Legal Barriers Hindering ASEAN Trade


More needs to be done to address existing legal barriers to entrepreneurship and innovation in the Association of Southeast Asian Nations (ASEAN), according to a report from legal researchers at Singapore Management University (SMU).

Titled ‘Improving Connectivity Between ASEAN’s Legal Systems To Address Commercial Issues’, the report by SMU School of Law researchers Professor Locknie Hsu, Associate Professor Pearlie Koh and Associate Professor Yip Man, calls on ASEAN member states to work towards transboundary legal frameworks which better support e-commerce and businesses seeking to use emerging digital technologies.

The report is the result of an SMU-funded research project on legal barriers to doing business in ASEAN. The Canada-ASEAN Business Council (CABC) provided logistical and other non-financial support to the research.

Despite efforts to integrate the diverse economies of ASEAN member states into a single market – in the form of the ASEAN Economic Community (AEC), established in 2015 – businesses still face considerable obstacles when operating in the region. These barriers can be found in corporate laws, trade and investment laws, land laws, as well as dispute settlement laws and processes.

Of particular importance are the report’s findings and recommendations on ASEAN laws relating to e-commerce and digital technologies such as automation, blockchain and cloud computing (commonly referred to as ‘Industry 4.0’). The rapid digitalisation of trade and business processes must be clearly and effectively addressed by ASEAN laws, for the benefit of both ASEAN businesses and those interested in investing in the region, the report said.

In e-commerce, ASEAN lacks a coherent, region-wide legal approach with which to handle diverse issues such as consumer rights, data privacy, e-payment regulation and goods returns and refunds, the report found. An e-commerce startup headquartered in Singapore, for example, must navigate laws and regulations for every ASEAN country it expands into.

In some instances, gaps in legal information also presented challenges to businesses. Legal obstacles are particularly difficult for ASEAN’s micro, small and medium enterprises (MSMEs) to handle, given their relative lack of legal and other resources. This applies especially to MSMEs wishing to participate in e-commerce and global value chains.

Similarly, regulations on newer technologies like blockchain and cryptocurrency are fragmented, and laws on data transfer and storage vary throughout ASEAN. These Industry 4.0-related issues require urgent attention, and the report calls for the speedy establishment of an ASEAN committee (with members contributing diverse expertise) to address them, among other recommendations.

Creating legal frameworks that transcend international boundaries is never an easy task–challenges include obtaining consensus on complex issues, as well as the need to undertake proper consultations with a range of stakeholders.

“Overcoming these challenges is possible, if the key objectives of the AEC are kept clearly in focus,” said Professor Hsu, who led the study.

Ultimately, the researchers hope that their work will help improve business laws and processes throughout ASEAN. “The report provides policy makers and businesses with concrete recommendations–based on research on ASEAN laws and feedback from businesses–and with insights as to where ASEAN laws and regulations need to be addressed,” says Professor Hsu.

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