Lawyer in Vietnam Dr. Oliver Massmann - WHY ASEAN and WHY NOW ?
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Lawyer in Vietnam Dr. Oliver Massmann - WHY ASEAN and WHY NOW ?
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Lawyer in Vietnam Dr. Oliver Massmann - WHY ASEAN and WHY NOW ?
- 1. www.duanemorris.com ©2010 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices | New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Washington, D.C. Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Boca Raton | Wilmington | Cherry Hill | Princeton | Lake Tahoe | Ho Chi Minh City | Duane Morris LLP – A Delaware limited liability partnership DR. OLIVER MASSMANN - Partner, General Director DUANE MORRIS VIETNAM LLC WHY ASEAN AND WHY NOW? Vietnam focus 1
- 2. www.duanemorris.com AGENDA • ASEAN ECONOMIC COMMUNITY (“AEC”) –WHAT IS IT? • WHAT DOES AEC HAVE TO OFFER TO INVESTORS? • INVESTING IN VIETNAM – WHY? • CONCLUSION 2
- 3. www.duanemorris.com The Association of Southeast Asian Nations (ASEAN) • Intra-ASEAN trade was insignificant when ASEAN was established • The ASEAN Free Trade Area (AFTA) was established in 1992 to: – Create a single market and an international production base; – Attract foreign direct investment; and – Increase intra-ASEAN trade • The AFTA started with the introduction of the Common Effective Preferential Scheme (CEPT) in 1993 to eliminate intra-ASEAN import tariffs 3
- 4. www.duanemorris.com Does AFTA achieve its purposes? 4
- 5. www.duanemorris.com AEC establishment • One of the 3 pillars of ASEAN Community, together with ASEAN Security Community and ASEAN Socio- Cultural Community • Originated from ASEAN Vision 2020 adopted in 1997 on the 30th anniversary of the Association of Southeast Asian Nations • The realization of the end goal of economic integration as espoused in the Vision 2020, which is based on a convergence of interests of ASEAN member countries to deepen and broaden economic integration through existing and new initiatives with clear timelines. 5
- 7. www.duanemorris.com AEC Market Snapshot – Asia’s main investment hub • GDP: US$2,432 billion (2015) • GDP per capita: US$3,867 (2015) • Population: 629 million, 60% under the age of 35 • AEC % of world GDP: ~3.3% (2015) • Annual GDP growth: 4.7% (2015) • AEC’s merchandise exports: US$2.2 trillion • ASEAN could be the 4th largest economy in the world by 2030 7
- 9. www.duanemorris.com Progress of AEC formation – Single market and production base • 2010: duties applicable for 99.2% of tariff lines for ASEAN 6 Member States were eliminated; for other countries (Lao PDR, Cambodia, Myanmar and Vietnam): duty rates of 0-5% on 97.52% of tariff lines. • Removing NTBs to intra-ASEAN trade: ASEAN Single Window Gateway, mutual recognition arrangements, ASEAN Harmonized Tariff Nomenclatures • ASEAN Framework Agreement on Services: ease restrictions in at least 80 sub- sectors; gradually allow 70% foreign (ASEAN) equity participation for all service sectors • ASEAN Comprehensive Investment Agreement: investor state dispute settlement mechanism based on non-discrimination principles; investment protection • 9/2012: ASEAN Exchanges launched ASEAN Trading Link • ASEAN Agreement on the Movement of Natural Persons 9
- 10. www.duanemorris.com Progress of AEC formation – Competitive Economic Region • Great attempts by ASEAN Member States to introduce competition laws and policies • On-going developed physical infrastructure: – ASEAN Highway Network – ASEAN Power Grid – Trans-ASEAN Gas Pipelines – ASEAN Open Skies Policy: liberalization of air services – Reduced telecommunication rates within ASEAN 10
- 11. www.duanemorris.com Progress of AEC formation – Equitable Economic Development • Enhancement of competitiveness and expansion of SMEs under the Strategic Action Plan for ASEAN SME Development (2010-2015) • 2011: ASEAN Framework for Equitable Economic Development – different level of economic development of each Member State is of utmost consideration • AEC benefits are evenly shared among Member States 11
- 12. www.duanemorris.com Progress of AEC formation – Integration into global economy • A number of ASEAN+1 FTAs • On-going negotiations for Regional Comprehensive Economic Partnership (RCEP) – the world’s largest trade bloc in terms of population • Several key ASEAN Member States are members of the CPTPP (formerly the TPP) • ASEAN Member States are individually negotiating FTAs with the European Union 12
- 13. www.duanemorris.com ASEAN Framework Agreement on Services • Expanding WTO commitments on services • Free flow of services in AEC: substantially no restriction on ASEAN service providers in providing services and in establishing companies across national borders within the region • Modes 1 (cross-border supply) and 2 (consumption abroad): none except for bona fide regulatory reasons • Mode 3 (commercial presence): gradually allow 70% foreign (ASEAN) equity participation for all service sectors • Removal of Other Mode 3 Market Access Limitations • Set Parameters of Liberalisation for Mode 3 NT, Mode 4 (presence of natural person), and Horizontal Limitations 13
- 14. www.duanemorris.com Services sectors of priority integration • Air travel • e-ASEAN • Healthcare • Tourism • Logistics services 14
- 15. www.duanemorris.com Mutual recognition arrangement • To facilitate the free flow of professional services • Professional service providers registered/certified in their home countries to be equally recognized in other signatory countries • Up to now, 8 mutual recognition arrangements on: – Engineering services – Nursing services – Architectural services – Surveying qualifications – Accountancy services – Medical practitioners – Dental practitioners – Tourism professionals 15
- 16. www.duanemorris.com Why doing business in ASEAN – Investors’ perspective 16 Source: Economic Corporate Network
- 19. www.duanemorris.com Vietnam 2017 Economy at a glance • GDP: US$220.3 billion • GDP per capita: US$2,385 • GDP Growth: 6.81% (record breaking in 10 years) • Inflation: 1.41% • Population: About 91.70 million • Labor force aged 15 and above: 54.61 million • Total export and import turnover: : >US$420 billion (7.1% increase) • Regional Minimum wage (Region I): VND 3.980 million (US$ 175) per month (Jan 2018) 19
- 20. www.duanemorris.com Vietnam’s super rich population is growing faster than anywhere else…. 20 … and is on track to continue leading the growth in the next decade
- 21. www.duanemorris.com Communist Vietnam Has More Millionaires Than Capitalist Philippines 21
- 22. www.duanemorris.com Political stability • Vietnam is one of the most ideal locations to expand businesses thanks to its political stability and rising middle class, according to the United Overseas Bank (UOB)’s Asian Enterprise Survey 2016 • Vietnam is considered the second most attractive location to open and expand business after Singapore. 22
- 23. www.duanemorris.com Government vs. private sector • PM Nguyen Xuan Phuc stressed the crucial role of private sector in national development. • In its 2016-2020 socio-economic development strategy, Vietnam is determined to create every possible favourable conditions for the development of enterprises, especially private ones. • The Government commits to make continued efforts in adopting laws and policies, pushing forward with administrative reform 23 PM Nguyen Xuan Phuc met with AIIB to propose its support for private sector to get involved in infrastructure projects
- 24. www.duanemorris.com Vietnam’s Free Trade Agreements 24 ASEAN - China ASEAN - Korea ATIGA ASEAN - India ASEAN – Australia – New Zealand ASEAN - Japan RCEP Vietnam - Chile Vietnam - Korea Vietnam – Eurasian Economic Union Vietnam - EU Vietnam - EFTA CPTPP ASEAN – Hong Kong Vietnam - Israel Vietnam - Japan Signed In negotiation/ Negotiation concluded In negotiation
- 25. www.duanemorris.com Comprehensive and Progressive Trans-Pacific Partnership (“CPTPP”) • On 8 March 2018, the CPTPP was finally signed in Chile. The CPTPP accounts for 495 million people representing 13.5% of the world total economic output - worth a total of $10 trillion. • CPTPP will lead to an increase of 1.32% in Vietnam’s GDP • Vietnam will have access to newer markets and can expand their exports to countries such as Canada, Mexico, and Peru with whom it does not have a trade agreement. 25
- 27. www.duanemorris.com WTO ANALYSIS OF LIBERALIZATION OF MARKET ACCESS Vietnam ties in first place with Singapore • *Typical restrictions: number of opened sectors, JV requirement, limits on foreign-owned shares, permission requirement 27 Country Limitation of market access* Country Limitation of market access* Malaysia medium Myanmar high Indonesia medium Cambodia medium Philippines medium Laos medium Singapore low India high Thailand medium China medium Brunei high Vietnam low
- 28. www.duanemorris.com ASEAN’s challenges • Member countries’ interests are different • Necessary legal reform takes time in each country • Different languages and variety of culture • Different level of economic development • Monetary and financial integration is a long way and big challenge (lessons learned from the EU) 28
- 29. www.duanemorris.com How to be successful in AEC • Not assuming that business is done like it is in the U.S. • Deep understanding of business environment • Knowing AEC’s culture and behaviors will bring a significant effect on the success of business relationships • Careful and thorough investment action plan will lead to great success • Patience is golden – Things will not happen as quickly or efficiently as you expect • Learn to speak the local language! 29
- 30. www.duanemorris.com CONCLUSION Reasons to invest in ASEAN ü Robust market ü Diverse ASEAN ü AEC 5 fundamental freedoms ü More comprehensive investment protection and dispute settlement mechanism 30
- 31. www.duanemorris.com CONNECTIONS ARE BUSINESS PLEASE CONNECT WITH ME ON LINKEDIN: OLIVER MASSMANN 31
- 32. www.duanemorris.com WHEREVER YOU ARE - BE ALL THERE Jim Elliot 32
- 33. www.duanemorris.com DUANE MORRIS VIETNAM LLC Thank you very much! HANOI OFFICE HO CHI MINH CITY OFFICE Pacific Place, Unit V1307/08, 13th Floor, Suite 1503/04, Saigon Tower 83B Ly Thuong Kiet, Hoan Kiem District 29 Le Duan Street, District 1 Hanoi, Vietnam Ho Chi Minh City, Vietnam Tel.: +84 4 39462200 Tel.: +84 8 3824 0240 Fax: +84 4 3946 1311 Fax: +84 8 3824 0241 Contact email: omassmann@duanemorris.com 33