Commercial' Presence'

Transcription

1 Market'Access'to'Financial'Sectors'in'Asia'! As!with!market!access!for!all!other!services,!the!ability!of!foreign!providers!to! offer!services!in!the!financial!sector!depends!on!regulatory!measures!that!are!in! place.!one!source!of!comparable!information!on!services!trade!policy!measures! is!the!world!bank s!services!trade!restrictions!database!that!provides!crossc country!information!from!103!countries.!the!data!was!collected!over!the!period! of! !and!reflects!actual!policy!in!place,!as!opposed!to!market! commitments!under!the!wto s!services!negotiations!which!are!in!general!more! restrictive.!! The!researchers!who!compiled!the!database!created!an!index!to!measure!the! restrictiveness!of!a!country s!policy!regime!(from!the!perspective!of!a!foreign! service!provider),!the!design!of!which!is!necessarily!subjective!(as!is!generally! the!case!with!any!attempt!at!translating!qualitative!data!into!quantitative! measures).!nevertheless,!it!renders!a!set!of!complex!information!info!a!form!that! is!simple!and!easy!to!comprehend.!the!bankingcsector!indices!for!countries!in! the!asiacpacific!that!were!surveyed!in!the!database!are!ranked!in!the!following! table!from!least!to!most!restrictive.!! Country' Overall' Cross6border'' Trade'in'Financial' Services' Commercial' Presence' Cambodia' 0! 0! 0! Japan' 0! 0! 0! 'Republic'of' 0! 0! 0! '' 0! 0! 0! Indonesia' 21.3! 0! 25! China' 32.5! 75! 25! Australia' 42.5! 0! 50! Malaysia' 44.4! 12.5! 50! Philippines' 46.3! 25! 50! India' 50! 50! 50! Viet'Nam' 51.9! 62.5! 50! Thailand' 57.5! 100! 50!! Based!on!this!index,!Australia s!openness!to!foreign!financial!service!providers! lies!in!the!middle!of!the!pack,!and!is!attributable!to!the!restrictions!placed!on! commercial!presence!(see!attached!tables!of!detailed!policy!measures!in!place).! Cambodia,!Japan,!Korea!and!!,!by!comparison,!do!not!have!similar! measures!and!were!thus!ranked!as!being!more!liberal.!this!result!in!itself! reflects!one!of!the!shortcomings!of!the!index.!even!though!cambodia,!japan,! Korea!and!!!have!not!followed!Australia!in!introducing!ownershipC threshold!restrictions,!the!ability!of!foreign!financial!providers!to!establish! commercial!presence!is!still!subject!to!licensing!by!regulators!who!have! significant!discretion!in!its!approval!and!are!frequently!not!obliged!to!provide! reasons!for!its!denial.!

2 ! Nevertheless,!the!detailed!policy!measures!extracted!from!the!database!provide! a!useful!insight!into!existing!policies.!most!jurisdictions!are!generally!relaxed! about!crosscborder!lending!and!depositctaking.!thailand!has!an!outright! prohibition!of!crosscborder!lending!whereas!china!and!india!impose!a!range!of! conditions.!malaysia!and!philippines!also!impose!restrictions!on!crosscborder! lending,!albeit!less!stringent!ones.!china,!thailand!and!vietnam!however!do!not! allow!crosscborder!depositctaking!by!foreign!.!india!and!philippines!do,!but! subject!to!the!approval!of!the!central!.!!! A!higher!number!and!a!variety!of!regulatory!restrictions!are!imposed!on!foreign! providers!wishing!to!establish!commercial!presence:! hurdle!requirements!or!discriminatory!licensing!criteria!(china,!india,! Indonesia,!Philippines),!! quotas!on!foreign!entry!(india,!malaysia,!philippines),! limits!on!ownership!(china,!india,!indonesia,!malaysia,!philippines,! Thailand,!Vietnam),! branching!restrictions!(indonesia,!malaysia,!philippines,!thailand),! restrictions!on!activity!conducted!(australia,!china,!india,!malaysia,! Philippines),!and! nationality!requirement!for!board!of!directors!(india,!indonesia,!malaysia,! Philippines,!Thailand).!! Cambodia,!Japan,!Korea!and!!!do!not!have!explicit!conditions!on!the! establishment!of!commercial!presence.!!! Preferential*trade*agreements* Based!on!the!documents!obtained!from!DFAT s!website,!australia!does!not! appear!to!have!secured!better!market!access!commitments!from!countries!with! whom!preferential!trade!agreements!are!currently!in!force.!in!fact,!market!access! commitments!in!financial!services!under!preferential!trade!agreements!are!more! restrictive!than!those!that!are!being!applied!in!practice.!!! In!the!recently!concluded!trade!agreement!with!!Australia!managed!to! secure!a!binding!commitment!that!korea!will!extend!national!treatment!and! mostcfavouredcnation!treatment!to!australian!investors,!financial!institutions,! investments!of!investors!in!financial!institutions,!and!crosscborder!financial! service!suppliers!(and!vice!versa).!while!a!number!of!exceptions!were!registered! in!the!agreement,!especially!by!!the!agreement!nevertheless!bound!both! parties!to!current!practices!that!are!more!permissive!than!those!committed!at! the!wto s!gats!and!other!preferential!trade!agreements.!!! Other*Observations* There!is!clearly!variation!in!the!relative!openness!of!regional!financial!markets.! While!some!jurisdictions!(such!as!Australia,!Hong!Kong,!Japan!and!Singapore)! have!demonstrated!clear!preferences!for!open,!globally!integrated!markets,! competing!dynamics!operate!in!others.!there!are!at!least!two!developments!in!

3 the!relatively!closed!markets!that!favour!a!move!towards!greater!openness:!low! loansctocdeposits!ratio!(by!international!standards)!accompanied!by!limited! lending!opportunities!in!domestic!economies,!and!the!emergence!of!a!small! number!of!financial!institutions!(such!as!malaysia s!cimb!and!maybank,!and! Singapore s!dbs)!that!have!begun!to!benefit!from!the!establishment!of!a!regional! presence.!on!the!other!hand,!a!number!of!regional!governments!are!still!wary!of! greater!openness!citing!financial!stability,!infant!industry!and!strategic!industry! arguments.!the!absence!of!more!credible!international!and/or!regional! mechanisms!to!resolve!crosscborder!financial!instability!reinforces!these! conservative!arguments.!

4 KEY POLICY MEASURES Data extracted from World Bank s Services Trade Restrictions Database ( in April Country SSID Label Mode 1 (Cross-border Trade) Mode 3 (Commercial Presence) Australia 1012 Australia 1013 Cambodia 1012 Cambodia 1013 China 1012 This is allowed, except that there is a 10 percent tax on interest payments. However not all interest payments will be liable to this tax, as there are exemptions available in certain circumstances. This is allowed, except that marketing and direct solicitation are not allowed. Allowed. Allowed. Allowed with restrictions. Medium- and long-term foreign loans of Chinese funded firms must be approved by NDRC and the loans must be used for approved investment projects. Short-term foreign loans of Chinese funded firms are subject to the method of outstanding balance management. The outstanding balance shall be decided by the State Administration of Foreign Exchange bureau. For foreign invested firms there are no restrictions, except that the amount should not exceed the shortfall between the total project investment and its registered capital. There are no restrictions on the legal form of entry. Branches cannot accept retail deposits of AUD 250,000 or less from residents/noncorporate entities. An acquisition of a stake of 15 percent or more by a person in a financial sector company is subject to government approval. An acquisition of 15 percent or more by a single foreign investor (or where 40 percent or more of the aggregate ownership is foreign) is subject to government approval. Approval is required for a foreign takeover of a bank in Australia. There are no restrictions on the legal form of entry. Branches cannot accept retail deposits of AUD 250,000 or less from residents/noncorporate entities. An acquisition of a stake of 15 percent or more by a person in a financial sector company is subject to government approval. An acquisition of 15 percent or more by a single foreign investor (or where 40 percent or more of the aggregate ownership is foreign) is subject to government approval. Approval is required for a foreign takeover of a bank in Australia. There are no restrictions. There are no restrictions. There are no restrictions on legal form of entry. A foreign bank branch may, in accordance with the scope of business approved by the banking regulatory agency of the State Council, engage in granting short-term, medium-term and long-term loans in RMB provided the customers are other than Chinese citizens within the territory of China. The sole shareholder or the controlling shareholder of a proposed wholly foreign-funded bank shall have maintained a representative office within the territory of the People s China for over two years. The sole foreign shareholder or the major foreign shareholder of a proposed Chinese-foreign joint venture bank shall have maintained a representative office within the territory of the People s China. The qualifications of members of the Board of Directors need to be approved by the China Regulatory Commission (CBRC). Where the combined Key Policy Measures Page 1

5 China 1013 India 1012 India 1013 Not allowed. This is allowed, subject to the following conditions: under the automatic route, and financial institutions are not eligible. Domestic corporations could obtain a loan not exceeding USD 500 million in any one fiscal year. Under the approval route, an additional USD 250 million can be obtained with a 10-year maturity. Prepayment of USD 300 million is allowed without approval of the Reserve Bank of India (RBI). Under the approval route, and financial institutions that exclusively deal with infrastructure, steel and textile projects may obtain a loan subject to approval. This is allowed, subject to approval by the Reserve Bank of India (RBI). Approval is obtained on a case by case basis. equity investment proportion of all overseas financial institutions in a listed Chinese financial institution is equal to or exceeds 25 percent, the listed Chinese financial institution shall be treated as a Chinese financial institution by the regulatory authority. The 20 percent ownership limitation applies to a single foreign financial institution that is listed on the Stock Exchange. There are no restrictions on legal form of entry. For Chinese citizens within the territory of China, the minimum deposit at a foreign bank branch is RMB 1 million yuan per deposit. The sole shareholder or the controlling shareholder of a proposed wholly foreign-funded bank shall have maintained a representative office within the territory of the People s China for over two years. The sole foreign shareholder or the major foreign shareholder of a proposed Chinese-foreign joint venture bank shall have maintained a representative office within the territory of the People s China. The qualifications of members of the Board of Directors need to be approved by the China Regulatory Commission (CBRC). Where the combined equity investment proportion of all overseas financial institutions in a listed Chinese financial institution is equal to or exceeds 25 percent, the listed Chinese financial institution shall be treated as a Chinese financial institution by the regulatory authority. The 20 percent ownership limitation applies to a single foreign financial institution that is listed on the Stock Exchange. There is no limit on foreign ownership through greenfield investment (only through one form of legal entry at a time). The limit on foreign ownership is 74 percent if through an acquisition. Acquisition of public domestic entities is not allowed. There is a limit of 20 licenses for foreign bank branches per year, which applies regardless of whether a foreign bank is establishing a new branch as its primary vehicle of entry into India, or setting up branches of a wholly-owned subsidiary that is already operating in India. Licensing criteria differ between foreign and domestic ; foreign are required to bring an assigned capital of USD 25 million up front at the time of opening each branch. Banks are required to retain 25 percent of their earnings in India. A minimum of 50 percent of the Board of Directors should be Indian nationals. There is no limit on foreign ownership through greenfield investment (only through one form of legal entry at a time). The limit on foreign ownership is 74 percent if through an acquisition. Acquisition of public domestic entities is not allowed. There is a limit of 20 licenses Key Policy Measures Page 2

6 Indonesia 1012 Indonesia 1013 Japan 1012 Japan Malaysia 1012 Allowed. Applicants must send periodic reports to the Bank of Indonesia on their borrowing. State-owned companies may be required to obtain approval. Allowed. This is allowed, except that marketing and direct solicitation are not permitted. This is allowed, except that marketing and direct solicitation are not permitted. Credits up to USD 30 million require notification to foreign exchange. Above USD 30 million requires notification to the Central Bank. This is allowed, except that transfers abroad by individuals exceeding USD 50,000 a year require prior notification to the Central Bank. This is allowed, with restrictions: companies on a per corporate group basis are allowed to borrow up to RM50 million equivalent in foreign currency, and residents up to RM10 million in foreign currency. Any borrowing in excess of this would require prior approval of the Central Bank. for foreign bank branches per year, which applies regardless of whether a foreign bank is establishing a new branch as its primary vehicle of entry into India, or setting up branches of a wholly-owned subsidiary that is already operating in India. Foreign are required to bring an assigned capital of USD 25 million up front at the time of opening each branch and to submit branch expansion plan annually. Banks are required to retain 25 percent of their earnings in India. A minimum of 50 percent of the Board of Directors should be Indian nationals. Entry through foreign bank branches is limited to 11; since the limit has been reached, no new entry through a branch is allowed. No license limit for locally incorporated subsidiaries. Greenfield investment: the foreign ownership limit is 99 percent. Difference in licensing criteria: Foreign must form a JV with local partners. The Board of Directors must include one Indonesian national. Acquiring a state-owned bank requires the approval of the President and House of Representatives. Entry through foreign bank branches is limited to 11; since the limit has been reached, no new entry through a branch is allowed. No license limit for locally incorporated subsidiaries. Greenfield investment: the foreign ownership limit is 99 percent. Difference in licensing criteria: Foreign must form a JV with local partners. The Board of Directors must include one Indonesian national. Acquiring a state-owned bank requires the approval of the President and House of Representatives. This is open, except that the deposit insurance system does not cover deposits taken by branches of foreign. This is open, except that the deposit insurance system does not cover deposits taken by branches of foreign. There are no restrictions. There are no restrictions. Entry through a branch is not allowed. There is no limit on foreign ownership for Islamic Financial Institutions, which conducts business in international currencies. For all other, the foreign ownership limit is 49 percent. The number of new licenses is not fixed; these are available and announced on an ad hoc basis. Key Policy Measures Page 3

7 Malaysia Philippines 1012 Philippines 1013 Thailand 1012 Thailand 1013 This is allowed with restrictions. Exchange control requirements apply. The deposits are considered investments abroad; i) where the depositor has no local borrowing, there is no limit; ii) where the depositor is a corporation with domestic credit facilities, there is no limit on foreign currency held and up to RM10 million can be converted into foreign funds; iii) where the depositor is an individual with domestic credit facilities, there is no limit on foreign currency held and up to RM100,000 can be converted into foreign currency. This is allowed: marketing and direct solicitation are allowed as long as a perspective is issued and the institution does not call itself a Bank. This is allowed: marketing and direct solicitation are allowed as long as a perspective is issued and the institution does not call itself a Bank. This is allowed, but is subject to restrictions. Regarding the period of a loan, foreign loans with maturities greater than one year, to be obtained by and financial institutions and intended for relending, require prior approval of the Central Bank. Approval is also required for companies that have already obtained loans guaranteed by the government or government corporations. This is allowed, subject to approval of Central Bank. If deposits are denominated in Philippine Pesos, restrictions apply as to the size of the deposits. Not allowed. Not allowed. Branching, locations of ATMs: this is decided upon a case-by-case basis. There are no requirements for employing nationals. Entry through a branch is not allowed. There is no limit on foreign ownership for Islamic Financial Institutions, which conducts business in international currencies. For all other, the foreign ownership limit is 49 percent. The number of new licenses is not fixed; these are available and announced on an ad hoc basis. Branching, locations of ATMs: this is decided upon a case-by-case basis. There are no requirements for employing nationals. There are no restrictions. There are no restrictions. Seventy percent of banking assets must be held by domestic, which are at least majority owned by Filipinos. For greenfield investment, the foreign ownership limit is 60 percent of voting stocks. Acquisition of state-owned is not allowed. Regarding branching, six branches per bank are permitted. All employees must be Filipino, and the majority of the Board of Directors must be Filipinos. Seventy percent of banking assets must be held by domestic, which are at least majority owned by Filipinos. For greenfield investment, the foreign ownership limit is 60 percent of voting stocks. Acquisition of state-owned is not allowed. Regarding branching, six branches per bank are permitted. All employees must be Filipino, and the majority of the Board of Directors must be Filipinos. Must be locally incorporated and established as a limited public company. Foreign equity generally limited to 25% of paid-up registered capital. Branching: 1 branch for each foreign bank. General oversight of MOF. 75% of BOD must be Thai nationals for that are locally incorporated (no restrictions for foreign operating through a single branch as their primary entry point). Applicants must be locally incorporated and established as a limited public company. Foreign equity is generally limited to 25 percent of paid-up registered capital. Branching: 1 branch for each foreign bank. General oversight of MOF. 75% of BOD must be Thai Key Policy Measures Page 4

8 Viet Nam 1012 Viet Nam 1013 This is allowed, subject to approval of the size of loan. Not allowed. nationals for that are locally incorporated (no restrictions for foreign operating through a single branch as their primary entry point). Wholly foreign-owned subsidiaries are allowed. The limit on foreign ownership (aggregate) through acquisition is 30 percent. The equity limit is 10 percent for a single foreign credit institution, 15 percent for a 'foreign strategic partner.' At least 20 percent of the total number of managers, executives, and specialists of an enterprise shall be Vietnamese nationals. This restriction is not applicable to domestic firms. A minimum of three non-vietnamese managers, executives and specialists shall be permitted per enterprise. Wholly foreign-owned subsidiaries are allowed. The limit on foreign ownership (aggregate) through acquisition is 30 percent. The equity limit is 10 percent for a single foreign credit institution, 15 percent for a 'foreign strategic partner.' At least 20 percent of the total number of managers, executives, and specialists of an enterprise shall be Vietnamese nationals. This restriction is not applicable to domestic firms. A minimum of three non-vietnamese managers, executives and specialists shall be permitted per enterprise. Key Policy Measures Page 5

9 MAIN POLICY MEASURES Data extracted from World Bank s Services Trade Restrictions Database ( in April Country Sector Subsector Mode Variable Year Response Comment Australia 1 Market entry allowed 2008 yes Marketing and direct solicitation in Australia are not allowed. There is normally a 10% tax on interest payments, exemptions are available in certain circumstances. (Confirmed by the government, May 28) Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia Australia 1 Demonstration of 3 Market entry allowed 2008 yes Acquisition of 15% or more in a bank by a single foreign investor (or where 40% or more would be held by foreign investors in aggregate) is subject to the Foreign Acquisitions and Takeovers Act 1975 and prior government approval is required yes 1 Market entry allowed 2008 yes Marketing and direct solicitation in Australia are not allowed. 1 Demonstration of 3 Market entry allowed 2008 yes Acquisition of 15% or more in a bank by a single foreign investor (or where 40% or more would be held by foreign investors in aggregate) is subject to the Foreign Acquisitions and Takeovers Act 1975 and prior Main Policy Measures Page 1

10 Australia Australia Australia Australia Australia Australia Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia 1 Market entry allowed 2008 yes 1 Demonstration of 3 Market entry allowed 2008 yes government approval is required. Main Policy Measures Page 2

11 Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia Cambodia China 1 Market entry allowed 2008 yes 1 Demonstration of 3 Market entry allowed 2008 yes 1 Market entry allowed 2011 yes 1) Medium-term or long-term loans borrowed by Chinese-funded firms shall be approved by the National Development and Reform Commission. 2) i) With regard to the medium-term or long-term international commercial loans which national commercial raise, the State shall enforce a balance control; the balance shall be subject to the examination and verification of the National Development and Reform Commission and other relevant departments, and then shall be reported to the State Council for examination and approval. ii) With regard to the short-term international commercial loans borrowed by domestic-funded firms, the State shall exert a balance control; the balance be subject to examination Main Policy Measures Page 3

12 China China China China China 1 Demonstration of 2011 no 3 Market entry allowed 2011 yes and approval by the State Administration of Foreign Exchange. iii) With regard to the foreign debts raised by foreign-funded financial institutions within China, the State shall enforce an administration on the total amount. iv) The summation of the accumulated medium-term and long-term debts and the balance of short-term debts by a foreign-funded enterprise shall not exceed the surplus between the total investment in projects and the registered capital, as approved by relevant authorities. 3) Institutions within the Chinese territory should make sure that their total cost for taking out a commercial loan from outside of China does not exceed the total cost that would be charged to a borrower with the same level of credit in the international financial market. The foreign exchange administration shall monitor and guide the institutions within the Chinese territory with regard to their borrowing costs. 4) Contracts for international commercial loans or contracts for the corresponding guaranty shall not enter into force until they are registered. Medium-term or long-term foreign debt capital borrowed by Chinese-funded firms shall, strictly according to the approved purposes, be rationally used, and shall not be diverted for other purposes In order to establish a solely foreign-funded bank in the People''s Republic of China, a foreign bank shall satisfy the following conditions: (1) it is a commercial bank; (2) two or more years have lapsed since it established a representative office within the territory of the PRC; (3) its total assets at the end of the year prior to submitting the establishment application shall not be less than USD 10 billion; and (4) its capital adequacy ratio meets the requirements of the financial regulatory authority of the country or region where it is located and of the banking regulatory institution of the State Council yes In order to establish a solely foreign-funded bank in the People''s Republic of China, a foreign bank shall satisfy the following conditions: (1) it is a commercial bank; (2) two or more years have lapsed since it established a representative office within the territory of the PRC; (3) its total assets at the end of the year prior to submitting the establishment application shall Main Policy Measures Page 4

13 China China China China China China China China China not be less than USD 10 billion; and (4) its capital adequacy ratio meets the requirements of the financial regulatory authority of the country or region where it is located and of the banking regulatory institution of the State Council no 2011 no 2011 yes However, it is not possible to appeal general administrative acts. 1 Market entry allowed 2011 no 1 Demonstration of 2011.Not applicable. 3 Market entry allowed 2011 yes In order to establish a solely foreign-funded bank in the People''s Republic of China, a foreign bank shall satisfy the following conditions: (1) it is a commercial bank; (2) two or more years have lapsed since it established a representative office within the territory of the PRC; (3) its total assets at the end of the year prior to submitting the establishment application shall not be less than USD 10 billion; and (4) its capital adequacy ratio meets the requirements of the financial regulatory authority of the country or region where it is located and of the banking regulatory institution of the State Council yes In order to establish a solely foreign-funded bank in the People''s Republic of China, a foreign bank shall satisfy the following conditions: (1) it is a commercial bank; (2) two or more years have lapsed since it established a representative office within the territory of the PRC; (3) its total assets at the end of the year prior to submitting the establishment application shall not be less than USD 10 billion; and (4) its capital adequacy ratio meets the requirements of the financial regulatory authority of the country or region where it is located and of the banking regulatory institution of the Main Policy Measures Page 5

14 China China China India India India India India India India 2011 no 2011 no State Council yes However, it is not possible to appeal general administrative acts. 1 Market entry allowed 2008 yes This is allowed, subject to the following conditions: under the automatic route, and financial institutions are not eligible. Domestic corporations could obtain a loan not exceeding USD 500 million in any one fiscal year. Under the approval route, an additional USD 250 million can be obtained with a 10-year maturity. Prepayment of USD 300 million is allowed without approval of the Reserve Bank of India (RBI). Under the approval route, and financial institutions that exclusively deal with infrastructure, steel and textile projects may obtain a loan subject to approval. 1 Demonstration of 3 Market entry allowed 2008 yes For greenfield entry, a foreign bank can have only one type of presence at any one time--either a branch or a wholly-owned subsidiary. India India Subject to the condition that at least 26% of the paid-up capital are held by residents at all times. The 74% cap includes foreign investment of all types yes Foreign are required to bring an assigned capital of USD 25 million up front at the time of opening each branch. Foreign should submit their plans for branch expansion annually yes There is a limit of 20 licenses for foreign bank branches per year, which applies regardless of whether a foreign bank is establishing a new branch as its primary vehicle of entry into India or setting up branches of a wholly-owned subsidiary that is already operating in India yes At least 50% of directors should be Indian nationals resident in India. Main Policy Measures Page 6

15 India India India India India India India India India Indonesia Indonesia 1 Market entry allowed 2008 yes 1 Demonstration of 3 Market entry allowed 2008 yes For greenfield entry, a foreign bank can have only one type of presence at any one time--either a branch or a wholly-owned subsidiary Subject to the condition that at least 26% of the paid-up capital are held by residents at all times. The 74% cap includes foreign investment of all types yes Foreign are required to bring an assigned capital of USD 25 million up front at the time of opening each branch. Foreign should submit their plans for branch expansion annually yes There is a limit of 20 licenses for foreign bank branches per year, which applies regardless of whether a foreign bank is establishing a new branch as its primary vehicle of entry into India or setting up branches of a wholly-owned subsidiary that is already operating in India yes At least 50% of directors should be Indian nationals resident in India. 1 Market entry allowed 2008 yes While cross-border banking activities are not restricted, they must be reported periodically to the Bank of Indonesia according to certain rules. For instance: 1) Banks and non-finance institutions which make a loan amounting to USD 200, or more is obliged to make a report to the Bank of Indonesia; and 2) Non-finance institutions whose activity creates a foreign exchange traffic is obliged to make a report to the Bank of Indonesia if they have a total asset/earning amounting to Rp or more. 1 Demonstration of Main Policy Measures Page 7

16 Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia Indonesia 3 Market entry allowed 2008 yes yes For locally incorporated foreign that are required to form joint ventures with local partners. 11 licenses issued for foreign bank branches. No limit for locally incorporated subsidiaries yes 2008 yes 1 Market entry allowed 2008 yes While cross-border banking activities are not restricted, they must be reported periodically to the Bank of Indonesia according to certain rules. For instance: 1) Banks and non-finance institutions which make a loan amounting to USD 200, or more is obliged to make a report to the Bank of Indonesia; and 2) Non-finance institutions whose activity creates a foreign exchange traffic is obliged to make a report to the Bank of Indonesia if they have a total asset/earning amounting to Rp or more. 1 Demonstration of 3 Market entry allowed 2008 yes Indonesia 2008 yes For locally incorporated foreign that are required to form joint Main Policy Measures Page 8

17 Indonesia Indonesia Indonesia Japan Japan ventures with local partners. 11 licenses issued for foreign bank branches. No limit for locally incorporated subsidiaries yes 2008 yes 1 Market entry allowed 2008 yes OPEN, except marketing and direct solicitation are not allowed. 1 Demonstration of 3 Market entry allowed 2008 yes OPEN, except marketing and direct solicitation are not allowed. Japan Japan Japan Japan Japan Japan Japan 2008 yes Japan 1 Market entry allowed 2008 yes Japan 1 Demonstration of Japan 3 Market entry allowed 2008 yes Main Policy Measures Page 9

18 Japan Japan Japan Japan Japan Japan 2008 yes 1 Market entry allowed 2008 yes Credits of up to $30 million require notification to foreign exchange. Credits of an amount above $30 million require notification to the Bank of Korea. (Confirmed by the govt, May 28) 1 Demonstration of 3 Market entry allowed 2008 yes Commercial presence is permitted only to foreign financial institutions that will engage in the same types of services as in their country of origin (except for financial leasing). Main Policy Measures Page 10

19 2008 yes 1 Market entry allowed 2008 yes Transfers abroad by individuals in an amount exceeding $50,000 a year require prior notification to the Bank of Korea. (Confirmed by the govt, May 28) Malaysia Malaysia 1 Demonstration of 3 Market entry allowed 2008 yes Commercial presence is permitted only to foreign financial institutions that will engage in the same types of services as in their country of origin (except for financial leasing) yes 1 Market entry allowed 2008 yes Exchange control requirements apply. Companies on a per corporate group basis are allowed to borrow up to RM 50 million''s equivalent in foreign currency and residents up to RM 10 million in foreign currency. Any borrowing in excess of this would require prior approval of the Central Bank. 1 Demonstration of Main Policy Measures Page 11

20 Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia 3 Market entry allowed 2008 yes There is no limit on foreign ownership for Islamic Financial Institutions, which conducts business in international currencies. For all other, the foreign ownership limit is 49 percent Foreigners are allowed to own 100% in Islamic financial institutions that conduct business in international currencies. 100% foreign equity is also allowed for foreign as long as they adhere to certain restrictions, most importantly in terms of the number of branches they can operate. For all other, a limit of 49% on foreign ownership applies. All offshore in Labuan can be 100% foreign owned but there are limits on how much Malaysian residents can deposit or borrow from such Foreigners are allowed to own 100% in Islamic financial institutions that conduct business in international currencies. 100% foreign equity is also allowed for foreign as long as they adhere to certain restrictions, most importantly in terms of the number of branches they can operate. For all other, a limit of 49% on foreign ownership applies. All offshore in Labuan can be 100% foreign owned but there are limits on how much Malaysian residents can deposit or borrow from such. are usually announced from time to time on an adhoc basis. Such announcements will prescribe the criteria for applicants and the number of licenses to be issued. There is no requirement that a certain percentage of employees/directors must be Malaysian nationals, but such conditions may be specified under the terms of a particular license that is issued. 1 Market entry allowed 2008 yes Exchange control requirements apply. The deposits are considered investments abroad. 1) Where the depositor has no outstanding loans in Malaysia, there is no limit on foreign deposit. 2) Where the depositor is a corporation with domestic credit facilities, there is no limit on foreign currency held, and up to RM 10 million may be converted into foreign funds. 1 Demonstration of 3 Market entry allowed 2008 yes There is no limit on foreign ownership for Islamic Financial Institutions, which conducts business in international currencies. For all other, Main Policy Measures Page 12

21 Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia the foreign ownership limit is 49 percent Foreigners are allowed to own 100% in Islamic financial institutions that conduct business in international currencies. 100% foreign equity is also allowed for foreign as long as they adhere to certain restrictions, most importantly in terms of the number of branches they can operate. For all other, a limit of 49% on foreign ownership applies. All offshore in Labuan can be 100% foreign owned but there are limits on how much Malaysian residents can deposit or borrow from such Foreigners are allowed to own 100% in Islamic financial institutions that conduct business in international currencies. 100% foreign equity is also allowed for foreign as long as they adhere to certain restrictions, most importantly in terms of the number of branches they can operate. For all other, a limit of 49% on foreign ownership applies. All offshore in Labuan can be 100% foreign owned but there are limits on how much Malaysian residents can deposit or borrow from such. are usually announced from time to time on an adhoc basis. Such announcements will prescribe the criteria for applicants and the number of licenses to be issued. There is no requirement that a certain percentage of employees/directors must be Malaysian nationals, but such conditions may be specified under the terms of a particular license that is issued. 1 Market entry allowed 2008 yes There are no restrictions as long as the institution does not call itself a 'bank.' (Government comment, May 28) 1 Demonstration of 3 Market entry allowed 2008 yes Main Policy Measures Page 13

22 Philippines 2008 yes 1 Market entry allowed 2008 yes Marketing and direct solicitation in the country are allowed as long as a perspective is issued and the institution does not call itself a 'bank.' 1 Demonstration of 3 Market entry allowed 2008 yes 2008 yes 1 Market entry allowed 2008 yes This is allowed, but is subject to restrictions. Foreign loans obtained by private commercial and financial institutions intended for relending to public or private sector enterprises with maturities in excess of one year Main Policy Measures Page 14

23 Philippines Philippines Philippines Philippines Philippines required approval from the Central Bank ('Bangko Sentral ng Pilipinas'). 1 Demonstration of 3 Market entry allowed 2008 yes The Monetary Board may authorize foreign to operate in the Philippine banking system through either of the following modes of entry: (1) by acquiring, purchasing or owning up to 60% of the voting stock of an existing bank; or (2) by investing in up to 60% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines. However, a foreign bank may avail itself of only one mode of entry and own voting stocks of only one domestic bank or new banking subsidiary. Also, the General Law requires that at least 70% of the resources or assets of the entire banking system must be controlled by that are at least majority-owned by Filipinos at all times However, the General Law requires that at least 70% of the resources or assets of the entire banking system must be controlled by that are at least majority-owned by Filipinos at all times Foreign individuals and non-bank corporations can acquire up to 40% of the voting stocks of a domestic bank. A foreign bank may acquire, purchase or own up to 60% of the voting stocks of an existing bank. Additionally, the General Law requires that at least 70% of the resources or assets of the entire banking system must be controlled by that are at least majority-owned by Filipinos at all times. Note: The Monetary Board was temporarily able to authorize a foreign bank to acquire up to 100% of the voting stock of only one bank organized under the laws of the the Philippines during the period between 2000 and yes Republic Act no provides guidelines with regard to foreign. Philippines 2008 yes 70% of banking assets must be held by domestic, which are at least majority owned by Filipinos Philippines 2008 yes The number of non-filipino citizens permitted on the board of directors of a universal or commercial bank depends on the extent of foreign participation in the equity of the bank. For Islamic, the minimum required percentage of Filipinos directors is 60%, and for thrift, it is 51% (a majority). Additionally, the majority of the directors of a bank organized under the laws of the Philippines must be residents of the Philippines. Philippines 2008 yes Main Policy Measures Page 15

24 Philippines Philippines Philippines Philippines Philippines Philippines Philippines Philippines 1 Market entry allowed 2008 yes This is allowed, subject to approval of Central Bank. No person may deposit with a foreign bank an amount exceeding P5, without authorization from the Central Bank. (This applies if the money to be deposited in a foreign bank is denominated in Philippine Pesos.) 1 Demonstration of 3 Market entry allowed 2008 yes The Monetary Board may authorize foreign to operate in the Philippine banking system through either of the following modes of entry: (1) by acquiring, purchasing or owning up to 60% of the voting stock of an existing bank; or (2) by investing in up to 60% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines. However, a foreign bank may avail itself of only one mode of entry and own voting stocks of only one domestic bank or new banking subsidiary. Also, the General Law requires that at least 70% of the resources or assets of the entire banking system must be controlled by that are at least majority-owned by Filipinos at all times However, the General Law requires that at least 70% of the resources or assets of the entire banking system must be controlled by that are at least majority-owned by Filipinos at all times Foreign individuals and non-bank corporations can acquire up to 40% of the voting stocks of a domestic bank. A foreign bank may acquire, purchase or own up to 60% of the voting stocks of an existing bank. Additionally, the General Law requires that at least 70% of the resources or assets of the entire banking system must be controlled by that are at least majority-owned by Filipinos at all times. Note: The Monetary Board was temporarily able to authorize a foreign bank to acquire up to 100% of the voting stock of only one bank organized under the laws of the the Philippines during the period between 2000 and yes Republic Act no provides guidelines with regard to foreign yes 70% of banking assets must be held by domestic, which are at least majority owned by Filipinos 2008 yes The number of non-filipino citizens permitted on the board of directors of a universal or commercial bank depends on the extent of foreign participation in the equity of the bank. For Islamic, the minimum Main Policy Measures Page 16

25 Philippines Thailand Thailand Thailand Thailand Thailand Thailand Thailand Thailand 2008 yes 1 Market entry allowed 1 Demonstration of 2008.Not applicable. required percentage of Filipinos directors is 60%, and for thrift, it is 51% (a majority). Additionally, the majority of the directors of a bank organized under the laws of the Philippines must be residents of the Philippines. 3 Market entry allowed 2008 yes Must be locally incorporated and established as a limited public company yes No restrictions for a foreign bank operating through a single branch as its primary entry point. 75% of BOD must be Thai nationals for that are locally incorporated yes Thailand Thailand 1 Market entry allowed Thailand 1 Demonstration of 2008.Not applicable. Thailand 3 Market entry allowed 2008 yes Must be locally incorporated and established as a limited public company. Thailand Main Policy Measures Page 17

26 Thailand Thailand Thailand Thailand Thailand Viet Nam Viet Nam Viet Nam Viet Nam Viet Nam Viet Nam yes No restrictions for a foreign bank operating through a single branch as its primary entry point. 75% of BOD must be Thai nationals for that are locally incorporated yes 1 Market entry allowed 2008 yes The size of a loan must be in accordance with the Prime Minister''s annual approval on loan limitations. 1 Demonstration of 3 Market entry allowed 2008 yes Viet Nam Viet Nam Viet Nam 2008 yes 2008 yes In order to establish a bank in Vietnam, a foreign bank must have had assets whose value is equivalent to USD 10 billion in the year prior to the time of submitting an application for issuance of an establishment and operation license. Main Policy Measures Page 18

27 Viet Nam Viet Nam Viet Nam Viet Nam Viet Nam Viet Nam Viet Nam Viet Nam Viet Nam 1 Market entry allowed 1 Demonstration of 2008.Not applicable. 3 Market entry allowed 2008 yes yes In order to establish a bank in Vietnam, a foreign bank must have had assets whose value is equivalent to USD 10 billion in the year prior to the time of submitting an application for issuance of an establishment and operation license yes Main Policy Measures Page 19