• Indonesia is planning to introduce new incentive packages to oil investors to encourage them to invest and operate in marginal or ageing oil fields. The package might also include a provision for increasing an investor’s share in such fields. There are currently 66 marginal fields in Indonesia, as well as 21 ageing fields, that have not been fully utilised. The details of the package are still under discussion.

 

  • Algeria has had a new Hydrocarbons Law approved. The new law moves away from a regime based on production-sharing for oil and gas exploration, to a regime based on taxes and royalties. Under the new legislation, companies will be liable for five layers of taxes and royalties: an area tax (with a maximum rate of $400 per square kilometre annually); a royalty, set on a sliding scale depending on volume of production and differentiated by geographic zone; a petroleum revenue tax; a complementary profit tax; and a property tax on fixed assets.

 

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  • Pakistan is introducing a new bill aimed at strengthening the Foreign Investment (Promotion and Protection) Act of 1976. Under the new bill, litigation cases will be dealt by high courts within a period of six months. Any appeals against the decisions of high courts would need to be filed in the Supreme Court.

 

  • Russia is planning to introduce legislation aimed at forbidding foreign investors from gaining control of strategic areas of the economy. Limits on foreign investment will be imposed in the areas of national security, infrastructure, defence, natural monopolies and strategic natural resources.

 

  • Vietnam is drafting a new Investment Law that will allow foreign investors to purchase, buy back, merge or affiliate companies operating in the country. The proposed law will also allow foreign investors to buy back stakes in Vietnamese joint-stock enterprises. The law will set a ceiling of 49% of a company’s equity stake for ‘strategic’ economic areas. Otherwise, foreign investors are allowed to own up to 80% of a company’s stake. Another provision of the bill seeks to compensate foreign investors if they incur losses because of changes in government policies.

 

  • Israel has amended its Encouragement of Capital Investment Law, providing additional tax benefits to foreign investors and simplifying the procedure for approving investments qualifying under the law. Among other things, approved investments may qualify for cash investment grants, depending on their geographic location, and may also be entitled to receive fiscal benefits. Investors would be given the choice of foregoing all incentives for approved investments, and receive instead a tax holiday of up to 10 years, depending on their geographical location.

 

  • South Korea has removed a ban on the construction and expansion of manufacturing plants in Seoul and adjacent metropolitan regions, for foreign affiliates in 25 high-tech industries, in order to attract more FDI.

 

  • Uruguay is planning to approve several tax policy changes aimed at promoting foreign and domestic investment this year. Agriculture, forestry, transportation, ICT and services are among the sectors that will be benefit from the changes.

 

  • Chile has a new law intended to promote investment in power generation. The law provides more flexibility on price increases, as well as longer-term contracts. These provisions should help investors in power generation to recoup their investments faster and increase the predictability of their returns.

 

  • Saudi Arabia plans to increase the cap on FDI in local banks to 60%, from 49%, in order to fulfil membership requirements for the World Trade Organisation.

 

  • Bolivia’s Congress has finally approved the revised Energy Bill, which would tax foreign gas companies at a rate of 32% (on top of a rate of 18% in royalty payments). This controversial bill has already prompted some companies (Petrobras) to announce reductions in investments.

 

  • New bilateral investment treaties (BIT), double taxation-avoidance treaties (DTT) and free trade agreements (FTA):

 

-Philippines and China (BIT)

-Thailand and New Zealand (BIT)

-Malta and San Marino (DTT)

-Pakistan and Austria (DTT)

-Iran and Pakistan (DTT)

 

 

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