Current Developments in ASEAN Service/Investment Sectors


​published on May 14, 2019 | reading time approx. 2 minutes


On April 23, 2019, , the Trade in Services Agreement (ATISA) and the fourth protocol amending the ASEAN Comprehensive Investment Agreement (ACIA) have been signed at the 25th ASEAN Economic Ministers Meeting in Phuket, Thailand. Negotiations on both agreements had been concluded in November 2018.



The ATISA will enter into force 180 days after the signing. It aims at achieving an improvement of the regulatory standards for the services sector in the region, as well as a reduction of unnecessary barriers to services trade within ASEAN, and at increasing the respective regulatory transparency in each member state. The agreement, however, does not provide any clear commitment and enforcement schedule.


The fourth amendment to the ACIA protocol is an investment agreement in the ASEAN region consisting of four aspects of investment – namely protection, promotion, facilitation and liberalization of investment. ACIA contains a prohibition on performance requirements as well as elements of the trade related investment measures regime set by the World Trade Organization. It further switches from the current list of reservations (which are included in a single annex) to a “two-annex” negative-list approach. This means a split of the existing list so that non-conforming measures that are in effect will remain on the first annex, while the second annex will detail related sectors or subsectors exempt from liberalization. With this, the fourth protocol amendment shall create a stable and predictable climate for trade service and prepare for the integration and liberalization of the services sector in the future. The initial ACIA was signed in 2009, and entered into force on March 29, 2012. It aims at creating a free and open investment environment through the consolidation and expansion of previous agreements between the ASEAN member countries.


Liberalization provisions, however, do currently not yet appear ambitious, covering only the five main sectors of manufacturing, agriculture, fishery, forestry, mining and quarrying, as well as services incidental to these sectors. The focus of ACIA rather lies, among others, on national and most-favored-nation treatment, free capital transfers, restrictions of expropriation and respective compensation rules, cooperation on investment facilitation, transparency as well as on the implementation of a general investor-state arbitration. Previously, such ICSID proceedings were solely governed by bilateral investment protection treaties which ASEAN member states entered into individually.


The agreement’s scope of application requires for an investment to be undertaken either by a natural person originating from an ASEAN member state, or by an ASEAN-based legal entity being subject to further definition in ACIA. It should be noted that the ACIA specifies exact definitions of authorized investments and investors rather than overall investment regulations that any business type or investor may benefit from. German and other overseas entrepreneurs should note that a legal entity in an ASEAN member state which is controlled by a third-country national is generally included as an allowed investor, subject though to some conditions such as substantive business operations to be carried out by the company located in ASEAN. A mere holding entity would thus not be sufficient under ACIA-regulations.


It remains to be seen whether the revised agreements will lead to an enhanced market opening of ASEAN members for the commercial presence of foreign service providers. Their signing, however, indicates a joint political will to achieve the free movement of services within the ASEAN Economic Community, and may thus be regarded as a positive signal for foreign investors.


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