AGREEMENT ON INVESTMENT
AMONG
THE GOVERNMENTS OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
OF THE PEOPLE’S REPUBLIC OF CHINA
AND
THE MEMBER STATES OF
THE ASSOCIATION OF SOUTHEAST ASIAN
NATIONSPREAMBLE
The Governments of the Member States of the
Association of Southeast Asian Nations (“ASEAN”),
namely Brunei Darussalam, the Kingdom of Cambodia(“Cambodia”), the Republic of Indonesia (“Indonesia”),
the Lao People’s Democratic Republic (“Lao PDR”),
Malaysia, the Republic of the Union of Myanmar(“Myanmar”), the Republic of the Philippines(“Philippines”),
theRepublicofSingapore(“Singapore”), the Kingdom of Thailand (“Thailand”),
and the Socialist Republic of Viet Nam (“Viet Nam”)(hereinafter referred to collectively as the “ASEAN
Member States” and individually as an “ASEAN
Member State”), and the Government of the Hong
Kong Special Administrative Region of the People’s
Republic of China (“the Hong Kong Special
Administrative Region”), the latter having been duly
authorised to conclude this Agreement by the Central
People’s Government of the People’s Republic ofChina;
RECOGNISING the importanceinvestment flows among the Parties;ofenhancing

RECOGNISING that the creation of a business-friendly
environment will be conducive to the stimulation ofbusiness initiative for greater investment among theParties; andREAFFIRMING that this Agreement is part of a wider
process of economic integration and tradeliberalisation among the Parties, initiated by the
ASEAN - Hong Kong, China Free Trade Agreement;
HAVE AGREED AS FOLLOWS:

Article 1
Definitions
For the purposes of this Agreement:(a)Area in respect of:(i)each ASEAN Member State means
its territory; and

(ii)

the
Hong
Kong
SpecialAdministrative Region means theHong Kong Special Administrative
Region as delineated by the Order ofState Council of the People’s
Republic of China No. 221 dated 1
July 1997, which includes Hong Kong
Island, Kowloon and the New
Territories;(b)covered investment means, with respect
to a Party, an investment in its Area of aninvestor of any other Party, in existence asof the date of entry into force of thisAgreement or established, acquired or
expanded thereafter, and has been
admitted, according to its laws, regulations
and policies, and where applicable,
specifically approved in writing by its
competent authority;(c)freely usable currency means a freely
usable currency as determined by theInternational Monetary Fund (“IMF”) under
its Articles of Agreement and any
amendments thereto;

2

(d)

GATS means the General Agreement on
Trade in Services in Annex 1B to the WTO
Agreement;(e)investment 1 means every kind of asset
that an investor owns or controls, and thathas the characteristics of an investment,such as the commitment of capital or otherresources, the expectation of gains or
profits or the assumption of risk, including
but not limited to:(i)

movable and immovable property
and other property rights such asmortgages, liens or pledges;(ii)

shares,stocks,bonds
anddebentures and any other forms ofparticipation in a juridical person andrights derived therefrom;(iii)

intellectual property rights which arerecognised pursuant to the laws andregulations of a host Party;(iv)

claims to money or to any contractual
performance having financial value2;(v)

business concessions required for
conducting economic activities andhaving financial value conferred by

For greater certainty, the term “investment” does not include an order or judgment
entered in a judicial or administrative action or an arbitral award made in an arbitralproceeding.
1

For greater certainty, investment does not mean claims to money that arise solely
from:(i) commercial contracts for sale of goods or services; or(ii) the extension of credit in connection with such commercial contracts.
23

law or under a contract, including any
concession to search for, cultivate,
extract or exploit natural resources;
For the purpose of the definition of“investment”, returns that are invested shallbe treated as investments and any
alteration of the form in which assets areinvested or reinvested shall not affect theircharacter as investments;(f)

investor of a Party means a natural
person of a Party or a juridical person of a
Party that has made an investment in the
Area of another Party;(g)juridical person means any legal entity
duly constituted or otherwise organised
under the applicable law of a Party,
whether for profit or otherwise, andwhether
privately-ownedorgovernmentally-owned, including any
corporation, trust, partnership, joint
venture, sole proprietorship, association orsimilar organisation;(h)measures mean any measure by a Party,
whether in the form of a law, regulation,
rule, procedure, decision, administrative
action, or in any other form affecting
investors or investments, and include
measures taken by:(i) in the case of ASEAN Member States,(1) central, regional, or local
governments or authorities; and4

(2) non-governmental bodies inthe exercise of powers delegated bycentral,regional,
or
local
governments or authorities; and(ii) in the case of the Hong Kong Special
Administrative Region,(1) the Government of the Hong
Kong Special Administrative Region;and(2) non-governmental bodies inthe exercise of powers delegated by
the Government of the Hong Kong
Special Administrative Region;(i)natural person of a Party shall have themeaning as agreed by the Parties under
Article 22 (Work Programme);(j)newer ASEAN Member States means
Cambodia, Lao PDR, Myanmar and Viet
Nam;

(k)

Parties means the ASEAN Member States
and the Hong Kong Special Administrative
Region collectively;(l)

Party means an ASEAN Member State or
the Hong Kong Special Administrative
Region;(m)

returns mean amounts yielded by orderived from an investment including, but
not limited to, any profits, interests, capitalgains, dividends, royalties or fees;

5

(n)

TRIPS Agreement means the Agreement
on Trade-Related Aspects of Intellectual
Property Rights in Annex 1C to the WTO
Agreement, as revised or amended fromtime to time by a revision or amendmentthat applies to the Parties and including any
waiver in force among the Parties of any
provision thereof granted by Members of
the World Trade Organization inaccordance with the WTO Agreement; and(o)

WTO Agreement means the Marrakesh
Agreement Establishing the World Trade
Organization, done on 15 April 1994.
Article 2
Scope

1.
This Agreement shall apply to measures adopted
or maintained by a Party relating to:

2.

(a)

investors of any other Party; and(b)covered investments.

This Agreement shall not apply to:(a)government procurement;(b)subsidies or grants provided by a Party;(c)taxation measures except under Article 12(Transfers);(d)claims arising out of events which occurred,or claims which had been raised, prior to
the entry into force of this Agreement;

6

(e)

services supplied in the exercise ofgovernmental authority by the relevant
body or authority of a Party. For the
purposes of this Agreement, a service
supplied in the exercise of governmental
authority means any service which issupplied neither on a commercial basis nor
in competition with one or more service
suppliers; and(f)measures adopted or maintained by a
Party to the extent that they are covered by
Chapter 8 (Trade in Services) of theASEAN - Hong Kong, China Free Trade
Agreement.

3.
Notwithstanding subparagraph 2 (f), Article 5(Treatment of Investment), Article 10 (Expropriation
and Compensation), Article 11 (Compensation forLosses or Damages), Article 12 (Transfers), Article 14(Subrogation) and Article 20 (Settlement of Investment
Disputes between a Party and an Investor) shall apply,
mutatis mutandis, to any measure affecting the supply
of a service by a service supplier of a Party throughcommercial presence in the Area of any other Party but
only to the extent that any such measure relates to acovered investment and an obligation under thisAgreement regardless of whether or not such service
sector is scheduled in the latter Party’s Schedule ofCommitments under Chapter 8 (Trade in Services) of
the ASEAN - Hong Kong, China Free Trade Agreement.
Article 3
National Treatment3
Each Party shall accord to investors of any other Party,
For greater certainty, the titles of Article 3 (National Treatment) and Article 4(Most-Favoured-Nation Treatment), and references to the same in this Agreement,
have no implication on the status of the Hong Kong Special Administrative Region asa part of the People’s Republic of China.
37and to covered investments of investors of any otherParty, treatment no less favourable than that it accords,
in like circumstances, to its own investors and toinvestments of its own investors with respect to the
management, conduct, operation, use, and sale orother disposition of investments in its Area.

Article 4
Most-Favoured-Nation Treatment
1.
Each Party shall accord to investors of anotherParty treatment no less favourable than that it accords,
in like circumstances, to investors of any other Party ora non-Party with respect to the management, conduct,
operation, use, and sale or other disposition of
investments in its Area.
2.
Each Party shall accord to covered investments
treatment no less favourable than that it accords, in likecircumstances, to investments in its Area of investorsof any other Party or a non-Party with respect to the
management, conduct, operation, use, and sale orother disposition of investments in its Area.
3.
The treatment, as set forth in paragraphs 1 and2, shall not include:(a)any preferential treatment accorded toinvestors or their investments under any
existing bilateral, regional or international
agreements or arrangements or any formsof economic or regional cooperation withany non-Party; and(b)any existing or future preferential treatment
accorded to investors or their investments8under any agreement or arrangement
between or among ASEAN Member
States, or between or among the Hong
Kong Special Administrative Region andother customs territories of the People’s
Republic of China.
4.
Notwithstanding paragraphs 1 and 2, if a Party
accords more favourable treatment to investors ofanother Party or a non-Party or their investments byvirtue of any future agreement or arrangement to which
the Party is a party, it shall not be obliged to accord
such treatment to investors of any other Party or theirinvestments. However, upon request from any otherParty, it shall accord adequate opportunity to negotiate
the benefits granted therein.
5.
For greater certainty, the obligation in this Article
does not encompass a requirement for a Party toextend to investors of another Party dispute resolution
procedures other than those set out in this Agreement.
Article 5Treatment of Investment
1.
Each Party shall accord to covered investments
fair and equitable treatment and full protection andsecurity.
(a)“fair and equitable treatment” requires eachParty not to deny justice in any legal oradministrative proceedings in accordancewith the principle of due process of law;(b)“full protection and security” requires eachParty to take such measures as may bereasonably necessary to ensure thephysical protection and security of thecovered investment; and9(c)the concepts of “fair and equitable
treatment” and “full protection and security”
do not require treatment in addition to or
beyond that which is required undercustomary international law, and do notcreate additional substantive rights.

3.
A determination that there has been a breach ofanother provision of this Agreement, or of a separate
international agreement, does not establish that there
has been a breach of this Article.
Article 6
Non-Conforming Measures4
1.
Article 3 (National Treatment) and Article 4(Most-Favoured-Nation Treatment) shall not apply to:
(a)

(b)

4

any existing non-conforming
maintained by a Party:

measure(i)in the case of an ASEAN Member
State, at the central or regional levelsof government, as set out by that
Party in its Schedule to List 1 under
Annex
1(Schedulesof
Reservations), or at the local level ofgovernment; and(ii)

in the case of the Hong Kong Special
Administrative Region, as set out in
its Schedule to List 1 under Annex 1(Schedules of Reservations);

the continuation or prompt renewal of any
non-conforming measure referred to in
subparagraph 1 (a); orThis Article is subject to Article 22 (Work Programme).

10

(c)

an amendment to any non-conforming
measure referred to in subparagraph 1 (a)to the extent that the amendment does notdecrease the conformity of the measure, as
it existed as of the date of entry into forceof that Party's Schedule to List 1 under
Annex 1 (Schedules of Reservations), with
Article 3 (National Treatment) and Article 4(Most-Favoured-Nation Treatment).

2.
Article 3 (National Treatment) and Article 4(Most-Favoured-Nation Treatment) shall not apply to
any measure that a Party adopts or maintains withrespect to sectors, subsectors or activities as set out in
its Schedule to List 2 under Annex 1 (Schedules ofReservations).
3.
Procedures for the modification of the Schedules
are to be agreed pursuant to Article 22 (WorkProgramme).
4.
Article 3 (National Treatment) and Article 4(Most-Favoured-Nation Treatment) shall not apply to
any measure that falls within Article 5 of the TRIPS
Agreement, and any measure that is covered by an
exception to, or derogation from, the obligations under
Article 3 or Article 4 of the TRIPS Agreement.
Article 7
Transparency
1.
Each Party shall make publicly available orprovide upon request of another Party, its laws,
regulations, procedures and administrative guidelinesof general application as well as any of its international
investment agreements in force which may affect thecovered investments of investors of any Party.

11

2.
Nothing in this Agreement shall require a Party tofurnish or allow access to any confidential or
proprietary
information,
includinginformation
concerning
particularinvestorsorcoveredinvestments, the disclosure of which would impede law
enforcement, or be contrary to public interest or to its
laws protecting confidentiality, or prejudice legitimate
commercial interests of particular investors, public or
private.
Article 8
Security Exceptions
1.

Nothing in this Agreement shall be construed to:(a)require a Party to furnish or allow access toany information, the disclosure of which it
considers contrary to its essential security
interests;(b)

prevent a Party from taking any actions
which it considers necessary for theprotection of its essential security interests:(i)relating to the traffic in arms,
ammunition and implements of war
and to such traffic in other goods andmaterials or relating to the supply ofservices as carried on, directly or
indirectly, for the purpose of
supplying or provisioning any military
establishments;(ii)

taken in time of war or otheremergency
indomesticorinternational relations;(iii)

relating to fissionable and fusionable
12

materials or the materials from which
they are derived;
(iv)

(c)

taken to protect critical public
infrastructures,
includingcommunication, power and water
infrastructures,fromdeliberateattempts intended to disable ordegrade such infrastructures; orprevent a Party from taking any action inpursuance of the obligations that apply to it
under the United Nations Charter for the
maintenance of international peace andsecurity.

2.
The ASEAN - Hong Kong, China Free Trade Area
Joint Committee (“AHKFTA Joint Committee”)
established pursuant to Article 1 (AHKFTA Joint
Committee) of Chapter 12 (Institutional Provisions) of
the ASEAN - Hong Kong, China Free Trade Agreement
shall be informed to the fullest extent possible ofmeasures taken under subparagraphs 1 (b) and 1 (c)and of their termination.
Article 9
General Exceptions
1.
Subject to the requirement that such measures
are not applied in a manner which would constitute ameans of arbitrary or unjustifiable discrimination
between the Parties or their investors where likeconditions prevail, or a disguised restriction on
investors of another Party or their investments, nothing
in this Agreement shall be construed to prevent the
adoption or enforcement by any Party of measures:(a)necessary to protect public morals or to13

maintain public order5;(b)necessary to protect human, animal orplant life or health;(c)necessary to secure compliance with laws
or regulations which are not inconsistent
with the provisions of this Agreement
including those relating to:(i)the prevention of deceptive andfraudulent practices or to deal withthe effects of a default on contracts;(ii)

the protection of the privacy of
individuals in relation to theprocessing and dissemination of
personal data and the protection ofconfidentiality of individual records
and accounts; or(iii)

safety;(d)inconsistent with Article 3 (National
Treatment), provided that the difference intreatment is aimed at ensuring theequitable or effective imposition orcollection of direct taxes in respect ofinvestors of any other Party or theirinvestments6;(e)

imposed for the protection of nationaltreasuresofartistic,
historicorarchaeological value; or

The public order exception may be invoked by a Party only where a genuine andsufficiently serious threat is posed to one of the fundamental interests of society.
5

For the purpose of this subparagraph, footnote 6 of Article XIV of GATS isincorporated into and shall form part of this Agreement, mutatis mutandis.

6

14

(f)

relating to the conservation of exhaustible
natural resources if such measures are
made effective in conjunction withrestrictions on domestic production or
consumption.

2.
Insofar as measures affecting the supply offinancial services are concerned, paragraph 2(Domestic Regulation) of the Annex on Financial
Services of GATS is incorporated into and shall form
part of this Agreement, mutatis mutandis.
Article 10
Expropriation and Compensation7
1.
A Party shall not expropriate covered
investments of an investor of any other Party, either
directly or through measures equivalent to
expropriation (“expropriation”), except:(a)for a public purpose;(b)in accordance with due process of law;(c)on a non-discriminatory basis; and(d)upon payment of compensation inaccordance with the requirements of this
Article.

2.
For the purpose of subparagraph 1 (d),compensation shall:(a)7

be equivalent to the fair market value (if the
expropriating Party is an ASEAN Member

This Article is subject to Annex 2 (Expropriation and Compensation).

15

State) or real value (if the expropriating
Party is the Hong Kong Special
Administrative Region) of the expropriatedinvestment at the time when the
expropriation was publicly announced8, or
when
the
expropriation
occurred,whichever is applicable;(b)

not reflect any change in value occurring
because the intended expropriation had
become known earlier;(c)be settled and paid without undue delay9;
and

(d)

be effectively realisable and freelytransferable between the Areas of theParties.

3.
In the event of delay, the compensation referred
to in subparagraph 1 (d) shall include appropriate
interest10 at the prevailing commercial rate. The
compensation, including any accrued interest, shall bepayable either in the currency of the expropriating Party,
or if requested by the investor, in a freely usable
currency.
4.

Notwithstanding paragraphs 1, 2, and 3, any

ln the case of the Philippines, the time when or immediately before theexpropriation was publicly announced refers to the date of filing of the Petition for
Expropriation.
8

The Parties understand that there may be legal and administrative processes thatneed to be observed before payment can be made.
9

For Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines,
Thailand and Viet Nam, in the event of delay, the rate and procedure forpayment of interest of compensation for expropriation of covered
investments of investors of another Party shall be determined inaccordance with their laws, regulations and policies provided that suchlaws, regulations and policies are applied on a non-discriminatory basis.
1016

measure of expropriation relating to land shall be as
defined in the existing laws and regulations of the
expropriating Party on the date of entry into force of thisAgreement, and shall be, for the purposes of and upon
payment of compensation, in accordance with theaforesaid laws and regulations. Such compensation
shall be subject to any subsequent amendments to theaforesaid laws and regulations relating to the amountof compensation where such amendments follow thegeneral trends in the market value of the land.
5.
For greater certainty, this Article does not apply
to the issuance of compulsory licences granted inrelation to intellectual property rights, or to therevocation, limitation, or creation of intellectual
property rights, to the extent that such issuance,
revocation, limitation, or creation is consistent with
TRIPS Agreement11.
Article 11Compensation for Losses or Damages
Each Party shall accord to investors of another Party
that have suffered loss or damage relating to theircovered investments in the Area of the former Party
owing to war, armed conflict, a state of emergency,
revolution, insurrection, civil strife or any other similar
event in that former Party, treatment, as regards
restitution, indemnification, compensation or any othersettlement, that is no less favourable than that which it
accords, in like circumstances, to its own investors or
to investors of a non-Party.

The Parties recognise that, for the purposes of this Article, the term “revocation”
of intellectual property rights includes the cancellation or nullification of suchrights, and the term “limitation” of intellectual property rights includes exceptions
to such rights.

1117

Article 12
Transfers
1.
Each Party shall allow all transfers relating to acovered investment to be made freely and without
delay into and out of its Area. Such transfers include:(a)contributions to capital, including the initial
contribution;(b)

profits, capital gains, dividends, royalties,
licence fees, technical assistance andtechnical and management fees, interest
and other current income accruing from any
covered investment;(c)proceeds from the total or partial sale or
liquidation of any covered investment;(d)payments made under a contract, including
a loan agreement;(e)payments made pursuant to Article 10(Expropriation and Compensation) and
Article 11 (Compensation for Losses or
Damages);(f)payments arising out of the settlement of adispute
by
any
means
including
adjudication, arbitration or the agreementof the parties to the dispute; and(g)earnings and other remuneration of
personnel engaged from abroad inconnection with that covered investment.

2.
Each Party shall allow such transfers relating toa covered investment to be made in a freely usable18

currency at the market rate of exchange prevailing at
the time of transfer.
3.
Notwithstanding paragraphs 1 and 2, a Party
may prevent or delay a transfer through the equitable,
non-discriminatory, and good faith application of its
laws and regulations relating to any of the following:(a)bankruptcy, insolvency, or the protection of
the rights of creditors;(b)issuing, trading, or dealing in securities,
futures, options, or derivatives;(c)criminal or penal offences and the recoveryof the proceeds of crime;(d)financial reporting or record keeping oftransfers when necessary to assist law
enforcement or financial regulatory
authorities;(e)ensuring compliance with orders or
judgments in judicial or administrative
proceedings;(f)taxation;(g)social security, public retirement,
compulsory savings schemes;(h)severance entitlements of employees; and(i)requirement to register and satisfy othertransfer formalities imposed by the Central
Bank or other relevant authorities of a Party.

or

4.
Nothing in this Agreement shall affect the rights
and obligations that apply to the Parties under the19

Articles of Agreement of the IMF, including the use of
exchange actions which are in conformity with the
Articles of Agreement of the IMF, provided that a Party
shall not impose restrictions on any capital transactions
inconsistently with its specific commitments regarding
such transactions, except under Article 13 (Temporary
Safeguard Measures) or at the request of the IMF.
Article 13
Temporary Safeguard Measures
1.
A Party may adopt or maintain measures notconforming with its obligations under Article 3 (National
Treatment) relating to cross-border capital transactions
and Article 12 (Transfers):

2.

(a)

in the event of serious balance of payments
and external financial difficulties or threat
thereof; or

(b)

in
cases
where,
inexceptional
circumstances, movements of capitalcause or threaten to cause serious
difficulties
formacroeconomic
management, in particular monetary andexchange rate policies.

The measures referred to in paragraph 1 shall:(a)be consistent with
Agreement of the IMF;(b)

avoid unnecessary damage
commercial, economic andinterests of another Party;(c)

not exceed those necessary to deal with
thecircumstances
described
in
20

the

Articlesofto thefinancialparagraph 1;(d)be temporary and phased out progressively
as the situation specified in paragraph 1
improves; and(e)be applied such that any one of the otherParties is treated no less favourably thanany other Party or non-Party.

3.
Any measures adopted or maintained underparagraph 1 or any changes therein shall be promptly
notified to the other Parties.
Article 14
Subrogation
1.
If a Party or an agency of a Party makes apayment to an investor of that Party under a guarantee,
a contract of insurance or other form of indemnity it has
granted on non-commercial risks in respect of acovered investment, the host Party shall recognise thesubrogation or transfer of any right or claim in respectof such investment. The subrogated or transferred
right or claim shall not be greater than the original rightor claim of the investor.
2.
Where a Party or an agency of a Party has madea payment to an investor of that Party and has takenover rights and claims of the investor, that investor shallnot, unless authorised to act on behalf of the Party or
the agency making the payment, pursue those rights
and claims against the host Party.
3.
In the exercise of subrogated rights or claims, aParty or the agency of the Party exercising such rights
or claims shall disclose the coverage of the claims

21arrangement with its investors to the host Party.
Article 15
Promotion of Investment
The Parties shall cooperate in promoting andincreasing awareness of the region as an investmentarea through, among others:(a)increasing
Parties;investments

betweenthe(b)organising investment promotion activities;(c)promoting business matching events;(d)organising and supporting the organisationof various briefings and seminars on
investment
opportunities
andon
investment laws, regulations and policies;
and

(e)

conducting information exchanges on otherissues of mutual concern relating toinvestment promotion and facilitation.
Article 16
Facilitation of Investment

Subject to their laws and regulations, the Parties shallcooperate to facilitate investments among the Parties
through, among others:(a)creating the necessary environment for all
forms of investment;(b)simplifying

procedures
22

forinvestment

applications and approvals;(c)promoting dissemination of investment
information, including investment rules,
regulations, policies and procedures; and(d)establishing one-stop investment centres in
the respective host Parties to provide
assistance and advisory services to thebusiness sectors including facilitation ofoperating licences and permits.
Article 17

Special Formalities and Disclosure of Information
1.
Nothing in Article 3 (National Treatment) or
Article 4 (Most-Favoured-Nation Treatment) shall be
construed to prevent a Party from adopting ormaintaining a measure that prescribes special
formalities in connection with covered investments,
including a requirement that covered investments belegally constituted under the laws or regulations of theParty, provided that such formalities do not materially
impair the protections afforded by a Party to investorsof another Party and covered investments pursuant tothis Agreement.
2.
Notwithstanding Article 3 (National Treatment) or
Article 4 (Most-Favoured-Nation Treatment), a Party
may require an investor of another Party, or a covered
investment, to provide information concerning thatinvestment solely for informational or statistical
purposes. The Party shall protect to the extent
possible any confidential information which has been
provided from any disclosure that would prejudicelegitimate commercial interests of the investor or thecovered investment. Nothing in this paragraph shall be
construed to prevent a Party from otherwise obtaining23

or disclosing information in connection with theequitable and good faith application of its law.
Article 18
Special and Differential Treatment for the Newer
ASEAN Member States
In order to increase the benefits of this Agreement for
the newer ASEAN Member States, and in accordancewith the objectives set out in the Preamble, the Parties
recognise the importance of according special anddifferential treatment to the newer ASEAN Member
States under this Agreement, through:(a)technical assistance to strengthen theircapacity in relation to investment policies
and promotion, including in areas such as
human resource development;(b)access to information on the investment
policies of other Parties, businessinformation, relevant databases andcontact points for investment promotion
agencies;(c)commitments in areas of interest to thenewer ASEAN Member States; and(d)recognising that commitments by eachnewer ASEAN Member State may be madein accordance with its stage ofdevelopment.

24

Article 19
Denial of Benefits
1.
to:

A Party may deny the benefits of this Agreement(a)an investor of another Party that is ajuridical person of such other Party and toinvestments of that investor if an investor ofa non-Party owns or controls the juridical
person and the juridical person has no
substantive business operations in the
Area of such other Party;(b)

an investor of another Party that is ajuridical person of such other Party and toinvestments of that investor if an investor ofthe denying Party owns or controls thejuridical person and the juridical person has
no substantive business operations in the
Area of any Party, other than the denying
Party; or(c)an investor of another Party that is ajuridical person of such other Party and toinvestments of that investor if persons of a
non-Party own or control the juridical
person and the denying Party adopts ormaintains measures with respect to the
non-Party or a person of the non-Party thatprohibit transactions with the juridical
person or that would be violated or
circumvented if the benefits of thisAgreement were accorded to the juridical
person or to its investments.

2.
Notwithstanding paragraph 1 and subject to priornotification to the relevant Party, Thailand may, under25

its applicable laws and regulations, deny the benefitsof this Agreement relating to the admission,
establishment, acquisition and expansion of
investments to an investor of another Party that is ajuridical person of such Party and to investments ofsuch an investor where Thailand establishes that thejuridical person is owned or controlled by natural
persons or juridical persons of a non-Party or thedenying Party.
3.

In the case of Thailand, a juridical person is:(a)“owned” by natural persons or juridical
persons of a Party or a non-Party if morethan 50 percent of the equity interest in it isbeneficially owned by such persons;(b)“controlled” by natural persons or juridical
persons of a Party or non-Party if such
persons have the power to name a majorityof its directors or otherwise to legally direct
its actions.

4.
Without prejudice to paragraph 1, the Philippines
may deny the benefits of this Agreement to investors ofanother Party and to investments of that investor,
where the Philippines establishes that such investor
has made an investment in breach of the provisions ofCommonwealth Act No. 108, entitled “An Act to Punish
Acts of Evasion of Laws on the Nationalization of
Certain Rights, Franchises or Privileges”, as amended
by Presidential Decree No. 715, otherwise known as“The Anti-Dummy Law”, as may be amended.
5.
A Party's right to deny the benefits of thisAgreement as provided for in this Article may be
exercised at any time, including after the institution ofarbitration proceedings in accordance with Article 20(Settlement of Investment Disputes between a Party
26

and an Investor).
Article 20
Settlement of Investment Disputes between a
Party and an Investor
This Article shall be agreed by the Parties under Article
22 (Work Programme).
Article 21
Consultations and Dispute Settlement
between the Parties
Chapter 13 (Consultations and Dispute Settlement) of
the ASEAN - Hong Kong, China Free Trade Agreement
shall apply mutatis mutandis to this Agreement.
Article 22
Work Programme
1.

The Parties shall enter into discussions on:(a)Annex 1 (Schedules of Reservations);(b)

procedures for the modification of Annex 1(Schedules of Reservations);(c)the application of Article 10 (Expropriation
and Compensation) to taxation measuresthat constitute expropriation;(d)

the definition of “natural person of a Party”;
and

(e)

Article 20 (Settlement of Investment
Disputes between a Party and an Investor).
27

2.
The Parties shall conclude the discussions
referred to in paragraph 1 within one year of the dateof entry into force of this Agreement under paragraph 1
or 2 of Article 26 (Entry into Force), unless otherwise
agreed by the Parties. The discussions shall beoverseen by the AHKFTA Joint Committee.
3.
Annex 1 (Schedules of Reservations) shall enter
into force on a date to be agreed by the Parties.
4.
Article 3 (National Treatment) and Article 4 (MostFavoured-Nation Treatment) shall not apply until
Annex 1 (Schedules of Reservations) enters into force
in accordance with paragraph 3.
Article 23
Relation between this Agreement andthe ASEAN - Hong Kong, China Free Trade
Agreement
1.
Unless otherwise specified in this Agreement,
provisions in the ASEAN - Hong Kong, China Free
Trade Agreement shall not apply to this Agreement.
2.
In the event of any inconsistency between thisAgreement and the ASEAN - Hong Kong, China Free
Trade Agreement, the Parties shall proceed to holdconsultations within the AHKFTA Joint Committee
pursuant to its functions under Article 1 (AHKFTA
Joint Committee) of Chapter 12 (Institutional
Provisions) of the ASEAN - Hong Kong, China Free
Trade Agreement with a view to finding a mutuallysatisfactory solution.

28

Article 24
Annexes and Footnotes
The Annexes and footnotes to this Agreement
constitute an integral part of this Agreement.
Article 25
Amendments
This Agreement may be amended by the Parties byagreement in writing.
Article 26
Entry into Force1.
This Agreement shall be subject to ratification,
acceptance or approval. The instrument of ratification,
acceptance or approval by a Party shall be deposited
with the depositary who shall promptly notify all otherParties of each deposit. This Agreement shall enter
into force on 1 January 2019 for the Parties that havedeposited their instruments of ratification, acceptanceor approval provided that the Hong Kong Special
Administrative Region and at least four ASEAN
Member States have deposited their instruments ofratification, acceptance or approval.
2.
If this Agreement does not enter into force on thedate referred to in paragraph 1, it shall enter into force,for the Parties that have deposited their instruments ofratification, acceptance or approval, 60 days after thedate by which the Hong Kong Special Administrative
Region and at least four ASEAN Member States havedeposited their instruments of ratification, acceptanceor approval.

29

3.
After the entry into force of this Agreement
pursuant to paragraph 1 or 2, this Agreement shallenter into force for any other Party 60 days after thedate of the deposit of its instrument of ratification,
acceptance or approval.
4.
Notwithstanding the entry into force of thisAgreement for a Party pursuant to paragraph 1, 2, or 3of this Article, the rights and obligations in thisAgreement except Article 28 (Withdrawal andTermination) shall not take effect for the Party unlesssuch Party is, at the same time, a party to the ASEAN– Hong Kong, China Free Trade Agreement.
Article 27
DepositaryThis Agreement including its amendments shall bedeposited with the Secretary-General of ASEAN, whoshall promptly furnish a certified copy thereof to eachParty.
Article 28
Withdrawal and Termination
1.
Any Party may withdraw from this Agreement bygiving 180 days’ advance notice in writing to thedepositary who shall promptly notify the same to allother Parties.
2.
Any other Party may request in writing,consultations concerning any matter that would arise
from the withdrawal within 60 days after the date ofreceipt of the notification in paragraph 1 from thedepositary. The requested Party shall enter into
consultations in good faith upon receipt of the request.

30

3.
to:

Any Party giving a notice of withdrawal pursuant(a)paragraph 1 to withdraw from thisAgreement shall be deemed to have given
a notice of withdrawal at the same time
under paragraph 1 of Article 6 (Withdrawal
and Termination) of Chapter 14 (Final
Provisions) of the ASEAN - Hong Kong,
China Free Trade Agreement; and(b)paragraph 1 of Article 6 (Withdrawal andTermination) of Chapter 14 (Final
Provisions) of the ASEAN – Hong Kong,
China Free Trade Agreement shall bedeemed to have given a notice of
withdrawal at the same time underparagraph 1 to withdraw from thisAgreement.

4.
This Agreement shall terminate if, pursuant toparagraph 1:(a)the Hong Kong Special Administrative
Region withdraws; or(b)this Agreement is in force for less than fourASEAN Member States.

5.
The ASEAN - Hong Kong, China Free Trade
Agreement shall automatically terminate upon thetermination of this Agreement pursuant to paragraph 4.
Article 29
Review
The Parties shall undertake a general review of thisAgreement with a view to furthering its objectives within31three years from the date of entry into force of thisAgreement, and every five years thereafter, unlessotherwise agreed by the Parties.

IN WITNESS WHEREOF, the undersigned, being duly
authorised by their respective Governments, havesigned this Agreement.
DONE at,, thisin a single original in the English language.

For the Government ofBrunei Darussalam,

For the Government of theHong Kong Special
Administrative Region of thePeople’s Republic of China

PEHIN DATO LIM JOCK SENG
Minister at the Prime Minister's
Office and Second Minister of
Foreign Affairs and Trade
For the Government of
the Kingdom of Cambodia

PAN SORASAK
Minister of Commerce

32

EDWARD YAU TANG-WAH
Secretary for Commerce andEconomic Development

For the Government of
the Republic of Indonesia

ENGGARTIASTO LUKITA
Minister of Trade
For the Government of
the Lao People’s Democratic
Republic

KHEMMANI PHOLSENA
Minister of Industry and Commerce
For the Government of
Malaysia

DATO’ SRI MUSTAPA MOHAMED
Minister of International Trade andIndustry33

For the Government of
the Republic of
the Union of Myanmar

KYAW WIN
Union Minister for Planningand FinanceFor the Government of
the Republic of the Philippines

RAMON M. LOPEZ
Secretary of Trade and Industry

For the Government of
the Republic of Singapore

LIM HNG KIANG
Minister for Trade and Industry(Trade)34

For the Government of
the Kingdom of Thailand

APIRADI TANTRAPORN
Minister of Commerce
For the Government of
the Socialist Republic of Viet Nam

TRAN TUAN ANH
Minister of Industry and Trade35

Annex 1
Schedules of Reservations
This Annex shall be agreed by the Parties under Article
22 (Work Programme).

36

Annex 2
Expropriation and Compensation
1. An action or a series of related actions by a Partycannot constitute an expropriation unless it interfereswith a tangible or intangible property right or property
interest12 under the laws or regulations of that Party, ina covered investment.
2. Paragraph 1 of Article 10 (Expropriation andCompensation) addresses two situations:(a)the first situation is direct expropriation,
where a covered investment is directly
expropriated through formal transfer of title
or outright seizure; and(b)the second situation is where an action orseries of related actions by a Party has aneffect equivalent to direct expropriation
without formal transfer of title or outrightseizure.

3. The determination of whether an action or seriesof related actions by a Party, in a specific fact situation,
constitutes an expropriation of the type referred to in
subparagraph 2 (b) requires a case-by-case and factbased inquiry that considers, among other factors:(a)the economic impact of the government
action, although the fact that an action orseries of related actions by a Party has anadverse effect on the economic value of acovered investment, standing alone, does

12
For greater certainty, “property interest” refers to such property interest as may be
applicable under the law of that Party.

37not establish that such an expropriation
has occurred;(b)whether the government action breaches
the government’s prior binding written
commitment to the investor whether bycontract, licence or other legal document;
and

(c)

the character of the government action,
including its objective and whether theaction is disproportionate to the public
purpose.

4.
Non-discriminatory regulatory actions by a Party
that are designed and applied to achieve legitimate
public welfare objectives, such as the protection of
public health, safety, and the environment, do notconstitute expropriation of the type referred to in
subparagraph 2 (b).

38