Legal & Regulatory
By Bradley Dunseith
Officially the Lao Peoples’ Democratic Republic (Lao PDR), landlocked Laos borders China, Cambodia, Myanmar, Thailand, and Vietnam. In 2015, Laos exported US$3.81 billion worth of goods and imported US$6.54 billion. Laos’ main export destinations include Thailand, China, Vietnam, India, and Japan. Laos’ top import sources include Thailand, China, Vietnam, South Korea, and Japan. In this article we explain best practices for importing into and exporting out of Laos.
The latest issue of ASEAN Briefing Magazine titled, “How to Set Up in the Philippines“, is out now and available to subscribers as a complimentary download in the Asia Briefing Publication Store.
In this issue of ASEAN Briefing
- Political, Economic, and Social Introduction to the Philippines
- Entering the Philippine Market: Comparing Models
- Corporate Establishment in the Philippines: A Step-by-Step Guide
- Using Singapore as a Gateway to the Philippines
By: South-East Asia IPR SME Helpdesk
Although the Philippines has slipped behind other ASEAN nations in automotive market size and though lacking in major domestic brands, the country’s massive exports of electronics and metal goods still make it a significant part of the international automotive supply chain. Currently, over 250 automotive companies operate in the Philippines, with foreign businesses largely represented by Japanese firms. Automotive exports created a net trade surplus of US$ 2.7 billion in 2010 and reached a total market size of US$ 3.5 billion in 2012. For automotive firms, these exports include many humble but critical components such as ignition wiring sets, intake air filters, clutch pedals, and radio receivers. Other exports are more immediately recognizable, including pneumatic tires, lead-acid storage batteries, and transmissions. Alongside these automotive staples are integrated circuits, the electronic brains which will form a critical part of the worldwide automotive industry’s adoption of self-driving cars. Many of these more sophisticated parts are produced not by automakers themselves but rather by smaller specialized contractors.
While the Philippine intellectual property regime stands head and shoulders above some of its other ASEAN counterparts, automakers or automobile component companies which source their products from the Philippines will still encounter challenges. Enforcement in the Philippines lags behind that of more developed markets, and there are always difficulties inherent in negotiating IP contracts with local partners. Nonetheless, with careful IP protection and a smart IP management strategy SMEs can reap the benefits of the Philippines’ comparative advantage in relative safety. To do so, a company must focus on three key elements: patents for key technology, especially in propulsion systems which will play a central role in international fuel efficiency design competition; semiconductor topography designs (integrated circuit layout-designs) for electronics which will give smart cars eyes and ears to manoeuvre safely and control their components; and copyrights for computer codes which will run on those electronics.
Malaysia: GST exempted for supplies directly related to exported goods
Malaysia’s finance ministry recently issued an order exempting suppliers from the need to charge Goods and Services Tax (GST) on certain goods and services directly connected to exports. The GST relief, which came into effect from July 1, 2017, will apply to four broad categories of services and supplies directly connected to exports and export processing. These include handling or storage services related to goods for export; services provided by a company with licensed manufacturing warehouse status or a business operating in a free zone; research and development (R&D) services related to goods for export; and tools or machines which are highly specialized in nature and used for the manufacture of goods in Malaysia for export.
To qualify for the GST waiver, the recipient of the goods and services must be an overseas customer of foreign nationality, who is resident abroad at the time of receiving the goods and services, and who does not own a business entity in Malaysia. Certain categories of the aforementioned goods will require the approval of Malaysia’s Director General of Customs to avail of the GST waiver. Further, the goods for which the supplies are made must be exported within a period of 60 days from the date of the completion of the services.
Myanmar: Trade in construction materials, hospital equipment and agricultural goods opened to foreign companies
Foreign companies will now be allowed to engage in both retail and wholesale trade in construction materials, hospital equipment, and agricultural goods such as seeds, fertilizers and pesticides. Previously, overseas firms were allowed to trade in these commodities only if they entered into a joint venture with a local company. The Myanmar ministry of commerce’s latest decision to open these sectors to foreign wholly foreign-owned enterprises (WFOEs) comes as part of its bid to make the domestic market more competitive.
According to the commerce ministry, there have been complaints from local traders about the presence of poor quality products smuggled from across the country’s land borders. The liberalization of trade in these sectors is expected to lead to the availability of better-quality equipment and materials in Myanmar. However, foreign companies have been urged to comply with prescribed health and safety codes and internationally accepted trade procedures. They will also be required to open bank accounts in Myanmar with foreign capital.
Malaysia: Tourism tax comes into effect from August 1
Malaysia’s customs department has announced that with effect from August 1, foreign visitors as well as domestic tourists will have to pay a tourism tax to operators of different types of accommodation. The tax, which has to be paid regardless of business or leisure travel, has been fixed at RM20 (US$5) for five-star hotels, RM10 (US$2.5) for four-star, RM5 (US$1.25) for three-star, and RM2.5 (US$0.62) for non-rated accommodation.
Accommodations such as traditional kampong stays and homestays as well as premises with less than 10 rooms are exempted from the new tax. The tourism tax will be levied over and above the goods and services tax and service charges.
Philippines: Tax incentives announced for companies going green
The Philippines Board of Investment (BOI) has announced that it is planning to introduce tax incentives for companies going green. The initiative under the Climate Incentives for Manufacturing (CLIMA) program will target firms in the manufacturing sector. To qualify, enterprises should promote energy efficiency and use technology that reduces greenhouse gas emissions. While the exact nature of the incentives are not known, they are likely to be in the form of capital equipment incentives and income tax holidays.
By: South-East Asia IPR SME Helpdesk
Trade fairs are now a well-established part of the business calendar in Thailand, particularly in Bangkok, with a number of high-tech industries represented, as well as areas of the creative sector such as furniture and design. Trade fairs provide foreign businesses with the opportunity to present their innovations and ideas to potential business partners and customers, and allow them to learn from and collaborate with other innovators. There is, however, a risk, in that disclosing your innovations to the public leaves you exposed to copying and infringements of your IP.
Infringement of innovations may not necessarily be straightforward ‘counterfeiting’ – i.e. exact product, packaging and brand imitation. It is more likely that competitors could be using, intentionally or otherwise, a certain part of your product or innovation. It is therefore advisable to be as diligent as possible and to get to know competitors’ products well. In the light of this, a practical and realistic approach must be taken when preparing for and attending trade fairs in Thailand. IP owners must also be patient and pragmatic, as it is unlikely that immediate action can be taken against an infringer. There are, however, steps that IP owners can take before, during and after the event to best protect their IP.
MALAYSIA: Sarawak, Sabah and Labuan exempted from cabotage policy
With effect from June 1, 2017 the states of Sarawak and Sabah as well as the Federal Territory of Labuan will be exempted from the cabotage policy. As per the erstwhile policy, only Malaysia-flagged ships were permitted to transport cargo from Peninsular Malaysia to these three territories and vice versa. As a result foreign vessels carrying freight bound for the three territories had to stop at the port of Klang in Selangor state in Peninsular Malaysia in order to transfer the goods to domestic ships for onward shipment to Sarawak, Sabah and Labuan.
The Malaysian transport ministry has announced that the exemption will however not apply to freight transport between Labuan and the states of Sarawak and Sabah. While the domestic shipping industry has protested against the government’s move to end the cabotage policy, it has been welcomed by the local administrations. It is believed that the policy had led to higher prices of commodities and as a result a higher cost of living in the three territories. Observers have stated that now it will be possible to ship goods directly to Sarawak, Sabah and Labuan without having to transfer at a Peninsular Malaysian port.
Singapore: ISO 37001 Anti-Bribery Systems Management Standard adopted
In order to enable Singapore-registered companies to implement and manage anti-bribery best practices, the city-state recently adopted the ISO 37001 Anti-Bribery Systems Management Standard. The Standard is being launched jointly by SPRING Singapore, an agency under the Ministry of Trade and Industry, and Singapore’s Corrupt Practices Investigation Bureau (CPIB). The two organisations released a joint statement saying ISO 37001 “is based on internationally recognized good practices [and] provides guidelines to help Singapore companies strengthen their anti-bribery compliance systems and processes [to] ensure compliance with anti-bribery laws.”
An accreditation mechanism for certification bodies is expected to be rolled out by the end of 2017. The majority of people prosecuted for bribery and corruption in Singapore in 2016 were private sector employees. According to the CPIB, 808 corruption complaints were filed in 2016, down from 877 complaints filled in the previous year.