15 Jan ASEAN Today – Regional Legal and Business News – December 2021
ASEAN Today – Regional Legal and Business News for December 2021 including an Update on Quarantine Rules and Corporate Law News on the Stamp Duty for Electronic Instruments
ASEAN Economic Community News
RCEP Becomes Effective
The Regional Comprehensive Economic Partnership (RCEP), which goes into effect on January 1, 2022, is a trade deal between the 10-member Association of Southeast Asian Nations (ASEAN) and China, Japan, South Korea, Australia, and New Zealand. The RCEP integrates the different trade agreements between ASEAN member states and their key trading partners into one unified agreement. The RCEP is the world’s largest free trade agreement and China’s first multilateral trade agreement and will cover 30% of global gross domestic product currently worth US$26.2 trillion and a third of the world’s population, 2.2 billion people. Experts say that the RCEP is a significant achievement for free trade in Asia through its advancements in rules of origin, intellectual property protection, and tariff reduction. The RCEP also has geoeconomic implications for the region as it is the first free trade agreement between China, Japan, and South Korea, three of the four largest economies in Asia. China and Japan had no previous FTA, and under the RCEP, China will eventually eliminate tariffs on 86% of Japanese goods, up from the current 8% that are tariff free, and Japan will cut tariffs on 88% of Chinese goods, up from the current 60%. Experts also warn that China, Japan, and South Korea stand to gain far more from the RCEP than the ASEAN member states. The RCEP may also erode the benefits from inter-ASEAN trade for the least developed ASEAN countries, and ASEAN members may also lose the benefits from trade preference programs that allowed them to export tariff free goods outside of ASEAN. Another important aspect of the RCEP is the creation of a common rule of origin. Previously, companies had to comply with the different rules of origin from the five ASEAN+1 FTAs. Under the RCEP, companies can easily ship goods built according to the rules of origin between all RCEP nations.
Regional Car Sales Decline
A recent study assessing the automotive market in key ASEAN countries with a focus on Thailand, Indonesia, and Malaysia says that the ASEAN automotive market saw a 28.5% sales decline in 2020 from total sales of 3.5 million units in 2019 to 2.5 million units in 2020. Thailand, Indonesia, and Malaysia had a joint market share of 75% and Thailand led the market in 2020. Japanese automotive brands lead the ASEAN market and are the key contributors in Thailand, Indonesia, and Malaysia. The study says that an increase in government spending including fiscal injections, infrastructure development, individual financial aid, and tax exemptions in Thailand, Indonesia, and Malaysia in 2021 should accelerate the economic activity in these countries and further stimulate automotive sales.
ASEAN E-Commerce Agreement
The ASEAN Agreement on Electronic Commerce (AAEC) entered into force this month following its final ratification by Indonesia and establishes common principles and rules to promote the growth of e-commerce in ASEAN and strengthens the capacity to implement them. The AAEC will provide a domestic regulatory framework, facilitate electronic transactions and trading, promote cross border data and information flows and set the location of computing facilities, help lower logistics costs and improve the speed and reliability of supply chains in cross border e-commerce, adopt and maintain consumer protection measures, recognize technology neutrality, and allow for future review and amendment of the agreement.
New Online Systems
The Philippines launched two new online systems for business registration and tax incentives applications in 2021 to further the country’s goal of improving its business environment. On September 15, 2021, the Securities and Exchange Commission (SEC), the government agency responsible for the Philippines’ company register, launched the One-Day Submission and Express Registration of Companies (OneSEC) feature of the Electronic Simplified Processing of Application for Registration of Company (eSPARC). Using OneSEC, domestic corporations fully owned by Filipinos can register with the SEC within a single business day. The government also launched another online portal, the Fiscal Incentives Registration and Monitoring System (FIRMS), where investors can submit and monitor all their different incentive applications submitted with the various investment promotion agencies.
Digital Trade Agreement
Singapore and the United Kingdom signed a Digital Economy Agreement this month which has the distinction of being the first digitally focused trade pact signed by a European nation. The agreement will overhaul outdated trade rules, slash red tape, cut costs, and support high paying jobs in the UK and Singapore. The Agreement will also demonstrate the potential of future digital trade pacts for other World Trade Organization members. The Singapore-UK trade relationship was worth US$22 billion in 2020.
New Tax Guidelines
In June 2021, Vietnam issued Circular 40 that provides new guidelines on personal income tax (PIT), value-added tax (VAT), and tax administration for businesses and individuals. The Ministry of Finance recently released Circular 100 that amends certain sections of Circular 40. Both circulars deal with the issue of when e-commerce platforms need to declare and submit taxes from online transactions. Circular 40 also set the threshold for the annual taxable revenue for households and individuals. Under the new Circular 100, e-commerce organizations are not required to declare and pay taxes on behalf of individual sellers without authorization. Additionally, individuals engaging in property leasing with annual rental revenue of less than US$ 5,000 are not subject to PIT or VAT.
Corporate Governance Guide
Bursa Malaysia, the stock exchange of Malaysia, issued an updated Corporate Governance Guide that provides public listed companies with a comprehensive, practical guide to the various recommended practices under the Malaysian Code on Corporate Governance. Bursa Malaysia says that the new Guide will help companies instill good corporate governance practices and build competent and accountable boards of directors with high levels of ethics and integrity in line with global standards. Bursa Malaysia says its goal is to create better corporate governance practices through mandatory requirements under the listing requirements as well as voluntary best practices via the Guide.
Foreign Investment in Fisheries Sector
Indonesia announced that it plans to reopen its capture fisheries sector to foreign investment. The proposed regulation will allow foreign-funded Indonesian companies to catch fish in 7 of the country’s 11 fishery management areas for 15 years. Under the regulation, all fishing vessels must be Indonesian flagged and Indonesian entities will retain organizational and operational control of all capture fisheries. The government will also regulate catch quotas, vessel size, fishing gear, landing ports, and live fish carriers. The capture fisheries sector has been closed to foreign investment since 2016. Critics say that the reopening to foreign investment could bring about a return to the rampant illegal fishing practices that depleted the country’s fish stocks.
THAILAND LEGAL REVIEW
Due to the new variant Omicron and the increasing number of contact cases from overseas travelers, the Prime Minister of Thailand suspended the Test and Go Scheme except for the Phuket Sandbox which includes Surat Thani islands, Krabi, and Phang Nga. This means Thailand Pass will be closed for the Test and Go Scheme as well as all Sandbox applications EXCEPT the Phuket Sandbox from December 22, 2021, until further notice. Travelers may apply for any applicable type of visa without any restriction. However, they will need to enter Thailand and apply for Thailand Pass QR-Code via either of the Phuket Sandbox or the State Quarantine (SQ) schemes. New measures that apply for all Thailand Pass applicants are as follows:
1. Applicants who have received their Thailand Pass QR Code can enter Thailand under the scheme they have registered under.
2. Applicants who have registered, but have not received their QR Code, must wait for their Thailand Pass to be considered / approved. Once approved, they can enter Thailand under the scheme they have registered under.
3. New applicants will not be able to register for Test and Go and Sandbox measures (except for Phuket Sandbox). Thailand Pass will only accept new applicants seeking to enter Thailand under Alternative Quarantine (AQ) or Phuket Sandbox only.
4. Passengers who will arrive in Thailand under Test and Go and Sandbox Programs must undergo their 2nd COVID-19 test using the RT-PCR technique (not ATK self-test) at government designated facilities at no additional cost.
Our summary is as follows:
1. Aside from the temporary suspension of Test and Go and the blue zone Sandbox (EXCEPT for the Phuket Sandbox Scheme), everything else remains unchanged. The Government will review and re-evaluate the situation again after January 10, 2022. However, we do not expect changes in January 2022.
2. During the temporary suspension, travelers will be able to enter Thailand as before. However, they will need to enter via the Phuket Sandbox or State Quarantine (SQ) schemes. Thus, Thailand Pass QR-Code applications are only available for these 2 options.
2.1 For Phuket Sandbox. Travelers must quarantine in SHA + hotel or SQ hotel and stay for seven (7) days quarantine in Phuket before being able to travel across the country. Travelers eligible to choose the Phuket Sandbox must be fully vaccinated with a vaccine approved by Thailand’s Ministry of Public Health (MoPH) or the World Health Organisation (WHO) no less than 14 days before their travel date. They are required to present the vaccine certificate (either the original or a printed copy) at the point of entry into Thailand.
2.2 SQ Scheme. Note: The rules for SQ Scheme remain unchanged and were implemented on October 1, 2021. See details below.
For travelers who have been fully vaccinated with a vaccine approved by Thailand’s Ministry of Public Health (MoPH) or the World Health Organisation (WHO) no less than 14 days before their travel date, they are required to present the vaccine certificate (either the original or a printed copy) at the point of entry into Thailand. During the quarantine, they are required to undergo two RT-PCR tests – first upon arrival on Day 0-1, and the second before finishing the quarantine period on Day 6-7.
10-day Quarantine BY AIR
Travelers who have not been vaccinated, are without a vaccine certificate, or partially vaccinated, and who arrive in Thailand by AIR will be required to enter a 10-day quarantine and undergo two RT-PCR tests – first upon arrival on Day 0-1, and the second on Day 8-9.
14-day Quarantine BY LAND
Travelers who have not been vaccinated, are without a vaccine certificate, or partially vaccinated, and who arrive in Thailand by LAND will be required to enter a 14-day quarantine and undergo two RT-PCR tests – first upon arrival on Day 0-1, and the second on Day 12-13.
Corporate Law News
Update on Stamp Duty for Electronic Instruments
Under the Notification regarding Revenue Stamp (No. 63), the instruments/transactions prescribed in the Stamp Duty Schedule under the Revenue Code made in electronic form and liable to a payment stamp duty include the following hereunder in addition to five instruments/transactions: i) hire of work, ii) loan of money or bank overdraft agreement, iii) power of attorney, iv) proxy for voting at a meeting, and v) suretyship, which are prescribed by the Notification regarding Revenue Stamp (No. 58).
However, e-instruments/transactions falling under Notification (No. 63) shall be made from October 6, 2021, onwards and the payment of stamp duty via (i) the Revenue Department’s Website or (ii) the Application Programming Interface must be done before an instrument is executed or within 15 days from the following day of an instrument’s execution. E-instruments and transactions under the Notification (No. 63) are as follows:
(1) Hire of work
(2) Loan of money or agreement for bank overdraft
(3) Power of attorney
(4) Proxy for voting at a meeting
(6) Rental of land, building, other construction, or floating house
(7) Transfer of share certificate, debenture certificate, bond and certificate of debt issued by company, association, group of person or organization
(8) Hire-purchase of property
(9) Insurance policy
(10) Bill of exchange or similar instrument used like bill of exchange, and promissory note or similar instrument used like promissory note
(11) Bill of lading
(12) Share certificate or debenture certificate or certificate of debt issued by company, association, group of person or organization, and bond of government sold in Thailand
(13) Cheque or written order used in lieu of cheque
(14) Receipt for interest bearing fixed deposit in a bank
(15) Letter of credit
(16) Traveler’s cheque
(17) Goods receipt
(19) Warehouse receipt
(20) Delivery order
(22) Partnership contract
(23) Receipt issued in connection with a sale, sale with right of redemption, hire-purchase or transfer of ownership in a vehicle, only if the vehicle is registered under the law governing such vehicle.
The material contained herein is only provided for information purposes. No part thereof may be deemed to constitute legal advice or the opinions of this law firm or any of its attorneys. Whilst every effort has been made to verify the contents of the material contained herein, we do not represent, warrant, undertake, or guarantee that the information contained in this newsletter is correct, accurate, or complete. Legal advice must be sought before acting on any information contained herein.