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Short-Term Accommodation (“STA”) or Short-Term Rental Accommodation (“STRA”) has become a popular option amongst tourists, offering affordably priced accommodation coupled with different choices of lodging. The benefits are also felt by the community, bringing about economic opportunities to the area.

Yet, STA is not without its downside. Public nuisance issues have arisen from the influx of tourists causing noise pollution, traffic congestion and other manners of disturbance. Residents of stratified buildings (i.e., apartments and condominiums) have also raised concerns regarding the adequacy of the safety and protection of their homes. They believe that their safety has been compromised by unregistered guests, giving rise to increased risk of break-ins, theft, drug abuse, sex crimes, illegal gambling, money laundering, vandalism as well as increased risk of COVID-19 transmission amongst the tenants.

To address these problems, the Penang State Government intends to issue guidelines to regulate STA through by-laws set down by the Joint Management Bodies (“JMB”) and Management Corporations (“MC”) of each of the stratified buildings (“Proposed Guidelines”).

Under the Proposed Guidelines, STA will be regulated in the following manner:

• owners or operators of stratified premises/units will be required to register with the local authorities after obtaining approval from the JMB/MC through a special resolution which is supported by no less than ¾ valid votes which are counted at the AGM or EGM or any special meetings under section 70(2) of the Strata Management Act 2013 (“SMA”);[1]
• the maximum annual rental period is 30 days (except for service apartments). The operational days for every rental transaction are limited to three days. Any additional days requires approval from the relevant JMB/MC.[2] This would mean that each rental transaction can only be for a period of three days subject to further approval from JMB/MC, but any such period shall be subject to the maximum annual cap of 30 days;
• body temperature scanning and MySejahtera verification is mandatory;[3]
• the number of tenants in one premise/unit is controlled according to the size of the particular premise – a maximum of two people are allowed for each room;[4] and
• the owner or operator of the premises/units is required to produce annual statements and a STA operation report to the JMB/MC. The JMB/MC will then submit the reports to the Commissioner of Buildings (COB) with the Yearly Meeting Report.[5]

Current interpretation of section 70(2) Strata Management Act 2013 – are the Proposed Guidelines in line with it?

Pursuant to section 70(2) of the SMA, MC may, by special resolution, make additional by-laws to regulate the control, management, administration, use and enjoyment of the subdivided building or land and the common property, which includes for safety and security measures.

Furthermore, the ability of MC to create by-laws restricting the engagement in short-term rentals have been clarified by the Federal Court in Innab Salil & Ors v Verve Suites Mont’ Kiara Management Corporation [2020] 12 MLJ 16 (“Innab”). In Innab, the Federal Court held that management bodies may pass additional by-laws to restrict the use of parcels for short-term rentals. The Federal Court suggested that the defendants intended their premises to be utilised like a hotel or lodging facility, which amounted to the grant of a license instead of a tenancy.

Section 70(5) of the SMA states that no additional by-law shall be capable of operating:

1. to prohibit or restrict the transfer, lease or charge of, or any other dealing with any parcel of a subdivided building or land; and
2. to destroy or modify any easement expressly or impliedly created by or under the Strata Titles Act 1985 (“1985 Act”).

While “dealing” is not a defined term under the SMA, section 3 of the SMA provides that the SMA 2013 will need to be read with the 1985 Act as long as the provisions are not inconsistent. Within the 1985 Act, section 5 provides that it shall be read and construed as part of the National Land Code (“NLC”). Naturally, moving to section 5 of the NLC, dealing is defined as “any transaction with respect to alienated land effected under the powers conferred by Division IV, and any like transaction effected under the provisions of any previous land law, but does not include any caveat or prohibitory order”. Section 213 of the NLC (which is contained in Division IV), states that a “tenancy exempt from registration” is a dealing. In this case, the defendants argued that their transactions were “dealings” as short-term rental constitutes “tenancies exempt from registration” under section 213 of the NLC, and therefore the house rule prohibiting the use of parcels for short-term rentals was ultra vires. On this issue, the court held that when there is no proof of exclusive possession on the part of short-term renters and there is no evidence to suggest that occupancy of the renters is intended to be a tenancy, the said arrangements are nothing more than mere licenses and do not amount in law to ‘dealings’ within the ambit of section 70(5) of the SMA.

Guidelines passed by the JMB/MC will be considered as additional by-laws under section 70(2) of the SMA. The ratified by-laws will regulate the administration of the property on matters stated in section 70(2) of the SMA, to the extent that it is not inconsistent with the prescribed regulations under section 150 of the SMA (namely the Strata Management (Maintenance and Management) Regulations 2015) (“Strata Management Regulations”). They will be treated as additional conditions for purposes of regulation. The Strata Management Regulations covers the duties and powers of the JMB/MC, including regulations on matters such as inter-floor leakages, damage to party walls and requirements for the first annual general meeting held by the JMB/MC. Any by-laws passed under section 70(2) of the SMA must not be inconsistent with these regulations to be effective.

Premised on the above, the Proposed Guidelines are in line with the current interpretation of section 70(2) of the SMA.

Do the Proposed Guidelines have any force of law?

It should however be noted that without anything further, the Proposed Guidelines do not have any force of law. The issuance of the Proposed Guidelines alone is insufficient for the Penang State Government to compel MC to pass them.

The method and basis under which the Penang State Government intends to bring the Proposed Guidelines currently remains unclear. It therefore remains to be seen whether the Proposed Guidelines will have any legal force.

A considerable possibility of implementing the Proposed Guidelines would be through the implementation of a license requirement by the Penang State Government. Pursuant to section 102 of the Local Government Act 1976 (“LGA”), every local authority may from time to time make, amend and revoke by-laws for matters that are necessary or desirable for the maintenance of the health, safety and well-being of the inhabitants or for the good order and government of the local authority area and in particular for purposes specified under the section. Notably, under section 102(s) of the LGA, local authorities are allowed to make by-laws to control and supervise, by registration, licensing or otherwise, including in proper cases by prohibition, a trade, business or industry which is of an obnoxious nature or which could be a source of nuisance to the public or a class of the public.

As an illustration, the city council of Kuala Lumpur – Dewan Bandaraya Kuala Lumpur (Kuala Lumpur City Hall, “DBKL”), under its authority under section 102(s) of the LGA, implemented the Licensing of Trades, Businesses and Industries (Federal Territory of Kuala Lumpur) By-Laws 2016 (“2016 By-Laws”), which brought into effect the requirement of a business premises license. Pursuant to paragraph 3 of the 2016 By-Laws, any person who utilises a premise to carry out a business activity, as defined in the Schedule to the 2016 By-Laws, is required to obtain a business premise license from DBKL. Failure to comply attracts a fine not exceeding RM2,000 or imprisonment for a term not exceeding one year or both. If the offence continues, a fine not exceeding RM200 for each day during which the offence is continued after conviction.

As the operation of STA may be considered as an industry of its own, it is possible for the Penang State Government to pass a by-law requiring STA operators to register with the Penang State Government to operate as STA. The requirements for license registration could mirror the Proposed Guidelines, thereby bringing the Proposed Guidelines into effect.

Parallels to New South Wales STRA Code

In Australia, the New South Wales (“NSW”) government, in particular the NSW Fair Trading Department of Customer Service, has implemented the Code of Conduct for the Short-term Rental Accommodation Industry (“Code”). The Code lays down the rights and obligations of STRA industry participants and facilitates the oversight of the STRA industry as a whole.

The Code implements the requirement of a premises register, whereby premises used as STA must be registered on a premises register. Notably, hosts are required to take reasonable steps to ensure that guests comply with their obligations in the Code, which include not to:

• create noise that because of its level, nature, character, or quality, or the time it is made, is likely to harm, offend, or unreasonably disrupt or interfere with the peace and comfort of neighbours and other occupants of the premises;
• act in a violent or threatening manner towards neighbours or other occupants of the premises;
• act in a manner that could reasonably be expected to cause alarm or distress to neighbours and other occupants of the premises;
• use or enjoy the premises in a manner, or for a purpose, which interferes unreasonably with the use or enjoyment of common property by neighbours and other occupants of the premises;
• intentionally, recklessly or negligently cause damage to premises, any common property or any other communal facilities within the immediate vicinity of the premises, or any public property in the vicinity of the premises; or
• intentionally, recklessly or negligently damage the personal property of neighbours of the premises or other occupants of a strata or community scheme.

Guests are also responsible for the actions of visitors that they invite onto the premises during the occupancy period. They must ensure that visitors to the premises comply with the same obligations as if they were guests on the premises.

A notable difference between the Code and the Proposed Guidelines is that in addition to the hosts, obligations are placed on booking platforms and letting agents as well. The Code represents a comprehensive guideline that regulates the STRA industry in NSW.  We believe that the Code may serve as a suitable reference point for the Proposed Guidelines moving forward.

Treatment from stakeholders

Hotels, represented by the Malaysia Budget and Business Hotel Association (MyBHA), have refuted Airbnb’s claim that the Proposed Guidelines may affect Malaysia’s tourism industry and Penang’s economic growth. They have stated that they “do not agree [with] and refute the claim as … an accommodation through STRA is a business that does not have laws or regulations to regulate the business, and an unlicensed business is an illegal business”.[6] Based on public news sources, the hotel industry generally welcomes the Proposed Guidelines, stating that it will directly help to restore the hotel and tourism industry in Penang.

Airbnb has urged the Penang State Government to reconsider the Proposed Guidelines, noting that the Proposed Guidelines will affect the recovery of the tourism industry as well as the Penang economy.[7] The Malaysian Association of Homestay (Short-Term Rental) Practitioners has also joined the call, urging the Penang State Government to reconsider the Proposed Guidelines in high-rise buildings.[8] They have pointed out that this would make it harder for owners who rely on STA to pay off their housing loans.

Commentary

The Proposed Guidelines introduced by the Penang State Government will significantly alter the STA industry as it will change the landscape of the STA industry in Penang. Penang stratified homeowners may expect an improvement in the quality of living through the increased protection offered by the Proposed Guidelines.

In contrast, the effect of the Proposed Guidelines on STA platforms such as Airbnb, Agoda Homes, and Booking.com remains to be seen. In complying with the Proposed Guidelines, these STA platforms would need to adapt, through creative methods, to remain relevant in the tourist accommodation industry.

We believe that the introduction of the guidelines will improve competition in the hotel industry. STA homeowners and platforms will now be required to innovate to remain competitive with hotels.

If you have any questions or require any additional information, please contact Jeyakuhan S K Jeyasingam or the Zaid Ibrahim & Co. partner you usually deal with. This article was prepared with the assistance of Tee Kai Yan, a Trainee Associate in Zaid Ibrahim & Co.

This article is for general information only and is not a substitute for legal advice

[1] Article 17 of the Guidelines.

[2] Article 18 of the Guidelines.

[3] Article 19 of the Guidelines.

[4] Article 19 of the Guidelines.

[5] Article 20 of the Guidelines.

[6] https://www.theedgemarkets.com/article/malaysian-hoteliers-refute-airbnbs-claim-shortterm-rental-accommodation accessed 29 September 2022

[7] https://www.theedgemarkets.com/article/airbnb-urges-penang-govt-reconsider-draft-proposal-shortterm-rental-accommodation accessed 29 September 2022

[8] https://www.penangpropertytalk.com/2022/09/high-rise-owners-urge-penang-govt-to-review-homestay-restrictions/ accessed 29 September 2022

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Recently, there has been a shift from traditional regulatory reform (which focuses on reviewing existing legislation and improving them by way of amendments or new laws) towards non-regulatory solutions (such as using behavioural sciences to revise policy framework). This is a global widespread phenomenon where even ASEAN countries are not oblivious to its impact.

In this article, our Partner and Head of the Corporate & Government Advisory practice, Mohamad Izahar Mohamad Izham and Associate Amiza binti Ahmad Murad will uncover among others, the application of Behavioural Insights among the ASEAN countries, and lessons learned from Behavioural Insights projects in select countries.

Introduction

It is trite that when the subject matter of a contract is illegal, it is void for illegality. But what if the contract had already been performed or partially performed? This article examines the case of Patel v Mirza [2016] UKSC 42 and the Malaysian courts’ approach in light of this case.

The case of Patel v Mirza

Using advance insider information, which Mirza expected to obtain from Royal Bank of Scotland (“RBS”) contacts regarding an anticipated government announcement that would affect the price of RBS shares, Patel paid Mirza £620,000 in an agreement to bet on the price of the RBS shares. Such betting amounts to a conspiracy to commit insider dealing, an offence under section 52 of the Criminal Justice Act 1993. The scheme ultimately fell through and as a result, the intended betting did not take place. Mirza subsequently made promises to repay the money to Patel, but failed to do so. Consequently, Patel brought a claim against Mirza for recovery of the sums paid.

The crucial issue in this case is that, by allowing Patel’s claim, the court could be condoning a cause of action which was made on an illegal basis. As explained by Lord Mansfield in Holman v Johnson (1775) 1 Cowp 341, 343 “no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act”. The essential rationale of this illegality doctrine, as explained by the Supreme Court of Canada in Hall v Hebert [1993] 3 RCS 159, is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system.

The judge in the High Court, applying the “reliance principle” from Tinsley v Milligan [1994] 1 AC 340, held that Patel’s claim to recover the sum paid was unenforceable because he had to rely on his own illegality to establish his claim.  He also could not establish that his circumstances fell within the policy exception to the reliance principle known as the doctrine of locus poenitentiae, since he had not voluntarily withdrawn from the illegal scheme.

At the Court of Appeal, the majority agreed with the judge on the reliance issue, but disagreed with him on the application of the locus poenitentiae exception. They held that it was enough for the claim to succeed as the scheme had not been executed. It should also be noted that Gloster LJ agreed with the majority that Patel’s claim should succeed, but took a different approach in reaching the conclusion.

In the subsequent and final appeal, the UK Supreme Court unanimously dismissed Mirza’s appeal, holding that Patel could recover the money he had paid to Mirza. Further, the court held that the formal test in Tinsley v Milligan was no longer representative of the law, as it is inconsistent with the coherence and integrity of the legal system.

In his leading speech in Tinsley v Milligan, Lord Browne-Wilkinson held, as his starting point that title to property can pass under an unlawful transaction. However, the court would not assist an owner to recover the property if he had to rely on his own illegality to prove his title. In his judgment, Lord Toulson of the UK Supreme Court in Patel v Mirza noted that the case of Tinsley v Milligan has been subject to much criticism over the years.

Lord Toulson further held that a claimant, such as Patel, who satisfies the ordinary requirements of a claim for unjust enrichment, should not be debarred from enforcing his claim by reason only of the fact that the money which he seeks to recover was paid for an unlawful purpose. Instead, the court should consider whether it would be contrary to the public interest to enforce the claim, if to do so would be harmful to the integrity of the legal system.

In assessing whether the public interest would be harmed in that way, it is necessary:

• to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim;
• to consider any other relevant public policy on which the denial of the claim may have an impact; and
• to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts.

Application of the principles generally in Malaysian Law

The case of Patel v Mirza has been heralded as “a significant development in the law relating to illegality at common law” in the case of Stoffel & Co v Grondona [2020] UKSC 42. In Stoffel & Co, the Supreme Court applied the trio of considerations in Patel and held that Grondona’s claim is not barred by the illegality defence. In light of Patel v Mirza, the Malaysian approach to contract illegality should be considered.

Illegality in Malaysian legislation

A notable difference between the contract laws of the UK and Malaysia is that in Malaysia, contract principles are enshrined in legislation (the Contracts Act 1950) as well as common law.

Section 10(1) of the Contracts Act 1950 provides that all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void (emphasis added).

Section 24 of the Contracts Act 1950 defines lawful considerations and objects in the negative, where the consideration or object of an agreement is lawful unless:

• it is forbidden by a law;
• it is of such a nature that, if permitted, it would defeat any law;
• it is fraudulent;
• it involves or implies injury to the person or property of another; or
• the court regards it as immoral, or opposed to public policy.

In essence, any agreement which consideration or object falls within the five categories above is void.

The effect of a void contract (whether the agreement is discovered as void or eventually becomes void), as described in section 66 of the Contracts Act 1950, is such that any person who has received any advantage under the agreement or contract is bound to restore or make compensation for it, to the person from whom he received it.

Specific application of the Patel v Mirza principles in Malaysian case law

Generally, Malaysian courts welcomed and adopted the considerations and principles in Patel v Mirza.

In Tan Keen Keong v Tan Eng Hong Paper & Stationery Sdn Bhd & Ors and Other Appeals [2021] 2 CLJ 318 Tan Keen Keong (“TKK”) moved three separate petitions to wind-up three companies, i.e. the respondents. TKK petitioned to wind up these companies on the grounds that it was just and equitable to do so under section 218(1)(f) of the Companies Act 1965 (now section 465(1)(h) of the Companies Act 2016) because the affairs of the companies had been conducted in an unfair, unjust and inequitable manner by the persons in control of the companies. Amongst the allegations, it was alleged that there was illegality involved by claiming the existence of a ‘family fund’, where monies were siphoned from the companies and its subsidiaries due to illicit activities. At the High Court, the judge identified breaches of the Income Tax Act 1967 pertaining to the ‘family fund and under-counter activities’. The court agreed with the considerations set out in Patel v Mirza. It is necessary for the court to consider the purpose of the statute as well as to whether any other policy will be undermined or affected before striking down contracts or in this instance, winding-up corporations on the ground of illegality even if there are criminal penalties involved in the contraventions.

In particular, the Court of Appeal in Public Bank Bhd v Ria Realiti Sdn Bhd & Ors [2021] 4 MLJ 537 extensively explored the application of the Patel trio of considerations. The appellant brought a claim for the repayment of a loan against the respondent. The High Court had earlier dismissed the plaintiff’s claims on the grounds that the loan was to finance the purchase of native lands by non-natives (in contravention of section 17 of the Sabah Land Ordinance). The Court of Appeal, in allowing the appeal, held that the appellant was entitled to repayment of the loan. In reaching this decision, the learned judge Ravinthran JCA elaborated on each limb of the Patel considerations as follows:

(a) Consider the underlying purpose of the transgressed prohibition

On this issue, His Lordship began by analysing the purpose of the Sabah Land Ordinance (Cap 68) (“Ordinance”), specifically sections 17 and 64. His Lordship observed that the purpose of the prohibition in sections 17 and 64 of the Ordinance is to protect native ownership of the land held under native title and customary tenure. As the appellant is only seeking to enforce remedies under the loan and guarantee agreement, this would not have any impact on native ownership land nor amount to recognition of the first respondent (i.e. Ria Realiti Sdn. Bhd.) as the actual owner or recognition of the second respondent as a native nominee. The judge concluded that the purpose of the prohibition contravened will not be enhanced if the appellant is denied relief.

(b) Consider whether any other public policy would be affected by denial of the claim

On this limb, the Court of Appeal took into consideration that if the appellant was denied relief, a heavy burden would be placed on banks to investigate the purpose of loans and details of transactions involving nominees and actual purchasers. As observed by Zulkefli Makinudin FCJ in the case of Chang Yun Tai & Ors v HSBC Bank (M) Bhd and other appeals [2011] 7 CLJ 909, the courts should not impose requirements that would impede the flow of commerce or on the particular facts, render banking business impracticable or burdensome. Consequently, this favours the granting of relief to the appellant.

(c) Would denying the claim be a proportionate response to the illegality?

In considering proportionality, the Court of Appeal weighed the fact that there was a lack of intention on the part of the appellant, who is a mere financier. This was in contrast to the culpability of the respondents, whose, as described by His Lordship, “blatant and unmitigated illegality runs like a thread throughout the transaction…” His Lordship also observed that the prohibitions against dealings in native land by non-natives under the Ordinance is only directed at the immediate parties to a sale transaction, with no provisions outlawing a bank from financing such a transaction.

The judge also pointed out that the respondents are guilty of approbating and reprobating, as well as guilty of bad faith. He observed that none of the respondents contested the illegality argument during the winding up proceedings of the first respondent. Additionally, in this action, the second and fifth respondents are claiming that the appellant cannot rely on the loan agreements and related documents, yet, they are seeking the court’s aid for the return of the lands which were charged in the same transaction (by way of counterclaim).

Premised on the above, the court concluded that “the second to fifth respondents are unjustly using their own illegal actions to seek to reap a multi-million dollar windfall from a financial institution”. Consequently, denying the appellant relief would be an “unconscionable and totally disproportionate response”.

Applying the trio of considerations, the court concluded that the appellant is entitled to seek relief.

Commentary

As described by Harmindar Singh Dhaliwal JCA in Pang Mun Chung & Anor v Cheong Huey Charn [2018] 8 CLJ 663, the Patel approach is “consistent with upholding the integrity and harmony of the law by achieving an equitable result based on the facts of the case”. The landmark change in approach brought about by Patel v Mirza towards restitution of illegal contracts marks a welcomed change in the right direction, as the courts now may apply the necessary considerations to arrive at an equitable outcome. An example of one such consideration is where the person who had breached the contract had been unjustly enriched and should therefore make restitution to the other party.

The courts have gone to great lengths to point out that restitution may only be justified where the unlawful act, which is the subject matter of the illegal contract, has not been performed. In such circumstances, not permitting restitution to the aggrieved party would unjustly enrich the party who committed the breach of contract.

If you have any questions or require any additional information, please contact Jeyakuhan S K Jeyasingam or the Zaid Ibrahim & Co. partner you usually deal with. This article was prepared with the assistance of Tee Kai Yan, a Trainee Associate in Zaid Ibrahim & Co.

The Securities Commission Malaysia (“SC”) had on 30 June 2022 launched the Sustainable and Responsible Investment linked (“SRI-linked”) Sukuk Framework (“Framework”).^[1] Introduced as an extension of the initiatives under the Sustainable and Responsible Investment (“SRI”) Roadmap by SC to broaden SRI products offerings, this Framework is intended to facilitate fundraising by companies in addressing sustainability concerns such as climate change or social agenda.^[2] This would enable companies in these as well as other industries to transition into a low-carbon or net zero economy.^[3]

With the introduction of this Framework, private financing for sustainable development would no longer be limited to companies eligible to issue sukuk under the SRI Sukuk Framework but would also be available to a wider pool of eligible companies under the SRI-linked Sukuk Framework. Such introduction is timely for eligible companies to tap into the huge global sustainability financing market. As at 31 December 2021, the global sustainable bonds outstanding exceeded USD1 trillion with sustainability-linked bonds making up USD118.8 billion.^[4]

What is a SRI-linked sukuk?

Under the Framework, a SRI-linked sukuk is a sukuk where the financial and/or structural characteristics vary depending on whether the issuer achieves its predefined sustainability objectives within a predefined timeline.^[5] For example,^[6] a company issues a SRI-linked sukuk with a baseline profit rate of 5% per annum. The key performance indicator (KPI) is reduction in carbon dioxide (CO2) emission to 50 million tonne in Year 3 whereupon if it achieves the KPI, the profit rate will be reduced by 25 basis point (b.p.). In Year 3, the external verifier confirms that the CO2 emission target has been achieved. The profit payment is reduced to 4.75% as incentive for achieving the objective.

Differences between SRI-linked sukuk and SRI sukuk

Such primary feature of a SRI-linked sukuk greatly differs from that of a SRI sukuk where there is no such feature i.e. variation to the financial and/or structural characteristics for SRI Sukuk.^[7]

Further, there is no restriction on the use of the SRI-linked sukuk proceeds. Proceeds raised from a SRI-linked sukuk may be utilised for general purposes, whereas the proceeds from a SRI sukuk issued under the SRI Sukuk Framework must be applied exclusively for funding of any activities or transactions relating to the eligible SRI projects^[8] as set out in Chapter 20 of the Guidelines on Issuance of Corporate Bonds and Sukuk to Retail Investors (“Retail Bonds Guidelines”).

SC has also announced on 23 August 2022 that the SRI Sukuk and Bond Grant Scheme, to facilitate companies raising sukuk to meet sustainable finance needs, will also be extended to the Framework.^[23] This will enable eligible SRI-linked sukuk issuers to apply to the Grant Scheme to offset up to 90% of the external review costs incurred, subject to a maximum of RM300,000 per issuance. The expansion aims to encourage the issuances of SRI-linked sukuk by companies in carbon-intensive industries as they transition to better sustainability practices and low-carbon activities.

Further details of the requirements for the SRI-linked sukuk are set out in Chapter 9 of Part 3 of the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework and Chapter 23 of the Retail Bonds Guidelines.

A set of Frequently Asked Questions issued by the SC on the SRI-linked Framework can be accessed here.

This article was authored by Andreanna Ten. If you have any questions or require any additional information, please contact the Zaid Ibrahim & Co partner you usually deal with.

This alert is for general information only and is not a substitute for legal advice.

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[1] Securities Commission Malaysia, ‘SC releases new sukuk framework to facilitate companies’ transition to net zero’ (30 June 2022) <https://www.sc.com.my/resources/media/media-release/sc-releases-new-sukuk-framework-to-facilitate-companies-transition-to-net-zero>.

[2] Supra note 1.

[3] Supra note 1.

[4] Securities Commission Malaysia, ‘SC releases new sukuk framework to facilitate companies’ transition to net zero’ (30 June 2022) <https://www.sc.com.my/resources/media/media-release/sc-releases-new-sukuk-framework-to-facilitate-companies-transition-to-net-zero>.

[5] Securities Commission Malaysia, ‘Frequently-Asked Questions Sustainable and Responsible Investment Linked (SRI-Linked Sukuk Framework)’ (30 June 2022) <https://www.sc.com.my/api/documentms/download.ashx?id=d34d6f67-8f41-4e20-a478-b54fbb817389>.

[6] Supra note 5.

[7] Supra note 5.

[8] Supra note 5.

[9] Paragraph 23.08, Retail Bonds Guidelines.

[10] Guidance to Paragraph 23.08, Retail Bonds Guidelines.

[11] Paragraph 23.10, Retail Bonds Guidelines.

[12] Guidance to Paragraph 23.10, Retail Bonds Guidelines.

[13] Paragraph 23.12, Retail Bonds Guidelines.

[14] Guidance to Paragraph 23.12, Retail Bonds Guidelines.

[15] Paragraph 23.13, Retail Bonds Guidelines.

[16] Guidance to Paragraph 23.13, Retail Bonds Guidelines.

[17] Paragraph 23.16, Retail Bonds Guidelines.

[18] Paragraph 23.17, Retail Bonds Guidelines.

[19] Supra note 5.

[20] Supra note 5.

[21] Paragraph 23.19, Retail Bonds Guidelines.

[22] Paragraph 23.20, Retail Bonds Guidelines.

[23] Securities Commission Malaysia, ‘Expansion of SRI Sukuk and Bond Grant Scheme to Facilitate Sustainable Finance’ (23 August 2022) <https://www.sc.com.my/resources/media/media-release/expansion-of-sri-sukuk-and-bond-grant-scheme-to-facilitate-sustainable-finance>.

In a very important and critical change, the First Schedule to the Employment Act 1955 (“EA”) has been amended by way of Ministerial Order on 12 August 2022. The change now means that…

The EA now applies to all

The salary threshold to limit applicability of the EA has been removed. The EA now applies to:

“1. Any person who has entered into a contract of service.”

There are exceptions

However, there are certain provisions that have been carved out from being applicable across the board.

The table below sets out the items that are only applicable to the following (Non-Exempt Employees):

• those who earn a monthly wage of RM4,000 or less per month; or
• those who, regardless of how much they earn, are covered by section 2 of the First Schedule, e.g. employees who are, engaged in or who supervise manual labour; operate or maintain vehicles; engaged to work on Malaysian registered vessels; and domestic employees.

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With these amendments in place slated to be effective from 1 September 2022, alongside the amendments made under the Employment (Amendment) Act 2022, it is certainly critical for employers to take note of the changes and implement policies and procedures to ensure compliance with the requirements of the Act.

Anticipated Changes to the EA

In a previous article, we have touched on the changes that were passed by Parliament earlier this year.

In short, based on the revisions to the First Schedule, employers must be ready to meet the requirements of the EA in areas that include but are not limited to the following:

• maternity leave;
• paternity leave;
• maximum work hours per day/per week (must at least be reflected in the employment contract to be within EA limits even though overtime may not be payable);
• minimum annual leave entitlement;
• minimum sick leave entitlement (with a standalone 60 days leave if hospitalisation is required);
• flexible work arrangements;
• discrimination complaints;
• ensuring conduct does not constitute “forced labour”;
• application to the DGL for approval before hiring foreign employees;
• creating contracts with a 3^rd party if there is an arrangement for the supply of labour to such 3^rd party as a Contractor for Labour; and
• notice to raise awareness on sexual harassment.

Whilst the date for roll out of these changes have been set for 1 September 2022, there still remain areas of uncertainty, such as the types of orders that the Director General of Labour can make in disputes on discrimination, whether there is any test as to when flexible work arrangements ought to be granted or rejected and what circumstances can constitute forced labour.

Certainly a good time for employers to revisit and review their employee handbooks and policies!

If you have any questions or require any additional information, please contact Yong Hon Cheong or the Zaid Ibrahim & Co partner you usually deal with.

The Labuan Companies Act 1990 (“the Act”) was recently updated to be more effective and to meet the ever-changing needs of the financial sector. These welcomed changes bring Labuan’s incorporation, registration and administration of Labuan companies, domestic and foreign, in line with international standards. Key updates include procedures relating to directors’ qualifications, introduction of beneficial ownership, striking off companies, and increase in penalties.

Companies based in Labuan will need to update their registration in line with the updated provisions to avoid penalties. The amended act allows a six-month grace period to allow companies to comply with the new provisions.

Other amendments for the Labuan financial sector allow licensed Labuan insurance/takaful broker to handle insurance or reinsurance of domestic insurance business, transacted in the Ringgit Malaysia in certain cases.

A. Labuan Companies (Amendment) Act 2022

The Labuan Companies (Amendment) Act 2022 (“Amendment Act”) was gazetted on 9 June 2022 and came into force on 10 June 2022.

Key changes are discussed as follows.

Directors

Resident Directors

Previously, Labuan companies had to have at least one director who may be a resident director. This has been amended to provide that a Labuan company may have one or more directors, at least one of which must be a resident director.

A resident director is one who is:

• a trust officer of a Labuan trust company authorised by the Labuan Financial Services Authority (“LFSA”) and made available by the Labuan trust company to be appointed as a resident director; OR
• a natural person who:
  - has attained the age of 18;
  - is otherwise of full legal capacity;
  - fulfils other criteria or requirement determined by LFSA; and
  - has consented in writing to be appointed as a resident director.

Thus, a body corporate which is a domestic company or a Labuan company wholly-owned by a Labuan trust company will no longer be eligible to be a resident director. Companies who do not meet the updated requirements have six months from 10 June 2022 (the coming into force date) to comply with the new provisions.

The Amendment Act also provides that any director who discloses any information obtained as by way of his office will be penalised RM3 million or imprisonment for a term not exceeding five years or both.

Directors’ disqualification

The Amendment Act has substituted section 90, relating to directors’ disqualification. While the disqualifying events remain the same (i.e. director should not have been convicted of offence, not involved in fraud, bribery or dishonesty, or not bankrupt or insolvent), the new section allows LFSA to disqualify a director if LFSA deems them unfit.

Further, the burden is shifted to the Labuan company to ensure that no person who is acting or nominated to act as a director is a disqualified person. Failure to do so is an offence and upon conviction, can be fined RM1 million or imprisonment for a term not exceeding five years or both.

Disclosure of interests

The Amendment Act now has included a penalty provision in respect of a director’s duty to disclose interest in contracts, property, offices and etc. as set out under section 91 where failure to comply with section 91 is punishable with a fine of RM3 million or imprisonment for a term not exceeding five years or both.

New penalties for breach of duty and liability

New penalties have also been introduced for two offences under section 92 with regards to the duty and liability of officers:

• failure of a director to exercise reasonable care, skill and diligence with the knowledge, skill and experience which may be expected of a director having the same responsibilities, and any additional knowledge, skill and experience which the director in fact has, will be an offence punishable with a fine of RM3 million or a term of imprisonment not exceeding five years or both; and
• where a solvency statement is made without any reasonable grounds for the opinions, the penalty is RM500,000 or a term of imprisonment not exceeding five years or both.

Further, the officer who breached this section shall be liable to the company for any profits made by him and for any damage suffered by the company as a result of the breach.

Beneficial ownership

New sections have been introduced to deal with beneficial ownership of a Labuan company. Beneficial ownership is defined as:

• a natural person who owns or controls a Labuan company or foreign Labuan company, in whole or in part, through direct or indirect ownership or control of shares or voting rights or other ownership interest in the Labuan company or foreign Labuan company; or
• who exercises effective control and influence in the Labuan company or foreign Labuan company as may be determined by LFSA.

A Labuan company is now required to take reasonable steps to find out and identify its beneficial owner. This can be done by issuing notice requiring:

• that any member who knows or has reasonable grounds to believe, or any other person, is a beneficial owner of the subject company to:
  - state whether he is a beneficial owner of the subject company;
  - state whether he knows or has reasonable grounds to believe that any other person is a beneficial owner of the subject company; and
  - provide such other information requested in the notice; and

• any members, within the time specified in the notice, to inform the subject company whether their ownership in the subject company is subjected to an arrangement in which another person is entitled to control the member’s interest or right, and provide the particulars and parties to such agreement.

Introduction of bearer share and bearer share warrants

A new section 46A prohibits a Labuan company (including a foreign Labuan company) from:

• issuing a bearer share or bearer share warrants;
• converting a share into a bearer share or bearer share warrants into share warrants; or
• exchanging a share for a bearer share.

Any purported issuance, conversion or exchange, or even including any enabling provision in the company’s memorandum or articles to do so, is void.

Striking off

The striking off powers under the Act have been widened to provide that a Labuan company may be struck off if it:

• fails to pay its annual fees and additional amounts;
• fails to appoint a replacement resident secretary under section 93(2). Previously, LFSA has the discretion to strike off a Labuan company in the event that the Labuan company fails to appoint a replacement secretary within 30 days from the date of resignation. This has been tightened to state that the company is deemed to be struck off for failure to replace a resident secretary;
• contravenes any provisions of the Act or any other law relating to Labuan financial services;
• surrenders or LFSA revokes its licence, approval or registration under the Labuan Financial Services and Securities Act 2010 or Labuan Islamic Financial Services and Securities Act 2010; and
• is not carrying on business or is not in operation.

New provisions have been included to prohibit directors, members, approved liquidators and receivers of a Labuan company whose name has been struck off the register from incurring any new liability.

Notifications to LFSA

The Act has been amended to impose an obligation on a Labuan company to notify LFSA of any transfer of shares or debentures or any change in the information submitted on the transfer within 30 days.

Further, where there is any change in the chargee or details of the charge, under the new section 84A, a Labuan company is required to lodge with LFSA a notice of the assignment or variation containing such information as may be determined by LFSA.

Other amendments

The Act has been amended to remove the restrictions and notification requirements relating to dealings by a Labuan company with residents and in Ringgit Malaysia as they are no longer applicable. Also, LFSA may, in addition to a Labuan trust company, require any person that is approve by LFSA, to subscribe for and file documents electronically.

In relation to capital reduction, the penalty for wilfully concealing the name of a creditor entitled to object the reduction, or wilfully misrepresenting the nature or the amount of debt or claim of a creditor, or who aids, abets or is a party to any such concealment or misrepresentation has been increased to RM3 million or imprisonment for a term not exceeding five years or both.

With regards to the lodgment of solvency, failure of the directors of the Labuan company to lodge a certified copy of the solvency declaration within 30 days with LFSA is an offence, with the penalty being a fine of RM50,000 or imprisonment for a term not exceeding three years or both.

Section 85(1) has been amended to provide that a registered office in Labuan of the Labuan company has been extended to be any other office approved by LFSA.

B. Labuan Financial Services and Securities Amendments

The Labuan Financial Services and Securities (Amendment) Act 2022 and the Labuan Islamic Financial Services and Securities (Amendment) Act 2022 have also been gazetted and deemed to come into force on 1 January 2019. Such amendments stipulate compliance requirements of international taxations standards that prohibit harmful tax practices.

The amendments provide for the definition of Labuan insurance business and Labuan takaful business, and that a licensed Labuan insurance or takaful broker may handle insurance or reinsurance of domestic insurance business, transacted in the Ringgit Malaysia provided that such activity does not include any activity that is regulated or prohibited under other written law in Malaysia.

Commentary

The Amendment Act supports accountability, enhanced disclosure, further facilitation of businesses and dealings, and better board governance. While the amendments are certainly welcomed, greater clarity is needed on certain introductions. One such question is whether the provision relating to resident director is limited to such director residing in Labuan. There may be further interesting developments to provide clarity on certain introductions but in the meantime, existing Labuan companies should start reviewing its corporate documents and information to ensure that they are in line with the Amendment Act.

If you have any questions or require any additional information, you may contact Stephanie Choong Siu Wei or the Zaid Ibrahim & Co partner you usually deal with.

This article is for general information only and is not a substitute for legal advice.

“Audentes Fortuna Juvat” (Fortune Favours the Bold) – a Latin proverb that perhaps spurred the aspirations of many and sculpted the resilience of humanity to thrive above catastrophes, pandemics and economic downturns. This desire to rise beyond circumstances has led to the explosion of creative innovations that challenges traditional systems and propelling humanity to a new frontier.

The insurgence of digital innovations which redefined payment methods, delivery services, dining cultures, shopping experiences have woven itself into the fabric of our current lifestyle. That said, the maturing digital landscape which revolutionised the financial services sector and inculcated a seamless user culture, now demands for a further evolution of digital offerings.

Blockchain technology which shadows the spotlight introduction of the digital assets ecosystem has often been misunderstood as a co-dependent solution exclusive to the issuance of digital assets. Nonetheless, truth be told, Blockchain technology itself is neutral and its offering promotes, in all simplicity, the ability for a peer to peer maintenance and authentication of information.  This comes in useful whether for our day-to-day digital transactions, or to provide a decentralised infrastructure for digital assets offerings.

Fungible Tokens

The popularity of fungible tokens rose around 2017. The concept of a decentralised digital currency which operates free of any central control or the oversight of banks or government began to creep in and set its footprint in our nation’s financial ecosystem. The hedging and trading of Bitcoin coupled with alternative fund raising mechanisms such as Initial Coin Offerings (“ICO”) exploded in popularity amongst entrepreneurs and innovators, creating a fresh vertical of investment opportunities or offerings through the issuance of digital assets.

Unregulated as they were, the insurgence of ICOs, enticed the attention of global regulators where the US Securities and Exchange Commission (SEC) and the US Supreme Court applied the Howey’s Test to determine if digital asset offerings qualify as “investment contracts” and if so, those transactions are considered securities^[1] under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Similarly in 2019, our Ministry of Finance issued the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019^[2] (the “Order”) which describes Digital Assets to encompass both Digital Currency and Digital Tokens. Digital Assets which fulfils the criteria as defined under the Order are prescribed as securities and are subject to the provisions of the Capital Markets and Services Act 2007 (the “CMSA”) which in turn falls within the purview of the Securities Commission of Malaysia (the “SC”).

Following the Order, the SC introduced additional frameworks which includes the introduction of the Digital Asset Exchange License (the “DAX”) under the Recognised Market Operator Guidelines (the “RMO Guidelines”), where parties with the proper set of expertise can obtain approval to operate a crypto trading platform.

To date we have four approved DAX consisting of Luno, Sinegy, Tokenized and MX Global. In a recent article,^[3] SC announced that over RM16 billion in digital assets and cryptocurrencies were traded in Malaysia between August 2020 and September 2021 amid an uptrend in prices of blockchain-based assets.

Recognising the potential innovation where alternative fund raising is conducted through a tokenised regime, the SC in 2020 introduced under the RMO Guidelines and the Digital Assets Guidelines (the “DA Guidelines”), the Initial Exchange Operator framework (the “IEO”), where companies are able perform to tokenised fundraising exercises through approved licensed IEO Operators in a regulated environment. Unlike ICOs, the IEO is positioned to provide better clarity and a supervised environment to marginalised fraudulent propositions in view to protect investor interests while promoting legitimate value propositions.

Whilst value propositions with their respective white papers can now be vetted through an IEO platform, continuous efforts in ensuring public confidence was further promoted through the introduction of a registration regime under the DA Guidelines for Digital Custodians. The introduction of a DAX coupled with an IEO platform and a Digital Custodian framework, seems to complete the architecture which provides sufficient broad strokes for “check and balance” whilst balancing minimal interference in the economic growth of the decentralised market in Malaysia.

To date, SC has approved the registration of two   IEO platform operator, namely Kapital DX Sdn Bhd and Pitch Platforms Sdn Bhd^[4]. Perhaps, while “the gold standard” was the economic totem of the age, digital assets may spring as the lifeblood of a parallel yet alternative financial system potentially setting the foundation for an alternative standard or a metaverse economy.

Non Fungible Tokens

Non Fungible Tokens or NFTs has recently dominated the headlines of the crypto world. Whilst fungible tokens are starting to firm its grip and gain its traction in the financial world, spinning away from stable coins and government backed coins, NFTs has generated immense interest in recent months. The ideation years in creating an authentication token for purposes of embracing intellectual properties has now come into fruition when Ethereum introduced the ERC-721 standard.

To put it simply, NFTs are digital tokens that provide representation of rights, authentication or guarantee of ownership to digital images, videos, games and other forms of digital assets. NFTs are non-fungible in nature.  In other words, each NFT is uniquely identifiable. Generally, when a NFT is bought or sold, the asset never changes hands. Rather, the transfer of the asset is recorded and the ownership of the asset is assigned in the blockchain.

Due to the NFTs’ unique characteristics, unlike fungible tokens, further uncertainty looms over the regulatory vertical in determining whether such digital tokens would fall within the definition or parameters of a security. In the US, the Commodity Futures Trading Commission (the “CFTC”) interprets commodities to include cryptocurrencies such as bitcoin.^[5] However, the CFTC has yet to provide an official guidance about whether NFTs should be considered commodities or whether NFTs should be treated as securities under the Securities Act of 1933 and the Securities Exchange Act of 1934.

Separately, the Financial Conduct Authority in UK suggests that generally, NFTs are likely to be ‘unregulated tokens’. In Singapore, the Monetary Authority of Singapore adopts the approach to differentiate NFTs under its existing laws. Whether an NFT will be regulated is subject to whether that NFT warrant a utility, payment or security characteristic.

That said, it is noteworthy that, the European Union in its recent issuance of the ‘Markets in crypto-assets Regulation’ (MCA) (which is expected to be in force in 2025) expanded the definition of crypto assets to include NFT.

Whilst global regulators seem to be distant in navigating the regulations pursuant to NFTs, closer to home, it would seem that NFTs may arguably fall out of the criteria as set out in the Order. Nonetheless, it remains useful to thread with caution as the influx of new methods of using NFTs, especially through NFT gaming (where NFTs are mined for returns in fiat currency), remains untested and may potentially assume the risk of being prescribed as securities under the Order.

To date, the SC has yet to clarify whether NFTs is prescribed as a security. Thus, NFTs remain a white space of which regulation are yet to be put in place by the Malaysian regulators.

Difference between Fungible Tokens and Non Fungible Tokens^[6]

Medium of Exchange

Undeniably, with the significant influx of investments and fiat currencies into the crypto market, the concept of embracing digital assets as a medium of exchange has begun to gain traction. Pioneers in the global payment system space, such as Visa, has emerged to embrace the acceptance of digital currencies as a medium of exchange. Likewise in Japan, crypto currencies such as bitcoin and ethereum have been accepted as a medium of exchange, however it is treated very much like an asset rather than an alternative currency.

Similarly, onshore retailers^[7] have begun to accept cryptocurrencies as a medium of exchange for their goods and services. Nonetheless, in a joint statement between Bank Negara Malaysia and SC published on 6 December 2018, BNM announced that digital currencies and digital tokens are not recognised as legal tender nor as a form of payment instrument that is regulated by BNM.^[8] This position has recently been reaffirmed by the current Deputy Finance Minister II.^[9]

That said, the doctrine of freedom of contract^[10] is embedded in the Malaysian Contracts Act 1950 which states that all agreements are contracts if made with the free consent of parties competent to contract, for a lawful consideration and lawful object. Whilst cryptocurrencies has yet to obtain legal tender status, it remains recognised as a medium of exchange as upheld by the Courts of Malaysia in the case of Luno Pte Ltd & Another v Robert Ong Thien Cheng.^[11]  Nonetheless, while parties are free to adopt digital assets as a medium of exchange,^[12] such adoption does not exempt parties from compliance with other laws and regulations that are relevant to the said transaction (e.g. tax regimes).

Embracing Change

Perhaps it is no longer appropriate to assess this space from the safety of an observation tower.   With the new norm and the volatility of the present economic climate, the insurgence of an alternative yet parallel financial system may be a healthy development.  As we embrace these changes, regulation remains the key in balancing both economic and social interest.

“Entrepreneurship rests on a theory of economy and society. The theory sees change as normal and indeed as healthy. And it sees the major task in society – and especially in the economy – as doing something different rather than doing better what is already being done. That is basically what Say, two hundred years ago, meant when he coined the term entrepreneur. It was intended as a manifesto and as a declaration of dissent: the entrepreneur upsets and disorganizes. As Joseph Schumpeter formulated it, his task is “creative destruction.”
― Peter F. Drucker, Innovation and Entrepreneurship: Practice and Principles

If you have any questions or require any additional information, you may contact Jonathan Lim or the Zaid Ibrahim & Co partner you usually deal with.

Jonathan Lim is a corporate partner in the Communications, Multimedia and Technology practice group of Zaid Ibrahim & Co, and helms the Fintech portfolio of the firm. He is also serving as the Secretary for the Fintech Association of Malaysia for the term 2021/2022.

The views expressed here are the writers’ own.

This article is for general information only and is not a substitute for legal advice.

[1] ‘Howey Test’ (Investopedia) <https://www.investopedia.com/terms/h/howey-test.asp>: Securities are fungible and tradable financial instruments used to raise capital in public and private markets. The public sales of securities are regulated by the SEC. The definition of a security offering was established by the Supreme Court in a 1946 case called SEC v. W.J. Howey Co. In its judgment, the court derives the definition of a security based on four criteria (a) the existence of an investment contract, (b) the formation of a common enterprise, (c) a promise of profits by the issuer, and (d) the use of a third party to promote the offering.

[2] Please see here for a copy of the Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019.

[3] Ahmad Naqib Idris, ‘SC: Over RM16b in cryptocurrencies, digital assets traded in Malaysia as at September 2021’ The Edge Malaysia (26 October 2021) <https://www.theedgemarkets.com/article/sc-over-rm16b-cryptocurrencies-digital-assets-traded-malaysia-september-2021>.

[4] ‘SC Registers Two Initial Exchange Offering (IEO) Operators’ (Fintech News, 23 March 2022) <https://fintechnews.my/30958/blockchain/sc-registers-two-initial-exchange-offering-ieo-operators/>.

[5] Commodity Futures Trading Commission, ‘Bitcoin Basics’ (CFTC) <https://www.cftc.gov/sites/default/files/2019-12/oceo_bitcoinbasics0218.pdf>.

[6] See ‘Difference between FT and NFT’ (Social NFT, 20 April 2021) <https://socialnft.market/difference-between-ft-and-nft/> and Gwyneth Iredale, ‘The Difference Between Fungible and Non-Fungible Tokens’ (101 Blockchains, 24 March 2021) <https://101blockchains.com/fungible-vs-non-fungible-tokens/>.

[7] Team Luno, ‘Where to Spend Bitcoin in Malaysia’ (Luno, 7 August 2021) <https://discover.luno.com/spend-bitcoin-in-malaysia/>.

[8] Please see ‘Joint Statement on Regulation of Digital Assets in Malaysia’ (Bank Negara Malaysia, 6 December 2018) <https://www.bnm.gov.my/-/joint-statement-on-regulation-of-digital-assets-in-malaysia>.

[9] Kevin Helms, ‘Malaysia’s Deputy Finance Minister: Crypto Not Suitable as Means of Payment or Store of Value’ (Bitcoin.com, 3 March 2022) <https://news.bitcoin.com/malaysias-deputy-finance-minister-crypto-not-suitable-as-means-of-payment-or-store-of-value/>.

[10] Ooi Boon Leong & Ors v Citibank NA [1984] 1 LNS 26.

[11] [2019] 1 LNS 2194.

[12] Please see ‘Half a Bitcoin Used to Buy 3 Acres of Land in Sabah’ (Property Guru, 11 January 2018) <https://www.propertyguru.com.my/property-news/2018/1/167836/half-a-bitcoin-used-to-buy-3-acres-of-land-in-sabah>.

Climate change, net-zero and carbon neutral commitments are now fuelling the growth of electric vehicle (EV) sales. Other factors such as high oil prices come into play too and they contribute to the global shift to emission-free motoring. Across ASEAN, many countries are aiming for a more significant impact for the EV industry by introducing policies encouraging the use of EVs. These lead to the implementation of EV roadmaps, the introduction of tax exemptions and incentives and collaborations with the private sector.

This publication sets out how ASEAN is driving towards green mobility with a focus on the growth of the EV industry. Increased government support will lead to more investors in the region, which in turn will encourage more regional growth and choices in the EV market. The future of EV is promising, offering much choice for existing assets and incumbent players alike, and provide new opportunities and promising returns.

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