Table 1 International Investment Arrangements National level Regional level Global National Law Bilateral Treaty National investment laws and regulations Treaties of Friendship Commerce and Navigation 1961 OECD Code of liberalisation of Capital Movements 1948 Charter Bilateral Investment Treaty, Bilateral Double Taxation Treaties 1961 OECD Code of Liberalisation of Current Invisible Operations 1958 Convention on the Recognition and Enforcement of Foreign Arbital Awards 1963 OECD Model Tax Convention on Income and on Capital 1962 UN GA Resolution 1803 (XVII) : Permanent Sovereignty over Natural Resources 1967 Revised Recommendation of the OECD Council Concerning Co-operation Between Member Countries on Anticompetitive Practices Affecting International Trade 1965 Convention on the Settlement of Investment Disputes between States and Nationals of other States 1967 Draft Convention on the Protection of Foreign Property 1974 UN GA Resolution 3201 (S-VI) : Declaration on the Establishment of a New International Economic Order and UN GA Resolution 3202 (S-VI) : Programme of Action on the Establishment of a New International Economic
1969 Agreement on Andean Subregional Integration 1974 UN GA Resolution 3281 (XXIX) : Charter of Economic Rights and Duties of States 1970 Agreement on Investment and Free Movement of Arab Capital among Arab Countries 1976 Arbitration of the UN Commission on International Trade Law 1973 Agreement on the Harmonisation of Fiscal Incentives to Industry (Caribbean Common Market) 1977 ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy 1973 Treaty Establishing the Community 1979 UN Draft International Agreement on Illicit Payments 1976 OECD Declaration on International Investment and Multinational Enterprises 1979 UN Model Double Taxation Convention between Developed and Developing Countries 1980 Guidelines Governing the Protection of Privacy and Trans border Flows of Person Data 1980 The Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices 1987 Revised Basic Agreement on ASEAN Industrial Joint Ventures 1983 Draft UN Code of Conduct on Transnational Corporations 1987 Agreement Among the Governments of the ASEAN Countries for the Promotion and Protection of Investment 1985 Draft International Code of Conduct on the Transfer of Technology 1994 Protocol of Colonia for the Reciprocal Promotion and Protection of Investment in the MERCOSUR 1985 Convention Establishment the Multilateral Investment Guarantee Agency 1994 Protocol on Promotion and Protection of Investment from States not Parties to MERCOSUR 1992 IBRD Guidelines on the Treatment of Foreign Direct Investment 1994 APEC Non-Binding Investment Principles 1994 General Agreement on Trade in Services, Multilateral Agreement on Trade in Goods, Agreement on Trade-Related Investment Measures, Agreement on Trade-Related
Law No.6,1968 Law No.12, 1970 Govt regulation, Presidential Decrees, Ministerial Regulations, Decision, Decree of Investment Board (ICB) 54 of 1993, Foreign Investment Act 1994) (Presidential Decree No. 34 of 1992) television broadcasting (Presidential Decree No. 54 of 1993, Foreign Investment Act 1994) (Presidential Decree No. 54, 1993, Decree of the Ministry of Industry No. 114/M/SK/1993, Decree of the Ministry of Finance No. 645/KMK 01/1993) ( Law No. 6, 1968, Act No. 12, 1970, Guidelines of the Capital Investment Board The Promotion of Investment Act (PIA) of 1986, The Industrial Act (ICA) of 1975, revised in 1986, MITI Regulations, The Foreign Investment Committee Guidelines(FIC) depending on proportion of production exported (ICA 1975, MITI regulations) No restriction (except for some threats to environment) certain parts or components industries ( 1975) local content requirements in motor vehicles, export requirement depending on level of foreign equity (ICA 1975, MITI regulations 1991) Pioneer Status, depending on local content linkages, value added, MTS ratio, export manufacture, technology, R&D and HRD (The Promotion of Investment Act, 1986, Malaysian Income Tax Act, 1967 (MITA) Foreign Investments Act of 1991 R.A. 7042 as amended by RA 8179 subject to negative (Foreign Investment Act of 1991, Second Regular Foreign Investment Negative List pursuant to executive order) right, up to 75 years, hold land subject to approval and conditions (the Investors’ Lease Act of 1993, President Decree No. 1648) retail trade, mass media, engineering, rice and corn production, defence related activities, small and medium-size domestic market enterprises, import and wholesale activities Foreign Investment Act of 1991, Nationalisation Laws and Other Requirements, Various Republic Acts (RA), Constitution)) content requirement , export performance requirements and technology transfer requirements in certain sectors, including motor vehicles (the Car Development Program, Commercial Vehicle Development Program, the Motorcycle Development Program Investment incentives Tax and incentives (The Omnibus Investments Code of 1987, RA 6810, BOI’s Official Order No. 6 of Order No. 470: Tariff f Reform of 1991) Company Act, The Business Registration Act, generally is no restriction except in banks, air lines and shipping No restriction arms and ammunitions manufacture, electricity, gas, and water, newspaper No performance requirements Pioneer Status, Package of tax incentives
Acts under administration of Economic Development Board (Company Act, the Banking Act, Monetary Authority of Act) publishing, airlines and shipping (the Control of Manufacturer Act, and the National Security Act, the Banking Act) (Economic Expansion Incentives Relief from Income Tax Act, Income Tax Act Investment Promotion Act B.E. 2520 (1977)amended by the Investment Promotion Act (No. 2) B.E. 2534 (1997), the Business Law of 1972 in restricted sectors or if less than 80% of output exported (permission of the Board of investment Promotion, permission of the Ministry of Commerce, Civil and Commercial Code, Investment Promotion Act Generally foreigners are not allow to own land unless promoted by the Board of Investment (Land Code, the Condominium Act, the Investment Promotion Act, Petroleum Act of 197, and the Industrial Estate Authority of Act) banking and finance, insurance, certain public utilities and military goods, agriculture, animal husbandry, fishery (the Alien Business Law, 1972, Commercial Banking Act, 1962, Act on the Undertaking of Finance Business, Securities Business and Credit Foncier Business, 1979 and the Securities and Exchange Act, 1992, Life Insurance Act, 1992 and the Casualty Insurance Act, 1992, Thai vessel Act, 1971 local content requirements in motor vehicles, pasteurised and skimmed milk, and various other manufacturing industries, domestic sales and export requirements in certain sectors (the Factory Act(B.E. 2535), The Investment Promotion Act (B.E. 2520) Tax and Incentives (Investment Promotion Act, 1977, 1997, BOI announcement, BOI Guidelines: Criteria for granting Tax and Duty Privileges for promoted Projects, 1993, Revenue Code) Source: Compiled by the author from national legislation. Table 3 An Example of the Bilateral Investment Agreement Model Contracting Parties and date of agreement Scope of application Admission and Treatment Expropriation and Compensation Disputes settlement Other main points Investor Investment The and Nationals and Legal persons legally constituted under applicable laws and regulations of a party Investment every kind of investment in the territory of one party owned or controlled directly or Admission Pre-entry and Post-entry Expropriation and Compensation Dispute settlement (1) initially seek solution (1) MFN and National treatment will not extend to the other party because the other party
whether or not organised for pecuniary gain, or privately or governmentally owned or controlled. indirectly by nationals or companies of the other party treatment or national treatment, whichever is the most favourable, except the agreed annex issues Investment shall not be expropriated or nationalised either directly or indirectly through measures tantamount to expropriation or nationalisation except for a public purpose, in a manner, upon payment of prompt, adequate and effective compensation through consultation and negotiation (2) submit the dispute to the court or administrative tribunals of the party that is a party to the dispute or in accordance with the agreed procedure (3) submit to the ICSID accorded to any regional arrangement, free trade area, custom union or multilateral international agreement (2) the treaty shall not dero gate from laws, regulations and practice of either party; international obligation; obligations assumed by either party Source: compiled from the BIT between the and by the author. Table 4 Comparison of some Investment Agreements concluded between ASEAN countries and some European countries, and the ASEAN Agreement for the Promotion and Protection of Investments Contracting Parties and date of agreement Scope of application Admission and Treatment Expropriation and Compensation Disputes settlement main points Investors Investment and On British side: British companies and nationals including citizen of , colonies and British subjects On side: Indonesian companies and nationals Only investment has been granted admission in accordance with foreign investment law, within the territory of contracting parties only Admission Pre - entry subject to foreign investment law and regulations Treatment post - entry MFN treatment Expropriation for a public purpose Compensation market value, without undue delay Refer to ICSID On the British side, there is territorial extension to cover such territories, for whose international relations the are responsible and National or company of a contracting party who Only investment granted admission in Admission Pre-entry Expropriation 1.Amicably settled within 6 months Repatriation subject to and to the discriminatory
26 November 1991 replaced the one signed on effected or is effecting investment in the territory of the other contracting party accordance with foreign investment laws of and in accordance with laws and regulations of , within the territory of contracting party only subject to foreign investment laws on Indonesian side and in accordance with laws and regulations on Norwegian side Treatment Post-entry MFN for public interest, Compensation market paid without delay, with interest at commercial rate if not A. Submit to the contracting party’s court having jurisdiction B. refer to ICSID extent permitted by its laws and regulations and Nationals and legal persons of the either contracting party Only approved investment in accordance with the legislation and administration of contracting situated in the territory of the contracting parties only Admission Pre-entry subject to its legislation but grant MFN treatment for admission Treatment Post - entry national treatment (similar investment), MFN treatment for the protection Expropriation for public interest Compensation just compensation, actual of the affected goods, MFN treatment -Diplomatic channels within a six month period, if failed then submit to arbitral tribunal -Arbitration decision binding the parties For the purpose of protecting Indonesian national economy, some facilities may only grant to Indonesian concerns and 21 May 1981 On the British side : citizen of the and colonies, and any British subject and companies constituted under the law in force in the & On the Malaysian side : Malaysian nationals and companies Investment made in the territory of either contracting party only, and must be an approved project under Malaysian laws, on the British side, investments made in accordance with its legislation Admission Pre-entry subject to laws enforced in either contracting party Treatment Post-entry treatment accorded fair and equitable treatment Expropriation for a public purpose Compensation prompt, adequate and effective to ICSID Exception from MFN treatment for the preference or privilege extend to custom union or free trade area by either party
and Nationals and companies lawfully constituted in accordance with its legislation of the that party Investment admitted in accordance with their laws and regulations with in the territory of contracting party only, and on the Malaysian side, it must be an approved project in Admission Pre-entry subject to the approval process in and in accordance with its legislation in Treatment Post-entry MFN or National treatment Expropriation for a public purpose Compensation prompt, adequate and effective compensation and freely transferable 1. Settle by the both governments 2. Arbitration and the arbitral decision is binding Companies not include a branch(es) which has its seat or incorporated in the territory or by or under the laws of a third party and Nationals and companies constituted in accordance with its legislation of that parties Investment made in the territory of either contracting party in accordance with their laws and regulations, and on Malaysian side, it must be an approved project in Admission Pre-entry subject to the approval process in and in accordance with its legislation in Treatment Post-entry MFN treatment Expropriation for a public purpose and Compensation prompt, adequate, and effective, freely transferable A. amicable settlement, if not B. submit to ICSID Repatriation of return of investment and others is freely transferred but subject to its laws and regulations and 6 November 1984 Nationals and companies lawfully constituted, having its seat or having predominating interest of that party Investment made in the territory of either contracting party in accordance with its legislation. On Malaysian side, it must be an approved project Admission subject to its right to exercise powers conferred by its laws, and screening process Treatment MFN treatment Expropriation for public interest, under due process, Compensation prompt, adequate and effective, is freely transferable Refer to ICSID -Freely repatriation of return of investment but subject to its laws and regulations -MFN treatment will not extend to existing or future REIO
and Nationals and companies lawfully constituted in territory of that party or having predominating interest of that party Investment made in accordance with its laws and regulations in the territory of either contracting party, and on Malaysian side it must be an approved project. Admission subject to approval and in accordance with its legislation Treatment MFN treatment Expropriation for a public purpose, and under due process of law Compensation prompt, adequate and effective, amount to market value and freely transferable Refer to ICSID -Freely repatriation of return of investment but subject to its laws and regulations -MFN treatment will not extend to existing or future REIO and Nationals and companies lawfully constituted in accordance with its legislation of that On the side, including companies controlled directly or indirectly by its national or legal person. On Malaysian side, approved project On the side, investment under the relevant laws and regulations Admission in accordance with their legislation, and approval process Treatment Post-entry national treatment Expropriation for a public purpose, due process of law and Compensation prompt, adequate and effective 1. local administrative and judicial remedies 2. to ICSID Including shipping services and Nationals and companies of either party. Companies lawfully constituted in the territory of that contracting party, and actually doing business in the territory of that party wherein a place of effective management is situated, and directly or indirectly controlled by the national or company of that party Investment brought into, derived from, or directly connected with investment brought into the territory of either contracting in conformity with their laws and regulations Admission fair and equitable treatment Treatment Post-entry MFN Expropriation for public use, in the public interest or national defence Compensation just compensation at the market value, without undue delay and freely convertible currency Refer to ICSID -Freely transfer of investment but subject to the right to impose equitably and in good faith such measures to safeguard the integrity and of its currency - Exception of MFN contracting will not extend privilege and preference to custom union, free trade area,
which they are a member and Nationals and companies of either party. Interpretation of company base on the concept of the seat (siege social) Investment made in the territory of either contracting party including the ones made prior to its enter into force of the agreement Admission accords to any similar investment in its territory, in accordance with laws and regulations, need certificate of admission and with fair and equitable treatment Treatment Post-entry MFN treatment Expropriation for the public benefit Compensation the equivalent of the investment affected, without delay A. settle by the two contracting parties B. arbitration -Exception MFN not included the privilege grant to the nationals and companies and British nationals include British, citizen of colonies, British subjects, and British protected person, and companies constituted under the British law. Singaporians and companies constituted the law enforced in Investment specifically approved in writing by the contracting in whose territory the investment have been made or will be made Admission with fair and equitable treatment but subject to its right to exercise powers conferred by it laws to admit investment, Treatment Post-entry MFN and national treatment where applicable Appropriation for public purpose Compensation prompt, adequate and effective compensation amount to the market made without delay and freely transferable 1. settled through diplomatic channel 2. arbitration On British side, territorial extension covered any territory for whose international relations they are responsible but with the consent of the government of and Nationals and companies lawfully constituted under the law in force in that party. Approved investment in writing in the territory of either contracting party Admission Pre-entry fair and equitable treatment Treatment Appropriation for the public purpose, Compensation commercial of the Refer to ICSID Exception MFN treatment , privilege and preferential treatment accorded by virtue of regional
Company ,on French side, must has head office in MFN and national treatment assets, without undue delay and free transferability arrangement by either contracting party will not extend to the other party and Nationals and companies lawfully constituted in accordance with its legislation of either party. Definition of company in respect of is having seat in the and lawfully incorporated. Only Investment made within the territory of either party. On side, investment must be approved in writing by the government of , and on German side, investment made in accordance with its legislation. Admission Pre-entry in accordance with its legislation and administrative practice within the framework of the general economic policy Treatment Post-entry national treatment or at MFN treatment where applicable Appropriation for the public benefit Compensation just and equitable with fair market without delay, freely transferable 1. amicable settled by the both governments 2. arbitration -Admission shall not be conditional for availing incentives for the purpose of investment promotion. -Companies not include a branch(es) which has its seat or constituted in a third state. and 16 May 1972 Nationals and legal persons controlled directly or indirectly by nationals of that contracting party and constituted in accordance with the laws of the other contracting party. On side, only the approved investment in writing made within the . On the side, all investment made by nationals of in the Admission Pre-entry fair and equitable treatment within the framework of their respective legislation Treatment Post-entry national treatment and MFN treatment whichever is more favourable Appropriation in the public interest and under due process of law Compensation just Compensation without undue delay, transferable in the currency of the country of the nationals affected arbitration including international merchant shipping services and Nationals and legal persons legally constituted under the laws in force in either Investment approved in writing by the contracting party in whose territory the investment have been made or Admission Pre-entry accorded fair and equitable treatment in the territory of Appropriation for public purpose, 1. Amicably settled by the both parties 2. refer to ICSID MFN treatment not extend to the regional arrangements for custom, trade tariff or monetary
contracting party will be made subject to the laws and to the condition upon which such approval shall be granted either contracting party subject to its right to exercise powers conferred by its laws or its administrative practice within the framework of its general economic policy Treatment Post-entry MFN treatment Compensation prompt, adequate and effective payment of compensation, represent market value and free transferability matters which each contracting party is or will be a member and Nationals and juristic persons of either contracting parties. the term juristic persons or companies mean entity having its seat in the territory of either party and lawfully existing consistent with legal provisions only approved investment made in the territory of either contracting in accordance with their legislation. Contracting party is free to decide in accordance to its policies and published plans Admission Pre-entry the investment in accordance with the legislation and subject to approval process Treatment Post-entry national treatment and MFN treatment where applicable Appropriation for the public benefit Compensation just compensation, freely transferable, without delay 1. settled by the both governments 2. arbitration or transfer of benefit Transfers from are subject to the regulation of the Bank of Thailand regarding stability and balance of payment, large amount of transfers shall be made in instalments and Nationals and legal persons constituted in accordance with the laws of either contracting party in the territory of that party including legal person which is controlled by a national of the other subject to legislation, companies, associations, other organisations of any kind or subsidiary bodies connected with economic life and all other nationals engaged in economic Admission Pre-entry in accordance with its laws and requirements to admit investment from the other contracting party Appropriation for the public benefit and under due process of law, Compensation just compensation in accordance with international arbitration territorial extension, on the side, the agreement shall apply to the territory of the Kingdom in , to and to the
contracting party activities in its territory Treatment Post-entry national treatment and MFN treatment where applicable within the limit of laws or legislation law, without undue delay, in currency of the affected nationals. In case of transfer of large amount, it can be in instalments The Agreement for the Promotion and Protection of Investments Contracting Parties Scope of application Admission and Treatment Expropriation and Compensation Disputes settlement Other main points Investor Investment amended on Nationals and legal persons incorporated or constituted under the laws in force in the territory of any contracting party wherein the place of effective management is situated Only investment brought into, derived from or directly connected with investments brought into the territory of any contracting party by nationals or companies of any other contracting party and specifically approved investment in writing and registered in the territory of host country Admission fair and equitable treatment subject to laws and regulations of host countries Treatment Post-entry MFN but any two or more of the contracting parties may negotiate to accord national treatment Appropriation for public use or public purpose or public interest, under due process of law, on a basis Compensation adequate compensation amount to market value, freely transferable in freely-usable currencies, without unreasonable delay Dispute among contracting parties settled by 1. amicable settlement between the parties 2. submitted to AEM Disputes between contracting parties and investors settled by 1. settled amicably between the parties to the dispute 2. arbitration Justification of company, incorporated under the laws in force in the territory of contracting party wherein the place of effective management is situated