ASEAN ECONOMIC COMMUNITY 2015

DOING BUSINESS IN

Indonesia

| Thailan

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alaysia

| Sing

apore

| Phili

ppine

s | V

ietna

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yanma

r | B

runei

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Laos

ASEAN

Doing Business in ASEAN 2015 1

Foreword 5

IntroductIon to ASeAn 8 AimsandPurposes9 FundamentalPrinciples 10 ASEANCommunity 10

ASEANPolitical-SecurityCommunity(APSC) 10 ASEANEconomicCommunity(AEC) 11 ASEANSocio-CulturalCommunity(ASCC) 11

ASEANCharter 12

ASeAn At A GlAnce 13 RegionProfile:ASEAN 14 CountryProfile:BruneiDarussalam 15 CountryProfile:Cambodia 16 CountryProfile:Indonesia 17 CountryProfile:Laos 18 CountryProfile:Malaysia 19 CountryProfile:Myanmar 20 CountryProfile:Philippines 21 CountryProfile:Singapore 22 CountryProfile:Thailand 23 CountryProfile:Vietnam 24

ASeAn todAy: SocIo-PolItIcS 25 UnderstandingASEANDemographics:IsthereaDividend? 26 HumanRights 27 LabourandMigrants 27 ExtractiveIndustries:Mining,GasandOil 28 Environment,ClimateChangeandClimateJustice 28 GenderandChildRights 28 IndigenousPeoples 28 FreedomofInformation 29 Myanmar 29 Disability 29

ASeAn todAy: economIcS And Aec 2015 30 GrowingWithASEAN:TheAEC2015Vision 31 SingleMarketandProductionBase 32

FreeFlowofGoods 32 FreeFlowofServices 32 FreeFlowofInvestment 33 FreerFlowofCapital 33 FreerFlowofSkilledLabour 34 PriorityIntegrationSectors 34 FormsofForeignInvestments 35 Food,AgricultureandForestry 35 DisputeResolutionEnvironment 35

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CompetitiveEconomicRegion35 CompetitionPolicy 35 ConsumerProtection 36 IntellectualPropertyRights(IPR) 36 InfrastructureDevelopment 36

EquitableEconomicDevelopment37 Small-MediumEnterprise(SME)Development 37 InitiativeforASEANIntegration(IAI) 37

IntegrationintotheGlobalEconomy38 CoherentApproachtowardsExternalEconomicRelations 38 EnhancedParticipationinGlobalSupplyNetworks 38

BridgingDevelopmentGaps39

lookInG Beyond ASeAn 40 ASEANandChina41

TradeRelationsintheModernEra 41 TheChinaConnectionforASEAN 42 ABrightFutureforASEANandChina 43 TheAsianInfrastructureInvestmentBank 44

ASEANandJapan44 RelationsbetweenSoutheastandEastAsia 44

ASEANandSouthKorea45 ASEAN-KoreanMultilevelCooperation 45

ASEANandIndia46 ASEAN-IndiaTradeRelations 46

ASEANandtheTrans-PacificPartnership47 ASEANandtheEuropeanUnion47 ASEAN,AustraliaandNewZealand48

dId you know: AmAzInG FActS ABout ASeAn 49

GloSSAry And AcronymS 54

reFerenceS And AcknowledGementS 55

AttrIButIon And credItS 57

rePoSItory oF PolIcIeS And dAtA 58

ABout the AuthorS 99 SpecialMention 105

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Doing Business in ASEAN 2015 3

tABleS

Table1:PayingTaxesinASEAN(asat31December2013)58Table2:RestrictionstoForeignInvestment(asat31December2014)59Table3:CorporateFramework(asat31December2014)60Table4:LegalSystemsandDisputeResolutionEnvironment(asat31December2014)67Table5:Competition(asat31December2014)69Table6:ASEAN:Population,TerritoryandEconomy(2012)75Table7:ASEANandSelectedTradingPartners:Population,Economy(2012-2013)76Table8:ASEAN:NominalGrossDomesticProductforperiodsindicated77Table9:ASEAN6:ConsumerPriceIndexforFood,Housing,Transport(2008-2012)78Table10:ASEAN:InflationRate,end-of-period(inpercent)forperiodsindicated79Table11:ASEANLendingRates(inpercent)forperiodsindicated79Table12:ASEAN:ExchangeRates,average-of-period(nationalcurrency/US$)forperiodsindicated80Table13:ASEAN:TotalTradeforperiodsindicated81Table14:ASEANwithSelectedTradePartners:TradeBalanceforperiodsindicated82Table15:ASEANMemberStates:TradeBalanceforperiodsindicated83Table16:ASEANMemberStates:TotalTradewithASEAN+3(2012)84Table17:ASEANMemberStates:TotalTradeswithSelectedTradePartners(2012)85Table18:ASEANMemberStates:PercentShareofTotalTradewithSelectedTradePartners(2012)86Table19:ASEAN:Top20ExportCommodities1(2013)87Table20:ASEAN:Top20ImportCommodities1(2012)89Table21:Intra-ASEAN:TrendofPriorityIntegrationSectorsExportsforperiodsindicated91Table22:ASEAN:TrendsinFDIInflowsforperiodsindicated92Table23:ASEAN:TrendsinTouristArrivals,byhostcountryforperiodsindicated93Table24:ASEAN:InternetSubscribers/Users,per1,000personsforperiodsindicated94Table25:ASEAN:DistributionofPopulation,byagegroup(2012)94Table26:ASEANMemberStates:PopulationLivingunderPPP$125,inpercentforperiodsindicated95Table27:ASEANMemberStates:GiniCoefficientinASEANMemberStates,inpercentforperiodsindicated95Table28:ASEANMemberStates:LifeExpectancyatBirth,inyearsforperiodsindicated96Table29:ASEANMemberStates:GovernmentHealthExpenditureasPercentageofGDPforperiodsindicated96Table30:ASEANMemberStates:AdultLiteracyRate15YearsOldandAbove,inpercentforperiodsindicated97Table31:ASEANMemberStates:UnemploymentRatebyGender,inpercentforperiodsindicated98

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FIGureS

Figure1:ASEANTotalTradewithChina43Figure2:ChinaODIDestinations43Figure3:ASEAN:AverageTariffRatesonIntra-ASEANImports90Figure4:ASEAN:ItemswithZeroPercentTariff90

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dISclAImerTheinformationcontainedinthispublicationdoesnotconstituteprofessionaladviceTheauthorshaveendeavouredtoaccuratelystatethecontentsofthispublicationasat31March2015butdonotmakeanyrepresentation,expressorimplied,inrespectoftheaccuracyofthematerialandcannotacceptanylegalresponsibilityforanyerrorsoromissionsthatmaybemade

coPyrIGht notIceNopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmittedinanyformorbyanymeans,electronic,mechanical,photocopying,recording,orotherwisewithoutwrittenpermissionoftheauthorsoralicencepermittingrestrictedcopyingCopyrightUnitedOverseasBankLimited,RSMChioLimLLPandRajah&TannSingaporeLLP2015Allrightsreserved

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Doing Business in ASEAN 2015 5

Foreword

unIted overSeAS BAnk lImItedSoutheastAsiasgrowthstoryhaspropelledforwardinrecentyears

TherearehugeinvestmentopportunitiesinSoutheastAsiafrommanufacturingtoinfrastructuretoenergyandservicesWhentheeconomicblocof10nationsistakenasawhole,ASEANranksastheseventhlargestglobaleconomywithacollectivegrossdomesticproductofoverUS$24trillion

ItisthereforenosurprisethatrobustregionalgrowthforecastssuggestthatthecombinedeconomiesofSoutheastAsiawillbeacrucial,long-termdriveroftheglobaleconomy

However,realisingtheregionsfullpotentialislikelytobechallengingThekeychallengeliesintradeliberalisation,integrationofcapitalmarketsandstandardisationof legalandregulatoryframeworkswhichwillmakeitmucheasiertodobusinessacrosstheregion

Inspiteofthis,foreigndirectinvestment(FDI)inflowsintoSoutheastAsiahavesurgedoverthelastfouryears,growing fromUS$478 billion in 2009 toUS$151billion in 2014 This trend is expected to gather evenmoremomentuminthecomingyearsastheregionworkstowardseconomicintegration

UOBunderstandsthatcompaniesneedtoadoptaregionalstrategytotakeadvantageoftheshiftinginvestmentlandscapeTheBankalsohasdedicatedFDIAdvisoryteamsinChina,HongKongSAR,India,Indonesia,Malaysia,Myanmar, Singapore,Thailand andVietnam to address the diverse needs of companies expandingwithin theregion

Inlightofthis,wearepleasedtopartnerRSMChioLimandRajah&TannAsiatointroducethisguideaspartofourefforttohelpinternationalandregionalcompaniesnavigatetheirinvestmentsintheregion

eric thamManagingDirectorandGroupHeadofCommercialBankingUnitedOverseasBank

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rSm chIo lIm llPAnyonewhowishestodobusiness inASEANmustfirstembrace itsdiversityAs a regional network of 10member nations governed by different politicalsystems, ithasapopulationofmore than600millionpeoplewhopractiseamultitudeofreligionsandspeakover70languagesanddialects

At present, there are three constitutional monarchies (Malaysia, CambodiaandThailand),threerepublics(Indonesia,thePhilippinesandSingapore),twocommuniststates(LaosandVietnam),oneconstitutionalsultanate(Brunei)andaformermilitaryjunta(Myanmar)

ASEANs economicperformance continues tooutperform theglobal averagewiththeAsianDevelopmentBankpredictingthatGDPinASEANcountrieswillgrow56%in2014ItisanticipatedthatwiththeimplementationoftheASEANEconomicCommunity(AEC)endof2015,aimingtointegrateASEANseconomyasasinglemarketandproductionbaseviathefreeflowofgoodsandservices,capital,investmentsandskilledlabour,ASEANsgrowthprospectswillbeexcitingASEANwillbeabletoenhanceitscompetitiveness inattractingforeigndirectinvestmentandtherewillbemoreinitiativestopromoteintegrationofbusinessesintheregiontocompeteeffectivelyintheglobaleconomy

Whataretherisks?CanASEANcontinueforgingaheadamiduncertaintyoverglobaldemand?Thedevelopmentgapswithinandbetweenthecountries,suchasdisparitiesinincome,law,taxsystems,financialsystems,capitalandexchangecontrols,arelikelytounderminetheadoptionofAECandwillcontinuetobethekeychallengesoverthenextfewyearsASEANneedstofosterdeeperintegrationasamatterofpriorityMorerigorouspoliciesareneededtonarrowthedevelopmentgapsbetweenmembersinordertoreapthedesiredbenefits

TheAEC2015visionisbutastartingsteponalongjourneyTobeatthemiddleincometrap,ASEANmustraiseproductivityandcreateanintegratedmarketwithstrongintra-andinter-regionaltradeflowsAccordingly,theseinitiativesmust bebusiness-centric anddrivenby thebusiness community leadership (such as the SingaporeBusinessFederation)andtheprivatesectorfromthegroundup

WeinRSMChioLim,togetherwithournetworkfirmsinASEAN,arewell-poisedtohelpourclientsridethewaveofopportunitiesthatwillundoubtedlyarisefromthisexcitingjourney

chio kian huatChiefExecutiveOfficerRSMChioLimLLP

Foreword

Doing Business in ASEAN 2015 7

rAjAh & tAnn ASIAWithacombinedgrossdomesticproductofUS$24trillion,ASEANrankstodayastheworldsseventhlargesteconomy(ifitwereacountry)

Demographic factors, suchasproximity toeconomicgiants,andacombinedpopulationrepresentingaround9%oftheworldspopulation,havecontributedto making ASEAN an attractive dest