Regional Round-Up

Your Snapshot of Key Legal Developments in Asia

Issue 1 - Jan/Feb/Mar 2015




      Royal Kram No. NS/RK/1014/025 on Law on Management of Factories and Handicrafts
      Under this Royal Kram, dated 23 October 2014, factories and handicrafts that supply foods, drinks and tobacco; textile, clothes, and leather products; paper products; chemical, rubber and plastic products shall be under the supervision of the Ministry of Industry and Handicraft ("MIH"). Therefore, any establishment, expansion, and change of location of the above mentioned products shall require prior approval from the MIH.

      Applicants shall submit the relevant form and supporting documents to the competent department of the MIH to start the process. After the submission of the form, the MIH shall issue its approval or disapproval with reasons within the set timeline. The Royal Kram also states that factories and handicrafts shall be managed in accordance with the Law. Otherwise, the MIH may suspend the factory's operation and impose punishment.

      Royal Kram No. NS/RK/1014/024 on Adoption of Nagoya Protocol
      This Royal Kram was issued on 23 October 2014 regarding the adoption of the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity.

      The Nagoya Protocol was adopted on 29 October 2010 in response to the third objective of the Convention on Biological Diversity. The Protocol provides a legal framework for genetic resource usage, and strengthens the access to genetic resources by the indigenous and local communities. Also, through the Protocol, incentives are given to conserve and maintain biological diversity.

      Benefits, either monetary or non-monetary, arising from utilisation, application and commercialisation of genetic resources shall be shared equally and in fair manner. Parties shall ensure that their jurisdiction respects domestic access and benefit-sharing legislation and regulatory requirements where resources or knowledge are acquired.

      Cambodia and Singapore Sign MOU on Industrial Property Cooperation
      A Memorandum of Understanding ("MOU") was signed on 20 January 2015 between the Ministry of Industry & Handicraft ("MIH"), which is in charge of administration, development and promotion of industries and handicraft in Cambodia; and the Intellectual Property Office of Singapore ("IPOS"), a government agency advising and administering IP laws as well as promoting IP awareness in Singapore.

      The MOU is to streamline the IP protection application process for businesses and inventors. It allows (i) the patent search and examination reports form IPOS and patents, and (ii) industrial design filed with IPOS, to be recognised in Cambodia. IPOS will recognise patent and industrial design registered at MIH. Moreover, the MOU re-assures the on-going patent work-sharing programs including ASEAN Patent Examination Cooperation, and emphasises the exchange of best practice, experience and knowledge on IP administration and protection between these two countries.

      We previously issued an Update on this. To access the Update, click
      Cambodia Joins the Madrid System
      In light of the transition into the ASEAN Economic Community ("AEC") by the end of 2015, Cambodia has joined the Protocol relating to the Madrid Agreement concerning the International Registration of Marks, commonly known as the "Madrid Protocol". Cambodia is now the 95th member of the Madrid Protocol. The Protocol will come into force with respect to Cambodia from 5 June 2015. This accession is also part of Cambodia's compliance with the Intellectual Property Rights Action Plan 2011 – 2015, through which ASEAN member states have collectively agreed to accede to the Madrid Protocol by 2015.

      The Madrid Protocol, administered by the International Bureau of the World Intellectual Property Organisation, is an international legal instrument whose aim is to facilitate and ease the registration, protection and management of trademark in various jurisdictions which are members of the Protocol. Under this Protocol, a trade mark owner may apply for registration in one or more member countries by filing just a single application in one language and paying one set of fees. Applicants are required to prove connection, establishment, domicile or nationality with a contracting party to the Protocol. Accession to the Protocol would bring some of these benefits to Cambodian trademark owners, allowing them to register, protect and manage their products in more than 110 countries.

      For more details on Cambodia joining the Madrid Protocol, please click here.

      Sub-Decree No.01 SD.P on Incentive in Securities Sector
      This Sub-Decree is issued to determine various tax incentive in securities sector. There are two types of securities players: (1) companies / enterprises issuing for the sale of equity securities and/or debt securities which are licensed by the Securities and Exchange Commission of Cambodia ("SECC") and registered as securities trading in the permitted securities and (2) public investors holding and/or purchasing and selling state securities, equity securities, and/or debt securities which are issued for sale to the public, and registered as securities trading in the permitted securities market. However, Qualified Investment Projects that are in the period of profit tax incentive as stated in the Law on Investment of Cambodia shall not be granted tax incentives as mentioned in Article 4 and 5 of the Sub-Decree.

      Under the Sub-Decree, there are three main kinds of tax incentive, including 50% reduction of tax on profit, tax amnesty and 50% reduction of withholding tax. 50% reduction of tax on profit is granted for period of 3 years. The incentive period starts from either the beginning of tax year or the beginning of tax year after the year that such securities are issued for sale to the public. Tax amnesty is for period of 5 years, and it is granted on the condition that the tax debt is subject to a comprehensive audit by the General Department of Taxation. 50% reduction of withholding tax is granted to public investors on interest and/or premium received from the holding and/or purchase and sale of state securities, equity securities and debt securities for a period of 3 years.

      Prakas No. 285 MLVT/P on Registration with NSSF
      Pursuant to Prakas No. 285, all enterprises or establishments shall register their employees with the National Social Securities Fund ("NSSF"). However, the registration procedure and process shall be determined clearly by a separate regulation to be issued by the director of the NSSF. Each registered employee will obtain an "NSSF Membership Card" for free.

      Further, the employer or owner of the enterprise or establishment is required to submit a monthly report no later than the twentieth day of the next month to NSSF. This report shall be done regularly to update the number of the employees in the enterprise.

      Prakas No. 294 MLVT/P on Employer Contribution
      In accordance with this Prakas, any employer who fails to pay employer contribution by the fifteenth day of the next month shall pay an additional monthly interest of 2% of the actual contribution and shall be liable for punishment as stipulated in Article 36 of Law on Social Security Schemes for Persons Defined by the Provisions of the Labor Law.

      The contribution payment shall be paid directly to any bank determined by the director of NSSF, via internet banking service or Unity service or by any other means as instructed by the director of NSSF.

      Notification No. 030/15 MLVT/SCN on Overtime Work
      This Notification was issued on 27 February 2015 to limit the maximum number of hours for overtime work. Under the Notification, overtime work shall not be more than 2 hours per day and the total working hours per day shall not exceed 10 hours. Moreover, the overtime work shall be on a voluntary basis, and the employers need to get approval from the Ministry of Labor and Vocational Training ("MLVT") prior to the performance of overtime work.

      Click here to refer to our Update on the overtime work Notification.
      Notification No. 0738 MOC.IP on Recording of License Contracts and Franchise Contracts
      While the new law on commercial contracts is still in its draft form, license contracts in Cambodia are governed by the existing laws, namely the Law on Marks, Trade Names and Acts of Unfair Competition of 2002 ("Trademark Law") and the Sub-Decree on Implementation of the Law Concerning Marks, Trade Names and Acts of Unfair Competition of 2006. According to the Trademark Law, a license contract is required to be recorded with the register of the Ministry of Commerce ("MOC"), so that it can be used to assert against third parties. However, the Trademark Law is silent on franchise contracts. To fill in this gap, the MOC issued this Notification on 12 March 2015.

      Based on the Notification, both license agreements and franchise contracts shall be registered and recorded with the register of the MOC to gain protection against third parties. The supporting documents required for registration and recording include the original license / franchise contract and the Khmer translation of such contract certified by a trademark agent recognised by the MOC or a licensed professional translator.

      Our Update on this Notification can be accessed here.


      Public Consultation on Draft Law on Foreign Investments
      On 19 January 2015, the Ministry of Commerce of the People's Republic of China ("MOFCOM") published a draft of the Law of the People's Republic of China on Foreign Investments (the "Draft Law") for public consultation. The Draft Law, if passed, will replace the existing Foreign Invested Company Law, the Sino-Foreign Equity Joint Venture Law and the Sino-Foreign Cooperative Joint Venture Law, and may grant foreign investors more access to the Chinese market.  At this point in time, the Draft Law is still undergoing the legislative process, and the Draft Law may undergo significant amendments before it is finalised.

      According to the Draft Law, the PRC State Council will publish a Negative List of industries in which foreign investment is restricted or prohibited, similar to the model adopted by the China (Shanghai) Pilot Free Trade Zone. It is generally expected that most foreign investment projects will no longer require pre-approval by the MOFCOM or its local agency when the Draft Law comes into effect. This will reduce the time required for foreign investment projects and offer parties greater flexibility in structuring their investment as relevant contracts, such as joint venture contracts and equity transfer agreements, will no longer require MOFCOM's approval.

      The Draft Law also targets the variable interest entity ("
      VIE") corporate structure, which is set up to sidestep Chinese restrictions on foreign investment in sensitive industries. The Draft Law has introduced a concept of "actual control", upon which domestic companies which are controlled by foreign investors will be subject to the Draft Law; but on the other hand, if the actual controller can be qualified as a PRC investor, their investment will be deemed as domestic investment which means they will not be subject to the restrictions in the Negative List.

      Currently, we do not know when this Draft Law will be passed, whether it will be in its current form if passed, and how the restricted and prohibited industries in the Negative List will be reduced. However, we will provide a separate update if there is any significant change to this Draft Law.

      Public Consultation on Draft Law on Anti-terrorism
      The PRC draft Anti-terrorism Law (the "Anti-terrorism Law") was published for public consultation in late 2014. The draft Anti-terrorism Law is China's first Anti-Terrorism Law to better counter-terrorist activities while protecting citizens' rights.  In late February 2015, Chinese lawmakers began reviewing the second draft of the Anti-terrorism Law.

      As currently drafted, the draft Anti-terrorism Law could strengthen China's counter-terrorism efforts at the legal front and improve how information is collected and shared in the intelligence field. According to the draft Anti-terrorism Law, terrorism is defined as "any speech or activity that, by means of violence, sabotage or threat, generates social panic, undermines public security, and menaces government organs and international organisations."

      Of particular concerns to tech companies are Article 15 and 16 of the draft Anti-terrorism Law, which require, amongst other things, companies to keep servers and user data within the country and hand over encryption keys to the government.

      In March 2015, it was reported that the Chinese government had decided to suspend the third reading of the draft Anti-terrorism Law, putting it on hiatus for now. Many commentators are of the view that this is a result of pressure from the US government and the concerns raised by US tech companies about the implications of the draft Anti-terrorism Law on their businesses in China.

      While it is unclear whether the draft Anti-terrorism Law will proceed or not, it could be picked up again at any point as only the Standing Committee of the National People's Congress – and not the full Congress – is required to pass the law. It is also unclear if the draft Anti-terrorism Law will be passed in its current form, or if there will be any substantial amendments to the provisions.


      Bank Indonesia Tightens Up Corporate Offshore Debt Rules
      As pressure against the Rupiah continues and fears mount about the possible overleveraging of Indonesian corporates on the offshore debt markets following years of cheap credit, Bank Indonesia (Indonesia's central bank) moved to limit exposure by issuing a new regulation that requires non-bank corporations to satisfy a number of prudential requirements in the form of explicit hedging and liquidity ratios, as well as to have secured a minimum credit rating. The new regulation shows once again that Bank Indonesia has learned well the lessons of the 1998 financial crisis, which was in part precipitated by the bursting of a corporate offshore debt bubble. With a world awash in cheap funds for the last few years, the temptation is always there to "borrow first, ask questions later".  Thus, the new regulation is to be welcomed.

      Please click
      here to refer to our Firm's update on this subject.
      Constitutional Court: A company in Process of Extending License Cannot be Prosecuted for Lacking Such License
      On 21 January 2015, the Constitutional Court held that a party whose environmental management license had recently expired, and which was in the process of obtaining a new one, could not be prosecuted for lacking such license. The Petitioner in this case was one Bachtiar Abdul Fatah, a former General Manager of PT Chevron Pacific Indonesia ("Petitioner"). He was prosecuted on corruption charges and was convicted by the Anticorruption Court on account of breaches of the Environmental Protection Act. One of the reasons was that a bioremediation project for land contaminated by hazardous and poisonous waste produced by PT Chevron Pacific Indonesia was conducted without a license, even though at the time the company had submitted an application for a renewal of their previous license and was awaiting its issuance by the relevant authority. Corruption charges were laid by the Prosecution Service on the ground that the Petitioner's actions had inflicted losses on the state.

      The Constitutional Court's decision in this case is of paramount importance to the enforcement of environmental law, where parties that are in the process of renewing their environmental management licenses in accordance with the law must be deemed to have a license until such time as a definitive decision is made by the relevant authority. This means that they cannot be prosecuted for not having one, including on charges of corruption for inflicting losses on the state. In the interests of legal certainty, it is to be earnestly hoped that this decision will serve as an important precedent, and that the law enforcement authorities will apply the reasoning and principles contained in the judgment to other sectors.

      We had published a client update on this subject. Please click 
      here to read the full update.
      New Power Purchase Procedures and Prices
      On 13 January 2015, the Minister of Energy and Mineral Resources ("MEMR") issued a new regulation governing power purchase procedures and benchmark prices payable by the state power utility, PT Perusahaan Listrik Negara (Persero) ("PLN") for the purchase of power sourced from mine-mouth power plants, coal-fired power plants, gas-fired power plants / dual-fuel power plants, and hydro power plants. The new regulation, MEMR No. 03 of 2015, came into operation on 13 January 2015.

      The key provisions of the new regulation are discussed in more detail in our Update which can be accessed
      Energy and Mineral Resources Ministry Delegates New Power Licensing Authority to BKPM
      If the Government's plan to install an additional 35,000 megawatts of power generation capacity during the 2015 – 2019 period is to have any chance of success, a comprehensive one-stop integrated service to facilitate the licensing process will be essential. 

      An earlier attempt to streamline the licensing process had been made by the Minister of Energy and Mineral Resources ("
      MEMR") through Regulation No. 05 of 2010 ("MEMR No. 5/2010") which delegated a limited amount of licensing authority in the energy and mineral resources sectors to the Investment Coordinating Board ("BKPM") However, this regulation was revoked in so far as it refers to the electrical power sector, by MEMR Regulation No. 35/2014 (the "New Regulation"). The New Regulation entered into effect on 24 December 2014. While the New Regulation sees the BKPM lose the (limited) power-sector licensing authority it was granted by MEMR No. 5/2010, such loss is more than offset by the significant new licensing authority in the power sector granted to the BKPM by the New Regulation. Under the New regulation, the BKPM, acting on behalf of the MEMR, has now been granted the authority to license 10 types of license / approval:

      • Electrical Power Supply Licenses / Izin Usaha Penyediaan Tenaga Listrik;
      • Operating Licenses / Izin Operasi;
      • Work Area Determinations  / Penetapan Wilayah Usaha;
      • Power Support Service Licenses / Izin Usaha Jasa Penunjang Tenaga Listrik;
      • Cross-border Power Purchase & Sale Licenses / Izin Jual Beli Tenaga Listrik Lintas Negara;
      • Power Network Utilization for Telecommunications, Multimedia and Informatics / Izin Pemanfaatan Jaringan Tenaga Listrik Untuk Kepentingan Telekomunikasi, Multimedia dan Informatika;
      • Geothermal Preliminary Survey Assignments / Penugasan Survei Pendahuluan Panas Bumi;
      • Geothermal Licenses / Izin Panas Bumi;
      • Geothermal Support Service Approvals / Persetujuan Usaha Penunjang Panas Bumi; and
      • Explosives Storage Licenses for the Geothermal Industry / Izin Penggunaan Gudang Bahan Peledak Panas Bumi.

      For further information, please refer to the Firm's update here

      LAO PDR

      New Minimum Wage Regulation
      On 9 February 2015, Ministry of Labor and Social Welfare issued a new minimum wage regulation No. 808/MOL, which increases the minimum wage from LAK626,000 to LAK900,000 per month for workers who work in normal environment, and an increase to LAK1,035,000 (US$1 = LAK8,000) for workers who work in hazardous environment. Examples of workers in the latter category are those who are in direct contact with chemicals, gases and underground in the course of their employment. The new regulation will come into effect on 1 April 2015 and applies to all labor units.


      Malaysia's Anti-Corruption Legislation to be Amended to Include Corporate Liability Provision
      In its effort to curb corruption in Malaysia, the Government has announced that the main legislation that regulates bribery and corruption in Malaysia will be amended to include provisions for corporate liability.  According to the website of NKRA (National Key Result Areas) Against Corruption, the Malaysian Anti-Corruption Commission Act ("MACCA") would be amended to incorporate legal provisions for corporate liability based on the United Kingdom's Bribery Act 2010 ("Corporate Liability Provision").  As it stands, the current law is unclear as to whether the term "person" who can be made liable for corrupt practices includes corporate bodies,  as only individuals / employees are charged for offences under the law.  The Corporate Liability Provision, when it comes into operation, will also make companies liable for the corrupt practices committed by its employees. 

      The Corporate Liability Provision, when enacted, will bring Malaysia's anti-bribery laws in line with that of the UK and the United States of America. Both the UK's Bribery Act 2010 and the US's Foreign Corrupt Practices Act 1977 have extra-territorial jurisdiction, which hold their multinational companies operating abroad liable for act of corruption committed not only by their employees but also the employees of their overseas subsidiaries. This represents an important step in making the private sector in Malaysia more accountable and transparent by making companies accountable for the action of their employees.

      We wrote an article on this subject, titled "Lifting the Veil on Corporate Corruption", in the February 2015 issue of
      The Sun, a Malaysian newspaper of general circulation.  To view the full article, click here.
      Securities Commission Malaysia Issues Guidelines in Relation to Equity Crowdfunding
      The Securities Commission Malaysia ("SC") recently issued the Guidelines on Regulation of Markets ("Guidelines") to introduce new requirements for the registration of equity crowdfunding ("ECF") platforms and provide governance arrangement for the operators of such platforms.  One of the key features of the Guidelines relates to the requirement for an operator of an ECF platform to be able to operate an orderly, fair and transparent market.  In this regard, an operator may deny an issuer access to its platform if it is of the view that the issuer or the proposed offering is not suitable to be hosted on the platform.  An operator must also ensure that funds obtained from investors are safeguarded in a trust account until the funding goal is met. The Guidelines came into operation on 10 February 2015.

      ECF is a new form of fundraising where small amounts of money are pooled from a large number of individuals to fund a business venture, project, cause or any other need.  Online portals are used to publicise and facilitate ECF. 

      This development will encourage the growth of innovation, productivity and competitiveness in Malaysia through the bridging of the capital gap between small to medium enterprises and listed companies who typically raise funds from traditional sources of financing such as equity or debt capital markets. With such improved access to funds and capital, the cost of capital will foreseeably decrease, spurring the growth business start-ups in the country.

      We wrote an article on ECF, titled "Equity Crowdfunding – the way forward", in the December 2014 issue of
      The Sun, a Malaysian newspaper of general circulation.  To view the full article, click here.


      Draft Myanmar Investment Law
      As part of Myanmar's ongoing reforms, the Directorate of Investment and Company Administration of Myanmar ("DICA") has recently invited interested stakeholders to participate in a public consultation process regarding its second draft of the new Myanmar Investment Law ("Draft MIL"). The Draft MIL seeks to create a level playing field for both local and foreign investors in Myanmar by establishing a unified investment law regime, through consolidating the Foreign Investment Law 2012 and Myanmar Citizens Investment Law 2013. 

      What is noteworthy is that the Draft MIL is intended to automatically apply to all local and foreign investors who undertake a "direct investment" in Myanmar. In short, there is no longer a requirement to obtain a permit from the Myanmar Investment Commission ("
      MIC") to benefit from certain rights, guarantees or benefits. This includes the right for foreign investors to lease land for up to 50 years with two extension terms of 10 years each, guarantees against expropriation or nationalisation of one's investment by the Government, and the right to remit profits, contractual payments, earnings of expatriates etc. This is a significant improvement over the existing regime where foreign companies are not permitted to lease land for more than a year unless a permit is obtained from the MIC. 

      However, the Draft MIL does leave certain important issues open. For instance, the Draft MIL does not provide a detailed list of tax incentives and exemptions available to investors. Further, no specifics are provided in relation to which sectors/industries have foreign ownership restrictions, or are prohibited to foreign and domestic investors (i.e. state monopolies). We expect such details to be stipulated in future accompanying rules and regulations to the Draft MIL. Nevertheless, the Draft MIL provides much-needed clarification and simplification of the investment regime in Myanmar, and demonstrates Myanmar's push towards having a more transparent and equitable investment framework.



      Launch of the Singapore International Commercial Court
      On 5 Jan 2015, the Singapore International Commercial Court ("SICC") was officially launched at the Singapore Supreme Court.   The SICC is set to become a vital component of Singapore's rapid advancement as the regional dispute resolution hub of choice in Asia, functioning alongside complementary institutions like the Singapore International Arbitration Centre and the Singapore International Mediation Centre.  Apart from the Singapore Rules of Court, the procedural guidelines for the SICC can be found in the SICC Practice Directions, which took effect on 1 January 2015, as well as in the newly introduced SICC User Guides.  

      Update takes a look at the pertinent features of the SICC, as well as what parties should know about dispute resolution before the SICC.
      MAS Consults on Proposals for Securities-based Crowdfunding
      In February 2015, the Monetary Authority of Singapore ("MAS") issued a consultation paper setting out proposals and clarifications on securities-based crowdfunding  ("SCF") in Singapore.  The consultation closed on 18 March 2015.

      MAS is proposing that at first instance, given the nascent stage of the SCF industry, to only facilitate SCF offers to accredited investors and institutional investors.  Retail investors may still participate in other forms of crowdfunding, e.g., donation-based crowdfunding and reward-based crowdfunding.  In addition, MAS is proposing to lower the base capital requirement for intermediaries interested in operating SCF platforms from $250,000 to $50,000 and to remove the requirement for such intermediaries to maintain a security deposit of $100,000 with MAS.

      Please refer to our 
      Update for more details on the proposals.
      Singapore and other APEC economies consult on Proposed Rules for Asia Region Funds Passport
      On 27 Feb 2015, Singapore, Australia, Korea, New Zealand, Philippines and Thailand ("Working Group") issued a joint consultation paper on the proposed rules that will govern the Asia Region Funds Passport ("ARFP").

      The proposed rules cover areas such as the eligibility and operational criteria for passport fund managers and passport funds, as well as the authorisation process for passport funds.  It will also set out common standards and expectations among regulators from passport member economies on the supervision of passport funds, including the protection of investor interests.  When implemented, the ARFP will allow fund managers operating in a passport member economy to offer their funds in other passport member economies under a streamlined authorisation process.

      More details on the ARFP can be found
      Singapore, Malaysia & Thailand sign MOU for common ASEAN prospectus for cross-border listings
      On 3 March 2015, the Monetary Authority of Singapore and the Singapore Exchange jointly signed a MOU with the Securities Commission Malaysia and the Securities and Exchange Commission, Thailand to establish a Streamlined Review Framework ("Framework") for the ASEAN Common Prospectus.  The Framework will facilitate cross-border offerings of equity securities and debt securities in ASEAN, and will enhance ASEAN's attractiveness as a fund-raising centre.  The Framework is an initiative of the Asean Capital Markets Forum.

      Under the Framework, the review process for a multi-jurisdiction offering of equity securities or debt securities will be streamlined, as long as the prospectus is prepared in accordance with the ASEAN Disclosure Standards. The Framework requires both home and host authorities to complete the review process at the same time, within three to four months from the date of submission. This will enhance market efficiency as the time taken for the issuer to obtain approval to offer its securities in multiple jurisdictions would be shortened, providing more certainty to the issuer in terms of the time-to-market.

      The signatories to the MOU target to implement the Framework by the third quarter of 2015. They will jointly issue a handbook to provide guidance on the various administrative and procedural matters including the criteria for issuers, the application procedures and the review timeline.


      Watch this space for more updates in the next edition


      Watch this space for more updates in the next edition

      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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