When observing the regulatory changes in Southeast Asia against the spread of the pandemic, it seems inevitable to interpret this reaction as a further manifestation of the progressive awareness of their importance on the global stage. A specific example of this awareness is the various regulatory movements that have recently been adopted not only to address the consequences of this pandemic but also to attract foreign investment to help balance accounts severely affected by it. An analysis of these movements, albeit limited, is in my opinion necessary to assess the scope of the regulatory changes currently in place or soon to be, and to see how they may impact companies interested in doing business in these countries.
Regulatory Changes in Southeast Asia
1. Indonesia: Omnibus Law
The Indonesian Law 11/2020, dated October 5, 2020, on job creation, also known as the Omnibus Law, has undergone various regulatory developments since its enforcement on November 11, 2020. The most recent regulatory changes in Southeast Asia include those in Decree GR 29/2021 and Ministerial Orders MOT 17/2021 and 24/2021. These changes impact direct or indirect distribution of goods (requiring a commercial identification number) and foreign investments in the retail sector (lifting existing limitations on ownership of large stores and self-service stores between 400 and 1,200 m2). Furthermore, Decree GR 39/2021 addresses halal certification, making it mandatory for products entering, circulating, or being exchanged in Indonesia.
2. Vietnam: E-commerce
As a result of the growth experienced in e-commerce and changes in consumption patterns, the Vietnamese government has approved a new regulatory framework for this commerce (Decree 85/2021/ND-CP), amending and supplementing the existing one (Decree 52/2013/ND-CP), which will come into effect on January 1, 2022. Among other regulatory changes in Southeast Asia, foreign entrepreneurs engaging in e-commerce activities must establish online platforms with Vietnamese domain names or language, or conduct over 100,000 annual transactions from Vietnam through these platforms, necessitating the appointment of a legal representative or the establishment of a representative office. Foreign investors in e-commerce must be listed in the Ministry of Industry and Trade’s (MoIT) roster of internationally renowned technology companies.
3. Cambodia: Minimum Wage 2022
The Cambodian Ministry of Labor and Vocational Training (MLVT) has approved, in accordance with the Minimum Wage Law of July 6, 2018, Ministerial Order (Prakas) 264 regarding the minimum wage that workers in the garment, textile, footwear, and travel goods and accessories sectors will start receiving from January 1, 2022. For permanent workers, this wage will amount to $194 per month, while for temporary workers, it will be $192 per month. Other benefits included in these regulatory changes in Southeast Asia are transportation or housing allowances ($7 monthly), attendance bonuses ($10 monthly), and meal assistance ($0.2 daily), with no changes in these benefits. The factors considered for these increases have been social (inflation and cost of living) or economic (productivity, competitiveness, and business profitability).
4. Malaysia: Budget 2022
The budget for the year 2022 is the largest one presented to date by the Malaysian government, as per expenditure forecasts, reaching 332.1 billion ringgits (RM), with an expected growth rate between 5.5% and 6.5%. Among the regulatory changes in Southeast Asia aimed at the socio-economic rehabilitation of the country, three are of particular interest to businesses: firstly, allowing micro, small, and medium enterprises to defer corporate tax payments until June 30, 2022; secondly, easing rental burdens by reducing taxes for property owners who lower rents by at least 30%; and thirdly, providing a tax deduction of RM 300,000 for companies that renovate their facilities to meet the safety requirements imposed by the pandemic.
5. Singapore: Green Plan 2030
The Singaporean government has introduced the “Singapore Green Plan 2030,” a plan aimed at developing a more environmentally sustainable socio-economic model that will impact various areas. This plan includes initiatives in finance to enhance sustainable financing, in mobility to promote the purchase of electric vehicles through tax incentives, and in research and development under the Enterprise Sustainability Programme to assist companies, especially small and medium enterprises, in seizing opportunities in the green economy through the Enterprise Financing Scheme-Green (EFS-Green). According to the official agency Enterprise Singapore, this will enable sustainable businesses, strengthen sectoral capabilities, and create a viable ecosystem.
Antonio Viñal
Lawyer
AVCO Legal
madrid@avco.legal
