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Investment law reform in ASEAN


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Hélène François looks at investment law reform in Southeast Asia. This presentation was made at the 2nd meeting of the Regional Policy Network on Investment, on 9 December 2015.

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Investment law reform in ASEAN

  1. 1. INVESTMENT LAW REFORM IN ASEAN Second meeting of the Regional Policy Network on Investment OECD, 9 December Hélène François Legal Advisor, Investment Division, OECD
  2. 2.  Impact of having an investment law  ASEAN-driven approach: towards harmonised legislations and closer to ACIA standards  Evolutions of investment laws  Comparative overview of AMS investment regimes  Identified areas for further improvement  Key take-aways and issues for discussions 2 Overview of issues discussed
  3. 3.  No single formula: having an investment law is not an absolute condition for a good investment climate  Not all AMS have an investment law: – Singapore: 900 billion FDI stock and no investment law!  But can be a useful promotion and implementation tool to attract FDI  Sound and predictable investment law has economic benefits for a host country; reflects the national investment strategy  Increased regulatory transparency and predictability improves investors confidence 3 Having an investment law: what is the impact?
  4. 4. More transparent, consistent and predictable investment rules Harmonisation investment policies Streamlined and simplified procedures for investment applications and approvals Dissemination of investment rules and procedures 4 Bringing countries’ legislation closer to ACIA principles
  5. 5. ACIA Non Discrimination No unlawful expropriation Dispute Settlement Free transfer of funds 5 Progressive alignment with ACIA standards of protection  Investment laws often not consistent with ACIA  Paradox: foreign investors are better protected; contradicts principle of Non-Discrimination
  6. 6.  Unification of regimes for domestic and foreign investment: Preamble to Myanmar 2015 Investment Law: “ Realising the necessity to consolidate the two laws to ensure consistency with best practice in the ASEAN region and as a sign of the commitment of the Republic of the Union of Myanmar to the Establishment of the ASEAN Economic Community”  Modernisation of investment incentives regimes: e.g. Lao PDR  Streamlining of entry procedures: e.g. Viet Nam, Myanmar 6 Main trends in investment law reform (1/2)
  7. 7.  Stronger and clearer investor protection provisions • Non discrimination rather than National treatment : it is a two- way road, not only in favor of foreign investors • Expropriation : more protection for investors and more leeway for host states  ISDS : improvements not only in treaties, but also in domestic laws  Increasing Focus on Responsible Investment  Better protection of the host state’s regulatory space  More balanced protection provisions: • e.g. expropriation; definition of investment; more guidance over ISDS proceedings 7 Main trends in investment law reform (2/2)
  8. 8. Reforms of investment laws in ASEAN countries: a comparative overview Single investment law covering domestic and foreign investments Recent amendments of the Investment legislation Provision on : environmental impact, sustainable economic development, etc. Brunei Darussalam No – 1 Investment Incentives Law (2001) No Cambodia Yes ongoing No Indonesia Yes 2007 Yes Lao PDR Yes ongoing Yes Malaysia No No Myanmar Yes 2012, 2013, 2015 Yes Philippines 2 investment laws 1987, 1991 No Singapore No No Thailand 2 investment laws 2000 No Viet Nam Yes 2005, 2014 Yes
  9. 9. Protection provisions in investment laws: a comparison Guarantee of non- discrimination at post- establishment stage Negative list approach Protection against expropriation Guarantee of free transfer of funds provided by law Brunei Darussalam No / Yes, but not specific to investors Yes Cambodia Yes, except for land / Yes, but incomplete Yes Indonesia Yes Yes Yes Yes Lao PDR Not clear / Yes, but inadequate Yes Malaysia No / Yes Yes Myanmar No Yes, but inadequate Yes, but incomplete Yes Philippines Yes Yes Yes Yes Singapore Yes / Yes Yes Thailand No Yes Yes, but incomplete Yes Viet Nam Yes Yes but inadequate Yes Yes
  10. 10. Access to ISDS and adherence to treaties in ASEAN countries Possibility to recourse to investment arbitration provided by law Adherence to international conventions on arbitration (ICSID & NY Convention) Adherence to International Investment treaties (including BITs and FTAs) Brunei Darussalam Yes Yes Yes Cambodia Yes, but vague Yes Yes Indonesia Yes Yes Yes Lao PDR Yes but vague Not a member of ICSID Yes Malaysia Yes Yes Yes Myanmar Yes Not a member of ICSID Adhered to NY Convention in 2013 Yes Philippines Yes Yes Yes Singapore Yes Yes Yes Thailand Yes ICSID Convention signed but not yet ratified Yes Viet Nam Yes but unclear Not a member of ICSID Yes
  11. 11.  ISDS provisions in investment laws too often unclear and ambiguous.  Need for greater alignment and consistency between domestic law and treaty obligations (e.g. expropriation).  Efforts need to focus on implementation: Implementing regulations matter as much as legal revisions!  Room for upgrading legal provisions (e.g. on environmental protection) according to most progressive emerging practices. 11 Main areas in need of further improvement
  12. 12. Key take-aways AMS investment legislation moving closer to ACIA Strong regional stance towards law modernisation Implementing regulations! ISDS: improvement needed in domestic laws!
  13. 13.  Why have an investment law? What are the objectives of the reform?  What is new in investment law making? Main evolutions? Is having a single law for domestic and foreign investment a better option?  What is the impact on the investment climate? Enacting new laws to improve ASEAN region investment performance? 13 Issues for discussion
  14. 14. THANK YOU!