ASEAN Regulatory Brief: Foreign Ownership in Indonesia, Burmese Tax Policy, and Scrapped Visa Requirements in Malaysia

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Indonesia: Foreign Ownership Laws in Power, E-commerce Other Sectors Relaxed

Franky Sibarani, head of Indonesia’s Investment Coordinating Board (BKPM), said on February 3 that the country will relax foreign ownership rules in three sectors. These sectors include power, e-commerce and retail. The new changes are a part of review by the BKPM on the “negative investment list”, which list a few sectors where Foreign Direct Investment (FDI) is restricted.

The new changes will allow full foreign ownership of geothermal power plants in excess of 10 megawatts (MW) while capping stakes in small plants at 67 percent. Under previously existing regulations, foreign ownership in large plants was capped at 95 percent and investors were not allowed to own smaller plants. Complimenting opportutnies in geothermal power generation, 49 percent ownership will also be permitted in high- and extra high- voltage power installation services.

In addition to power generation, Sibarani indicated that the government will permit full foreign ownership in e-commerce, which was earlier not allowed. While details of the foreign ownership liberalization have not been released yet, Sibarani has said that the sector would be made more open.

Local analysts believe these regulatory changes to be part of wider reforms iniciated by President Joko Widodo. In addition to creating ecnonomic stability through the broadening of indonesia’s industrial base, these changes bode well for investors who are looking to invest in the aforementioned sectors.

 

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Myanmar: Increased Fines for Tax Evading Firms

Myanmar‘s government has announced increased fines for tax evasion. This measure comes on the heels of the country’s new policy of self-reporting taxes. The policy will be applicable to all large tax-paying companies in Myanmar. If companies fail to report their income and do not pay the requisite tax, they will be fined an additional 100 percent of the commercial tax and 50 percent of income tax.

Starting in April, companies will be required to file and pay relevant taxes online. Under current self reporting requirements, companies will be required to reveal their yearly sales, debt, and employee salaries as part of annual income statements. The Internal Revenue Department (IRD) has iniciated fines for reporting failures as a deterrent for tax evasion, as the companies have to self-report their income and may be tempted to falsify data. Dezan Shira & Associates believe that companies that will file their own taxes should ensure compliance with new laws to mitigate the economic risk of the fines.

 

Malaysia: Government to Scrap Visa Requirements for Chinese Tourists

The Malaysia government recently agreed to scrap visa requirements for all tourists from China. The change will be effective from March 1. The Malaysian government hopes that this will create a boom of inbound tourism to Malaysia, especially from China.

Industry experts believe that Malaysia is trying to create a more favorable perception of its visa policy. No new policies have been announced for any other countries; however, the latest change highlights the intent to create a more liberal visa regime, which will be favorable for foreign business personnel planning to visit the country. The new visa policy, if effective in its aim, will create an economic boom for the Malaysian economy.

In the past 18 months, Malaysia has taken multiple steps to increase the inflow of Chinese tourists – previously waiving visa fess for Chinese tourists, scrapping visas for touring parties, and starting an e-visa scheme.

 


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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email asean@dezshira.com or visit www.dezshira.com.

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