• In China, the state council announced a Decision on Investment System Reform in July 2004, according to which the FDI project ratification procedure would be further simplified. In addition, provincial governments would be given increased power for project ratification. As regards the latter, the FDI project ratification threshold for provincial governments will be increased from $30m at present to $100m for projects encouraged by the central government, and from $30m to $50m for projects limited by the central government.

 

  • Zambia is in the process of revising its Investments Act. The revised Act, which was scheduled to go before the Cabinet in September 2004 and which has not yet been made public, is expected to offer incentives in line with those in other Southern Africa Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA) countries. If the amendments are approved by the Cabinet, the revised Act will be tabled in parliament for debate and final approval.

 

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  • Indonesia has passed a new bankruptcy law aimed at protecting foreign banks and insurance companies, some of which have been declared bankrupt by courts despite being clearly solvent. According to the new law, only the finance minister can file a bankruptcy petition against insurance companies and state-owned utility companies in commercial courts, while the attorney general and the central bank are the only bodies permitted to file similar petitions against banks.

 

  • In Bangladesh, the Cabinet has approved the Private Sector Infrastructure Guidelines, which allow both domestic and foreign investment in 14 infrastructure sectors. The guidelines, which essentially provides the required legal coverage, state that the government would not invest in areas fit for private sector investment. Local investors would be encouraged to invest in infrastructure projects worth less than $25m.

 

  • Iran’s parliament has approved the first reading of a bill that would give it the power of veto on FDI projects. The bill states that the government would have to seek the approval of parliament before signing major deals with foreign companies. The proposed legislation would apply to any contracts signed since March 20, 2004 in which a foreign company has more than a 49% stake. It also singles out contracts related to airport services and telecommunications.

 

  • A new law has been enacted in Pakistan aimed at protecting FDI and resolving business and tax-related disputes. Two investment treaties, concluded between Pakistan and the US and between Pakistan and Germany, incorporate the principles of this law as regards protection of investment, business operations, as well as policy continuity covering imports, exports, taxation, dispute resolution and production. The treaties also debar lower courts from taking up disputes involving FDI, and assign the High Courts as the first forum of dispute resolution.

 

  • A draft legislative initiative in Georgia dictates that no foreign legal entity will be able to buy Georgian state property if a foreign government owns more than 25% of that entity. The law is aimed at preventing companies that are partially owned by foreign governments from participating in the country’s privatisation process. However, an amendment to the privatisation law that would reflect such an initiative has not been approved by the parliament.

 

  • Egypt has unveiled plans to cut corporate and income taxes, as well as custom duties. Specifically, both corporate and income taxes will be reduced to 20%, while the average tariff rate will be reduced from 14.6% to 9% and the number of products subject to tariffs will be slashed from 13,000 to 6000.

 

  • In Sri Lanka, the Cabinet has approved a proposal to introduce promotional incentives to revive companies – approved by the Board of Investment – that have become defunct or are presently on the verge of being shut down.

 

  • Malaysia’s budget for 2005 is redefining and simplifying investment incentives in response to foreign investor demands.

 

  • New bilateral investment treaties, double taxation avoidance treaties (DTTs) and free trade agreements (FTAs) have been drawn up between:

     

    -Bangladesh and Norway (DTT)

    -Republic of Korea and Sudan (DTT)

    -Japan and Mexico (FTA)

    -Bahrain and US (FTA)

    -Bangladesh and US (DTT).