AEC Advisor in Asian Economic Community of ASEAN Countries

AFAS

AFAS

Summary of ASEAN Framework Agreement on Services (AFAS)

                In the area of Trade in Services, ASEAN formalized its integration commitment through the signing of ASEAN Framework Agreement on Services (AFAS) by the ASEAN Economic Minister (AEM) on 15 December 1995 in Bangkok, Thailand. All AFAS rules are consistent with international rules for Trade in Services as provided for under the GATS Agreement of the World Trade Organization (WTO), as the article XIV(1) of AFAS provides that “The terms and definitions and other provisions of the GATS shall be referred to and applied to matters arising under AFAS for which no specific provision has been made under it.”

                Under the AFAS, numerous packages of AFAS liberalization commitments have been made, concluded and signed by ASEAN Member States since the signing of AFAS in 1995. To date, ASEAN Economic Ministers (AEM) had signed 8 protocols to implement 8 Packages of Commitments which cover a wide range of services sectors. Each member states have to make Schedules of Horizontal Commitments, general commitments which binding all sectors of Trade in Services, and Schedules of Specific Commitments, commitments which binding only specific sectors of Trade in Services. Moreover, AFAS has adopted the same four Modes of Supply as used in GATS, including (1) Mode 1: Cross-Border Supply (2) Mode 2: Consumption Abroad (3) Mode 3: Commercial Presence (4) Mode 4: Presence of Natural Person.

Summary of Horizontal Commitments & Specific Commitments

Summary of Horizontal Commitments – Limitation on Market Access

Member States

MODE 3

MODE 4

Brunei

-   UNBOUND

-   UNBOUND except

  • Intra-corporate transferee at the level of

(1) managers (2) executives (3) specialists

Cambodia

-   Investors, seeking incentives under the provision of the Law on Investment shall provide adequate and consistent training to Cambodian staff.

-   UNBOUND except

  • Business Visitors
  • Persons responsible for setting up of a commercial establishment
  • Intra-Corporate Transferees

(1) managers (2) executives (3) specialists

Indonesia

-   Commercial presence of the foreign service providers may be in the form of joint  venture and/or representative office

  • Joint  venture should meet the following requirements:

(1) Limited Liability Enterprise,

(2) Not more than 49% of the capital share of the Limited Liability Enterprise owned by foreign partner(s).

- Business Visitors

- Intra-Corporate Transferees

(1) managers (2) executives (3) specialists

Lao PDR

-   Commercial presence of foreign service suppliers can be in the form of joint venture, wholly owned by foreigner, or a branch or representative office.

-   Foreign investors/service suppliers in a joint venture must contribute a minimum portion 30% of the total equity investment in that venture.

-   Foreigners who work in Lao PDR shall be subject to the law on Promotion and Management of Foreign Investment in the Lao PDR and the regulations on immigration.

Malaysia

-   The acquisition of assets or interests of Malaysian companies, mergers or take-overs requires approval and apply to the following:

  • The acquisition of the voting rights by any single foreign interest or associationed group of 15% or more, or an aggregate foreign interest of 30% or more, or exceeding RM5 million in value
  • Any proposed acquisition which will result in ownership or control passing to foreign interest
  • Control of Malaysian Corporations through any form of joint venture agreement, management agreement, technical assistance agreement or other arrangements.

-   UNBOUND except

  • Intra-corporate Transferees

(1) Senior managers,

(2) Two specialists or experts per organizations

  • Others

(1) Specialists or experts (2) Professionals

(3) Business visitors

Myanmar

-    Commercial presence of foreign service suppliers and/or providers are permitted under these laws:

  • 100% Foreign Investment
  • Joint  venture with a Myanmar citizen or enterprise with a minimum of 35% equity is permitted

-   The form of incorporation can be sole proprietorship, partnership or limited company.

-    Management level is allowed to stay up to one year and may be extendable there on subject to the approval of concerned agencies.

Philippines

-   The participation of foreign investors in the governing body of any corporation engaged in activities expressly reserved to citizens of the Philippines by law shall be limited to the proportionate share of foreign capital of such entities.

-   All executive and managing officers must be citizens of the Philippines.

-   Non-resident aliens may be admitted to the Philippines for the supply of a service after a determination of the non-availability of a person in the Philippines who is competent, able and willing, at the time of application, to perform the services for which the alien is desired.

Singapore

-   NONE

-   UNBOUND except

  • Intra-corporate Transferees

(1) Managers (2) Executives (3) Specialists or Experts

Thai

-   Commercial presence in sectors or subsectors in this schedule is permitted only through limited liability company which is registered in Thailand or the other type of legal entity as specified in the sector-specific commitments, and will have to meet one of the following condition as indicated in the sector-specific commitments:

  • Foreign equity participation must not exceed 70% of the registered capital and shall only operate through joint venture with a juridical person of Thai national,
  • Foreign equity participation must not exceed 51% of the registered capital and shall only operate through joint venture with a juridical person of Thai national,
  • Foreign equity participation must not exceed 49% of the registered capital and the number of foreign shareholders must be less than half of the total number of shareholders of the company concerned.

-   UNBOUND except

  • Business Visitors
  • Intra-corporate Transferees

(1) Managers (2) Executives (3) Specialists or Experts

Vietnam

-   Foreign enterprises are allowed to establish commercial presence in Vietnam in the form of:

  • Business co-operation contract
  • Joint  Venture
  • 100% Foreign-invested enterprises
  • Representative offices of foreign service suppliers that are not engage in any direct profit-making activities.

-   UNBOUND except

  • Intra-corporate Transferees

(1) Managers (2) Executives (3) Specialists or Experts

  • Other personnel
  • Service sales persons
  • Persons responsible for setting up a commercial presence
  • Contractual service suppliers (CSS)

 

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