![Page 1: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/1.jpg)
www.duanemorris.com
©2010 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C.
Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Princeton | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership
OLIVER MASSMANN - Partner, General Director
DUANE MORRIS VIETNAM LLC
DOING BUSINESS IN THE NEW ASEAN ECONOMIC COMMUNITY
How to do it right?
1
![Page 2: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/2.jpg)
www.duanemorris.com
AGENDA:
• ASEAN ECONOMIC COMMUNITY (“AEC”) –WHAT IS IT?
• WHAT DOES AEC HAVE TO OFFER TO INVESTORS? • CONCLUSION
2
![Page 3: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/3.jpg)
www.duanemorris.com
Introduction Regionalism and the multilateral trading system • RTA’S /FTA’S Are vastly in number, scope and coverage and their
number is still growing. • It is estimated that more than half of world trade is now conducted
under preferential trade agreements. • Among the best known are the European Union, the European
Free Trade Association (EFTA), the North American Free Trade Agreement (NAFTA), the Southern Common Market (MERCOSUR), the Association of Southeast Asian Nations (ASEAN), and the Common Market of Eastern and Southern Africa (COMESA).
• From its inception, the GATT — and now the WTO — has allowed member countries to conclude customs unions and free-trade areas, as an exception to the fundamental principle of non-discrimination set in the most-favored-nation clause of Article I.
3
![Page 4: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/4.jpg)
www.duanemorris.com
AEC establishment • One of the 3 pillars of ASEAN Community, together
with ASEAN Security Community and ASEAN Socio-Cultural Community
• Originated from ASEAN Vision 2020 adopted in 1997 on the 30th anniversary of the Association of Southeast Asian Nations
• The realization of the end goal of economic integration as espoused in the Vision 2020, which is based on a convergence of interests of ASEAN member countries to deepen and broaden economic integration through existing and new initiatives with clear timelines.
4
![Page 5: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/5.jpg)
www.duanemorris.com
AEC establishment
• AEC members: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Viet Nam
5
![Page 6: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/6.jpg)
www.duanemorris.com
AEC Market Snapshot – Asia’s main investment hub • GDP: US$2311.3 billion (2012) • GDP per capita: US$3748.4 (2012) • Population: 620 million, 60% under the age of 35 • AEC % of world GDP: ~3.3% • AEC % of world population: 9% • AEC’s merchandise exports: US$1.2 trillion - ~54% of total
ASEAN GDP and 7% of global exports • If ASEAN were one economy, it would be the 7th largest in
the world – 4th largest by 2050 if growth trends continue 6
![Page 7: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/7.jpg)
www.duanemorris.com
Key characteristics of AEC
7
![Page 8: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/8.jpg)
www.duanemorris.com
Progress of AEC formation – Single market and production base • 2010: duties applicable for 99.2% of tariff lines for ASEAN 6 Member States
were eliminated; for other countries (Lao PDR, Cambodia, Myanmar and Vietnam): duty rates of 0-5% on 97.52% of tariff lines.
• Removing NTBs to intra-ASEAN trade: ASEAN Single Window Gateway, mutual recognition arrangements, ASEAN Harmonized Tariff Nomenclatures
• ASEAN Framework Agreement on Services: ease restrictions in at least 80 sub-sectors; gradually allow 70% foreign (ASEAN) equity participation for all service sectors
• ASEAN Comprehensive Investment Agreement: investor state dispute settlement mechanism based on non-discrimination principles; investment protection
• 9/2012: ASEAN Exchanges launched ASEAN Trading Link • ASEAN Agreement on the Movement of Natural Persons
8
![Page 9: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/9.jpg)
www.duanemorris.com
Progress of AEC formation – Competitive Economic Region • Great attempts by ASEAN Member States to
introduce competition laws and policies • On-going developed physical infrastructure:
– ASEAN Highway Network – ASEAN Power Grid – Trans-ASEAN Gas Pipelines – ASEAN Open Skies Policy: liberalization of air services – Reduced telecommunication rates within ASEAN
9
![Page 10: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/10.jpg)
www.duanemorris.com
Progress of AEC formation – Equitable Economic Development • Enhancement of competitiveness and expansion of
SMEs under the Strategic Action Plan for ASEAN SME Development (2010-2015)
• 2011: ASEAN Framework for Equitable Economic Development – different level of economic development of each Member State is of utmost consideration
• AEC benefits are evenly shared among Member States 10
![Page 11: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/11.jpg)
www.duanemorris.com
Progress of AEC formation – Integration into global economy • A number of ASEAN+1 FTAs • On-going negotiations for Regional Comprehensive
Economic Partnership (RCEP) – the world’s largest trade bloc in terms of population
• Several key ASEAN Member States are currently negotiating the Trans-Pacific Partnership, a U.S-lead regional FTA
• ASEAN Member States are individually negotiating FTAs with the European Union
11
![Page 12: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/12.jpg)
www.duanemorris.com
ASEAN Framework Agreement on Services
• Expanding WTO commitments on services • Free flow of services in AEC: substantially no restriction on
ASEAN service providers in providing services and in establishing companies across national borders within the region
• Modes 1 (cross-border supply) and 2 (consumption abroad): none except for bona fide regulatory reasons
• Mode 3 (commercial presence): gradually allow 70% foreign (ASEAN) equity participation for all service sectors
• Removal of Other Mode 3 MA Limitations by 2015 • Set Parameters of Liberalisation for Mode 3 NT, Mode 4 (presence
of natural person), and Horizontal Limitations 12
![Page 13: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/13.jpg)
www.duanemorris.com
Services sectors of priority integration
• Air travel • e-ASEAN • Healthcare • Tourism • Logistics services
13
![Page 14: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/14.jpg)
www.duanemorris.com
Mutual recognition arrangement • To facilitate the free flow of professional services • Professional service providers registered/certified in their home
countries to be equally recognized in other signatory countries • Up to now, 8 mutual recognition arrangements on:
– Engineering services – Nursing services – Architectural services – Surveying qualifications – Accountancy services – Medical practitioners – Dental practitioners – Tourism professionals
14
![Page 15: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/15.jpg)
www.duanemorris.com
ASEAN Rules of Origin • Wholly obtained rule
– Includes products harvested, fished, planted etc. from a particular country
• Minimum content rule – 60 % minimum content rule (see next slide) – Cumulative rule of origin – Not including minimal operations:
Transportation facilitation Packaging Ensuring preservation
15
![Page 16: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/16.jpg)
www.duanemorris.com
ASEAN Rules of Origin
ROO – Formula For Minimum Content / Value Added Rule
16
Value of Non-ACFTA
materials
+ Value of
materials of Undetermined
origin
FOB Price
x 100 % < 40%
Therefore, the ACFTA content: 100% - non-ACFTA material = at least 60%
![Page 17: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/17.jpg)
www.duanemorris.com
ASEAN Rules of Origin • Direct consignment requirement in order to qualify
for tariff reductions: – Transit through ASEAN member states allowed – Transit through non-member states possible, if: Geographical reasons / transport requirements Products must not enter non-member state’s trade or
consumption no operation other than unloading or reloading in non-
member state
• Certificate of Origin: Form D issued by a Government Authority designated by the exporting Member State
17
![Page 18: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/18.jpg)
www.duanemorris.com
ASEAN Dispute Settlement Mechanism
18
ASEAN Legal Unit
Advisory Stage
Method 1
Method 2
ASEAN Consultation to Solve Trade and
Investment Issues (ACT)
* Operational issues should be mostly received at this stage
Consultative Stage
Method 3
ASEAN Compliance Board (ACB)
* Countries which feel that they have been injured by actions of another country can choose to engage the ACB at this stage, or skip to the enhanced ASEAN DSM directly.
Adjudication Stage
Method 4
Enhanced ASEAN DSM
* The enhanced ASEAN DSM resembles the WTO DSM, whose decisions will be binding and solely based on legal considerations.
![Page 19: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/19.jpg)
www.duanemorris.com
Investment protection and Dispute Settlement Mechanism
19
Investment Protection
Compensation in case of
strife
Free transfer of funds
Fair and equitable treatment
Full protection
and security
No unlawful expropriation
![Page 20: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/20.jpg)
www.duanemorris.com
Investor-state Dispute Settlement Mechanism
20
Alternate Dispute Resolutions
Meditation
Conciliation
Consultation/ Negotiation
Domestic Courts
Arbitration
ICSID
UNCITRAL
Others
![Page 21: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/21.jpg)
www.duanemorris.com
AEC perspectives – What does AEC have to offer? • Shared market, shared benefits - From TEN to ONE • Simplified rules, greater access - Trading on a bigger stage • ASEAN: Home for your investment – Partners in Business • Making capital work for you – Expanding access to finance • ASEAN professionals in the move – Best people and Best
practices (Source: www.asean.org) 21
![Page 22: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/22.jpg)
www.duanemorris.com
6 out of 10 ASEAN countries have improved their rankings
22
![Page 23: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/23.jpg)
www.duanemorris.com
Why doing business in ASEAN – Investors’ perspective
23 Source: Economic Corporate Network
![Page 24: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/24.jpg)
www.duanemorris.com
How to be successful in AEC
• Not assuming that business is done like it is in the U.S. • Deep understanding of business environment • Knowing AEC’s culture and behaviors will bring a
significant effect on the success of business relationships • Careful and through investment action plan will lead to
great success • Patience is golden – Things will not happen as quickly or
efficiently as you expect • Learn to speak the local language!
24
![Page 25: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/25.jpg)
www.duanemorris.com
CONCLUSION
Reasons to invest in ASEAN Robust market Diverse ASEAN AEC 5 fundamental freedoms More comprehensive investment protection and dispute
settlement mechanism
25
![Page 26: Omassmann doing business in the new asean economic community](https://reader038.vdocuments.us/reader038/viewer/2022110203/55d0f4ffbb61eb77788b4649/html5/thumbnails/26.jpg)
www.duanemorris.com
DUANE MORRIS VIETNAM LLC
Thank you very much!
HANOI OFFICE HO CHI MINH CITY OFFICE Pacific Place, Unit V1307/08, 13th Floor, Suite 1503/04, Saigon Tower 83B Ly Thuong Kiet, Hoan Kiem District 29 Le Duan Street, District 1 Hanoi, Vietnam Ho Chi Minh City, Vietnam Tel.: +84 4 39462200 Tel.: +84 8 3824 0240 Fax: +84 4 3946 1311 Fax: +84 8 3824 0241
Contact email:
26