ASEAN Integration in the Area of Investment and Investment Facilitation in ASEAN

Tan Tai Hiong – ASEAN Secretariat

UNESCAP Regional Seminar on Investment Facilitation for Sustainable Development

12 March 2019, Bangkok, Thailand

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ASEAN’s Macro-Economic Profile

ASEAN’s strong macroeconomic fundamentals have supported its robust development amidst uncertainties in the global environment

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Source: ASEANStats

ASEAN’s FDI Profile

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Source: ASEANStats

ASEAN Investment Legal Frameworks

• ASEAN Agreement for the Promotion and Protection of Investments

• Focus on Protection and Investor-State Dispute Settlement

ASEAN IGA, 1987 (amended 1996)

• Framework Agreement on the ASEAN Investment Area

• Focus on facilitation, promotion & liberalisation

• Temporary Exclusion List and Sensitive List

AIA, 1998 (amended 2001)

• ASEAN Comprehensive Investment Agreement

• Consolidates and upgrades the IGA and AIA Agreements

• Section on Investor-State Dispute Settlement (ISDS)

• Reservation Lists for 5 sectors and services incidental to them

ACIA, 2009 (amended 2014, 2017, 2019e)

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ASEAN Comprehensive Investment Agreement (ACIA)

Objective

•To create a free and open investment regime in ASEAN in order to achieve the end goal of economic integration under the ASEAN Economic Community (AEC)

Legal Enforcement

•Signed on 26 Feb 2009 & came into force on 29 Mar 2012

•Further amended on 26 Aug 2014, 21 Sep 2017 and 20 Dec 2017. Next amendment is expected within 2019

Structure

•4 pillars of liberalisation, protection, facilitation and promotion

•49 Articles, 3 Annexes, and 1 Schedule of Reservation List

•Direct & portfolio investment

•Manufacturing, agriculture, fishery, forestry, mining and quarrying and services incidental to these sectors

• Implemented by the AIA Council, assisted by CCI who will report to the Council through SEOM

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4 Pillars of ACIA

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ACIA

Protection

Facilitation

Promotion

Liberalisation

• National Treatment• Most-Favoured Nation• Prohibition of

Performance Requirements

• Senior Management & Board of Directors

• Schedule of Reservations

• Fair & Equitable Treatment• Full Protection and Security• Free Transfer of Funds• No Unlawful Expropriation • Investor-State Dispute Settlement

• Streamlined and simplified procedures

• One-stop centres• Advisory services to

business community• More transparent,

consistent and predictable rules and procedures

• http://Investasean.asean.org/• Cross-linking of websites of

investment agencies in ASEAN• Enhancing production network &

industrial complementation• Joint investment missions• Briefings and seminars on investment

opportunities and investment policies

Investment in the Services Sectors

❑ ACIA does not apply to services sectors and measures undertaken by ASEAN Member States affecting trade and investment in services sectors

▪ Except for services incidental to manufacturing, agriculture, fishery, forestry, mining and quarrying

▪ Except for protection obligations stipulated in paragraph 5 of article 3 of ACIA

❑ Cross-border trade and investment in services sectors in ASEAN is subject to ASEAN Framework Agreement on Services (AFAS) and the Schedules of Commitments made under it

▪ AFAS was signed by ASEAN Economic Ministers in Bangkok on 15 Dec 1995

▪ To-date have signed 10 packages of commitments under ASEAN Economic Ministers, 6 additional packages of commitment (the 7th package) in financial services under ASEAN Finance Ministers, and 7 additional commitments (the 10th package) in air transport services under ASEAN Transport Ministers

▪ A new ASEAN Trade in Services Agreement (ATISA) is expected to be signed in 2019, which builds upon existing progresses made under the AFAS and provides for transition into negative list approach, following from which AFAS will be superseded.

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ASEAN’s Investment Agenda

❑ ASEAN Economic Community (AEC) Blueprint 2025

▪ Adopted along with ASEAN Community Vision 2025 at the 27th Summit in November 2015 in Kuala Lumpur, Malaysia

▪ The Blueprint builds on the achievements and early gains of AEC 2015, while taking into consideration the evolving global context and relevant developments, to set a forward-looking direction for ASEAN for the next 10 years

❑ In terms of investment, ASEAN aims to enhance further its attractiveness as an investment destination globally through the establishment of an open, transparent and predictable investment regime in the region.

▪ The improvement in the investment environment in ASEAN is being achieved through the implementation of the ASEAN Comprehensive Investment Agreement (ACIA)

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Amendments to the ACIA

❑ ACIA has been amended 3 times through Protocols to Amend the ACIA

❑ A fourth amendment has been agreed and is expected to be signed within 2019

❑ All amendments have been made with overarching goal to improve investment regime in the region

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Signed on 25 Aug 2014 in Nay Pyi Taw: to provide clearer and expedited mechanism to amend or modify ACIA Reservation Lists, including a new Annex 3 to the ACIA.

First Amendment

Signed on 21 Sep 2017 in Hanoi: to incorporate consensus reached on ACIA built-in agenda on (a) permanent residence and (b) prohibition of performance requirement

Second Amendment

Signed on 20 Dec 2017 in Hanoi: to remove paragraph 8 of ACIA reservation lists’ headnote related to Thailand’s application of its Foreign Business Act.

Third Amendment

Expected to be signed within 2019Fourth

Amendment

ASEAN Investment Peer Review

❑ The ASEAN Investment Peer Review is an annual process under the ASEAN Coordinating Committee on Investment (CCI) aimed at monitoring the progress of ASEAN Member States (AMS) in eliminating or improving their investment impediments and restrictions.

▪ Each AMS submit its individual country report annually, summarising its macroeconomic, investment, and regulatory developments affecting investment climate for the period of second half of earlier year to first half of the year. These reports are presented and discussed at the CCI meeting.

▪ Following from the above, an overall ASEAN Investment Peer Review Report is prepared by the ASEAN Secretariat for CCI adoption and subsequent submission to the AEM-AIA Council for deliberation and endorsement.

▪ The peer review process has started since 2012 (7 times undertaken to-date) and provides opportunity for AMS to learn from each other as well

▪ The peer review reports show the continuous efforts of AMS to improve their investment regime and facilitate investment.

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AMS Efforts to Facilitate Investment (1 of 3)

The ASEAN investment peer review process reveals, amongst others, the variety of efforts of AMS to facilitate investment into the region

❑ Ease of doing business

▪ AMS made various efforts to improve their ease of doing business

▪ AMS highlighted their achievements in World Bank’s annual Doing Business Report, WEF Global Competitiveness Index, as well as in investment grade ratings and business surveys.

▪ Some AMS set up committee/task force or law/act explicitly on this effort

❑ Reforms of Investment-Related Laws and Regulations

▪ Reforms, reviews, or amendments to their laws and regulations which are related, directly or indirectly, to the improvement of investment regime (e.g. new or improved investment and company laws, economic policy packages, competition act, investment negative lists, tax reform, etc.)

▪ Reform of institutions that oversee/manage investment policies

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AMS Efforts to Facilitate Investment (2 of 3)

❑ Sectoral Policies and Investment Incentives

▪ Initiatives and measures to attract quality investment in sectors and areas which are aligned with AMS national economic development plan

❑ Streamlining of Business Processes and Requirements

▪ Drastic reduction of the time and number of steps and documents required to undertake investment activities or setting-up of business

▪ One-stop service centres for investment application and aftercare services

❑ Going digital

▪ Broadening of scope of application of digital and internet technologies in investment administration activities

▪ This not only improves ease of doing business, but also enhances transparency

❑ Private sector / Stakeholder Engagement

▪ Regular dialogues with private sector to address their concerns and interests

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AMS Efforts to Facilitate Investment (3 of 3)

❑ Infrastructure Development

▪ Major or essential infrastructure development projects that enables economic development and encourage investment

▪ Improve legal framework for Public-Private Partnership (PPP) on infrastructure

❑ Trade and Labour Policies

▪ Measures/initiatives to improve trade policies and customs procedures

▪ Policies to strengthen labour market and manage availability of human resources, including on foreign workers and talents

❑ OECD’s Investment Policy Review (IPR)

▪ A majority of AMS have undertaken and/or are undertaking IPR with the OECD

▪ IPR involves comprehensive assessment of a country’s investment trends and policies, and results in detailed policy recommendations across a broad range of economic policy areas.

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ASEAN Investment Reports

❑ ASEAN also regularly published ASEAN Investment Report to highlight the latest development of investment in the region and its various related issues.

▪ Since 2012, the Reports are published in cooperation with UNCTAD with support from the ASEAN-Australia Development Cooperation Programme (AADCP) Phase II.

▪ https://asean.org/asean-economic-community/asean-investment-area-aia-council/other-documents/

▪ http://investasean.asean.org/index.php/page/view/asean-publications

▪ https://unctad.org/en/Pages/Publications/ASEAN-Investment-Report.aspx

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http://investasean.asean.org/

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Thank You

investment@asean.org

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