Malaysia – EU trade to grow by 20-30 percent
Malaysian and EU authorities expect the proposed Malaysia-European Union (EU) Free Trade Agreement (FTA) will increase trade volumes from 10 percent to 20-30 percent. The growth is based on EU’s existing FTA with South Korea, which grew by 35 percent in the last five years. Both South Korea and Malaysia have similar EU trade volumes. Both parties are pushing to implement the agreement by the end of 2017. The countries met at the ASEAN Regional Seminar on Transit and Transshipment along with eight ASEAN member states.
Malaysia’s trade with EU has moved away from being a participant country to sharing best practices, especially in the area of export control after they implemented the Strategic Trade Act (STA) 2010. The act is an export control law that encourages exports of strategic items. Both parties also focused on trade laws, transit and transshipment regulations, regional cooperation, and challenges in building strategic trade controls. EU is Malaysia’s third largest trading partner, with the last three years witnessing a positive trade balance and a growing number of EU companies investing in Malaysia.
By Dezan Shira & Associates
Editor: Alexander Chipman Koty
As Myanmar continues to open up after years of isolation, many foreign investors and multinational companies are entering the country for the first time. For investors establishing businesses from the ground-up, skilled and experienced foreign workers are often brought in to oversee the establishment of new operations. The ability to employ skilled foreign workers is particularly important in Myanmar given the poor state of training and work-preparedness in the country. According to the Ministry of Labour, Employment and Social Security, of Myanmar’s population of approximately 52 million, there are only about 500 skilled workers who meet international standards.
The laws concerning the employment of foreign workers in Myanmar are still developing, as is the case with many other regulations governing the country’s rapidly changing business environment. Myanmar lacks a comprehensive work permit system for foreign workers, though the National League for Democracy-led government is drafting legislation to create a more cohesive framework. That being said, there are currently multiple paths for foreigners to acquire legal working status in Myanmar, which will be explored below.
Singapore: Government proposes new cybercrime laws
The Singapore government will include four major amendments to the Computer Misuse and Cybersecurity Act in view of growing cyber threats. Once the Bill is implemented, it will criminalize trading of personal information such as credit card details, medical information, and banking information, even if no hacking was involved to gain such information. Buying or selling of hacking tools and software with criminal intent will also be considered an offence. Overseas committed offences will also fall under the ambit of the amended Act. Any act that causes illness, injury or death, and disruptions to essential services, national security, and Singapore’s foreign relations will be considered an offence.
According to a new section in the bill, multiple unauthorized access to one computer for a period of 12 months or less will be treated as a single offence. Treating multiple unauthorized acts as a single offence will lead to a heavier penalty. The maximum penalty under the Computer Misuse and Cybersecurity Act varies from US$5,000 fine and two years’ imprisonment, to a US$100,000 fine and 20 years’ imprisonment depending on the crime. Last amended in 2013, the government plans to introduce a new Cybersecurity Act in the middle of 2017 after public consultations.
By: Dezan Shira & Associates
An Introduction to Doing Business in ASEAN 2017, the latest publication from Dezan Shira & Associates, is out now and available for complimentary download through the Asia Briefing Publication Store.
What happens in and around ASEAN is one of the key factors increasingly impacting upon China and India trade flows, as well as the rest of Asia. While the ASEAN trade bloc has been in existence since 1967, it has really shown its importance in trade and commercial business flows since the rise of China over the past three decades, and through its response to China’s changing domestic demographics. Those changes – an aging and increasingly consumer demanding China – have been skillfully adapted by ASEAN to place the future of global manufacturing, and where it takes place, firmly within its own orbit.
Simply put, free trade agreements that came into effect with China and India in 2010 changed the face of Asian trade and production, and are continuing to do so. For example, bilateral trade figures between China and ASEAN’s Big Five of Indonesia, Malaysia, Philippines, Singapore, and Thailand have multiplied by factors of 500 percent since the agreement was signed. With the smaller ASEAN nations of Cambodia, Laos, Myanmar and Vietnam coming into line with their own compliance of ASEAN customs duty reductions at the end of 2015, the entire bloc offers close to zero import-export tariffs for much of emerging Asia, including the giant markets of China and India, possessing some 500 million middle class consumers between them. ASEAN therefore represents a massive trade bloc possessing free trade agreements of global strategic importance. The question of accessing ASEAN for the benefit of North American, European and other global purchasing and manufacturing executives is a key function of this report.
An Introduction to Doing Business in ASEAN introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment and taxation. We also include the latest development news in our “Important Updates” section for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each. Additional research and commentary on ASEAN’s relationships with China, India and Australia is also provided.
- An introduction to ASEAN
- Country profiles
- Case studies: ASEAN as a platform for Asian growth
Our practice, Dezan Shira & Associates, has taken giant steps into the ASEAN market through the establishment of offices throughout the region, in addition to the creation of a unique alliance of firms. That, coupled with our existing long experience of handling foreign investment into China and India, puts us in a unique position of truly understanding how Asia works and how to maximize its free trade benefits.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in ASEAN 2017
An Introduction to Doing Business in ASEAN 2017 introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment, and taxation. We also include the latest development news for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each.
Human Resources in ASEAN
In this issue of ASEAN Briefing, we discuss the prevailing structure of ASEAN’s labor markets and outline key considerations regarding wages and compliance at all levels of the value chain. We highlight comparative sentiment on labor markets within the region, showcase differences in cost and compliance between markets, and provide insight on the state of statutory social insurance obligations throughout the bloc.
Myanmar: Hefty Fines for flouting building regulations
From April 1, building owners in Mandalay will face hefty fines if their buildings violate government regulations or have been constructed without a valid permit. As per the Mandalay City Development Committee (MCDC) building rules section 10 (a), (b), (c), the new fine rates for buildings constructed beyond the permit stipulations or without approval are US$10.89 (K15,000) per square foot for reinforced concrete buildings and US$7.26 (K10,000) per square foot for brick nogging buildings. The penalty for business and contract buildings will be US$10.89 (K15,000) per square foot, while for other buildings it will be US$5.81 (K8,000) per square foot.
Earlier, builders violating the norms could easily pay a small fine and continue flouting guidelines. The MCDC hopes that the new fines will force builders to construct in accordance with the regulations. In some cases, the fines can be higher than the value of the building depending on the violation. The MCDC also stipulated that buildings for business use should include parking lots, fire extinguishers, and automated fire extinguishing systems.
Thailand: Strong growth expected in e-commerce market
Analysts say that Thailand’s e-commerce market is expected to grow around 20 percent this year as more consumers shop online. At present, only three percent of consumers shop online, underlining the significant growth potential for the online market. Thai retailer Central Group only had one percent of its revenue come from online sales. The increased online sales expected this year are attributed to growing internet and smartphone use as well as improved logistics and e-payment systems. Quality and reliability of online shopping services will further help the sector.
The Electronic Transactions Development Agency predicted that the e-commerce market in Thailand will be worth US$7.1 billion (THB 2.52 trillion) this year. Thailand has around 41 million internet users, and 41 million Facebook, 33 million Line, 7.8 million Instagram, and 5.3 million Twitter users. Analysts have further stated that omni-channel strategies, meaning a balance between physical retail stores and online shops, would benefit the country.
By Alexander Chipman Koty
Following a series of bold political reforms beginning in 2011, Myanmar has sprung onto the radar of foreign investors as one of Asia’s last frontier markets. For decades, Myanmar was an isolated and overlooked pariah state dominated by a repressive military government that crushed dissent and participated in illegal drug and jewels trades. However, the military government’s unexpected democratic reforms, which culminated in the rise of Nobel Peace Prize winner Aung San Suu Kyi to power in 2015 and the removal of American economic sanctions in 2016, quickly changed the narrative surrounding the Southeast Asian nation.
Historically one of the region’s wealthiest countries but presently among its poorest, Myanmar has long been underperforming its vast economic potential, as the military regime’s ineffective political and economic policies hamstrung the country’s development. Favorable demographics, an advantageous location, and rich natural resources – along with the introduction of substantial economic reforms – make Myanmar an intriguing destination for adventurous investors who were previously blocked from entering the market.
By Mike Vinkenborg
With the government of Myanmar recently passing its new Investment Law, taking effect in April 2017, the country is showing its continued commitment to attracting foreign investment. After reopening its economy in 2012 following several political reforms beginning the year before, Myanmar has been receiving significant increases in foreign direct investment, reaching a high of US$9.5 billion in the 2015/2016 fiscal year ending in March. To put this in perspective, the total amount of FDI added up to only US$329.6 million in 2009/2010, the year before the military ceded power. While oil, gas, and energy remain the sectors with the highest FDI inflows, investments into Myanmar’s manufacturing industry are rapidly gaining traction, having risen from just US$33.2 million to over US$1 billion in the same period, and hitting a high of US$1.8 billion in 2014.
As China strives to move up the value chain and focus more on high-end manufacturing, the country’s wages have risen to the point where many garment manufacturers are looking to invest elsewhere. Cambodia and Vietnam have already established themselves as alternatives, and now Myanmar is bringing a new labor force to the competition. Clothing exports have already gone up from US$337 million in 2010 to US$1.46 billion in 2015. And now that the economic sanctions by the EU and US have been lifted, the Myanmar Garment Manufacturers Association (MGMA) has set a target for exports to increase to US$12 billion by 2020. Doing so would create an estimated 1.25 million new jobs, a sharp increase from the approximately 250,000 people currently working in the garment industry.
Philippines: Free Trade Agreement with European Free Trade Association Expected in August 2017
The Philippines’ government is expected to complete ratification of its Free Trade Agreement (FTA) with the four-nation European Free Trade Association (EFTA) by August 2017. The four countries include Switzerland, Iceland, Liechtenstein and Norway. The agreement is currently with the Department of Foreign Affairs and will later be sent to the Senate for ratification. This is part of the Philippines’ three-pillar strategy of widening and strengthening its access to Europe – one of the country’s biggest market.
Trade between EFTA states and the Philippines remained stable worth around US$ 850 million in 2015. As per the FTA, EFTA states will abolish all custom duties on industrial products, including fish and other marine products from the Philippines. In turn, Philippines will gradually eliminate custom duties on industrial products, fish and other marine products from EFTA states over a 10-year period. The Philippines is also currently negotiating a FTA with the European Union (EU), which will be in effect once internal procedures are completed.
By Alexander Chipman Koty
The Myanmar Investment Commission (MIC) recently announced that the country’s new Investment Law will come into force for the financial year starting April 2017. The Investment Law, which passed the lower house of Myanmar’s legislature on September 28th and the upper house on October 5th, was signed by President Htin Kyaw on October 18th and represents further liberalization of the Southeast Asian nation’s foreign investment laws and rapidly changing economic environment.
While the exact contents of the new law have yet to be finalized, many of its key features have already come to the surface. The Investment Law combines the previous Myanmar Citizen’s Investment Law with the Foreign Investment Law, ending Myanmar’s status as the only ASEAN member with separate investment laws for citizens and foreigners. Changes to Myanmar’s previous investment regulations include a new approval process with the MIC, updates to the distribution and length of various tax incentives, and further easing of foreign access to land leases. Although it remains a challenging destination for investment due to ongoing political uncertainty and a relatively undeveloped legal and regulatory framework, the new Investment Law reflects Myanmar’s continued commitment to attracting foreign direct investment.