Improvements to Enhance the Attractiveness of the Banking Sector in Hong Kong

Deposits in Hong Kong banks have been protected under the Deposit Protection Scheme (“DPS”) for almost two decades, providing stability and security. One of the conclusions of a recent review of the system was, among other things, the raising of the deposit protection limit by HK$300,000. These and other improvements have been implemented as of 1 October 2024 in order to continue ensuring confidence in the banking sector in Hong Kong.

Since 2006, the deposit protection system in Hong Kong has been established under the Deposit Protection Scheme Ordinance (Cap. 581) (“DPSO”) with the primary objective of protecting depositors against the potential failure of banks in Hong Kong.

The operation of the deposit protection system is overseen by the Hong Kong Deposit Protection Board (“HKDPB”), an independent statutory body established under the DPSO.

The special features of the DPS include:

• all licensed banks are DPS members unless exempted by the HKDPB;
• most types of deposits, whether in Hong Kong dollars or foreign currencies, are equally protected under the DPS;
• the current protection limit is HK$500,000 per depositor per bank; the deposit protection system is supported by the Deposit Protection Fund (“DPS Fund”) established under the DPSO, into which members of the deposit protection system contribute levies.

During the latest review, strengthening Hong Kong’s financial centre was called for.

Following the recommendations of the HKDPB, the Deposit Protection Scheme (Amendment) Bill 2024 was introduced into the Legislative Council for the first time on 8 May 2024.

The Deposit Protection Scheme (Amendment) Ordinance 2024 (“Amendment Ordinance”) was subsequently passed on 3 July 2024. It aims to enhance the aforementioned function of the deposit protection system as a financial safety net and to strengthen the protection of depositors conducting banking business in Hong Kong.

Some of the key changes include:

• raising the DPS protection limit from HK$500,000 to HK$800,000;
• providing additional recourse for depositors in the event of a bank merger or acquisition;
• improving the levy mechanism so that the DPS Fund can reach the target level within a specified period to facilitate the implementation of the increased protection limit under the amendment;
• mandatory display of the DPS membership sign on the electronic banking platforms of DPS members;
• streamlining the negative disclosure requirement for non-protected deposit transactions for private banking clients, i.e., improving customer awareness in the event that the transactions they conduct are not covered by the DPS.

The Amendment Ordinance was promulgated on 12 July and implemented in two phases. The first phase took effect on 1 October 2024 and included measures requiring less preparatory work, such as raising the deposit protection limit to HK$800,000, the refined levy mechanism, and the requirement for mandatory display of the DPS membership sign. The remaining changes were implemented in the second phase, which took effect on 1 January 2025.

The Amendment Ordinance appears to have been generally well received and widely welcomed, in the hope that the amendment will enhance depositor protection and confidence, strengthen the stability of our banking system, and reinforce Hong Kong’s niche as an international financial hub.

Your point of contact in Hong Kong: Stefan Schmierer

Ravenscroft & Schmierer

22nd Floor, Bupa Centre
141 Connaught Road West
Hong Kong, SAR

CELL:    +852 9229 6603
TEL:      +852 2388 3899
FAX:      +852 2385 2696

www.rs-lawyers.com.hk
sschmierer@rs-lawyers.com.hk

Generative AI for SMEs and Legal Challenges in Its Use in China

Effective implementation of generative artificial intelligence (“AI”) enables companies to save costs and operate more profitably by supporting and automating manual and repetitive work processes.

Chinese companies have already recognized the advantages of generative AI tools. According to a new study by the SAS Institute, 83% of companies in China are using AI tools in sales, marketing, production, and other areas.

Due to strong competition, cost pressures, and other market-specific challenges in China, it is essential for SMEs to also engage with AI locally in China in order to potentially integrate generative AI tools into their business activities in China and thereby secure their competitiveness in the market.

For the subsidiaries of foreign-invested enterprises in China, however, the question arises as to whether and to what extent it is technically and legally possible or permissible to use generative AI models of foreign origin in China. SMEs should therefore familiarize themselves with the relevant laws in China in order to identify and assess potential legal risks.

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Your point of contact in China: Rainer Burkardt

Burkardt & Partner

Suite 2507, 25/F, Bund Center
222 Yanan Road (East)
Shanghai 200002, P.R. China

CELL:    +86 186 1687 7153
TEL:      +86 21 6321 0088
FAX:    +86 21 6321 1100

www.bktlegal.com
info@bktlegal.com

Entry into Force of the Data Protection Act Approaches

In August 2023, the “Digital Personal Data Protection Act, 2023” was passed and promulgated. To date, however, the Act has not yet entered into force. The Indian government has now put forward a draft implementing regulation for discussion, a clear indication that the Act and regulation are soon to come into effect. The regulation contains a number of clarifications regarding the statutory provisions.

Particular emphasis is placed on the protection of minors. In addition, they allow the government to define personal data for so-called “Significant Data Fiduciaries” (not yet defined) that may not be transferred abroad. As a rule, personal data may only be transferred abroad as long as the Indian rules on data access by foreign governments are complied with. These provisions go beyond the Act, which only permitted the Indian government to restrict transfers to certain countries. One remains curious about the final regulation and its implementation.

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Your contact person in India: Dr. Jörg Schendel

Suman Khaitan & Co.

W-13, West Wing, Greater Kailash Part-II
Delhi 110048, Indien

CELL:     +91 97 11 08 04 03
TEL:       +91 11 49 50 15 00
FAX:       +91 11 49 50 15 99

www.sumankhaitanco.in
germandesk@sumankhaitanco.in
schendel@adwa-law.com

New Obligations for Employers as of April 2025

On 1 April 2025, a reform of the retirement age system came into force in Japan, introducing new obligations for employers. The new regulation is based on the “Act on Stabilization of Employment of Elderly Persons” and marks the next step in a series of legislative adjustments aimed at facilitating the continued employment of older workers.

Traditionally, many Japanese employment contracts provided for the termination of employment upon reaching the age of 60. In view of the country’s demographic developments, the Japanese legislator had already passed a reform in 2012 requiring companies to enable continued employment until the age of 65. However, companies were initially allowed to decide for themselves which employees would benefit from this. Since April 2025, this option of selection has been eliminated: employers must now offer continued employment until the age of 65 to all interested employees.

The law gives companies three options: first, they can abolish the retirement age altogether. Second, they can raise the retirement age to at least 65. Third, they can introduce a continued employment system, for example, by initially retiring employees at the age of 60 and then rehiring them.

When continuing employment, changes to salary and working conditions must be carefully reviewed. If an employee continues in a role with identical responsibility and comparable scope of duties, unjustified salary reductions are not permissible.

International companies with branches in Japan are also subject to the new regulations. It is now essential to adjust internal processes as well as to review and revise employment contracts and workplace rules.

Your point of contact in Japan: Michael Müller

Mueller Foreign Law Office

Shin-Kasumigaseki Building
3-3-2 Kasumigaseki, Chiyoda-ku
Tokyo 100-0013, Japan

TEL:      +81 3 6805 5161
FAX:      +81 3 6805 5162

www.mueller-law.jp
info@mueller-law.jp

FTA and Malaysia Agree on Free Trade Agreement

On 11 April 2025, the member states of the European Free Trade Association (EFTA) – Iceland, Liechtenstein, Norway, and Switzerland – and Malaysia successfully concluded negotiations on an Economic Partnership Agreement (MEEPA). The talks comprised a total of 17 negotiation rounds, interrupted by a pause between 2017 and 2020.

The aim of the agreement is to elevate the economic relations between the EFTA states and Malaysia to a new level. Among other things, it provides for improved market access for goods, services, and investments. In addition, the gradual elimination of tariffs on industrial and agricultural products is planned. The agreement also creates improved conditions for public procurement and contains provisions on sustainable development as well as digital trade.

Malaysia is considered one of the most dynamic countries in Southeast Asia and plays a central role in the so-called China+1 strategies of many international companies. The new agreement strengthens the position of Switzerland and the other EFTA states in trade with the ASEAN region. The signing of the agreement is scheduled for June 2025.

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Ihr Ansprechpartner in Malaysia: Dr. Harald Sippel

Aqran Vijandran

5-2A, Medan Klang Lama 28, 419, Jalan Klang Lama
Wilayah Persekutuan
Kuala Lumpur, Malaysia

TEL:      +60 1 8211 4958

www.aqranvijandran.com
sippel@adwa-law.com

Key Insights for Businesses and Taxpayers

In recent years, the issue of “Base Erosion and Profit Shifting” (BEPS) has become a central concern for governments and businesses worldwide, and the Philippines is no exception. The BEPS Action Plan, developed by the OECD, aims to curb aggressive tax planning strategies that exploit gaps and inconsistencies in international tax rules. With the increasing interconnectedness of the global economy, the risks of base erosion and profit shifting have grown, requiring stricter compliance and greater tax transparency.

The term “Base Erosion and Profit Shifting” (BEPS) refers to tax strategies used by multinational companies to deliberately shift profits from high-tax jurisdictions to low- or no-tax jurisdictions. As a result, the tax base in the countries where the actual economic activity takes place is reduced. This leads to competitive distortions and diminished government revenues. To counter this, the OECD developed an action plan with 15 measures, including stricter reporting obligations and improved cooperation among tax authorities.

The Philippines, as part of its membership in the Global Forum on Transparency and Exchange of Information, has taken significant steps to implement BEPS recommendations. In 2019, it signed the Multilateral Instrument (MLI), which modifies existing double taxation agreements to prevent treaty abuse and improve dispute resolution. In addition, the Bureau of Internal Revenue (BIR) has tightened transfer pricing rules, requiring intragroup transactions to be documented and taxed at arm’s length.

Key BEPS-related reforms in the Philippines include:

• Transfer Pricing Regulations: Alignment with OECD guidelines to ensure arm’s length pricing for related-party transactions.
• Country-by-Country Reporting (CbCR): Introduction of reporting requirements to disclose global business and tax structures of multinational groups.
• Anti-Treaty Shopping Rules: Measures to prevent the misuse of double taxation agreements.
• Taxation of Digital Business Models: Reforms aimed at capturing digital income within the Philippine tax base.

As a result, companies in the Philippines are required to review their transfer pricing documentation, implement CbCR requirements, monitor tax developments, and cooperate with tax authorities to ensure compliance. While these measures strengthen the tax system, they also increase administrative requirements for businesses.

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Your point of contact in the Philippines:  Lutz Kaiser

Villanueva Gabionza & Dy Law Offices

20th/F Corporate Center
139 Valero St., Salcedo Village
Makati City 1227, Philippines

CELL: +63 995 985 4957
TEL: +63 2 8813 3351
FAX: +63 2 8816 6741

www.vgdlaw.ph
kaiser@adwa-law.com

A Catalyst for Further Growth and Innovation in Singapore and Malaysia

On 7 January 2024, the governments of Singapore and Malaysia signed an agreement to establish the Johor-Singapore Special Economic Zone (JS-SEZ). This marked an important milestone in the economic cooperation between the two countries. The JS-SEZ is a significant project designed to leverage the complementary strengths of Singapore and Johor (Malaysia) to attract international investment.

Just one year after the initial decision to create the JS-SEZ, official details of interest to international investors have now been released: The JS-SEZ is a special economic zone aimed at promoting investment and facilitating the movement of goods and people between Malaysia and Singapore. Covering an area of 3,505 km², it is located in the Malaysian state of Johor, directly north of Singapore. Both governments are working hand in hand to attract not only investment from Singapore but also projects from around the globe. The initial goal is to secure 50 high-quality investments for the JS-SEZ within five years of its establishment, thereby creating 20,000 skilled jobs.

The special economic zone will be divided into nine representative areas, each open to different industries. The JS-SEZ is particularly targeting companies in the manufacturing, logistics, digital industry, healthcare, and education sectors. Aerospace, medical devices, electrical and electronics, chemicals, and pharmaceuticals have also been designated as new focus sectors. To facilitate business relocation, the establishment of the JS-SEZ will be supported by investment-friendly measures. Plans include a passport-free immigration system and improved transport links between Johor and Singapore. Malaysia will also set up a central point of contact for investors, the Invest Malaysia Facilitation Centre – Johor (IMFC-J).

In addition, Malaysia will establish infrastructure funds, and Singapore will set up funds to support investment by national and multinational companies in Singapore. Reduced corporate and income tax rates are also under discussion, although official announcements are still pending. The JS-SEZ and its promising implementation plans have the potential to transform Johor into a future economic hub of the region and further strengthen the competitiveness of both countries.

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Your point of contact in Singapore: Dr. Andreas Respondek

Respondek & Fan Pte Ltd

1 North Bridge Road
#16-03 High Street Centre
Singapore 179094

CELL:      +65 9751 0757
TEL:        +65 6324 0060
FAX:       +65 6324 0223

www.rflegal.com
respondek@rflegal.com

What DACH Companies Need to Consider Now

Last week, the Taiwanese Parliament (Legislative Yuan) passed in third reading a new law declaring four holidays as statutory public holidays and one as a general day off. The law, which will come into effect after ratification by the President, impacts all companies operating locally.

Effective immediately, Teacher’s Day (28 September), Taiwan Retrocession Day (25 October), Constitution Day (25 December), as well as the day before Chinese New Year’s Eve (小年夜) will again be recognized as statutory public holidays. In addition, May 1 (Labour Day), which was previously granted only to certain professional groups, will now become a general public holiday for everyone.

For businesses, this translates into an annual increase of five non-working days. This has direct implications for workforce planning, leave arrangements, overtime compensation, and payroll. HR teams and management of DACH subsidiaries in Taiwan should proactively update internal calendars, employment contracts, and payroll systems.

The reform is rooted in a political initiative, primarily driven by the Kuomintang (KMT), which emphasized the cultural and historical value of these holidays. While the ruling Democratic Progressive Party (DPP) expressed economic concerns, it nevertheless allowed the law to pass.

Practical Recommendation:
Companies from the DACH region with a presence in Taiwan should promptly review and update their HR policies/employee handbooks, ensure compliance with Taiwanese labor standards, and communicate the changes transparently to their employees. In particular, firms with multiple sites across the country should recalibrate their workforce and resource planning to avoid operational disruptions. If employment contracts explicitly list public holidays, these must also be amended.

Although the purpose of the reform is to honour cultural traditions, the additional time off for employees represents a clear challenge for employers—one that should not be underestimated.

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Your point of contact in Taiwan: Michael Werner

Eiger Law

Bldg. A, 2F, 25-2 Ren Ai Rd, Sec. 4
Taipei 10685
Taiwan

CELL:      +886 9 8726 1326
TEL:        +886 2 2771 0086
FAX:       +886 2 2771 0186

www.eiger.law
info@eiger. law

Update on E-Commerce Regulations in Thailand

On 5 June 2024, a new directive issued by the Ministry of Commerce in Thailand came into effect, modernizing and harmonizing the legal framework for electronic commerce. The “Notification Re: Business Regulations that Commercial Operators Must Register and Businesses that are Not Subject to the Commercial Registration Act B.E. 2567” aims to simplify registration requirements in the e-commerce sector and thereby facilitate access to Thailand’s digital economy.

A key element of the new regulation is the exemption of certain legal entities from the obligation to register for e-commerce under the Thai Commercial Registration Act B.E. 2499 (1956). Exempted from this requirement are, among others, registered partnerships, limited partnerships, limited companies under the Thai Civil and Commercial Code, public limited companies under the Public Limited Companies Act B.E. 2535 (1992), foreign companies with branches in Thailand, as well as so-called “farmer groups” registered under the Farmer Group Royal Decree B.E. 2547 (2004).

By contrast, natural persons and certain forms of partnerships—such as ordinary partnerships, cooperative groups, and joint ventures—are now explicitly subject to the registration requirements of the said Commercial Registration Act. The notification also specifies which business activities must in any case be commercially registered. These include, among others: rice mills, sawmills with a daily sales volume exceeding 300 baht or a total sales value of over 10,000 baht, trade agents or representatives with comparable turnover, craft enterprises and production companies with relevant production or sales volumes, as well as e-commerce providers selling goods or services online.

Legal entities already registered with the Department of Business Development in Thailand and holding a valid business registration are exempt from the additional requirement of applying for a specific e-commerce license. However, a direct marketing license is still required in order to operate lawfully in Thailand.

Finally, the directive also contains transitional provisions for businesses already registered under the old legal framework. These businesses will continue to meet the existing registration requirements unless the new regulations provide otherwise. However, commercial registration certificates of ordinary partnerships, limited partnerships, and private and public companies will lose their validity once the notification is published in the Royal Gazette of Thailand.

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Your point of contact in Thailand: Dr. Andreas Respondek

Respondek & Fan Ltd

United Center, 39th Floor, Suite 3904 B
323 Silom Road
Bangkok 10500, Thailand

CELL:     +66 89 896 4048
TEL:       +66 2 635 5498
FAX:       +66 2 635 5499

www.rflegal.com
respondek@rflegal.com

On 21 September 2024, the Vietnamese government adopted Decision No. 1018/QD-TTg on the “Strategy for the Development of the Semiconductor Industry 2030 with Vision to 2050.” This comprehensive policy paper aims to gradually position Vietnam as a new hub in the global semiconductor supply chain:

Phase 1 (2024–2030): Establishment of fundamental capacities in research, design, production, and testing. The goal is to attract foreign direct investment to establish 100 chip design companies, one manufacturing facility, and ten semiconductor packaging and testing plants. The semiconductor industry is targeted to generate annual revenues of USD 25 billion.

Phase 2 (2030–2040): Moving towards technological self-reliance, this phase focuses on expanding local semiconductor production. Plans call for increasing the number of qualified professionals to 100,000 and raising annual revenues from the sector to USD 50 billion.

Phase 3 (2040–2050): By 2050, Vietnam aims to become a global leader in semiconductor manufacturing with advanced research and development capacities, achieving annual revenues of USD 100 billion and 20–25% value-added.

To achieve these goals, the strategy focuses on the following measures:

• Innovation in chips and core technologies: Targeted R&D investments and production of specialized chips focusing on artificial intelligence, the Internet of Things, and digital transformation.
• Building a domestic semiconductor ecosystem: Creating an attractive environment with appropriate infrastructure and fostering local cooperation and partnerships with global companies.
• Further development of the electronics industry: Policy measures to promote next-generation electronic devices and strengthen Vietnam’s international position.
• Human resource development: Heavy investment in training and retraining to develop highly skilled professionals, leveraging partnerships with other countries such as the United States.
• Foreign investment: Comprehensive investment incentives and streamlined administrative procedures to make Vietnam a preferred destination for high-tech FDIs.

In summary, the “Strategy for the Development of the Semiconductor Industry 2030 with Vision to 2050” underscores Vietnam’s ambition to establish itself as a key player in the global semiconductor supply chain. The three-phase plan emphasizes building core capacities, fostering innovation, and developing skilled human resources. While the strategy sets out promising goals, Vietnam still faces challenges such as competition with established manufacturing nations and the need for substantial investment and technological expertise. Recent developments, however—such as NVIDIA’s agreement with the Vietnamese government to establish an AI data center, combined with Vietnamese technology company FPT’s announcement to build a USD 200 million artificial intelligence factory—are encouraging signs.

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Your point of contact in Vietnam: Christian A. Brendel

Brendel & Associates Law Co., Ltd.

Golden Tower, 9th Floor, 6 Nguyen Thi Minh Khai
Dakao Ward, District 1
Ho-Chi-Minh-Stadt, Vietnam

CELL:     +84 98 978 4791
TEL:       +84 28 3911 2008
FAX:       +84 28 3911 2010

www.brendel-associates.com
info@brendel-associates.com