Asia’s top regulatory risks revealed

Earlier this month, Clyde & Co and Singapore law firm Clasis LLC announced the formation of a Singapore-based joint law venture. The new venture will operate in Singapore as Clyde & Co Clasis Singapore from 1 August, and will increasingly operate as a regional hub for offices in Beijing, Hong Kong, Perth, Shanghai and Sydney. With this in mind, we asked several of Clyde & Co’s partners to list their biggest concerns for businesses operating in the Asia-Pacific region:

Thomas Choo, Ian Roberts and Melissa Russell on Singapore:

• Data Protection The Personal Data Protection (PDP) Act 2012 (Act 26 of 2012) was approved in October 2012 to come into force on a staggered basis – certain provisions on 2 January 2014 and the rest on 2 July 2014. A Personal Data Protection Commission (PDPC) will be established to enforce the PDP Act and the definition of personal data will be broadened to include electronic as well as non-electronic data. More importantly, the PDP Act will allow the PDPC to impose a number of fines and enforcement mechanisms against individuals, companies and their directors and officers. This will generally apply to all professions.
  
• Insurance Amendment Act Significant changes to the Insurance Act (Chapter 142) of Singapore took effect on 18 April 2013. The Insurance Act regulates the Singapore insurance market and has recently been amended to enhance the powers of the regulator and to introduce anti-solicitation provisions for non-licensed insurers. The Insurance Act significantly increases the awards and penalties for any breach of the Insurance Act by the insurer, its directors and even employees in some cases. Section 40B of the Insurance Act now expressly provides that a “parent supervisory authority” will, subject to the approval of the regulator and under conditions of secrecy, have the power to conduct an inspection in Singapore of a locally licensed insurer. 
  
• Employment Act Singapore’s main labour law, the Employment Act (Chapter 91) of Singapore, is currently up for review. The last review was in 2008. Given the complexity of some of the issues, the Ministry of Manpower of Singapore has announced that the review of the Employment Act will be conducted in two phases. The first phase, which is envisaged to end in the first quarter of 2013, will look at extending coverage of the Employment Act to include better protection and working conditions for professionals, managers and executives (PMEs), short-term contract workers and low-wage workers, improving employment standards and benefits for employees, and reducing rigidity and augmenting flexibility for employers (such as giving employers the flexibility to provide time-off-in-lieu for work done on public holidays by PMEs). The second phase, which will commence in the fourth quarter of 2013, will examine more complicated issues that require further study. These may include enhancing protection for employees in non-traditional work arrangements – such as contract work – and creating better dispute-resolution mechanisms for employers and employees.
  
• Companies Act The Companies Act (Chapter 50) of Singapore is up for review. The Ministry of Finance of Singapore has recommended various amendments to the Companies Act, and aims to table the amendment bill in parliament by the end of 2013. These amendments are the largest number to be made to the Companies Act since it was enacted in 1967, and would affect various stakeholder groups such as companies, small-and-medium enterprises, retail investors and company directors.

Dean Carrigan and Crystal Lawton on Australia:

• Carbon tax uncertainty Australia introduced a fixed-price emissions trading scheme (ETS) in July 2012. The transition from a fixed-price ETS to a floating ETS (whereby companies can trade their carbon units) was originally scheduled to occur in mid 2015, however, the government has recently announced that the transition will now occur in mid-2014. There is opposition to the ETS, which is seen as having a negative impact on cost of living and the resources sector. It will be a central issue in the federal election to be held later in the year.
  
• Privacy and data protection In March 2014, amendments to the Privacy Act 1988 will come into effect, imposing further restrictions on how businesses use or disclose personal or sensitive information and increasing regulatory power in this area. Further legislative amendments are also currently being considered in relation to the reporting of serious data breaches, which is a growing concern due to, among other things, the use of cloud computing and the increasing sophistication of cyber crime.
  
• Unfair contract terms in insurance contracts The Insurance Contracts Act 1984 has been amended to prohibit the use of unfair terms in retail general insurance contracts (such as homebuilding and contents insurance, and motor vehicle insurance). This legislative amendments seek to import into domestic insurance contracts the same protections that are provided under other consumer protection legislation. 

Mun Yeow on Hong Kong:

• Independent Insurance Authority Hong Kong’s Financial Services and Treasury Bureau (FSTB) has recently considered the views of the Hong Kong business community on draft legislation that would establish an Independent Insurance Authority (IIA) in Hong Kong. The penalty for those who breach insurance legislation remains high at HK$10m per individual. The government hopes to enact the legislation this year and establish the IIA in 2015.

Michael Horn on Indonesia:

• New independent financial regulator In October 2011, an independent financial regulator called Otoritas Jasa Keuangan (OJK) was established in Indonesia. OJK will take over several regulatory and supervisory authorities presently held by Bank Indonesia and the Capital Market and Financial Institution Supervisory Body (Bapepam-LK). The functions and authorities of the Ministry of Finance that are performed by Bapepam-LK will be transferred to the OJK on 31 December 2012, while Bank Indonesia’s authority over the banking industry will be transferred on 31 December 2013. Some analysts fear it will be heavy handed with its power, while others note that OJK inherits staff and functions drawn from its predecessors, suggesting continuity, not change.
  
• Elections These are due in April 2014 and have already introduced uncertainty in the regulatory environment as politics becomes a more prominent factor in the business landscape. A recent example has been the dissolution of upstream oil and gas regulator BP Migas on economic nationalist grounds. Additional changes in regulators and to regulations are anticipated later this year as the campaigning for votes intensifies.
  
• Michael Horn also adds that the United Kingdom’s Bribery Act 2010 is affecting those companies in Asia that have a connection to the UK, whether it be the fact that they have a branch office in the UK or transact business there. Such companies are forced to consider their risks under the Bribery Act for activities that until recently were considered routine and not worthy of particular concern in this region.