Rule of Law in ASEAN: Not All Appealing
ASEAN has shown mixed results in the 2015 Rule of Law Index, published by the World Justice Project (WJP), an initiative of the American Bar Association.
The index ranks 102 jurisdictions according to 44 factors grouped into eight categories, including absence of corruption, civil justice, constraints on government powers, criminal justice, fundamental rights, open government, order and security, and regulatory enforcement. The rankings are based on the results of 1,000 people surveyed in each jurisdiction, and reflect some regional variation within jurisdictions.
The ASEAN states that made the index, in order of ranking, are:
Singapore – At 9th place globally, Singapore came first in the world for regulatory enforcement, and third for its absence of corruption, civil justice, and criminal justice. As the leader in ASEAN, Singapore is shown to be an orderly and secure place to base your business. It scored well above the East Asia & Pacific and high-income jurisdiction averages in the timely and effective adjudication in its criminal justice system, and lack of unreasonable delays in civil justice.
Malaysia – In 39th place globally, Malaysia ranked above European Union member state Bulgaria. While the index scored Malaysia poorly in open government and fundamental rights, Malaysia ranked above the East-Asia & Pacific and upper-middle income averages in its lack of corruption in the civil and criminal justice systems, and for its effective enforcement in civil justice.
Philippines – In 51st place, the middle-ranking Philippines is an effective all-rounder. Setting it apart from East Asia & Pacific and other lower-middle income countries were its non-governmental checks on government powers, but its civil and criminal justice systems were ranked below average. Particularly apparent were lack of effective enforcement in civil cases, unreasonable delays, and ineffective alternative dispute resolution mechanisms.
Indonesia – Unlike the Philippines’ all-round average performance, in 52nd place Indonesia was a mixed bag. It scored highly in absence of conflict in the areas surveyed – Bandung, Jakarta, and Surabaya, which are all on the island of Java. It ranked well below the East Asia-Pacific and lower-middle income average on corruption and discrimination in the civil justice system, and in corruption in the judiciary. As for effective regulatory enforcement, Indonesia ranked around the average of lower-middle income countries.
Thailand – At 56th, Thailand was below the East Asia & Pacific average in most respects, but above China and India overall. It fell well below the average scores for alternative dispute resolution mechanisms. Still, it was around the upper-middle income average for respect for due process in regulatory enforcement and in timely and effective adjudication in the criminal justice system.
Vietnam – In 64th place, Vietnam ranked above neighboring economic powerhouse China. Vietnam has a developing legal system, but still ranked above other lower-middle income countries in terms of regulatory enforcement and open publication of laws and government data. It was above the regional average in its lack of discrimination in the civil and criminal justice systems. Respect for due process in regulatory enforcement was found to be around the lower-middle income average.
Myanmar – Dragging Myanmar down to 92nd place were its low scores in open government and fundamental rights. However, the country came second out of 15 lower income jurisdictions for both absence of corruption, and order and security. The index ranked Myanmar poorly for government interference in the civil and criminal justice systems, and corruption in the judiciary. Compared to other low income jurisdictions, Myanmar was found to have fewer than average unreasonable delays.
Cambodia – The worst performer in ASEAN came in 99th place globally. It ranked worst in the world for civil justice, and second worst for its regulatory enforcement, just above Venezuela. While it was found to be around the average for a low-income country in lack of unreasonable delays in regulatory enforcement, it was let down by ineffective regulatory enforcement and lack of respect for due process. Cambodia’s saving grace was the acknowledged absence of civil conflict in the areas of the country surveyed, putting it into 72nd place.
Brunei and Laos were not ranked by the World Justice Project Index.
Expert Guidance Crucial
The index shows that effective and experienced expertise is crucial when conducting business in ASEAN. These are not the easiest markets to do business in, and much of the region face similar challenges. From Vietnam’s developing legal and regulatory system to Cambodia’s endemic corruption, ASEAN is full of difficulties which investors may not face in their home markets. As Singapore performs best out of the ASEAN ten, it boasts the most attractive regulatory system in which to base your ASEAN hub.
The ASEAN Economic Community is drawing near its 2015 deadline, and the ASEAN ten are now set to form a market of over 630 million consumers. The challenges of this market are real, and so are the rewards. Effective guidance will help you overcome these obstacles and bring you closer to realizing your business’ potential in ASEAN.
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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