Regional Round-Up

Your Snapshot of Key Legal Developments in Asia

Issue 2 - Apr/May/Jun 2020




    New IT Platform for Business Registration

    The Royal Government of Cambodia ("RGC") has issued Sub-Decree No. 84 ANK.BK on Business Registration through IT Platform dated 10 June 2020. The Business Registration through IT Platform ("Single Portal") was officially launched on 15 June 2020 and has since been in operation.

    The Single Portal aims to facilitate and modernise the registration procedure for new businesses by requiring the submission of a set of application documents, with a cost-effective and speedy approval process.

    The applicant or his/her representative1 shall create a CamDigiKey account in the Single Portal in order to populate and submit the required information and apply via this link. Once the application is submitted, the Ministry of Commerce ("MOC"), the General Department of Taxation ("GDT") and the Ministry of Labour and Vocation Training ("MLVT") will review the accuracy of the documents submitted and issue approval documents in digital form within eight working days in the following chronological order: three days by MOC, four days by GDT and one day by MLVT. The applicant will be informed if any information or document needs to be rectified.

    For first-time business registrations, the Single Portal issues only the substantial documents, being the Certificate of Incorporation, Patent Tax Certificate, Tax Registration Certificate (VAT), Tax ID Card, GDT Letter on Tax Compliance and Declaration of Opening of the Enterprise. For other regulatory filings in compliance with the Law on Commercial Enterprises, the Law on Taxation and the Labour Law, such as the change in the composition of the board of directors, change of shareholders, transfer of shares, increase of capital, change of company details, filing of Annual Declaration of Commercial Enterprise and labour compliance, the applicant shall submit the applications for such changes to the respective authorities or their current online systems as usual.

    Where the applicant also applies for a Qualified Investment Project with the Council for the Development of Cambodia ("CDC") and the investment is not in the restricted sectors, CDC shall review the accuracy of the required information and documents, and issue the Project Registration Certificate to the applicant within 20 working days after the submission of the application.

    At this first stage, through the Single Portal, the applicant can reach out to the following main authorities: MOC, GDT, MLVT, Ministry of Interior, CDC and Ministry of Economy and Finance for the main business registration services. At the second stage, the Single Portal will also allow businesses to register and apply for permits, among other things, with other authorities, such as  the Ministry of Industry, Science, Technology and Innovation, Ministry of Tourism, Ministry of Posts and Telecommunications, General Department of Customs and Excise and Ministry of Agriculture, Forestry and Fisheries.


    1 The representative shall be acknowledged by the competent authorities and granted with the Power of Attorney for submission on behalf of the applicant. However, only the MOC and GDT currently have authorised agents to represent the applicant, while the MLVT has not formed any agent yet. Therefore, as a matter of practice and verbal confirmation, a representative can act for the applicant in the Single Portal by attaching the Power of Attorney into the system.

    Schedule to Negotiate the Minimum Wage in Textile, Garment and Footwear Sector for 2021

    The Ministry of Labour and Vocational Training issued Notification No. 019/20 dated 10 June 2020 on the schedule of minimum wage negotiations in the textile, garment and footwear sectors for 2021 ("Notification").

    The Notification schedules the negotiations as follows:

    • The employers' representatives, the unions' representatives and the Royal Government of Cambodia's representatives will conduct their separate internal negotiations on the minimum wage in July 2020.

    • The bilateral and tripartite negotiations on the minimum wage will be conducted in August 2020. Bilateral negotiations refer to the discussions between (i) the employers' representatives and the unions' representatives; (ii) the employers' representatives and the Royal Government of Cambodia; and (iii) the Royal Government of Cambodia and the unions' representatives. Tripartite negotiation refers to the discussion among all three parties.

    • The National Committee for Minimum Wage will decide the minimum wage in September 2020.

    The negotiations on the minimum wage must comply with Article 5 of the Law on Minimum Wage. The negotiated minimum wage will come into effect on 1 January 2021.

    Letter on Non-Extension Visa for Foreigners who have not Registered in the FPCS

    On 27 April 2020, the General Department of Immigration of the Ministry of Interior issued Letter No. 0183 ("Letter") on Non-Extension Visa for Foreigners who have not Registered in the Foreigners Present in Cambodia System ("FPCS").

    FPCS is the Foreigners Present in Cambodia System which was put in place by Guideline No. 009 dated 25 March 2010 with the aim of effectively enforcing the Cambodian Law on Immigration.

    The Letter is issued in line with Guideline No. 028 dated 19 July 2019 on the Management of Foreigner's Presence in the Kingdom of Cambodia ("Guideline") which follows Guideline No. 009 dated 25 March 2010 on the Management of Foreigner's Presence in the Kingdom of Cambodia. This Guideline requires the owners or possessors (but not limited to foreign owners or possessors) of all accommodations to report foreigners' presence in their places of accommodation to the Police Commune-Sangkat Office following the sample report provided or the FPCS within 24 hours. The report shall indicate the duration of the stay, any period of extension and any accident occurring to the foreigners. The accommodation owners or possessors shall be punished in accordance with the Cambodian Law on Immigration and other applicable laws for failing to comply with the reporting requirement.

    Based on the Letter, the General Department of Immigration will not extend a visa for any foreigner who has not registered in the FPCS. This implementation will come into effect on 1 July 2020 onward. The owners of all accommodations shall report the presence of foreigners who are living in their places into the system to obtain a visa.

    Measures to Support the Garment Sector from the Partial Suspension of the Everything But Arms Trade Scheme

    On 24 March 2020, pursuant to the Royal Government of Cambodia's intention to improve the economy and to support the garment sector (i.e. textile, footwear, bags, and hats) due to the impact of the partial suspension of the Everything But Arms ("EBA") trade scheme, the Ministry of Economy and Finance issued Prakas No. 319 ("Prakas") providing tax relief on tax on income for the impacted garment sector taxpayers.

    According to Article 4 of the Prakas, the formula for calculating the level of real impact for the purpose of determining whether the taxpayer qualifies to receive the tax relief is as follows:

                                                                          Impacted export amount

                            Level of real impact     =      -----------------------------------  x 100

                                                                             Total export amount

    Furthermore, Article 5 of the Prakas outlines the relief on tax on income for tax year 2020 for the garment sector companies producing textile, footwear, bags, and hats based on the level of real impact as follows:

    1. Exempt tax on income for a period of six months for garment sector companies that have the level of real impact ranging from 20% to 39%, by waiving 50% of the total annual income tax liability.

    2. Exempt tax on income for a period of one year for garment sector companies that have the level of real impact ranging from 40% to 100%, by waiving 100% of the total annual income tax liability.

    To receive the tax relief provided in Article 5, the garment sector companies producing textile, footwear, bags, and hats are required to submit the necessary documents on the level of real impact from the partial suspension of the EBA trade scheme to the tax administration during the preparation and filing of the annual tax on income.

    MEF to Provide Tax Incentives to Educational Institutes Until 2023

    The Ministry of Economy and Finance ("MEF") has issued Prakas No. 209 on Tax Incentives for Educational Institutes dated 2 March 2020 ("Prakas").

    The Prakas aims to provide tax incentives for the education sector in order to support and enhance human resources development and to reduce the expenses of parents and guardians of students. The Prakas sets out the mechanisms for determining the implementation of tax on income, withholding tax and Value-Added Tax ("VAT") that are applied to educational institutes in the Kingdom of Cambodia.

    Under the Prakas, "Educational Institutes" refers to public and private educational establishments which provide educational service from kindergarten to tertiary education. This also includes technical and vocational training institutes. The Educational Institutes are provided with the following tax incentives:

    • Suspension of the payment of Minimum Tax of 1% on annual turnover until the end of 2023;

    • Suspension of payment of Prepayment of Tax on Income until the end of 2023; and

    • Payment of tax on income only if there is taxable income.

    The provision of educational scholarships to students, either in full or partially, will not be considered as taxable revenue for the calculation of annual tax on income. The proof of such scholarships is required.

    In relation to withholding tax, Educational Institutes are required:

    • For transactions with resident taxpayers who are not under the Self-Assessed Regime: to withhold tax for services on construction, engineering, architecture and other services which indirectly involve the students' education; for rent of movable or immovable property; and royalties. Withholding tax for interests and management or consultation services or other similar services which directly involve the student's education shall be exempted. In such cases, the receipts or documents proving the payments shall be submitted to the tax authority on a monthly basis; and

    • For transactions with non-resident taxpayers: to withhold tax on royalties, rentals and other revenues related to the use of the subject property. Withholding tax for interests, dividends, and management and technical services which directly involve the students' education shall be exempted.

    In relation to VAT, the provision of educational service, and the supply of goods and other services for education including food and accommodation for students are considered as non-taxable supplies. VAT inputs related to the provision of non-taxable supplies cannot be claimed as VAT credit but are allowed as deductible expenses.

    Despite the fact that the above incentives are made available to the Educational Institutes, they are still obliged to comply with the prescribed tax obligations such as: (i) tax registration; (ii) monthly and annual tax declarations; (iii) having appropriate accounting system; and (iv) for educational establishments having an annual turnover of more than KHR 4,000 million, submission of the audited financial statements performed by a licensed independent accounting firm.

    The Prakas is effectively applicable starting 2 March 2020. However, the incentives set out therein will not be applicable to any educational establishment that fails to comply with the provisions of the Prakas.


    China Unveils 2020 Negative Lists for Foreign Investment

    On 24 June 2020, the People's Republic of China released its 2020 nationwide negative list for foreign investment in China (other than the free-trade zones of China) and the 2020 negative list for foreign investment in free-trade zones of China ("2020 Nationwide Negative List" and "2020 FTZ Negative List", respectively, and collectively "2020 Negative Lists"), both of which will take effect on 23 July 2020. Compared with the 2019 versions of the respective negative lists, the number of sectors that are restricted or prohibited for foreign investment will be cut from 40 to 33 in the 2020 Nationwide Negative List  and from 37 to 30 in the 2020 FTZ Negative List, with a view to further opening up the market access for foreign investment.

    Notably, the foreign shareholding restrictions on securities, fund management, futures, and life insurance companies will be removed entirely, reinforcing the relevant open-up regulations previously issued by the China Securities Regulatory Commission and the China Banking and Insurance Regulatory Commission. The 2020 Negative Lists will further remove restrictions on foreign investment in the production of commercial vehicles and air traffic control, and allow foreign investors to take majority shares in joint ventures that engage in the building and operation of water supply and drainage networks in cities with a population of more than 500,000. Similar to the current applicable foreign investment rules in the free trade zones, the 2020 Nationwide Negative List will further remove the restrictions on foreign investment in the smelting and processing of radioactive minerals, and the production of nuclear fuel. It will also raise the foreign shareholding ratio in wheat breading and seed production to 66%.

    Compared with the 2020 Nationwide Negative List, the 2020 FTZ Negative List will further allow academic vocational education institutions to be wholly owned by foreign-owned institutions. It must be noted that foreign investment in non-academic vocational training institutions has been freed up in the free-trade zones of China since 2015. The 2020 FTZ Negative List will also remove the restrictions for foreign investment in the application of steaming, frying, broiling, calcining and other processing techniques for prepared slices of traditional Chinese medicine and the production of products with confidential Chinese patent drug prescriptions.

    PRC Civil Code Comes into Effect on 1 January 2021

    On 28 May 2020, the National People's Congress of the People’s Republic of China ("PRC"), which is the top legislature of the PRC, passed the long-awaited PRC Civil Code ("Civil Code"). The Civil Code is the nation’s first civil code and the only existing legislation officially named a "code". The Civil Code will come into effect on 1 January 2021, and will replace, among other laws, the General Principles of the PRC Civil Law, the General Provisions of the PRC Civil Law, the PRC Marriage Law, the PRC Inheritance Law, the PRC Adoption Law, the PRC Security Law, the PRC Contract Law, the PRC Property Law and the PRC Tort Liability Law.

    The Civil Code reforms the PRC civil law system to keep pace with rapid social and economic modernisation. It consists of seven chapters, including chapters on general rules, property rights, contracts, personality rights, marriage and family, inheritance, and tort. It not only codifies the existing laws on civil matters, but also revises some of the existing provisions and introduces new provisions on civil matters. One of the major breakthroughs that the new Civil Code has achieved is the devotion of one entire chapter (Chapter IV) to addressing and protecting personality rights such as personal information and personal privacy. Additionally, the Civil Code for the first time recognises the legal status of the right of habitation, through which houseowners will no longer be able to evict registered habitants or sell the relevant houses before the period of habitation expires. The Civil Code is expected to spell out the clearest boundaries between the Government’s powers and the citizens’ personal rights since the founding of the PRC in 1949.

    Compared with the current PRC Property Law and the PRC Contract Law, the Civil Code introduces several major modifications with respect to Property Rights and Contracts which are found in Chapters II and III, respectively.  Consequently, the Civil Code will also have significant impact on foreign-related transactions in or relating to the PRC, such as those that relate to the conclusion of a contract and the obligations of a guarantor (e.g. the default assumption of general guarantee in the event the parties do not stipulate the type of guarantee or the agreement is not clear).


    OJK Tightens its Grip on the Capital Markets Sector by Issuing Regulation on Private Placement

    Besides issuing a new regulation on trustee agreement for debt securities or sukukOtoritas Jasa Keuangan ("OJK"), Indonesia’s Financial Services Authority, also issued a new regulation on private placement of debt securities or sukuk, being OJK Regulation No. 30/POJK.04/2019 ("Regulation No. 30"). The new Regulation No. 30 came into effect on 1 June 2020, and essentially tightens the private placement market by (a) prescribing criteria and procedure for a private placement of medium-term notes, sharia medium-term notes, long-term notes and perpetual bonds; (b) limiting issuers and purchasers in a private placement by prescribing eligibility criteria; (c) requiring the appointment of an arranger and a monitoring agent; and (d) mandating detailed documentation and reporting.

    Following this regulation, OJK issued a letter to exempt any offshore issuance of debt securities or sukuk through a private placement if they are offered to non-Indonesian investors. In this case, the issuer can voluntarily comply with Regulation No. 30 or mandatorily comply as ordered by the regulator.

    A New Push to Regulate E-Commerce

    Following the issuance of the E-Commerce Regulation, Government Regulation No. 80 of 2019, the Ministry of Trade issued Regulation No. 50 of 2020 ("Regulation No. 50") to implement the E-Commerce Regulation. Regulation No. 50 contains various requirements for e-commerce players, specifically regarding licensing and advertising, as well as regulating the development and supervision of businesses in the e-commerce sector.

    Clarifying past confusion, the new Regulation No. 50 explicitly requires local e-commerce players to obtain a business license, depending on the type of service that they provide. On the other hand, foreign e-commerce providers are not required to obtain a license but must appoint a representative in Indonesia to act on their behalf if such foreign providers satisfy certain thresholds based on the number of consumers or delivery.

    OJK Moves to Regulate Trustee Agreement for Debt Securities or Sukuk

    To keep pace with the developing debt securities and sukuk market in Indonesia, OJK issued OJK Regulation No.  20/POJK.04/2020 on Trustee Agreement for Debt Securities or Sukuk ("Regulation No. 20"), to revoke Bapepam-LK Regulation No. VI.C.4.

    One notable new change introduced by Regulation No. 20 is the requirement to include a force majeure provision on a trustee agreement. For the most part, the new Regulation retains and expands existing provisions from the old regulation. For example, a trustee must now also perform due diligence on assets that constitute the basis of the sukuk issuance, in addition to conducting due diligence on the issuer itself. On the replacement of a trustee, the new regulation introduces a 'catch-all' provision to allow an issuer to replace the trustee if that trustee no longer complies with the trustee requirements under prevailing law.

    New Minister of Land Affairs Rules Extend Land Rights’ Validity

    In light of the ongoing COVID-19 pandemic, the Minister of Land Affairs issued Decree No. 88.1/SK-HR.01/IV/2020 and Circular Letter No. 7/SE-100.HR.01/IV/2020, which extend the validity period of certain land rights due to the limitation of physical services at various land offices.

    Under this Decree, the right to build (hak guna bangunan), right to use (hak pakai) and right to cultivate (hak guna usaha) that originally expired on 31 March 2020 will remain valid until 31 December 2020.

    Further, the Circular Letter allows a land applicant to use a statement letter and proof of payment to register a transfer of right over land, as opposed to the usual validated evidence of a tax payment or duties.

    New OJK Regulation on Material Transaction and Change of Business Activity

    One of the regulations issued by OJK in the early months of 2020 was OJK Regulation No. 17/POJK/04/2020 on Material Transactions and Change of Business Activities ("POJK 17"). This regulation revokes Bapepam-LK Regulation No. IX.E.2 on the same subject matter.

    Among others, POJK 17 expands the definition of material transactions and changes in main business activities for public companies. Further, it also imposes stricter requirements by requiring approval by independent shareholders if a material transaction satisfies certain criteria.

    With respect to change of main business activities, POJK 17 may require a company to hold a general meeting of shareholders, publicly disclose the change, and complete a feasibility study prior to adding or conducting a new business activity, or reducing or changing an existing business activity.


    Lao Government and Singaporean-Lao Joint Venture Sign MOU to Develop Clean Thermal Fired Power Plant

    A Singaporean-Lao joint venture has signed a memorandum of understanding with the Lao government for the development of a clean thermal fired power plant in Sekong.

    On 27 May 2020, the Singapore-based Evolution Power Investment Corporation ("EPIC") and Khounmixay Bridge and Road Construction and Repair Co., Ltd ("KMX") signed a Memorandum of Understanding with the Government of Lao PDR to conduct a feasibility study on the development of a clean thermal fired power plant in Sekong Province, Lao PDR ("MOU"). The MOU was signed by Vice Minister of Planning and Investment Ms Khamchanh Vongseneboun, on behalf of the Government of Lao PDR, and KMX Vice President Mr Khamthanh Phommathat on behalf of the EPIC-KMX joint venture company.

    Under the MOU, EPIC and KMX will be permitted to conduct a feasibility study on the economic, social and environmental viability of a 1000MW clean thermal technology power plant project in Dakcheung District (Sekong). The estimated USD $1.7 billion power project, expected to be commissioned by 2027, aims to produce reliable year-round electricity for export to neighbouring countries like Thailand, Vietnam and Cambodia. Domestic offtake (electricity used within Lao PDR) is also expected, and the project intends to use domestically-extracted fuel sources to generate power for export. This will add value to local natural resources and optimise foreign exchange.

    As part of the project, EPIC and KMX will study some thermal power technology options such as conventional pulverized boilers and circulating-fluidized-bed boilers, all of which will operate within at least an ultra-supercritical steam parameter to determine how efficient the fuel source can be spent.

    Lao Civil Code 2020 Comes into Operation on 26 May 2020

    On 11 May 2020, the Civil Code No. 55/NA dated 6 December 2018 ("Civil Code") was published in the Lao Official Gazette and came into force on 26 May 2020. The Civil Code is a comprehensive piece of legislation comprising 630 articles. It replaces and repeals civil and commercial laws containing similar provisions, including the Law on Contract and Tort, the Law on Family, the Law on Property, the Law on Inheritance, the Law on Secured Transactions and other laws with respect to civil matters.

    The Civil Code brings notable changes to civil and commercial relationships. A summary of the key changes is set out below.

    • Possession period for acquisition of ownership by means of adverse possession – For immovable assets, the possession period for the acquisition of ownership by means of adverse possession has been reduced from 20 years to 10 years.
    • Formality requirements for the formation of a contract – The formality requirements for the formation of a contract have been amended, with the presence of a village chief and signatures of witnesses now optional for a written contract.
    • Rights affecting a third party – The Civil Code has introduced provisions relating to rights affecting a third party. These include the requirement for a third party to express its intention to receive a contractual benefit before it can receive such benefit. This also applies to transfer of debt. These provisions were absent from the Law on Contract and Tort, which was the general law governing contractual transactions and commercial relationships in Lao PDR before the adoption of the Civil Code. The previous law only included the rights of creditors to terminate fraudulent transactions of a debtor and the assignment of contractual benefit/s by means of a contract document or debt.
    • Title to a property to be transferred only after registration of sale – For general sale of an asset capable of registration, the Civil Code now expressly provides that title to a property will be transferred only after the registration of such transaction, regardless of whether there is actual transfer of the property or delivery of payment.
    • Hire-purchase agreement – The Civil Code has expanded the provisions governing hire-purchase agreements. It now provides that the seller has to notify the buyer of the failure to pay three consecutive installments, and must give the buyer 30 days within which to remedy the situation, before the seller can terminate the contract, claim for damages, and withhold all paid amounts. The Civil Code also imposes criminal liability on buyers who sell or otherwise transfer hire-purchase items to a third party during the term of a hire-purchase agreement.
    • New categories of civil liabilities – The Civil Code now recognises the tort of defamation, and introduces new categories of liability caused by third parties to property. This includes: (a) compensation for damage to a tree or building to the owner thereof; (b) damage caused by a building contractor; (c) damage caused by products and/or dangerous items; and (d) damage caused to the environment.
    • Rights of a secured creditor – The Civil Code provides that a secured creditor has rights over the secured assets and their proceeds until the debt is settled in full, notwithstanding whether there is a transfer of debt or change in identity of debtor.
    • Priority given to creditors who fund debtors – Creditors who fund debtors in the purchase of assets have priority over other creditors for a period of 10 days from the acquisition of the assets by the debtors. The priority will no longer apply if the 10-day period lapses without the secured transaction being registered.
    • New subcategories of secured transactions – The Civil Code has introduced subcategories of secured transactions including pledge of moveable assets, pledge of immovable assets, pledge of rights, mortgage of movable assets, mortgage of immovable assets, and pledge by an individual or juristic person.
    • Formal requirement for a secured transaction agreement involving immovable assets – Under the Civil Code, it is no longer a formal requirement to have three witnesses and/or a village chief witnessing the execution of a secured transaction agreement in the mortgage or pledge of immovable assets. For a mortgage of an immovable asset, it should be noted that the agreement must be registered with the natural resource and environment sector and the finance sector.

    In order for the Civil Code to be fully implemented, the Government may still need to issue supplementary instruments to clarify the principles set out in the law.

    Luang Namtha Landholders Affected by the Laos-China Railway Project Receive Compensation

    It was reported by the online publication Vientiane Times that the majority of families in the Luang Namtha province who have been affected by the Laos-China Railway Project ("Project") have received payment for their land to make way for construction of the Project.

    Compensation began in 2018, and many landholders have expressed interest in the scheme so far. More than 131 billion kip has been paid to 218 families, out of a total of 321 families affected by the Project.

    Namtha is still planning to compensate some landholders who are making way for the construction of the Project’s two stations, one in Boten and the other is Nateuy.

    Construction of the Boten station is still ongoing on a 20-hectare site. This is the first station on the southbound 414-km line, which is capable of carrying about 5,000 passengers per day as well as freight.

    The railway is scheduled to be completed by end of 2021, and will be the first rail route linking Laos to China’s network.

    Amended Law on Insurance Comes into Operation on 15 April 2020

    On 30 March 2020, the newly amended Law on Insurance ("Amended Law") was published in the Electronic Official Gazette. It has been in effect since 15 April 2020.

    Following on from the 2018 regulations for insurance business operations, reporting requirements, and risk prevention measures, the Amended Law addresses insurance activity in Laos, insurers’ daily operations, and the termination and liquidation of insurance companies.

    The key changes of the Amended Law relate to the following:

    • Life Insurance;
    • Compulsory Insurance;
    • Indemnity Payments;
    • Transfer of an Insurance Contract;
    • Business Operations;
    • Establishing and Maintaining an Insurance Business;
    • Ministry of Finance’s Approval for Shareholding Changes and Mergers;
    • Contingencies for Distressed Insurance Businesses;
    • Financial and Accounting Requirements;
    • Dissolution and Liquidation; and
    • Regulatory Environment for Insurance in Laos.

    Existing insurers are given three years to comply with the new requirements set out in the Amended Law. As for insurance and reinsurance companies that are not yet established in Laos, the application for and issuance of new insurance business licenses remain suspended under a 2016 notification.


    Regional Comprehensive Economic Partnership

    After several delays since negotiations were first launched during the 21st ASEAN Summit in November 2012, the Malaysian Ministry of International Trade and Industry ("MITI") announced in late June that the Regional Comprehensive Economic Partnership ("RCEP") is scheduled to be signed by November 2020. The RCEP embodies the initiative to economically integrate the 16 participating countries, which comprise the 10 ASEAN Member States (i.e. Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam), and five of the ASEAN Free Trade Agreement partners (i.e. Australia, China, Japan, New Zealand and South Korea).

    Once signed, the RCEP will be the world' largest trade deal, and is estimated to contribute to about 30% of the world's Gross Domestic Product and over a quarter of global exports. If all goes according to schedule, arguably the RCEP could not come at a better time considering the global economic decline brought about by the COVID-19 pandemic. It is hoped that the RCEP, once ratified according to each participating jurisdiction’s requirements, will mitigate the adverse effects of prolonged restrictions. Ultimately, materialising the goals of lowering of trade barriers and expanding market access for goods and services will require concerted efforts by the leadership of each participating country.

    Large Scale Solar Power Plants – Fourth Competitive Bidding Round (LSS@MEnTARI)

    On 28 and 29 May 2020, the Ministry of Energy and Natural Resources of Malaysia ("KeTSA"), along with the Energy Commission of Malaysia ("ECM"), launched its fourth competitive bidding process (known as "LSS@MEnTARI") for the development of up to 1,000MWac of Large Scale Solar power plants ("LSS") in Malaysia, which will be connected to the electricity supply networks in Peninsular Malaysia. KeTSA has explicitly linked this initiative to the government’s broader COVID-19 recovery efforts. The selection of successful bidders under this programme is based on bids with the most competitive offer prices that meet all requirements under the programme's Request for Proposal ("RFP"). For more information on the LSS@MEnTARI tender requirements, visit Christopher & Lee Ong's June and July client updates.

    In tandem with the LSS@MEnTARI tender announcement, the ECM had, on 22 May 2020, revised the key principles of the LSS power plant development framework stipulated under the Guidelines on Large Scale Solar Photovoltaic Plants for Connection to Electricity Networks ("LSS Guidelines"), mainly to limit the exposure of foreign shareholding in the participants of the programme (which includes the developer or the project special purpose vehicle, whichever applicable). The revisions indicate that a participant in the LSS programme must be a locally-incorporated company, or a consortium of locally-incorporated companies, and the Malaysian equity interest in each local company must be at least 51% or higher as determined by the ECM. Unlike the previous LSS Guidelines, it is now expressly stipulated in the latest LSS Guidelines that there will be no change to the shareholding structure of the participant in the LSS programme without the prior written approval of the ECM. This restricting requirement reflects the Government of Malaysia's intention to provide more opportunities for local players to participate in the industry.

    On 11 October 2019, the Government of Malaysia announced, in its Budget 2020 speech, that it will continue to provide incentives in the form of investment tax allowances for the purchase of green technology equipment or assets, and income tax exemptions for green technology service providers. According to the Malaysian Investment Development Authority's ("MIDA") Guidelines on Application for Incentive and/or Expatriate Posts for Green Technology ("MIDA Guidelines"), the qualifying companies that are listed under the MIDA Guidelines are, amongst others, companies involved in the following: (a) renewable energy - commercial and industrial business entities which undertake the generation of energy in the form of electricity, steam, heat and chilled water using renewable energy resources such as solar power, biomass, biogas, mini hydro and geothermal; and (b) energy efficiency - companies investing in energy efficient equipment or technologies and energy-saving equipment. In the Budget 2020 speech, it has been proposed that the present green technology tax incentives, namely, the Green Investment Tax Allowance ("GITA") and the Green Income Tax Exemption ("GITE"), be extended for a period of three years of assessment (from the year of assessment 2020 to the year of assessment 2023). Briefly, the GITA will be applicable to 100% of qualifying capital expenditure incurred on green technology projects related to renewable energy, energy efficiency, green building, green data centre, and waste management (from the date of the application received by MIDA until the year of assessment 2023). The GITE will be applicable to 100% of statutory income of companies that provide green technology services related to renewable energy, energy efficiency, green building, green data centre, green township, certification/verification bodies and electric vehicles (from the date of the application received by MIDA until the year 2023). In addition, an income tax exemption of 70% for up to 10 years will be introduced to companies implementing solar leasing activities.

    Case Updates

    We set out below cases that were recently decided by the Malaysian courts.

    Wabina Constructions & Engineering Sdn Bhd v. Kerajaan Malaysia & 4 Ors [Case Number: PA-25-26-05/2020]

    On 29 June 2020, the Malaysian High Court granted permission for judicial review of the Companies (Exemption) (No. 2) Order 2020 ("Minister's Order") which introduced temporary changes to the Malaysian corporate insolvency law as an interim measure to counter/mitigate the financial impact of the COVID-19 outbreak. Effectively, the Minister's Order aims to reduce winding up actions taken against companies, by allowing a 6-month period for a company to respond to a statutory demand issued by its creditor. Prior to the Minister's Order, a company had a maximum of 21 days after the service of the statutory demand to pay the sum due or to secure or compound for it to the satisfaction of the creditor, failing which the company may be liable to be wound up on the grounds that the company is unable to pay its debts.

    Goldpage Assets Sdn Bhd v. Unique Mix Sdn Bhd [2020] MLJU 723

    On 10 June 2020, the Malaysian High Court in Goldpage Assets Sdn Bhd v. Unique Mix Sdn Bhd [2020] MLJU 723 held that unsecured creditors can intervene in a judicial management application ("JM Application"), and the views of such unsecured creditors can be heard in opposing the making of a judicial management order ("JM Order"). Essentially, the Court held that an unsecured creditor is not prohibited by the Companies Act 2016 from opposing a JM Application. With specific reference to Rule 13 of the Companies (Corporate Rescue Mechanism) Rules 2018 which only allows parties provided under the said Rule 13 to be heard in a JM Application, the Court held that Rule 13, being subsidiary legislation, cannot contravene the parent Act, i.e. the Companies Act 2016, and has to be read in conjunction with the Companies Act 2016.

    Asia Pacific Higher Learning Sdn Bhd v. Majlis Perubatan Malaysia & Anor [2020] 2 MLJ 1

    The Federal Court of Malaysia in the recent case of Asia Pacific Higher Learning Sdn Bhd v. Majlis Perubatan Malaysia & Anor [2020] 2 MLJ 1 held that section 67(1) read with section 3 and section 68(1) of the Malaysian Courts of Judicature Act 1964 ("CJA") precludes a litigant's right of appeal against a High Court decision in an amendment application made in the course of trial that does not finally dispose of the rights of parties. The Court observed that an appeal against every decision of a trial court would indisputably delay the administration of justice. However, the Court pointed out that applications which are made before the commencement of a trial are not caught by section 3 of the CJA and are therefore appealable.

    Redha Resources Sdn Bhd v. Majlis Agama Islam Selangor & Ors [2020] 5 CLJ 715

    The Malaysian Court of Appeal recently held in the case of Redha Resources Sdn Bhd v. Majlis Agama Islam Selangor & Ors [2020] 5 CLJ 715 that it is not every breach of provisions of a contract or the law that would entitle a non-defaulting party to terminate the contract, more so when the non-defaulting party had acquiesced to the breach or illegality and reaped a benefit as a result of its own participation in the breach or illegality. In this case, the Court found that the Plaintiffs themselves had condoned the breach of the relevant contractual provisions by the Defendant. Hence, the Plaintiffs were estopped from relying on the breach to terminate the contract concerned.


    Industrial Zone Law 2020

    The Union Government has enacted the Industrial Zone Law 2020 ("IZL"), which came into effect on 26 May 2020. The IZL was enacted to regulate the industrial parks with respect to environmental conservation, and authorise the relevant government agencies to impose punishment on polluters and land speculators. The IZL allows the establishment of a Union-level central committee that would regulate the industrial zones on top of the existing regional and management committees. It also defines the responsibilities of the different levels of committees, and bans investors from occupying plots for speculation purposes.

    Moreover, the IZL sets out the parameters for creating and implementing pollution control management and proper waste disposal. In particular, investors will now be made legally liable for "failing to make [their] own arrangements for waste disposal" if the zone does not have a collective waste disposal system in place.

    Ministry of Commerce Import Updates

    The Ministry of Commerce ("MOC") has issued several notifications relating to the importation of goods and machines as well import duty free permits for medicines.

    MOC Notification No.38/2020 and No.39/2020 Permitting the Importation of Liquor

    MOC has issued Notification No. 38/2020 and No. 39/2020 dated 25 May 2020. Notification No. 38/2020 amended the list of goods that are prohibited from being imported into Myanmar. It has removed liquor from the list of prohibited goods, leaving only beers and cigarettes. Notification No. 39/2020 sets out the procedures and requirements which liquor importers must comply with in order to import liquors, including obtaining a Liquor Import Registration Certificate from MOC. 

    MOC Notification No.36/2020 Permitting the Import of Used Machinery

    MOC has issued Notification No. 36/2020 dated 14 May 2020 ("Notification") which allows businesses to import used machines that are not older than 10 years. In order to reduce the environmental impact of importing used machines, and regulate business productivity, the importation of these machines will only be permitted if the requirements stipulated in the Notification are complied with.

    MOC Notification No. 27/2020 on Duty Free Import on Medicines and Raw Materials

    MOC has issued Notification No. 27/2020 dated 11 April 2020 announcing the issuance of import duty free permits with respect to all medicines and raw materials used for manufacturing medicines in light of the recent COVID-19 outbreak.

    Myanmar Securities and Exchange Commission Updates

    MSEC Notification No. 1/2020 – Stipulations for the Offering of Securities not Required to Submit Prospectus

    ln the exercise of the power conferred by section 36 and section 71(b) of the Securities Exchange Law, the Securities and Exchange Commission of Myanmar ("SECM") issued Notification No.1/2020 dated 15 May 2020 on Stipulations for the Offering of Securities not Required to Submit Prospectus ("Notification"). The Notification sets out the requirements in relation to the offering of securities by public companies, stating that prospectuses shall not be submitted in accordance with the Securities Exchange Rule 107.

    Based on the Notification, the issuer shall notify the Commission of the names of the Other Institutions within 10 business days after the issuance of securities. ln relation to Article (c) of Rule 107 of the Securities Exchange Rule 107, it is provided that the amount of offer of securities of the same kind within a period of six months must not exceed 500 million kyats.

    In so far as the issuance of securities (except corporate bonds or debentures without rights to convert to shares, rights to acquire shares or similar products) is concerned, information related to such transactions must be provided to existing shareholders at least 35 days before the offering of such securities. SECM must be so notified in accordance with the stipulated format.

    For the issuance of corporate bonds or debentures, the issuer must comply with the requirements set out by the SECM Commission. It must notify SECM of the issuance of corporate bonds and debentures within 10 business days after such issuance.

    The Myanmar Insolvency Law and Rules 2020

    The Union Government has enacted the Myanmar Insolvency Law 2020 ("MIL") which came into operation on 25 March 2020, repealing the century-old Yangon Insolvency Act 1909 and the Myanmar Insolvency Act 1920. The pieces of legislation governing the winding up of companies in Myanmar used to be the Myanmar Companies Law 2017, the Yangon Insolvency Act 1909, and the Myanmar Insolvency Act 1920.

    Unlike the previous pieces of legislation, the MIL is a comprehensive and complete legislation providing for personal, corporate and cross-border insolvency rules. It adopts the United Nations Commission on International Trade Law ("UNCITRAL") Model Law on cross-border insolvency, providing a modern insolvency regime and a model framework for solving financially distressed companies that have creditors or assets in more than one state.

    It also provides for a separate insolvency regime for the micro, small and medium-scale enterprise ("MSME") sector. It is intended to focus on MSME by streamlining the rehabilitation and liquidation process for a simpler and more cost-effective system.

    In terms of Personal Insolvency, the MIL encourages debtors to reach a voluntary agreement with their creditors, if possible. The voluntary arrangement is legally binding and will write off part of the debt or allow for payment of the debt over a fixed period of time.

    Following the enactment of the MIL, the Union Supreme Court issued Notification No. 321/2020, otherwise known as the Myanmar Insolvency Rules 2020 ("MIR") on 28 April 2020 to supplement the MIL.

    The Union Government formed the Myanmar Insolvency Practitioners’ Regulatory Council pursuant to Notification 25/2020 on 26 March 2020.

    Central Bank of Myanmar Updates

    CBM Directive No.8/2020 – Reduction of Interest Rates on Deposit and Lending

    The Central Bank of Myanmar ("CBM") has issued Directive No. 8/2020 dated 27 April 2020 modifying the CBM-approved interest rate from 8.5% per annum to 7% per annum.


    DTI to Push E-commerce Growth, Support Legislation to Strengthen E-Commerce Law in the Philippines

    In commemoration of the 20th year of Republic Act No. 8792, otherwise known as the Electronic Commerce Act, and in light of the accelerated adoption of e-commerce amidst the COVID-19 pandemic, the Department of Trade and Industry ("DTI") committed to implement policies to strengthen the e-commerce industry. Seeing the need to tackle structural and legal impediments to e-commerce and digital marketplace growth, DTI Secretary Ramon Lopez said that the DTI is supporting various bills related to e-commerce, particularly the Internet Transactions Bill ("Bill").

    The Bill seeks to establish an eCommerce Bureau which will focus on the following: (a) promoting the development of e-commerce by building trust between sellers and consumers; (b) stronger online consumer protection; (c) safer e-payment gateways; (d) easier online business registration; and (e) formulation of other policies and programs to increase the number of online merchants and consumers.

    Aside from the Bill, various related bills that aim to promote the digital economy are being tackled in Congress. These include the e-Government Act, the National Digital Careers Act, and the National Digital Transformation Policy.

    Insurance Commission Issues Guidelines on the Adoption of a Regulatory Sandbox Framework

    On 14 June 2020, the Insurance Commission ("IC") issued Circular No. 2020-73 regarding the Guidelines on the Adoption of a Regulatory Sandbox Framework for Insurance Technology ("InsurTech") Innovations ("Guidelines"), which became effective on the same day. The Guidelines recognise the immense benefit that can be derived from further developing InsurTech through experimentation, testing and learning. They permit the adoption, implementation, and participation of persons in regulatory sandboxes to allow small scale and live testing of InsurTech only upon the approval of IC, which protects the interests of the insuring public. Requirements under the Guidelines include the submission of a formal proposal which sets forth, among others, a written projected plan and clear strategy for exit from the regulatory sandbox. The Guidelines also provide for application screening parameters and mandatory reporting requirements.

    Intellectual Property Office of the Philippines Reinforces Partnership with European Union Intellectual Property Office

    The Intellectual Property Office of the Philippines ("IPOPHL") has renewed its partnership with the European Union Intellectual Property Office ("EUIPO") by signing the Memorandum of Understanding on Bilateral Cooperation, which renewed the Memorandum of Understanding first signed by IPOPHL and EUIPO in 2014. The Memorandum of Understanding identifies intellectual property ("IP") administration and services, awareness, economics, education, and research as areas of cooperation, and will last until 2024. The previous Memorandum of Understanding had provided IPOPHL with capacity-building training on IP services, awareness and enforcement, and equipped IPOPHL with the technological tools and knowhow to successfully join Designview (the largest online consultation tool for industrial designs) and TM Class (an international classification tool that provides member countries access to the largest classification databases in the world).

    DICT Releases Amended Cloud First Policy for Government Transition to "New Normal"

    On 2 June 2020, the Department of Information and Communications Technology ("DICT") amended its Cloud First Policy to provide clearer instructions on policy coverage, data classification, and data security, as well as its policy on sovereignty, residency and ownership.

    As cloud computing is expected to foster flexibility, security and cost-efficiency among users, in 2017, the DICT issued Department Circular No. 002-17 prescribing the Cloud First Policy which was intended to promote cloud computing as the preferred technology for government administration and the delivery of government services.

    The recent amendments clarify which institutions shall be covered by the Cloud First Policy and which institutions shall only be encouraged to adopt it. As amended, the Cloud First Policy covers all departments, bureaus, offices, and agencies of the Executive Branch, Government Owned and/or Controlled Corporations ("GOCCs"), State Universities and Colleges ("SUCs"), Local Government Units ("LGUs"), and all cloud service providers and private entities rendering services to the government. Meanwhile, the Congress, the Judiciary, the Independent Constitutional Commissions, and the Office of the Ombudsman are encouraged to adopt the Cloud First Policy.

    Data classifications have also been updated to include: highly sensitive government data, above-sensitive government data, sensitive government data, and non-sensitive government data. The new classifications provide a more consistent structure to guide the application of safety protocols on the access, storage, processing, and transmission of data in the cloud.

    Bangko Sentral ng Pilipinas Approves Sustainable Finance Framework

    On 29 April 2020, the Bangko Sentral ng Pilipinas ("BSP") issued Circular No. 1085, Series of 2020 ("Circular No. 1085") on the Sustainable Finance Framework ("Framework") approved by the Monetary Board of the BSP. Circular No. 1085 took effect on 16 May 2020. The Framework sets out the expectations of BSP on the integration of sustainability principles, including those covering environmental and social risk areas, in the corporate governance and risk management frameworks, as well as in the strategic objectives and operations of banks. The Framework is now incorporated as Section 153 of the Manual of Regulations for Banks. Banks have three years to fully comply with the provisions of the Framework, and should submit transition plans approved by their boards of directors within six months from the effectivity of Circular No. 1085.


    MAS to Revise Exemption Framework for Cross-Border Business Arrangements of Capital Markets Intermediaries

    To facilitate business arrangements between financial institutions in Singapore ("Singapore FIs") and their foreign related corporations ("FRCs"), the Monetary Authority of Singapore ("MAS") has put in place a framework since 2002 that permits these FRCs to provide cross-border financial services to customers in Singapore without being subject to the licensing requirements in Singapore ("FRC Framework"). Under the current FRC Framework, an arrangement between a Singapore FI and its FRCs for the FRCs to provide cross-border financial services in Singapore ("FRC Arrangement") must be approved by MAS on a case-by-case basis.

    On 5 June 2020, MAS announced that it will proceed with its proposal to move the approval approach under the FRC Framework to an ex-post notification approach ("New FRC Framework"). This follows a public consultation conducted by MAS from 4 December 2018 to 31 January 2019.

    In summary, the New FRC Framework covers:

    • persons holding a capital markets services ("CMS") licence under the Securities and Futures Act (other than persons licensed to conduct the regulated activity of fund management solely in respect of the management of portfolios of specified products on behalf of venture capital funds);
    • persons licensed as financial advisers under the Financial Advisers Act;
    • specified exempt CMS licence holders;
    • exempt financial advisers;
    • exempt over-the-counter brokers; and
    • exempt futures brokers.

    Upon an FRC Arrangement meeting the boundary conditions imposed by MAS to mitigate the risks arising from cross-border business arrangements ("boundary conditions") under the new FRC Framework, the Singapore FIs will be able to commence the FRC Arrangement without the need to seek prior approval from MAS. The boundary conditions deal with the following matters:

    • Notification requirements by Singapore FIs;
    • Regulatory status of Singapore FIs;
    • Regulatory status of FRCs;
    • Permissible clientele under the FRC arrangement;
    • Internal controls over the FRC arrangement; and
    • Annual reporting requirements.

    For more information, click here to read our Legal Update.

    Singapore Issues First National Standard on Guidelines for E-Commerce Transactions

    E-commerce is a vital and growing section of the retail industry, with online retail making up a fast-increasing proportion of the total retail sales in Singapore.

    The e-commerce process, however, is not without its own complexities and unique considerations. Enterprise Singapore ("ESG") and the Singapore Standards Council ("SSC") have thus launched the first national standard, Technical Reference 76 ("TR 76"), on guidelines for e-commerce transactions. The development of TR 76 was an industry-led effort, comprising representatives from the Consumers Association of Singapore, Singapore Retailers Association, online marketplaces, as well as payment and logistics service providers, among others.

    TR 76 serves as a practical guide for e-retailers who sell directly to customers online, as well as online intermediaries such as e-marketplaces. It may also be relevant for third-party service providers, retailers providing online catalogues and parties looking to start their own online businesses. The guidelines provide comprehensive end-to-end coverage of the e-commerce transaction process, covering:

    • pre-purchase activities, such as browsing and selection;

    • purchasing and payment; and

    • post-purchase activities such as delivery, tracking, returns and refunds.
    For more information, click here to read our Legal Update.
    Singapore Enhances Legal Framework for Maritime Casualty Claims

    Maritime casualty incidents can lead to extensive and complex dispute resolution proceedings, including claims for damage, loss of cargo and subsequent salvage. The seat of dispute resolution is of particular importance, as such claims often require sufficient support in terms of legal infrastructure.

    As a global maritime hub, Singapore stands as one of the key jurisdictions for admiralty and shipping dispute resolution. On this front, the Singapore government continues to focus on developing the nation's maritime capabilities, pushing ahead with new laws to further enhance the legal framework and keep pace with other jurisdictions. Two recent developments demonstrate these progressive efforts:

    • the introduction of legislative amendments to support Singapore's adoption of the International Convention on Salvage; and

    • the implementation of the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims under Singapore law.

    These developments mean that Singapore will be better able to hear salvage claims and allow enforcement of such claims through ship arrest. They also serve to increase the limits of liability for claims against ship-owners, further extending the attraction of Singapore's maritime arbitration and litigation jurisdiction. The enhancements to Singapore's maritime legal framework greatly increase its viability and its attractiveness as a seat of dispute resolution, particularly for salvage claims or damage claims arising out of casualty incidents.

    For more information, click here to read our Legal Update.

    Public Consultation on the Draft Data Protection (Amendment) Bill

    On 14 May 2020, the Ministry of Communications and Information ("MCI") and the Personal Data Protection Commission ("PDPC") jointly issued a public consultation paper to seek comments on the draft Personal Data Protection (Amendment) Bill ("PDP (Amendment) Bill"). The consultation closed on 28 May 2020.

    The draft PDP (Amendment) Bill sets out the proposed amendments to the Personal Data Protection Act 2012 ("PDPA"). These amendments are precipitated by the global shift towards a digitised economy, and the exponential increase in the need for and usage of personal data in business transactions and growing threat of data breaches. The amendments are intended to ensure that the PDPA keeps pace with the changing circumstances, while providing for effective protection of personal data in the digital economy.

    For more information, click here to read our Legal Update.

    Landmark Court of Appeal Decisions on Resolving Conflict between Winding-up and Arbitration

    The interaction between the insolvency regime and the arbitration framework has been a subject of much discussion before the Singapore courts. In a series of landmark decisions, the Singapore Court of Appeal recently clarified a crucial question: when a dispute is meant to be arbitrated under an arbitration agreement but the creditor company instead applies to wind up the debtor company, what must the debtor company establish before it can successfully stay or dismiss the winding-up proceedings?

    This question was argued before the Singapore High Court and the Singapore Court of Appeal in three recent cases in which Rajah & Tann Singapore's dispute resolution team delivered wins for their respective clients:

    1. AnAn Group (Singapore) Pte Ltd v VTB Bank (Public Joint Stock Company) [2020] SGCA 33 ("AnAn v VTB"), in which the Appellant was successfully represented by Lee Eng Beng SC, Chew Xiang and Torsten Cheong from the Restructuring & Insolvency Practice;

    2. BWG v BWF [2020] SGCA 36 ("BWG v BWF"), in which the Respondent was successfully represented by Kendall Tan, Ting Yong Hong, Aleksandar Georgiev and Darren Lim from the Shipping & International Trade Practice; and

    3. BW Umuroa Pte Ltd v Tamarind Resources Pte Ltd [2020] SGHC 71 ("BW v Tamarind"), in which the Plaintiff was successfully represented by Sim Kwan Kiat and Ho Zi Wei from the Restructuring & Insolvency Practice.

    In AnAn v VTB, the Court of Appeal settled the disputed question of what standard should apply when determining whether to stay or dismiss winding-up proceedings in favour of arbitration – the "prima facie dispute" standard, or a higher "triable issue standard"? The Court held that the prima facie standard should apply, such that the winding-up proceedings would be stayed or dismissed as long as (a) there is a valid arbitration agreement between the parties; (b) the dispute falls within the scope of the arbitration agreement; and (c) the dispute is not being raised by the debtor in abuse of the court's process.

    In BWG v BWF, the Court of Appeal adopted the prima facie standard applied in AnAn v VTB and went on to elaborate on what might constitute an abuse of process which would prevent an applicant from restraining winding-up proceedings. The Court highlighted that abuse of process is ultimately exercised at the court's discretion, which depends on all the interests and circumstances of the case.

    In BW v Tamarind, the Defendant applied for a stay of winding-up proceedings in favour of arbitration. The High Court found in favour of the Plaintiff, holding that, even on the lower standard of proof, the Defendant had not managed to raise a bona fide prima facie dispute over the alleged unpaid debt, or in relation to its alleged cross-claims.

    For more information, click here to read our Legal Update.


    Requirements for Immigration Regulation (T.M. 30) Eased

    On 16 June 2020, the Government issued a new regulation titled "The Royal Thai Police Notification on Residence of Heads of Household, House Owners, Landlords, or Managers of Hotels, Who Accommodate Foreign Nationals on a Temporary Basis" ("Regulation") which came into force on 30 June 2020. The Regulation simplifies the duty of the head of a household, property owner, landlord, or hotel manager ("Operator") to notify the immigration office when there are foreign nationals staying at their premises (by using the T.M. 30 form).

    Prior to the enactment of the Regulation, an Operator was required to submit the T.M. 30 form every time a foreigner stays or returns to stay at its premises even after a short trip to another place in Thailand. Under the Regulation, Operators are required to submit the T.M. 30 form with information on the total period of a foreigner's stay. If, within that period, the foreigner in question travels to or stays over at another place but eventually returns to the premises within the said period, the Operator would not be required to resubmit the T.M. 30 form.

    In terms of submitting the T.M. 30 form, in addition to physical submission at the local immigration office where the premises are located, or the Immigration Office Headquarters, an Operator would also be able to submit the T.M. 30 form online at, or via the Section 38 mobile application (downloadable for Android and iOS).

    Collection of VAT on Foreign E-Services

    On 9 June 2020, the draft amendment to the Thai Revenue Code on the issue of collecting value-added tax ("VAT") on foreign electronic services and electronic platform providers ("Draft Amendment") was approved by the Thai cabinet. The Draft Amendment requires that foreign entities receiving revenue from operating electronic services and platforms exceeding THB 1.8 million per year to register as a VAT registrant and pay VAT to the Thai Revenue Department. The Draft Amendment is due to be presented to the House of Representatives for consideration.

    Thailand Signs the Multilateral Convention on Mutual Administrative Assistance in Tax Matters

    On 3 June 2020, Thailand signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters ("MAC") and became its 137th signatory state. The MAC aims to counter international tax evasion and provides for mutual assistance between parties in tax matters, including exchange of information, simultaneous tax examination, and assistance in tax collection. It is understood that the Revenue Department is in the process of presenting the signed MAC to the Parliament for consideration.

    Criteria for the Classification of the Utilisation of Land and Buildings as Residential or Agricultural

    On 29 May 2020, the Government published two notifications setting out the criteria for the classification of the utilisation of land and buildings as residential or agricultural, for the purposes of determining tax rates under the Land and Building Tax Act 2019 ("Land and Building Tax Act"). The notifications are (i) Notification of the Ministry of Finance and the Ministry of Interior Re: Criteria for the Utilization of Residential Property 2020 ("Residential Property Notification"), and (ii) Notification of the Ministry of Finance and the Ministry of Interior Re: Criteria for the Utilization of Agricultural Property 2020 ("Agricultural Property Notification").

    The Residential Property Notification provides that the utilisation of residential property under the Land and Building Tax Act refers to the use of land or buildings and the adjacent areas for residential purposes, including their use during the period of construction or alteration of the property. There are certain exceptions, which are: (i) land or buildings which are under development or are completed but are not yet sold under the Land Development Act B.E. 2543 (2000) and the Condominium Act B.E. 2551 (2008); (ii) hotels under the Hotel Act B.E. 2547 (2004); (iii) land or buildings provided for temporary accommodation, excluding homestay, or where remuneration for accommodation is paid monthly; and (iv) immovable property awaiting sale by certain types of financial institutions under relevant laws.

    The Agricultural Property Notification provides that the utilisation of land or buildings for agriculture refers to the use of land or buildings and the adjacent areas for agriculture operations for the purpose of exploitation, distribution or use in farms, including during the periods where the land or buildings are left fallow, breaks during the production season, and breaks in the chain of infection, but excluding fishery or weaving. The adjacent areas of such land and buildings must not exceed half of the total area of the agriculture operations, excluding aquaculture. The Agricultural Property Notification has also set out minimum rates for an agricultural operation, stall or house area, land utilisation rate, and utilisation characteristics for certain types of agricultural operation specified in the lists attached to the Agricultural Property Notification.


    National Assembly Approves New Law on Investment 2020

    On 17 June 2020, the National Assembly voted to approve the new Law on Investment 2020, replacing the 2014 law. This law will take effect from 1 January 2021. The key changes introduced by the law include the following:

    • The law updates the list of business lines subject to conditional market access. It now prohibits debt collection services, but also removes certain businesses from the "conditional" category such as franchising and logistics.

    • Investors may now establish enterprises that are innovative start-ups or investment funds without having to obtain an "Investment Registration Certificate". This would streamline the market entry and licensing procedures for start-ups seeking to tap into the Vietnamese market.

    • The law also removes the need for an "acquisition approval" from the licensing authorities for transactions that will not increase the extent of foreign ownership in the target company. This would effectively streamline certain M&A transactions.

    National Assembly Approves New Law on Enterprises 2020

    On 17 June 2020, the National Assembly voted to approve the new Law on Enterprises 2020, replacing the 2014 law. This law will take effect from 1 January 2021. The key changes introduced by the law include the following:

    • Enterprises will now be able to decide whether or not to have a corporate seal. The procedures for notifying the seal specimen have also been abolished.

    • State-owned enterprises ("SOEs") have been redefined to comprise enterprises having more than 50% capital being owned by the State, in contrast to the current requirement for 100% State ownership under the existing legislation. As SOEs are subject to different rules surrounding corporate governance and other regulations, this would impact investors that may have minority stakes in Vietnamese enterprises with certain State capital.

    Merger Filing Thresholds

    On 15 May 2020, Decree No. 35/2020/ND-CP (guiding the Law on Competition) came into effect. This decree provides the specific merger filing requirements. It includes the criteria for general cases as well as those for special businesses, namely credit institutions, insurance companies and securities companies.

    For the general cases (i.e. all businesses except the above three cases), filing is required if the transaction falls under any of the following categories:

    • the value of the intended transaction is VND 1,000 billion or more;

    • the total assets of a participating company, or the group of affiliate companies of which such company is a member, in the Vietnam market were at least VND 3,000 billion in the preceding fiscal year;

    • the total sales turnover or purchase turnover of a participating company, or the group of affiliate companies of which such company is a member, in the Vietnam market was at least VND 3,000 billion in the preceding fiscal year; or

    • the combined relevant market share of the participating companies is at least 20% in the preceding fiscal year.

    New Decision to Support Development of Solar Power in Vietnam

    On 6 April 2020, the Prime Minister issued the long-awaited Decision No. 13/2020/QD-TTg to encourage the development of rooftop solar projects in Vietnam. There are two key changes introduced by this decision:

    The first is that the decision now makes specific allowance for power purchase agreements ("PPAs") to be signed with parties other than Electricity of Vietnam ("EVN"), for rooftop solar projects. This allows investors to now engage in electricity distribution for such projects to private parties, provided that output does not exceed 1MW and the EVN grid is not used. The terms of the PPA and the applicable tariff will be subject to the parties' determination. Similar PPAs for other projects (e.g. floating / ground-mounted) still remain unregulated.

    The new feed-in-tariffs ("FiTs") are: (i) VND 1,783/kWh (7.69 US cents/kWh) for floating solar projects, (ii) VND 1,644/kWh (7.09 US cents/kWh) for ground-mounted solar projects and (ii) VND 1,943/kWh (8.38 US cents/kWh) for rooftop solar projects. The FiTs exclude VAT and may be subject to exchange rate adjustments.

    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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