Title
ASEAN COMPREHENSIVE INVESTMENT AGREEMENT
Preamble
The Governments of Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao Peoples Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand and the Socialist Republic of Viet Nam, Member States of the Association of Southeast Asian Nations (ASEAN), hereinafter collectively referred to as Member States or singularly as Member State;
RECALLING the decisions of the 39 th ASEAN Economic Ministers (AEM) Meeting held in Makati City, Philippines on 23 August 2007 to revise the Framework Agreement on the ASEAN Investment Area signed in Makati City, Philippines on 7 October 1998 (AIA Agreement), as amended, into a comprehensive investment agreement which is forwardlooking, with improved features and provisions, comparable to international best practices in order to increase intra-ASEAN investments and to enhance ASEANs competitiveness in attracting inward investments into ASEAN;
RECOGNISING the different levels of development within ASEAN especially the least developed Member States which require some flexibility including special and differential treatment as ASEAN moves towards a more integrated and interdependent future;
REAFFIRMING the need to move forward from the AIA Agreement and the ASEAN Agreement for the Promotion and Protection of Investments signed in Manila, Philippines on 15 December 1987 (ASEAN IGA), as amended, in order to further enhance regional integration to realise the vision of the ASEAN Economic Community (AEC);
CONVINCED that sustained inflows of new investments and reinvestments will promote and ensure dynamic development of ASEAN economies;
RECOGNISING that a conducive investment environment will enhance freer flow of capital, goods and services, technology and human resource and overall economic and social development in ASEAN; and
DETERMINED to further intensify economic cooperation between and among Member States,
HAVE AGREED as follows:
Body
Article 1. Objective
The objective of this Agreement is to create a free and open investment regime in ASEAN in order to achieve the end goal of economic integration under the AEC in accordance with the AEC Blueprint, through the following:
(a) progressive liberalisation of the investment regimes of Member States;
(b) provision of enhanced protection to investors of all Member States and their investments;
(c) improvement of transparency and predictability of investment rules, regulations and procedures conducive to increased investment among Member States;
(d) joint promotion of the region as an integrated investment area; and
(e) cooperation to create favourable conditions for investment by investors of a Member State in the territory of the other Member States.
Article 2. Guiding Principles
This Agreement shall create a liberal, facilitative, transparent and competitive investment environment in ASEAN by adhering to the following principles:
(a) provide for investment liberalisation, protection, investment promotion and facilitation;
(b) progressive liberalisation of investment with a view towards achieving a free and open investment environment in the region;
(c) benefit investors and their investments based in ASEAN;
(d) maintain and accord preferential treatment among Member States;
(e) no back-tracking of commitments made under the AIA Agreement and the ASEAN IGA;
(f) grant special and differential treatment and other flexibilities to Member States depending on their level of development and sectoral sensitivities;
(g) reciprocal treatment in the enjoyment of concessions among Member States, where appropriate; and
(h) accommodate expansion of scope of this Agreement to cover other sectors in the future.
Article 3. Scope of Application
1. This Agreement shall apply to measures adopted or maintained by a Member State relating to:
(a) investors of any other Member State; and
(b) investments, in its territory, of investors of any other Member State.
2. This Agreement shall apply to existing investments as at the date of entry into force of this Agreement as well as to investments made after the entry into force of this Agreement.
3. For the purpose of liberalisation and subject to Article 9 (Reservations), this Agreement shall apply to the following sectors:
(a) manufacturing;
(b) agriculture;
(c) fishery;
(d) forestry;
(e) mining and quarrying;
(f) services incidental to manufacturing, agriculture, fishery, forestry, mining and quarrying; and
(g) any other sectors, as may be agreed upon by all Member States.
4. This Agreement shall not apply to:
(a) any taxation measures, except for Articles 13 (Transfers) and 14 (Expropriation and Compensation);
(b) subsidies or grants provided by a Member State;
(c) government procurement;
(d) services supplied in the exercise of governmental authority by the relevant body or authority of a Member State. For the purposes of this Agreement, a service supplied in the exercise of governmental authority means any service, which is supplied neither on a commercial basis nor in competition with one or more service suppliers; and
(e) measures adopted or maintained by a Member State affecting trade in services under the ASEAN Framework Agreement on Services signed in Bangkok, Thailand on 15 December 1995 (AFAS).
5. Notwithstanding sub-paragraph 4 (e), for the purpose of protection of investment with respect to the commercial presence mode of service supply, Articles 11 (Treatment of Investment), 12 (Compensation in Cases of Strife), 13 (Transfers), 14 (Expropriation and Compensation) and 15 (Subrogation) and Section B (Investment Disputes Between an Investor and a Member State), shall apply, mutatis mutandis, to any measure affecting the supply of a service by a service supplier of a Member State through commercial presence in the territory of any other Member State but only to the extent that they relate to an investment and obligation under this Agreement regardless of whether or not such service sector is scheduled in the Member States schedule of commitments made under AFAS.
6. Nothing in this Agreement shall affect the rights and obligations of any Member State under any tax convention. In the event of any inconsistency between this Agreement and any such convention, that convention shall prevail to the extent of the inconsistency.
Article 4. Definitions
For the purpose of this Agreement:
(a) covered investment means, with respect to a Member State, an investment in its territory of an investor of any other Member State in existence as of the date of entry into force of this Agreement or established, acquired or expanded thereafter, and has been admitted according to its laws, regulations, and national policies, and where applicable, specifically approved in writing (1) by the competent authority of a Member State;
(b) freely usable currency means a freely usable currency as determined by the International Monetary Fund (IMF) under its Articles of Agreement and any amendments thereto;
(c) investment (2) means every kind of asset, owned or controlled, by an investor, including but not limited to the following:
(i) movable and immovable property and other property rights such as mortgages, liens or pledges;
(ii) shares, stocks, bonds and debentures and any other forms of participation in a juridical person and rights or interest derived therefrom;
(iii) intellectual property rights which are conferred pursuant to the laws and regulations of each Member State;
(iv) Claims to money or to any contractual performance related to a business and having financial value; (3)
(v) rights under contracts, including turnkey, construction, management, production or revenue-sharing contracts;
(vi) Business concessions required to conduct economic activities and having financial value conferred by law or under a contract, including any concessions to search, cultivate, extract or exploit natural resources.
The term investment also includes amounts yielded by investments, in particular, profits, interest, capital gains, dividend, royalties and fees. Any alteration of the form in which assets are invested or reinvested shall not affect their classification as investment;
(d) investor means a natural person of a Member State or a juridical person of a Member State that is making, or has made an investment in the territory of any other Member State;
(e) juridical person means any legal entity duly constituted or otherwise organised under the applicable law of a Member State, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any enterprise, corporation, trust, partnership, joint venture, sole proprietorship, association, or organisation;
(f) measures means any measure of a Member State, whether in the form of laws, regulations, rules, procedures, decisions, and administrative actions or practice, adopted or maintained by:
(i) central, regional or local government or authorities; or
(ii) non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities;
(g) natural person means any natural person possessing the nationality or citizenship of, or right of permanent residence in the Member State in accordance with its laws, regulations and national policies;
(h) newer ASEAN Member States means the Kingdom of Cambodia, the Lao Peoples Democratic Republic, the Union of Myanmar and the Socialist Republic of Viet Nam;
(i) WTO means the World Trade Organization; and
(j) WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done at Marrakesh, Morocco on 15 April 1994, as may be amended.
Article 5. National Treatment
1. Each Member State shall accord to investors of any other Member State treatment no less favourable than that it accords, in like circumstances, to its own investors with respect to the admission, establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory.
2. Each Member State shall accord to investments of investors of any other Member State treatment no less favourable than that it accords, in like circumstances, to investments in its territory of its own investors with respect to the admission, establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.
Article 6. Most-favoured-nation Treatment (4)
1. Each Member State shall accord to investors of another Member State treatment no less favourable than that it accords, in like circumstances, to investors of any other Member State or a non-Member State with respect to the admission, establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.
2. Each Member State shall accord to investments of investors of another Member State treatment no less favourable than that it accords, in like circumstances, to investments in its territory of investors of any other Member State or a non-Member State with respect to the admission, establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments.
3. Paragraphs 1 and 2 shall not be construed so as to oblige a Member State to extend to investors or investments of other Member States the benefit of any treatment, preference or privilege resulting from:
(a) any sub-regional arrangements between and among Member States; (5) or
(b) any existing agreement notified by Member States to the AIA Council pursuant to Article 8(3) of the AIA Agreement. (6)
Article 7. Prohibition of Performance Requirements
1. The provisions of the Agreement on Trade-Related Investment Measures in Annex 1A to the WTO Agreement (TRIMs), which are not specifically mentioned in or modified by this Agreement, shall apply, mutatis mutandis, to this Agreement.
2. Member States shall undertake joint assessment on performance requirements no later than 2 years from the date of entry into force of this Agreement. The aim of such assessment shall include reviewing existing performance requirements and considering the need for additional commitments under this Article.
3. Non-WTO Members of ASEAN shall abide by the WTO provisions in accordance with their accession commitments to the WTO.
Article 8. Senior Management and Board of Directors
1. A Member State shall not require that a juridical person of that Member State appoint to senior management positions, natural persons of any particular nationality.
2. A Member State may require that a majority of the board of directors of a juridical person of that Member State, be of a particular nationality, or resident in the territory of the Member State, provided that this requirement does not materially impair the ability of the investor to exercise control over its investment.
Article 9. Reservations
1. Articles 5 (National Treatment) and 8 (Senior Management and Board of Directors) shall not apply to:
(a) any existing measure that is maintained by a Member State at:
(i) the central level of government, as set out by that Member State in its reservation list in the Schedule referred to in paragraph 2;
(ii) the regional level of government, as set out by that Member State in its reservation list in the Schedule referred to in paragraph 2; and
(iii) a local level of government;
(b) the continuation or prompt renewal of any reservations referred to sub-paragraph (a).
2. Each Member State shall submit its reservation list to the ASEAN Secretariat for the endorsement of the AIA Council within 6 months after the date of signing of this Agreement. This list shall form a Schedule to this Agreement.
3. Any amendment or modification to any reservations contained in the Schedule referred to in paragraph 2 shall be in accordance with Article 10 (Modification of Commitments).
4. Each Member State shall reduce or eliminate the reservations specified in the Schedule in accordance with the three phases of the Strategic Schedule of the AEC Blueprint.
5. Articles 5 (National Treatment) and 6 (Most-FavouredNation Treatment) shall not apply to any measure covered by an exception to, or derogation from, the obligations under Articles 3 and 4 of the Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the WTO Agreement, as may be amended (TRIPS Agreement), as specifically provided in those Articles and in Article 5 of the TRIPS Agreement.
Article 10. Modification of Commitments
1. For a period of 12 months from the date of entry into force of this Agreement, a Member State may adopt any measures or modify any of its reservations made in the Schedule under Article 9 (Reservations) for prospective applications to investors of any other Member States and their investments, provided that such measures or modification shall not adversely affect any existing investors and investments.
2. After the expiration of the period referred to in paragraph 1, a Member State may, by negotiation and agreement with any other Member States to which it made commitments under this Agreement, adopt any measure, or modify or withdraw such commitments and reservations, provided that such measure, modification or withdrawal shall not adversely affect any existing investors or investments. (7)
3. In any such negotiations and agreement referred to in paragraph 2, which may include provisions for compensatory adjustments with respect to other sectors, the Member States concerned shall maintain a general level of reciprocal and mutually advantageous commitments and reservations that is not less favourable to investors and investments than that provided for in this Agreement prior to such negotiations and agreements.
4. Notwithstanding paragraphs 1 and 2, a Member State shall not, under any measure adopted pursuant to this Article after the entry into force of this Agreement, require an investor of any other Member State, by reason of that investors nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective, unless otherwise specified in the initial approval by the relevant authorities.
5. Any amendment or modification of the commitments and reservations in accordance with this Article shall be subject to the procedures prescribed in Annex 3 (Procedures for Amendment or Modification of Reservations).
Article 11. Treatment of Investment
1. Each Member State shall accord to covered investments of investors of any other Member State, fair and equitable treatment and full protection and security.
2. For greater certainty:
(a) fair and equitable treatment requires each Member State not to deny justice in any legal or administrative proceedings in accordance with the principle of due process; and
(b) full protection and security requires each Member State to take such measures as may be reasonably necessary to ensure the protection and security of the covered investments.
3. A determination that there has been a breach of another provision of this Agreement, or of a separate international agreement, does not establish that there has been a breach of this Article.
Article 12. Compensation In Cases of Strife
Each Member State shall accord to investors of any other Member State, in relation to their covered investments which suffered losses in its territory due to armed conflict or civil strife or state of emergency, non-discriminatory treatment with respect to restitution, compensation or other valuable consideration.
Article 13. Transfers
1. Each Member State shall allow all transfers relating to a covered investment to be made freely and without delay into and out of its territory. Such transfers include:
(a) contributions to capital, including the initial contribution;
(b) profits, capital gains, dividends, royalties, license fees, technical assistance and technical 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 Articles 12 (Compensation in Cases of Strife) and 14 (Expropriation and Compensation);
(f) payments arising out of the settlement of a dispute by any means including adjudication, arbitration or the agreement of the Member States to the dispute; and
(g) earnings and other remuneration of personnel employed and allowed to work in connection with that covered investment in its territory.
2. Each Member State shall allow transfers relating to a covered investment to be made in a freely usable currency at the market rate of exchange prevailing at the time of transfer.
3. Notwithstanding paragraphs 1 and 2, a Member State may prevent or delay a transfer through the equitable, non-discriminatory, and good faith application of its laws and regulations relating to:
(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 recovery of the proceeds of crime;
(d) financial reporting or record keeping of transfers 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, or compulsory savings schemes;
(h) severance entitlements of employees; and
(i) the requirement to register and satisfy other formalities imposed by the Central Bank and other relevant authorities of a Member State.
4. Nothing in this Agreement shall affect the rights and obligations of the Member States as members of the IMF, under the 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 Member State shall not impose restrictions on any capital transactions inconsistently with its specific commitments under this Agreement regarding such transactions, except:
(a) at the request of the IMF;
(b) under Article 16 (Measures to Safeguard the Balance-of-Payments); or
(c) where, in exceptional circumstances, movements of capital cause, or threaten to cause, serious economic or financial disturbance in the Member State concerned.
5. The measures taken in accordance with sub-paragraph 4(c) (8):
(a) shall be consistent with the Articles of Agreement of the IMF;
(b) shall not exceed those necessary to deal with the circumstances described in sub-paragraph 4(c);
(c) shall be temporary and shall be eliminated as soon as conditions no longer justify their institution or maintenance;
(d) shall promptly be notified to the other Member States;
(e) shall be applied such that any one of the other Member States is treated no less favourably than any other Member State or non-Member State;
(f) shall be applied on a national treatment basis; and