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. Find out more at http://www.oecd.org/daf/inv/investment-policy/seasia.htm - http://www.oecd.org/daf/inv/mne/pfi.htm - http://www.oecd.org/globalrelations/seaforum.htm

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.  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.  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. 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. 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.  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.  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. 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. 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. 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.  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. 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.  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. THANK YOU!
Helene.Francois@oecd.org