ASEAN Regulatory Brief: Malaysian Alcohol Standards, The Singapore-Cambodia DTA, and Mobile Financing in Myanmar

June 9, 2016 Posted by ASEAN Briefing Reading Time: 5 minutes

Malaysia Strengthens Alchohol Regulation

Malaysia has amended the Food and Regulation Act 1985, introducing a slew of changes to alcohol products. Amendments were introduced May 27 and will become effective December 1 of this year. Highlights of the changes are:

Legal drinking age raised to 21 years from 18 years
Warning labels need to be displayed on alcoholic drinks
Alcoholic drinks must be displayed separately from other drinks in shops
New standard to control availability of Compounded Hard Liquor (CHL) or cheap liquor; such products will be required to be sold in glass bottles with a minimum 700ml content

Authorities have stated that amendments are in line with the Global Strategy to Reduce the Harmful Use of Alcohol, which was signed by the health ministry during the World Health Assembly in 2010. In the near future, authorities have stated plans to raise tax on cheap liquor to US $9.6 (RM40) per liter. Failure to comply with the regulations are expected to attract a maximum fine of US $2,411 (RM 10,000) or up to a jail term of two years.

Singapore and Cambodia Sign Double Taxation Avoidance Agreement

The governments of Singapore and Cambodia signed an agreement on avoidance of Double Taxation (DTA) on May 20^th. The treaty will become effective once it is ratified by both countries. The agreement ensures that businesses in both countries are not required to pay tax twice on the same income. Highlights of the DTA include: a reduced withholding tax of 10 percent on dividends, interest and royalties. The agreement also works to facilitate information exchange on tax issues with mutual consent between both countries.

The new DTA is expected to increased trade and lower barrier to cross-border investment. This bodes well for investors in both countries as they seek to invest in new business opportunities between the two countries. To date, Singapore has invested US $825 million in fixed assets within Cambodia according to the Council for Development of Cambodia. In 2015, Cambodia, exported US $58.5 million of goods to Singapore and imported US $503.4 worth of goods.

Myanmar: Central Bank Introduces Mobile Money Rules

Myanmar’s Central Bank has released regulations for financial service providers seeking to utilize mobile as a means of connecting with customers. The announcement is a watershed moment for mobile as the provision of financial services was previously limited to banks. New regulations were made public on April 5.

Rules aim to create more efficient and secure mobile financial services throughout the country. The regulations state that service providers can offer several services including kyat-denominated cash-in, cash-out transactions and money transfer domestic payments. However, providers will be unable to process the domestic side of international remittance transactions.

Firms that want to enter the mobile financial services sector must have US $2.58 million (K3 billion) and pay US $256,000 (K300 million) for the application. Big players such as Telenor, Myanmar Posts and Telecommunications (MPT) are expected to take advantage of the new rules.

Despite a population of 60 million, banking adoption remains at just 10 percent within Myanmar and results in 97 percent of salaries being paid in cash. Mobile money is expected to fill this void, given the grown in the number of mobile phones throughout the country. In the last four years alone, the percentage of people owning mobile phones has increased from 9 percent to over 70 percent. Analysts believe that while the new regulation bodes well for the country, getting the population to trust such financial service technology will remain a challenge. Companies will have to work hard to educate the masses and invest in the technology to reap benefits.

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