malaysia to Enforce Crypto Regulation Next Year
- The Insolvency Act 1967 – A stricter bankruptcy regime for Malaysia
- Far East Holdings Bhd & Anor v Majlis Ugama Islam dan Adat Resam Melayu Pahang and other appeals
- View Esteem Sdn. Bhd. v. Bina Puri Holdings Bhd. (Civil Appeal No.: 02(f) – 11 – 02/2017(W))
- New Myanmar Companies Law Enacted
- Myanmar Investment Commission Expands Investment Benefits to Existing Companies
- Myanmar Investment Commission Issues Announcement on Appointment of Foreign Experts
- House Pushes for Simplified Licensing Procedure
- Drug Trafficking, Money Laundering to be exempt from Anti-Wiretapping Law
- Congress Ratifies the Tax Reform for Acceleration and Inclusion Bill
- DOF Set to Submit Package 2 of Tax Reform this January ‘18
- Proposed Enhancements to Continuous Disclosure Requirements under the Listing Rules
- CCS Consults on Proposed Amendments to the Competition Act
- Consultation on the New Regulatory Framework for Payments, Proposed Payment Services Bill
- Singapore's Latest Green Efforts – Draft Carbon Pricing Bill
- Singapore Court Issues First Decision on Rescue Financing
- The New Trade Competition Act
- Customs Act 2017
- Thailand's Accession to the Madrid Protocol
- The Payment Systems Act 2017
- NACC Guidelines on the Anti-Corruption Compliance
Audit on Banking and Financial InstitutionsOn 14 November 2017, the National Bank of Cambodia ("NBC") issued Prakas No. B7-017-335 on Audit on Banking and Financial Institutions ("Institutions") to determine the accreditation requirements and obligations of external auditing companies ("Auditing Firms") and the Institutions. The Prakas is applicable to all Auditing Firms accredited by the NBC and Institutions under supervision of the NBC.
According to the Prakas, the Auditing Firms shall submit applications for accreditation and provide supporting documents to the NBC. In the event that the Auditing Firms have already obtained permits from the NBC, the Auditing Firms shall submit applications for re-accreditation in accordance with this Prakas within 6 months from the effective date of the Prakas.
Register for National Social Security FundOn 10 November 2017, the Ministry of Labour and Vocational Training issued Prakas No. 448 on the Register of Enterprises, Establishments, and Workers in the National Social Security Fund ("NSSF") for Persons Falling under the Scope of the Labour Law. The Prakas aims to amend the registration requirements with the NSSF for enterprises, establishments, and workers who are under the Law on National Social Security Scheme for Persons under the Scope of Labour Law in the NSSF for work-related accident and healthcare schemes.
Going forward, all employers or owners of enterprises / establishments covered by the Prakas, employing at least one employee, must register with the NSSF and pay a monthly contribution to the NSSF on behalf of their employees. Employers or owners of enterprises / establishments must also register their workers / employees with the NSSF, and submit to the NSSF a monthly report on the total number of all their workers/employees.
Implementation of Reduced Withholding TaxThe Ministry of Economy and Finance issued on 27 October 2017 Prakas No. 1129 concerning the implementation of withholding tax ("WHT") on interest for loans from abroad. The Prakas aims to reduce charges on interest expense for loans that micro-finance institutions borrow from overseas lenders.
As stipulated in Article 26 (new) of the Law on Taxation, interest payments for loans borrowed from non-resident taxpayers are subject to 14% WHT. According to Article 4 of the Prakas, the 14% WHT must be implemented as follows: (i) micro-finance institutions shall withhold 10% of the interest amount paid to non-resident taxpayers; and (ii) the remaining 4% is considered as state charge in the form of subsidy to the micro-finance industry.
Codes of Profession and Conduct for Tourist AgentsOn 25 October 2017, the Ministry of Tourism issued Prakas No. 160 on the Taking of Effect of the Code of Profession and Code of Conduct for Tour Operators and Travel Agents in Cambodia. The Prakas implements the Code of Profession and the Code of Conduct for tour operators and travel agents in order to enhance the service quality, client's trust, and social moral values of the tourism sector in Cambodia.
The Code of Profession for Tour Operators and Travel Agents lays out many duties and obligations, including the duty not to unnecessarily charge tourists, not to hold tourists' passports, to provide services as advertised, and to provide good quality facilities and services to tourists. Also, tour operators and travel agents must not offer "zero package tours" or tours below the minimum price required by law. Failure to comply will subject tour operators and travel agents to revocation of tour/travel agent licenses or denial of renewal of licenses.
Granting Certification of Rural Credit InstitutionOn 25 October 2017, the National Bank of Cambodia ("NBC") issued Prakas No. B7-017-326 on Granting Certification for Rural Credit Institution. In order to operate as rural credit institution in Cambodia, an institution shall submit an application with supporting documents to the NBC and comply with the conditions as set out in this Prakas such as the minimum registered capital of 200,000,000 Khmer Riels, the deposit security of 5% of the registered capital in the account at the NBC, reporting obligations, etc.
Draft Law on Trade Remedies AdoptedOn 12 October 2017, the National Assembly of Cambodia adopted the Draft Law on Trade Remedies, which aims to shield domestic producers from the impact of dumped products. Comprising 45 Articles, the Law sets out principles, mechanisms, procedures, and related rules regarding trade remedies; and is applicable to trade-related activities in the Kingdom of Cambodia such as dumping. It also provides for subsidies and countervailing measures (tax credits) and safeguard measures including, but not limited to, the increase of import tax and import restriction.
The National Committee of Trade Remedies has been created and will be led by the Minister of Commerce, with the involvement of related institutions to fulfil the tasks related to trade remedies. The organization and functioning of the Committee will be determined by a Sub-Decree.
Increase of the Minimum Wage for 2018On 5 October 2017, the Ministry of Labour and Vocational Training issued Prakas No. 369 on the Increase in the Minimum Wage for Year 2018. Starting from 1 January 2018, the minimum wage for workers/employees in textile, garment and footwear industries will be increased by US$17, from US$153 per month in 2017 to US$170 per month in 2018.
For workers / employees on the probationary period, the minimum wage is US$165 per month. Piece-rate workers / employees shall receive their monthly wage according to the actual piece produced if the amount is greater than the minimum wage stated in the above Prakas. However, in case that it is lower, the employers shall to add the remaining amount to make it equivalent to the minimum wage.
Settlement of Complaint for Consumer of Banking and Financial InstitutionsOn 27 September 2017, the National Bank of Cambodia ("NBC") issued Prakas No. B7-017-299 on Settlement of Complaint for Consumer of Banks and Financial Institutions ("Institutions") to promote the protection of rights and benefits of consumers in relation to the use of products and services of the Institutions.
The Prakas is applicable to the Institutions under the supervision of the NBC. The Prakas requires the Institutions to receive and resolve complaints by consumers directly and / or through representatives of the consumers, including complaints received by the NBC and forwarded to the Institutions. Furthermore, the Prakas also provides provisions in relation to the resolution of complaints, reporting obligations, protection on complaints to NBC as well as penalties.
Banks and MFIs to Register with NBC to Sell SecuritiesOn 27 September 2017, the National Bank of Cambodia ("NBC") issued a Prakas No. B7.017.300 P to set out the conditions for banks and financial institutions to register with the NBC in order to sell securities on the Cambodia Securities Exchange ("CSX"). This Prakas helps boost the Cambodian economy by collecting and increasing the funds to expand businesses.
Any bank or financial institution which wishes to register with the NBC to sell securities on the CSX shall meet the following criteria:
- Obtain prior approval from the NBC;
- Have a minimum net worth of KHR 60,000,000,000 (sixty billion Khmer Riels), approximately US$15,000,000 (fifteen million Khmer Riels);
- Have good financial health and governance determined by the NBC as "safe" for at least 2 years; and
- Fully comply with other provisions of the NBC.
Liquidity Risk Management Framework for Banks and Financial InstitutionsOn 27 September 2017, the National Bank of Cambodia ("NBC") issued Prakas No.B7.017.301 P covering the legal framework for the liquidity risk management for banks and financial institutions under the supervision of the NBC ("Institutions"). This Prakas aims to mitigate the severe liquidity risk and impacts on the banking system of the Cambodia and to protect the consumers – especially the depositors and the borrowers.
In order to achieve the above, the Prakas also sets out the minimum requirements and points out the methods that the Institutions shall take into consideration and comply with i.e. good corporate governance, liquidity risk management, stress test and scenario analysis, risk indicator and capital strategy plan.
A Historical Change in the Chinese Courts' Attitude Towards Recovery of Lawyers' FeesUnder Chinese law, not all costs follow the event. In practice, the Chinese courts have long been reluctant in upholding a claim for the litigant’s lawyers' fees. In March 2017, a different approach was espoused by the Supreme People's Court of China – the highest level of Court in China - in Wu Xiaoguang v Li Qiang & Others  Supreme Court Civil Final No. 613 (the "Wu Xiaoguang case").
Here, the borrowers under a loan agreement had defaulted on repayment. The court ordered repayment of the principal sum, and further ordered the borrowers to pay the claimant's lawyers' fees in full. Notably, there was a provision in the loan agreement that the borrowers shall bear the lender's lawyers' fees in the event of default, and the court found no reason not to uphold such an agreement.
Even though China does not have the principle of 'binding precedents', the Wu Xiaoguang case is likely to be followed or at least considered by the lower courts as persuasive guidance in future cases. However, it cannot be said that the Supreme People's Court intended to lay down a general rule for all successful litigants to recover their lawyers' fees in all civil cases, as it dealt with the specific situation where the contract between the litigants expressly provided for the recoverability of lawyers' fees.
Newly Revised Anti-Unfair Competition Law ReleasedOn 4 November 2017, the Standing Committee of the PRC National People's Congress released the newly revised Anti-Unfair Competition Law, which came into operation on 1 January 2018 ("2018 Version"). The 2018 Version has re-defined the "unfair competition conduct", which new definition has emphasised the need to protect market competition order as well as the interests of business operators and consumers. Its amendments and updates also reflect the new types of unfair competition behaviors which are not included under the current Anti-Unfair Competition Law. One of such amendments is to prohibit unauthorised use of others' domain names, website names and web pages. A new clause is also included to deal with unfair competition in the field of Internet, prohibiting conduct that interferes with or sabotages the normal operation of other online businesses by technical means including, among others, inserting a link and forcing a redirection of webpages; misleading users into altering, closing or uninstalling other online products or services provided by others; and maliciously causing incompatibility with other online products or services provided by others etc.
Besides the newly added behaviors, the 2018 Version has also amended and improved existing clauses on commercial bribery, misleading commercial promotion, infringement of trade secrets, prize-giving sales and commercial defamation. In addition, supervision and inspection measures are further reinforced and penalties on unfair competition behaviors are substantially increased. The 2018 Version also draws a line between Anti-Competition Law and PRC Anti-Monopoly Law ("AML"), and deletes the provisions overlapping or even inconsistent with the AML and other laws.
Bank Indonesia Introduces Regulatory Sandbox to Support and Monitor FintechAgainst the backdrop of a rapidly evolving financial technology ("FinTech") landscape, Bank Indonesia ("BI") recently issued Regulation No. 19/12/PBI 2017 on the Organization of Financial Technologies ("Reg 19/12 2017"), and its implementing regulation, Regulation No. 19/15/PADG/2017 ("PADG 19/15 2017"), which sets out the procedures for registration, submission of information, and monitoring of financial technology organisers.
The regulation's primary development is the introduction of a regulatory sandbox – being a controlled program to test innovative FinTech services under BI supervision, which will then determine whether those services can be rolled out commercially. By providing FinTech innovators some scope to test their products in a live environment, the new rules recognise that start-ups developing sophisticated technological products and services face challenges in determining whether their businesses meet regulatory requirements.
The sandbox scheme is relevant to companies, businesses and investors with interests in the management and organisation of financial technologies, which include companies involved in the development of: payment systems – such as blockchains or distributed ledgers; market support – ie: aggregators; investment management and risk management services – such as online investment products and online insurance; loans, financing and capital allocation – such as peer-to-peer lending and crowd funding; and/or other financial services.
Click here to read our client update.
Government Deliberating Incentive Package for Palm Oil Business ActorsThe Indonesian Government continues to deliberate a Bill on Palm Oil ("Palm Oil Bill"). The Palm Oil Bill faces criticism from a cross-section of stakeholders including the Office of Indonesian Sustainable Palm Oil ("ISPO"), the Indonesian Palm Oil Smallholders Association ("Apkasindo"), and environmental activist groups.
The proposed law will cover licensing, land cultivation, foreign ownership, processing standardisation, trade, and incentives for investors in the palm oil industry. The Palm Oil Bill requires foreign investors to cooperate with domestic partners by establishing an Indonesian limited liability company, and states that further details on foreign shareholding ownership limits will be addressed under a specific government regulation. At present, Indonesia's investment regulations set a 95% cap on foreign ownership of Palm Oil businesses. Whether a new foreign shareholding ownership limit will be set remains uncertain.
The incentive scheme that will be made available to qualified investors includes, among others: income tax reduction, import duty exemptions or relief, VAT exemptions for certain periods of time, accelerated amortisation, land and building taxation relief, and /or product marketing support.
ISPO representatives criticise the Palm Oil Bill for its failure to implement actionable solutions to land acquisition issues. At the same time, Apkasindo secretary-general Asmar Arsjad argues that some articles under the Palm Oil Bill are obscure, and tax incentives favour large plantations over smallholders.
The Palm Oil Bill features as a priority of the 2017 National Legislation Program list. If the Bill is passed, the Government must issue its implementing regulations no later than one year after the law is passed.
Indonesia Joins the Madrid ProtocolOn 2 October 2017, Indonesia submitted its instrument of accession to the Madrid Protocol, making Indonesia the 100th member-state under the treaty. Under the Madrid System, an owner of an existing International Trademark Registration ("IR") will be able to expand the scope of the protection of its marks in any Madrid System member-territory, by filing a single international application and paying a single set of fees.
The Madrid Protocol came into force in Indonesia on 2 January 2018.
Bank of Indonesia issues Regulation to Settle Trade Transactions using Baht, RinggitBank Indonesia ("BI") has issued Governor Board Regulation on Local Currency Settlement ("LCS") to settle trade transactions between Indonesia and Thailand using Baht, as well as between Indonesia and Malaysia using Ringgit. This is aimed at reducing dependence on certain currencies and maintaining exchange rate stability.
Bilateral trade without using US dollar will be conducted through commercial banks designated as intermediaries, called Bank Appointed Cross Currency Dealer ("ACCD Banks"). BI and the counterpart authorities in Thailand and Malaysia will assign AACD Banks, which will have flexibility in performing certain financial transactions and activities in foreign exchange markets. These financial transactions and activities include the opening of Baht and Ringgit currency accounts, direct quotes for Baht and Ringgit currencies to Rupiah, and trade financing in Baht and Ringgit currencies.
The Regulation on LCS came into force on 2 January 2018.
Minimum Registered Capital Requirement for Foreign Investors in General Business Companies AbolishedOn 7 November 2017, the Ministry of Industry and Commerce ("MOIC") issued Notification No. 2633/Cabinet/MOIC ("Notification") abolishing the minimum registered capital requirement for foreign investors in general business companies. This follows the enactment on 19 April 2017 of the new Law on Investment Promotion (No. 14/NA, dated 17 November 2016) ("new LIP"), which amended the previous Law on Investment Promotion (No. 2/NA, dated 8 July 2009) ("previous LIP"). The new LIP introduced a number of amendments to facilitate foreign investment in Laos, including providing a seamless process for business applications and issuance of licenses, as well as granting various incentives for certain business activities. It did not, however, provide clarification on the minimum registered capital requirement for foreign investors, which, pursuant to the previous LIP, was set at US$120,000 (about LAK 1 billion). MOIC released the Notification to address this issue.
Pursuant to the Notification, the minimum registered capital requirement for foreign investments in general business companies such as manufacturing companies, training providers and real estate companies, is abolished. Instead, they will be required to meet a certain minimum registered capital threshold prescribed by MOIC.
Business activities governed by specific sector regulations are not affected by the Notification. These include business activities of the wholesale and retail trade, repair of motor vehicles and motorcycles, and short-term accommodation and food service sectors. Companies that belong to these sectors are still required to adhere to the minimum registered capital requirements applicable to their respective industries.
Draft Decision on the Establishment and Management of a Representative Office of Foreign Entities in Lao PDRThe Government of Lao PDR allows foreign institutions, corporations, and associations, which exist in legal form in other countries, to establish a Representative Office in Lao PDR in accordance with Decree No. 119/PM, dated 20 April 2011 regarding the implementation of the new Law Investment Promotion in Lao PDR ("Decree"). The establishment of a Representative Office in Lao PDR enables foreign investors to conduct studies and gather information that are necessary for future direct investments. All activities of a Representative Office must be in compliance with Article 13 of the Decree.
On 24 November 2017, the Ministry of Planning and Investment ("MOPI") issued the Draft Decision on the Establishment and Management of Representative Office of foreign entities in Laos ("Draft Decision"). This follows the issuance of the Decree on the organisation and operation of Ministry of Planning and Investment, reference no. 201/PM, dated 30 June 2017 and the new Law on Investment Promotion (No. 14/NA, dated 17 November 2016) ("new LIP"). (Please see related story above.)
The Draft Decision defines the principles, regulations and measures regarding the operation, organisation and management of a Representative Office of foreign entities in Lao PDR in order for the latter to comply with relevant laws and regulations of the country. Consistent with the new LIP, the Draft Decision aims to promote investment in Lao PDR pursuant to the policies of the national socio-economic development.
The Draft Decision provides that the Representative Office shall serve as the focal point of the parent company in the country to facilitate communication and coordinate activities that the parent company intends to implement in the country. The Representative Office will also monitor the implementation of the Memorandum of Agreement / agreement that is executed by the parent company and the Government in relation to concession activities (but not those relating to construction contracts, aid agreements and other business agreements).
The Draft Decision prescribes the minimum registered capital requirement for a Representative Office of a foreign entity to be US$50,000. The public consultation on the Draft Decision runs from 24 November 2017 until the assembly meeting day.
Decree on the Entertainment on Location of Entertainment Places and Age of Service Users of Entertainment PlacesThe Government of Laos PDR issued a new Decree on The Entertainment (No. 315/Gov, dated 2 October 2017) ("Decree"), which prohibits business establishments from putting up entertainment places near identified places. It also prohibits persons under the age of 18 from entering entertainment places. The Decree was issued to protect and monitor the entertainment business in the country and harmonise its standards across the whole country. The Decree covers disco houses, night clubs, pubs, snack bars, karaoke joints and concert places, as well as beer shops named as restaurants or general outdoor entertainment places.
The Decree defines the general standards that must be observed in the entertainment places, including their locations, the size of the parking areas, interior decorations, safety, and the services to be provided. It is stipulated that the entertainment places should be located at least 500 meters away from schools, hospitals, state organisations, international organisations, Buddha places, caves and other important national places. Additionally, these entertainment places, as well as the entertainment places in the hotels, resorts and restaurants shall have a parking area of over 600 square meters. For safety and security purposes, the Decree mandates that the entertainment places must have security guards, security warning systems, fire escapes, and other security protection equipment.
The Decree mandates that businesses must obtain permits from the Public Works and Transportation Department prior to the construction of entertainment places. The materials used for the construction should be durable and safe.
Draft Law on Economic Dispute Resolution (Amended)The Laos Government has presented the Draft Law on Economic Dispute Regulation (Amended) ("Draft Law") to the National Assembly. The Draft Law sets out the principles, regulations and measures regarding the organisation, practice, management and inspection of the economic dispute resolution task. This is to provide the means for the internal and external investors to resolve economic disputes peacefully, foster international integration, and ensure the expansion of businesses in the country.
From the wording of the Draft Law, some provisions of the current Law on Economic Dispute Resolution ("Applicable Law") will be amended and redrafted to be more comprehensive and thorough.
One such example is Section 16 on the types of economic disputes that falls within the purview of the law. The Applicable Law provides that the disputes that may be brought and considered for resolution are those that relate to economics or trade. The Draft Law seeks to clarify this by stating that these economic disputes, to be covered by the Draft Law, must be "breaches of contracts…related to business activities" and "disputes related to business activities".
The Draft Law is awaiting approval.
Draft Law on Technology TransferThe Laos Government has presented the draft Law on Technology Transfer to the National Assembly. It seeks to regulate technology transfer in various sectors in the country, through the enactment of regulations to facilitate research and development, inventions, and use of innovation. The draft Law also proposes to encourage use of technologies that result in environmentally-friendly production, and enhanced economic value of plants and animal fertility.
The Draft Law is awaiting approval.
Securities Commission Malaysia Revises Prospectus GuidelinesAs part of its on-going efforts to promote informed investment decisions, the Securities Commission Malaysia ("SC") has amended the Prospectus Guidelines. The changes were made following extensive consultations with key stakeholders including principal advisers, legal advisers, reporting accountants, research analysts and investors.
The key amendments include introducing a structured and concise prospectus summary not longer than 10 pages. The prospectus summary would no longer include information that is already publicly available to investors. They also set out SC's expectations in complying with the disclosure requirements.
The revised Prospectus Guidelines will come into effect on 1 March 2018.
Bank Negara Malaysia to Enforce Crypto Regulation Next YearBank Negara Malaysia ("BNM") Governor, Tan Sri Muhammad Ibrahim, has announced that BNM will enforce the country's crypto-currency regulation next year. Governonr Tan Sri Muhammad Ibrahim said that this move is aimed at preventing the abuse of the system for unlawful activities, and ensuring the integrity and stability of the financial system. Beginning 2018, BNM will designate persons converting crypto-currencies into fiat money as reporting institutions under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.
Click here for the related feature on BNM's issuance of cryptocurrency guidelines in the July-September 2017 issue of our Regional Round-Up.
The Insolvency Act 1967 – A stricter bankruptcy regime for MalaysiaThe Bankruptcy (Amendment) Act 2017, which came into force on 6 October 2017, brought significant amendments to the bankruptcy regime in Malaysia including imposing stricter requirements on the commencement of bankruptcy proceedings against individuals. The threshold for the commencement of bankruptcy proceedings has increased from RM30,000 to RM50,000. A creditor is also prohibited from commencing bankruptcy proceedings against social guarantors. More protection is given for guarantors who are not social guarantors, effectively that bankruptcy proceedings shall not be commenced without leave of the Court. To obtain leave, the creditor must satisfy the Court that he has exhausted all modes of execution and enforcement to recover the debt owed to him by the borrower. Further, there are more stringent requirements for the service of Bankruptcy Notices and the Creditors Petitions on the debtor.
The amendments also:
- introduce a voluntary arrangement scheme which gives an opportunity to a debtor to propose a voluntary arrangement with his creditors at any time before he is adjudged bankrupt;
- introduce the automatic discharge of the bankruptcy upon expiration of three years from the date of the submission of the statement of affairs provided the bankrupt achieves the target contribution of his provable debt and complies with the requirement to render an account of moneys and property to the Director General of Insolvency;
- prevent a creditor from objecting to the discharge of certain bankrupts such as a social guarantor, a bankrupt who is registered as a person with disability under the Persons with Disabilities Act 2008, a bankrupt suffering from a serious illness as certified by a Government Medical Officer and a deceased bankrupt.
Far East Holdings Bhd & Anor v Majlis Ugama Islam dan Adat Resam Melayu Pahang and other appealsThis judgment of the Malaysian apex court in Far East Holdings Bhd & Anor v Majlis Ugama Islam dan Adat Resam Melayu Pahang and other appeals  MLJU 1726 - 15 November 2017 is an important one in the field of Malaysian arbitration law.
This is for two reasons:
- Firstly, it explains the grounds available to a Malaysian court to set aside arbitral awards. This is the first such explanation by the apex court; and,
- Secondly it explains the law governing references of questions of law arising out of arbitral awards. This is the first such explanation by any Malaysian court.
View Esteem Sdn. Bhd. v. Bina Puri Holdings Bhd. (Civil Appeal No.: 02(f) – 11 – 02/2017(W))The Federal Court in its latest decision related to adjudication (View Esteem Sdn. Bhd. v. Bina Puri Holdings Bhd. (Civil Appeal No.: 02(f) – 11 – 02/2017(W))  1 LNS 1378) found that an adjudicator cannot decline to consider defences raised in the Adjudication Response even though these defences were not raised in the Payment Response. The Federal Court further held that a failure to consider defences raised at the Adjudication Response is in breach of natural justice. The effect of this decision is that the adjudicator's jurisdiction is no longer limited to the ambit of the Payment Claim and Payment Response. This decision overturned the decision of the Court of Appeal which upheld the High Court's decision.
New Myanmar Companies Law EnactedOn 6 December 2017, the President of Myanmar signed the Myanmar Companies Bill into law. This new legislation heralds a number of significant changes to the existing century-old companies legislation. Although the law will only come into effect at a later date to be announced by the President, this briefing highlights several key changes that might be of interest to foreign investors with existing presence in the country or those seeking to venture into the Myanmar market. Certain changes such as reducing the minimum number of shareholders, abolishing the requirement to obtain a Permit to Trade and removing the authorised capital concept would no doubt reduce the administrative burden of foreign companies operating in the country.
Click here to read our client update.
Myanmar Investment Commission Expands Investment Benefits to Existing CompaniesThe Myanmar Investment Commission ("MIC") issued on 10 October 2017 Notification No. 84/2017 ("Notification") expanding the criteria for Myanmar entities that can qualify for MIC endorsement benefits set out in Myanmar Investment Law. Pursuant to the Notification, MIC endorsement benefits have been extended to existing companies / investors undertaking business activities without having a Permit or Endorsement from the MIC. The MIC endorsement benefits were initially rolled out for the purpose of attracting new investments into Myanmar. With the issuance of the Notification, companies that have already established operations may now apply for MIC endorsement benefits.
Generally, endorsement benefits include allowing foreign-held companies to obtain long-term lease rights, which had otherwise not been previously made available to them. In addition, the Notification now provides for tax exemptions and reimbursements from customs duties on the importation of raw materials and partially-manufactured goods used to manufacture products for exportation. The Notification does not specify the full scope of the entities that would benefit from this announcement.
Myanmar Investment Commission Issues Announcement on Appointment of Foreign ExpertsThe Myanmar Investment Commission ("MIC") issued on 3 October 2017 an announcement in relation to applications for appointment of foreign experts to be appointed in the investment companies ("MIC Company") which obtained Permit (i.e. investment permit) from the MIC. The announcement entered into effect on 21 October 2017. Pursuant to this announcement, an MIC Company must submit an application letter including a work permit application form to the MIC for the MIC Approval on the appointment of foreign experts prior to or within seven days from the day of his arrival in Myanmar.
With respect to the resignation of the foreign expert, the announcement requires the employer to notify MIC of such resignation and submit documentary evidence of resignation, as well as departure airline ticket of such foreign expert. If an employer intends to appoint a new foreign expert in place of one who just resigned, the employer must submit proof that the former expert has exited Myanmar.
The announcement in its current form provides limited information as to the exact criteria and process in securing approval of appointments and work permits. For example, there is no guidance as to whether this applied to short / medium or long-term appointments, or to all.
This announcement only applies to foreign employees of investment companies which obtained MIC Permit (i.e. investment permit) from the MIC, and application for work permit for foreign employees of investment companies which obtained Endorsements (from State / Region Investment Committees) may need to be applied at the relevant State / Region Investment Committees. Therefore, this announcement does not apply to foreign employees of companies that do not require MIC permit, or Directorate of Investment and Company Administration ("DICA") “service” companies. For employees of DICA services companies, the employers are only required to obtain a business visa, and stay permit upon preference.
House Pushes for Simplified Licensing ProcedureThe House of Representatives has approved on third and final reading House Bill 6579 entitled "An Act Establishing A National Policy On Ease Of Doing Business, Creating For The Purpose The Ease Of Doing Business Commission". The Bill seeks to simplify permit and licensing procedures and streamline the requirements for the application of permits and licenses at the national and local levels. The bill intends to promote greater transparency in the government as well as attract foreign investments in the country.
The Bill proposes the creation of the Ease of Doing Business Commission ("Commission"), which shall be the policy-making body on business registration and regulatory management and shall set the overall direction for the implementation of the National Policy on Ease of Doing Business. As the lead agency, the Commission has the power to, among others, receive complaints and institute investigations for violations of the law, assist complainants in filing the necessary cases, and compel or petition any national government agency or local government unit to issue the permit, license or clearance for businesses.
The Bill mandates that the prescribed processing time shall in no case be longer that one working day for applications with barangay governments. For simple applications with national government agencies and local government units, the processing time shall be three working days from the time of receipt of the applications. The prescribed processing time for complex applications shall be 10 working days.
For special types of businesses that require clearances, accreditation, or licenses issued by government agencies, including regulatory agencies where technical evaluation or other conditions are required prior to the issuance of licenses or permits, the prescribed processing time shall in no case be longer than 30 working days or as determined by the relevant government agency, whichever is shorter. Where the prescribed processing time is fixed by special laws, the time prescribed by these laws shall apply. A system for automatic approval (in the event an application is not acted upon within the prescribed period) is being developed, along with a single or unified application form to be used for all new and renewed permit applications, as well as an electronic Business One Stop Shop which will be set up to receive and process manual or electronic submissions of applications.
Drug Trafficking, Money Laundering to be exempt from Anti-Wiretapping LawThe House of Representatives is set to amend Republic Act 4200 ("RA 4200") or the Anti-Wiretapping Act to exclude drug trafficking and money laundering from the law in order to further enhance its effectiveness.
RA 4200 was enacted on 19 June 1965 to safeguard the constitutional right to privacy of communication. It prohibits and penalises wiretapping and other related violations of the privacy of communication, subject to certain exemptions. Currently, the law exempts cases involving, among others, the crimes of treason, espionage, provoking war and disloyalty in case of war, piracy, mutiny in the high seas, rebellion, conspiracy and proposal to commit rebellion, inciting to rebellion, sedition, conspiracy to commit sedition, inciting to sedition, kidnapping.
The inclusion of drug trafficking and money laundering in the exempted acts is being proposed to make RA 4200 "more helpful in the apprehension and prosecution of people involved in drug trafficking".
Congress Ratifies the Tax Reform for Acceleration and Inclusion BillThe Senate and the House of Representatives, on 13 December 2017, ratified the bicameral conference committee report on the proposed Tax Reform for Acceleration and Inclusion ("TRAIN"), the first instalment in the series of tax reforms being pushed by the current administration. The TRAIN was ratified despite allegations from the House that there were barely 10 people present when voting was taken. As for the Senate, there were no quorum issues as it was overwhelmingly ratified with a vote of 16-4.
The TRAIN, following the ratification made by Congress, was signed by the President into law on 19 December 2017 and took effect on 1 January 2018. The President vetoed five (5) items of the TRAIN which included provisions relating to the: (i) preferential income tax rates enjoyed by employees of Regional Headquarters, Regional Operating Headquarters, Offshore Banking Units, and Petroleum Service Contractors and Subcontractors; (ii) zero-rating of sales of goods and services to a separate customs territory and tourism enterprise zones; (iii) exemption from percentage tax of gross sales / receipts not exceeding five hundred thousand (P500,000.00); (iv) earmarking of incremental tobacco taxes; and (v) exemption of various petroleum products from excise taxes when used as input or as raw material in the manufacture of petrochemical products, or in the refining of petroleum products, or as replacement fuel for natural-gas-fired-combined cycle power plants.
The TRAIN is set to increase the take-home income of many Filipinos as lawmakers have agreed to exempt the first P250,000 of annual income from income taxes. Further, the exemption of 13th month pay and other benefits from income taxes will rise to P90,000. On the other hand, the TRAIN adjusted the excise taxes on fuel, automobiles, imported coal, sin products, and cosmetic products. The value-added tax base has also been expanded with the new revenue measure.
DOF Set to Submit Package 2 of Tax Reform this January ‘18The Department of Finance ("DOF") is set to submit the proposed second instalment of the tax reform program within the month of January. This second package aims to reduce corporate income taxes, to 25 percent from the present 30 percent, and to rationalise fiscal incentives granted by current laws.
The second instalment of the tax reform program also seeks to include amnesty for taxpayers with deficiencies in the payment of property taxes, estate taxes, regular taxes such as income taxes and value-added taxes, as well as amnesty for pending tax cases. The DOF is currently considering the payment of a minimum of 40-percent basic tax as amnesty tax. The amnesty, however, will exclude criminal cases. In addition, amendments to the bank secrecy law and automatic exchange of information are also being considered.
Lawmakers have vowed to pass the second package of the tax reform program in the middle of 2018.
Proposed Enhancements to Continuous Disclosure Requirements under the Listing RulesSingapore Exchange ("SGX") is consulting on proposals to recalibrate disclosure requirements under the SGX-ST Listing Rules and the SGX-ST Catalist Listing Rules. The key proposed amendments relate to rights issue fund raising, transactions with interested persons, provision of financial assistance to third parties as well as significant disposal of assets. These proposed amendments take into account recommendations from a working committee tasked to review the Listing Rules, suggestions from market participants as well as SGX's review of the Listing Rules in light of developments in both local and global markets.
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CCS Consults on Proposed Amendments to the Competition ActOn 21 December 2017, the Competition Commission of Singapore ("CCS") issued a three-week public consultation on its proposed amendments to the Competition Act (Cap. 50B) (the "Act"). The proposed amendments have been introduced on the back of the CCS's practical experience in enforcing the Act, and aims to align the CCS's practices with international best practice.
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Consultation on the New Regulatory Framework for Payments, Proposed Payment Services BillIn August 2016, the Monetary Authority of Singapore ("MAS") consulted on a proposed payments regulatory framework, aimed at promoting e-payments in Singapore (namely, the "Proposed Activity-based Payments Framework and Establishment of a National Payments Council"). MAS has since issued its Response to feedback received on the Aug 2016 consultation.
On 21 November 2017, MAS launched a second consultation on its proposed payments regulatory framework, known as the Payment Services Bill ("Bill"). It is intended that the Bill will streamline the regulation of payment services under a single legislation, expand the scope of regulated payment activities to include virtual currency services and other innovations, and calibrate regulation according to the risks posed by such activities.
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Singapore's Latest Green Efforts – Draft Carbon Pricing BillOn 26 October 2017, the Ministry of the Environment and Water Resources launched a public consultation on the draft Carbon Pricing Bill ("Bill"), which ended on 22 December 2017. This public consultation follows an earlier consultation held by the National Climate Change Secretariat regarding the Government's plan to introduce a carbon tax in Singapore.
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Singapore Court Issues First Decision on Rescue FinancingSingapore's restructuring and corporate rescue framework has recently undergone significant reform, with the Companies (Amendment) Act 2017 coming into force earlier in the year. One of the areas that has seen the greatest development is that of schemes of arrangement, with the introduction of rescue financing provisions allowing the grant of 'super priority' status. In Re: Attilan Group Ltd  SGHC 283, the Singapore High Court issued its first decision on rescue financing, providing guidance on the application of these provisions and the relevant principles the Court would consider.
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Inward Re-domiciliation Regime Takes Effect in SingaporeThe inward re-domiciliation regime, introduced in the Companies (Amendment) Act 2017, came into effect in Singapore on 11 October 2017. Under this regime, a foreign corporate entity will be allowed to transfer its registration to Singapore. Once re-domiciled, the foreign corporate entity will become a Singapore company registered under the Accounting and Corporate Regulatory Authority of Singapore, and will have to comply with the provisions of the Companies Act.
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The New Trade Competition ActThe new Trade Competition Act 2017 was published on 7 July 2017 and became effective on 5 October 2017 ("2017 Act"). It repealed and replaced the Trade Competition Act 1999. The 2017 Act establishes the Trade Competition Commission ("Commission") as a separate entity, with its own budget, and independent of the government. Another key change is that, whereas state enterprises are completely excluded from the former act, under the 2017 Act, they are exempted only under limited circumstances; for example, where they carry out activities pursuant to a law or cabinet resolution as required for national security, public benefit or infrastructure requirements.
The 2017 Act also restricts and prohibits certain types of behaviour which would be considered as restricting trade competition or causing damage to other business operators in the market. Significant restrictions are a requirement for a business operator to obtain the Commission’s pre-merger permission for any mergers which may result in a monopoly or a business operator having market dominance, and a requirement for a business operator to submit a post-merger notification to the Commission in case of any other mergers which may cause a significant decrease of competition in a particular market.
Customs Act 2017A long awaited overhaul of customs laws took effect on 13 November 2017 ("Customs Act 2017"). Significant changes include the following:
- Reduced criminal punishments. For example, the penalty for duty evasion under the previous act (Customs Act 1926) of a fine equal to 4 times the duty-paid value of the goods and / or imprisonment for a period up to 10 years has been reduced to a fine from ½ up to 4 times the deficit duty and/or imprisonment up to 10 years.
- The language on the liability of individuals where the alleged offender is a juristic person eliminates the affirmative burden of proof imposed on individual defendants under Customs Act 1926 and imposes a burden on the Public Prosecutor to prove that the individuals had the duty to give an instruction or act, or omit to give instructions, which caused such juristic person to commit the offence.
- Assessment must be made within 3 years from import clearance.
- Post-audit will be limited to a five year period following importation, which is also in line with the document retention period.
- The Board of Appeal must now rule on appeals within 180 days from the date on which the submission of relevant documents is complete.
- Substantially reduced rewards will be payable to informants and officials with a maximum amount per case.
- Ministerial Regulation on the Determination and application of the customs value B.E. 2560 (2017), dated 13 November 2017, which replaced the previous Ministerial Regulation No.132 (as amended) issued in 2000 (MR 132), and implements the customs valuation provisions of the WTO Agreement on Implenmentation of Article VII of the General Agreement on Tariffs and Trade 1994 (CVA);
- Notification of the Customs Department No. 189/2560 Re: Criteria, Procedures and Conditions on Appeal Submission and Appeal Procedures and Request for a Stay of Duty Payment, issued on 29 December 2017;
- Regulation of the Customs Department Regarding Waiver or Reduction of Penalty B.E. 2560 (2017), notified on 22 November 2017, for the purpose of specifying the waiver or reduction of penalty in the case of an importer’s or exporter’s failure to pay full duty within the period specified in the notice of assessment;
- Regulation of the Customs Department Regarding Attachment of Property of Person Having Unpaid Duty B.E. 2560 (2017); and
- Regulation of the Customs Department regarding Payment of Bribe and Reward B.E. 2560 (2017), which provides for interesting reading on how officials allocate any reward received amongst the different positions.
Thailand's Accession to the Madrid ProtocolOn 7 August 2017, the Thai Government submitted the instrument of accession to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks ("Madrid Protocol") with the World Intellectual Property Organization. Thailand became the 99th contracting party of the Madrid Protocol on 7 November 2017. Under the Madrid Protocol, trademark owners are able to submit an international application in Thailand seeking registration of their trademark in other designated member countries. An international application can also be filed in other member countries seeking registration of trademark in Thailand. However, whether or not a trademark registration would be granted in each member country is subject to the applicable laws of such country. The Thai Trademark Act has been duly amended to reflect Thailand’s accession to the Madrid Protocol, and the Thai Department of Intellectual Property currently accepts applications accordingly.
The Payment Systems Act 2017The Payment Systems Act 2017 ("PSA") was published in the Government Gazette on 18 October 2017 and will become effective on 16 April 2018. The PSA consolidates and reforms existing payment laws to bring them in line with international standards of governance.
Under the PSA, holders of certain e-payment business licenses granted under existing laws must submit an application for a new licence or registration within 120 days (i.e., between 16 April 2018 to 13 August 2018). If an application is not submitted within the prescribed period, the operators would be prohibited from continuing with their businesses. For some new businesses, such as those utilising new financial technology and those undergoing a trial stage or whose services are provided to a limited number of customers without any impact on the payment system or public benefit on a broad scale, only registration would be required.
Further details of specific businesses requiring a new license or registration, and the process of licencing and registration are expected to be announced by the BOT in the near future. Once the new licenses are issued, the licenses previously granted for the same service businesses would be cancelled.
NACC Guidelines on the Anti-Corruption ComplianceOn 8 September 2017, the Cabinet approved the publication of the Guidelines on Appropriate Internal Control Measures for Juristic Persons to Prevent Bribery of State Officials, Foreign Public Officials, and Agents of Public International Organisations ("Guidelines") prepared by the National Anti-Corruption Commission ("NACC"). Although non-binding in nature, the key objective of the Guidelines is to clarify section 123/5 of the Organic Act on Counter Corruption 1999 (as amended), which makes it a criminal offence to bribe state officials, foreign public officials, and agents of public international organisations by corporate entities – except where appropriate internal controls are adopted to prevent bribery, possible liabilities would be eliminated or mitigated. The Guidelines also provide best practices for appropriate internal controls, together with several case studies on the implementation of the same. Samples of the recommended controls include development of strong and visible anti-corruption policy from top-level management, anti-corruption risk assessment, and maintaining of accurate books and accounting records.
Amendments to the Labour Protection Act 1998The sixth amendment to the Labour Protection Act was enacted and came into force on 1 September 2017. Under the amendment, employers are no longer required to submit work rules or amendments thereto to the authority. Other major amendments relate to retirement, for example, a provision requiring employers to pay statutory severance pay to retiring employees, and a criminal penalty for failure to do so. Further, the new law also provides that in the absence of an agreement on a retirement age, or if the agreed retirement age is over 60 years, employees would still be entitled to retire when they reach the age of 60 by notifying their employer of their intention 30 days in advance.
New Administrative Sanctions in ConstructionOn 27 November 2017, the Government passed Decree 139/2017/ND-CP to prescribe new administrative sanctions in the field of construction.
While the decree introduces a number of new sanctions, of note are those applied to employers of foreign contractors such as project owners. The decree now applies administrative fines (VND 80 – 90 million) against such employers for employing non-qualified foreign contractors and for using foreign contractors when the Vietnamese labour market could have satisfied the demands of the employer.
In effect, employers are now tasked with the burden of carrying out due diligence prior to employing foreign contractors.
Minimum Wage IncreaseOn 7 December 2017, the Government passed Decree 141/2017/ND-CP to prescribe new region-based minimum wages as follows, which will come into effect from 25 January 2018.
For Region I (which includes cities such as HCMC and Hanoi), the minimum wage will be increased to VND 3,980,000 per month (previously VND 3,750,000).
For Region II, the minimum wage will be VND 3,530,000 per month (previously VND 3,320,000).
For Region III, the minimum wage will be VND 3,090,000 per month (previously VND 2,900,000).
For Region IV, the minimum wage will be VND 2,760,000 per month (previously VND 2,580,000).
New Decree on Manufacturing, Assembly, Import, Warranty and Maintenance Service of AutomobilesOn 17 October 2017, the Government passed Decree 116/2017/ND-CP to govern the conditions for manufacturing, assembling, importing and providing warranty and maintenance services of automobiles.
The decree, applying to automobile manufacturers and assemblers, sets forth conditions on facilities, labour, safety and hygiene, fire safety, and environmental protection. They also require such parties to obtain a permit from the Ministry of Industry and Trade to carry out business.
Automobile importers, in order to obtain an Automobile Importing Business License, must engage appropriate warranty and maintenance centre(s) owned / leased by the automobile importers or belonging to the dealer network authorised by the importer and relevant offshore manufacturer / assembler to conduct recalls in 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.