By: Marquise Clarke

International arbitration centers have become the preferred location for the resolution of corporate disputes in ASEAN. The use of these centers is preferred due to their affordability, speed, privacy, and neutrality. As investors ramp up investment in ASEAN or enter the region for the first time, understanding where international arbitration is available and how to access it can provide significant protection from regulatory uncertainty.

In recent years there has been substantial economic growth and development among emerging markets within the ASEAN region. Within most jurisdictions, the increase in development, along with transnational transactions creates a high chance that commercial disputes will increase, in terms of both quantity and complexity. Any foreign investor thinking about investing in the ASEAN region should therefore carefully think about what options are open to them if commercial disputes do occur.

By: Eugenia Lotova

Having established foreign missions in the 10 other Southeast Asian countries, it seems increasingly likely that the small nation of Timor Leste will become the eleventh member of the 625 million, $2.8 trillion economy of the Association of Southeast Asian Nations (ASEAN). Timor Leste submitted its application for membership in 2006, but a lack of support amongst member nations made the alliance improbable. Today it remains the only country in Southeast Asia not taking part in the association, but it has taken several steps towards meeting the membership requirements. It gained the support of several Southeast Asian nations, particularly Indonesia—its former colonizer. If Timor Leste does in fact join ASEAN, it is likely to see rapid development and will undoubtably present exciting opportunities for investment.

Currently the country relies heavily on its oil and gas exports, but it is quickly running out of reserves and needs to diversify the economy. Timor Leste’s GDP is largely made up of the industrial sector (77 percent), with agriculture only composing 5.9 percent. The industrial production growth rate was 6 percent in 2015 and saw a 4.1 percent GDP growth in 2015, a drop from earlier years due to a decrease in oil and gas prices.

While the country shows potential outside of the oil and gas industry, a lack of basic infrastructure and shortage of skilled labor presents a major problem for growth. According to the World Economic Forum Global Competitiveness Report, Timor Leste ranks 133rd out of 143 countries in infrastructure and 117^th in primary education. Nonetheless, Timor Leste has been stable politically and joining ASEAN would allow it to tap into the collective experience and capital pools of its more advanced neighbors.

By: Dezan Shira & Associates 
Editor: Aysha Nesbitt

Vietnam is on its way to being the largest beneficiary of the Trans-Pacific Partnership (TPP). The agreement will produce greater access to foreign markets and foreign direct investment for Vietnam through the reduction of 18,000 tariff lines on industrial and agricultural products. However, in order to gain access to these reductions, Vietnam is expected to comply with labor standards outlined in the agreement as well as specific commitments made under the US-VN Plan for Enhancement of Trade and Labor Relations.

TPP Labor Standards

A predictable portion of the TPP’s labor standards require Vietnam to abolish forced or compulsory labor, including child labor. The country must also actively discourage the importation of goods from sources where products are in whole or partially produced by forced labor. In order to ensure this policy is strictly followed, Vietnam will be required to establish a labor council of government representatives who will monitor the implementation of the labor reforms.

Once the TPP comes to fruition, the council will be responsible for reviewing and accessing the reforms at the end of the first year and every two following. Other reforms that Vietnam must establish are acceptable conditions of work pertaining to minimum wage, hours of work, as well as safety and health conditions. Each province in Vietnam will be responsible for implementing, regulating, and maintaining these reforms to the satisfactory degree.

By: Dezan Shira & Associates
Editor: Maxfield Brown

Thailand – Business Collateral Act

Starting on July 2, 2016, small and medium sized enterprises in Thailand will be provided greater access to loans within the Kingdom. As part of the Business Collateral Act, passed in November of 2015, the scope of currently available credit lines will be broadened while at the same time ensuring those providing loans with the ability mitigate increased risk exposure.

For businesses currently seeking financing, restrictions on collateral within Thailand have been a serious impediment to the acquisition of funding. Under existing laws, the only collateral options available include mortgaging under very limited circumstances or a pledge system that surrenders assets to the lender during the duration of repayment.

A major component of BCA is its expansion of collateral options to allow for companies to make better use of their assets during repayment and to give businesses a greater variety of collateral options. The chart below contrasts the current and upcoming policies:While the BCA is sure to increase the availability of capital to growing businesses throughout the country, Dezan Shira & Associates would like to draw investors’ attention to a number of restrictions, penalties, and compliance requirements that have been placed on the financing process:

• Receiving Collateral: Financial institutions are the only actors permitted to receive collateral under the BAC.
• Business Collateral Agreements: Required for all collateral arrangements. All Agreements must be registered with the Business Collateral Registration Office.
• Preferential Claims: Pursuant to Business Collateral Agreements, those providing loans and receiving collateral shall have preferential claim over these assets. Claims will remain valid even if the assets in question have been transferred to a third party.
• Violations: any divulgence of confidential information, withholding of facts, or provision of false statements will be classified as a violation of the BCA. Punishments for these offenses can include fines and jail time of up to three years.