SHORT-TERM MEASURES
TO ENHANCE ASEAN INVESTMENT CLIMATE


The following measures will be taken to stimulate investment in ASEAN. In particular, companies that submit relevant applications to the ASEAN Investment Agencies from 1 January 1999 to 31 December 2000 and approved thereafter, with regard to investment projects in the manufacturing sector, will be granted the following:

Section 1

Privileges Granted to New Investments/Projects or
Expansion of Existing Investment Operations


  1. Fiscal Incentives

    Companies will be given :

    1. a minimum of 3 years corporate income tax exemption or a minimum 30% corporate income tax allowance. This tax exemption is not granted on an incremental basis over and above existing incentive provisions.

    2. duty exemption on imported capital goods required by the promoted investment projects.

  2. Domestic Market Access

    Companies will be given free market access to the domestic market of the host country.

  3. Foreign Equity Ownership

    Companies will be allowed 100% foreign equity ownership.

  4. Right of Use of Industrial Land

    Companies will be given the right of use or lease of factory or industrial land for a minimum period of 30 years.

  5. Customs Clearance

    Approved investment projects will be given speedy customs clearance through the ASEAN CEPT Green Lane or equivalent procedures adopted by the ASEAN Member Countries for all raw materials and capital goods required by the investment projects.

  6. Employment of Foreign Personnel

    The privileges cover more relaxed policy on the following:

    1. Approval of foreign professional, managerial and technical personnel posts required by the investor;

    2. At least one-year renewable multiple entry visas and exit permits for all foreign professional, managerial and technical personnel and their family members, where applicable; and

    3. Restrictions and levies on the employment of foreign professional, managerial and technical personnel, if any.


    Section 2

    Privileges Granted to Investors Injecting Equity Into
    Existing Companies


    All privileges available under Section 1, except for corporate tax incentives and land use privileges, also apply to investors under Section 2. However, with regard to tax incentives, the remaining period of the tax privileges enjoyed by the company being taken over, or into which capital is injected, will continue to be available to the new equity owners.


    Section 3

    Highlights of Specific Measures Extended
    by ASEAN Member Countries


    Brunei Darussalam

    Brunei Darussalam will allow 100% foreign equity ownership in high-technology manufacturing and export-oriented industries.

    Indonesia

    Indonesia offers wholesale and retail trade up to 100% foreign equity ownership to qualified investors, in addition to 100% foreign equity in all areas of the manufacturing sector. Indonesia has also reduced the processing time for approval in principle, for investments less than US$100 million, to 10 working days. In the banking sector, listed banks are open for 100% foreign equity ownership.

    Lao PDR

    Lao PDR allows duty exemption on imported capital goods required by the promoted investment projects.

    Malaysia

    Malaysia offers 100% foreign equity ownership in the manufacturing sector with no export conditions imposed on all new investments, expansions and diversifications (except for seven specific activities and products).

    With limited exceptions, foreigners can also own land in Malaysia.

    Myanmar

    Myanmar will extend minimum of three years corporate tax exemption to all investment projects in all sectors. In addition, Myanmar will also extend duty free import of raw materials to all industrial investments for the first three years of operation.

    Philippines

    Philippines will open retail trade and distribution business to foreign equity. In addition, the Philippines has opened private construction in the domestic market to foreign companies.

    Singapore

    Singapore has substantially reduced business costs as part of a cost reduction package that amounts to S$10 billion in savings in addition to extending 30% corporate investment tax allowance on a liberal basis to industrial projects and to selected service industries in respect of productive equipment. These activities include manufacturing, engineering or technical services and computer-related services.

    Thailand

    Thailand allows 100% foreign equity ownership for manufacturing projects regardless of location. Furthermore, agricultural projects which export 80% of sales will receive import duty exemption on machinery, regardless of location.

    Vietnam

    Vietnam extends duty exemption on imported capital goods for all projects. In respect of inport of raw materials for production for specially encouraged investments and for projects located in mountainous or remote regions for the first 5 years of operation. Issuance of investment licenses for several types of projects has been reduced to 15 days from the receipt of proper simplified documents. In addition, investment licensing for projects under US$ 5 million has been decentralised to all provinces and cities.

    Section 4

    Conditions


    To qualify for the privileges stipulated in the above sections of this Memorandum, investors must satisfy the following specific conditions:

    1. Meet the minimum investment level specified by the host country, if any;

    2. The industry must be in the published priority list for tax incentives to enjoy this particular privilege;

    3. The industry must not be in any negative list, if any; and

    4. The investor must show proof that foreign funds have been brought in for the entire amount of the investment, if required by the host country.

    Some details on specific privileges are contained in the table below.


    BOLD MEASURES

    MEASURES

    COMMENTS

    1. Fiscal Incentives

    Details of incentives, priority list and other terms and conditions can be obtained from the individual Member Countries’ websites or the individual Member Countries’ contact points listed in Section 6.

    2. Duty exemption on the import of capital goods

    Malaysia - duty-free for export zones and exemption for export-oriented projects. For others, applicable, if not locally manufactured.

    Philippines - only in export-zones, free ports and selected sectors covered by special laws.

    Thailand - duty free for export-oriented and special projects located in all zones and projects located in zone 3, if not manufactured locally.

    3. Free market access to domestic market

    Indonesia - covers all industries except those in the negative list and those in the bonded zones.

    Lao PDR - export condition may be imposed on selected products.

    Myanmar - only a certain amount will be allowed for domestic market.

    Malaysia, Philippines, Singapore, Thailand and Vietnam - covers all industries except those listed in the negative list.

    4. 100% foreign equity ownership

    Brunei Darussalam - only for high-technology manufacturing and export-oriented projects.

    Indonesia - after 15 years, companies must have at least some local equity ownership.

    Indonesia, Malaysia

    Philippines, Singapore

    Thailand

    And Vietnam - covers all industries except those listed in the negative list.

    5. Removal of Restrictions and Levies on the Employment of Foreign Nationals, if any

    Indonesia - any individuals must pay an exit tax but this is deductible against income tax.

    Malaysia - Foreign professionals, managerial and technical personnel paying income tax are exempted from paying levy.

     


    The priority list of industries, the negative list of the respective Member Countries and other details relating to the privileges are available in the ASEAN website as well as the individual Member Countries' investment agencies websites or through the individual Member Countries contact points listed in Section 6.

    The Investment Agencies are required to complete processing of the relevant applications within 60 working days from receipt of fully completed applications.

    In addition to the specific conditions, an investor must submit an application to the Investment Agency of the host country before 31 December 2000. Investors or companies will receive official confirmation of privileges relating to incentives, market access and equity ownership in writing on approval of their applications.


    Section 5

    Duration of Privileges


    Privileges will, unless otherwise specified in this Memorandum, or at the time of issue of approval, continue for the life of the investment project or such other period as may be specified by individual Member Countries at their websites. This will apply even if there are subsequent changes in the investment or other laws of the host country. If any approved project, under this Memorandum, is not implemented according to the project implementation schedule agreed to between the investor and the host government, during the promotion period, the above privileges may be withdrawn.


    Section 6

    Contact Points for Further Information and Enquiries


    Brunei Darussalam

    Indonesia


    Lao PDR

    Malaysia

    Myanmar

    Philippines

    Singapore

    Thailand


    Vietnam