17.10.2025
Newsletter October 2025
We are happy to inform you about the latest legal developments in Asia. The authors of the articles are at your disposal for further questions and information.
HONG KONG: The Closer Economic Partnership Agreement (CEPA) between Hong Kong and Mainland China
First established in 2003, CEPA is Hong Kong’s very first FTA (Free Trade Agreement) since its handover to Mainland China. It is designed to enhance economic cooperation and integration between Hong Kong and the Mainland market. Although part of China, Hong Kong has always maintained a hard customs boundary – as such, different regulations and tariffs apply. CEPA smoothens out these variations.
Hong Kong has been often recognized as the world’s freest business market, enjoying numerous competitive advantages over among others, the Mainland. Freedom of capital movement and low taxation, make it an attractive destination for investment and trade. The CEPA framework comprehensively covers the trade and economic relationship between Hong Kong and the Mainland, focusing on four key areas: trade in goods, economic and technical cooperation, trade in services and investment. It fosters a more favorable business environment and facilitates smoother access to the markets and resources of both jurisdictions.
—
Ihr Ansprechpartner 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
JAPAN: Reform of the Business Manager Visa in Japan: New Barriers for Entrepreneurs from October 2025
In August 2025, the Japanese government released a draft to tighten the conditions for the Business Manager (keiei kanri) visa. The proposed changes are scheduled to take effect in October 2025 and will raise the threshold for foreign entrepreneurs. They are part of a broader policy debate about immigration and entrepreneurial activity in Japan.
Until now, it was sufficient to show either five million yen in capital (about 30,000 Euros) or to employ two full-time staff in Japan. Under the new rules, the required capital will rise to 30 million yen, and at least one full-time employee resident in Japan must be hired. The previous choice between capital and staffing will therefore disappear: both are now mandatory.
The background to the reform includes concerns that this visa category is used merely as a pathway to residence, without the establishment of viable businesses or the creation of jobs. The outcome of recent elections has also increased pressure on the government to introduce stricter controls.
The reform will have consequences for current and future visa holders. Anyone wishing to establish or maintain a business in Japan under this visa category must now commit substantially more capital and hire staff. Also existing visa holders may face these new standards upon renewal. Entrepreneurs should therefore review their compliance with the revised criteria, or assess if other visa categories are a possible alternative to secure their stay in Japan.
Ihr Ansprechpartner 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
KOREA: Key Provisions and Implications of the Revised Korean Labor Standards Act
- Background of the Korean Labor Standards Act Revision
Under the previous legal framework before the revision, criminal penalties for wage arrears were often limited to small fines or resulted in non-prosecution due to workers withdrawing their complaints (offenses requiring the victim’s consent for prosecution). Consequently, the amount of unpaid wages in 2024 reached a record high of 2.0448 trillion won, a 14.6% increase from the previous year, affecting approximately 283,000 workers.
Therefore, the revised Korean Labor Standards Act (Act No. 20520, promulgated October 22, 2024, effective October 23, 2025) was enacted to eradicate chronic and habitual wage non-payment practices by employers and to ensure workers can stably secure wages—the minimum resource for livelihood—and maintain their lives.
Through this amendment, the scope of delayed interest payments on unpaid wages has been expanded to include current employees. It also establishes grounds for expanding and strengthening sanctions against habitual wage defaulting employers, including credit sanctions, restrictions on government support, contractual disadvantages in public sector bidding, introduction of punitive damages, requests for travel bans, and exclusion from the application of the provision on crimes requiring a complaint.
Below, we summarize the key provisions of this amended Korean Labor Standards Act and examine the changes expected following its implementation.
- Key Provisions of the Revised Korean Labor Standards Act
- Expansion of the scope of application for late interest on unpaid wages to include workers currently employed (Revised Article 37)
Article 37, Paragraph 1 of the Korean Labor Standards Act
Current:
An employer shall pay wages required under Article 36 and benefits under Article 2(5) of the Workers’ Retirement Benefits Security Act (only lump sums apply) pursuant to Article 36 of this Act, the employer shall pay interest on the delay at a rate prescribed by Presidential Decree, within the range of up to 40 per cent per annum, taking into account economic conditions such as the overdue interest rate applied by banks pursuant to the Banking Act, for the number of days of delay from the day following the date on which the reason for payment arose until the date of payment.
Amendment:
If an employer fails to pay all or part of the wages specified in any of the following items by the respective due dates, the employer shall pay late interest at a rate prescribed by Presidential Decree, within the range of up to 40 per cent per annum, based on the number of days delayed from the day following the due date until the date of payment. This rate shall be determined considering economic conditions such as the overdue interest rate applied by banks under the Banking Act.
1. Wages payable under Article 36 and benefits under Article 2(5) of the “Workers’ Retirement Benefits Guarantee Act” (only lump-sum payments): The day 14 days after the occurrence of the payment reason
2. Wages payable under Article 43: The day specified under Article 43(2)
Prior to amendment, Article 37(1) of the Korean Labor Standards Act imposed an obligation on employers to settle all monetary payments to workers within 14 days of their retirement date, with late interest accruing if the deadline was missed. However, the amended Korean Labor Standards Act introduced new subparagraphs to Article 37(1), stipulating that: Late interest shall be added if settlement is not made within 14 days of the retirement date (Subparagraph 1); and when the monthly wage payment date passes (Item 2). The late interest rate is 20% per annum, as stipulated in Article 10 of the Enforcement Decree of the Korean Labor Standards Act (Presidential Decree No. 35436, partially amended on April 8, 2025).
That is, previously, for employees still working, even if wages were not paid on the monthly payment date, late interest under Article 37 of the Korean Labor Standards Act was not added. However, following the amendment to the Korean Labor Standards Act, starting October 23, 2025, if wages are not paid on the monthly payment date, late interest under Article 37 of the Korean Labor Standards Act will be added.
- Establishment of ‘Habitual Wage Defaulting Employer’ Criteria and Strengthening of Economic Sanctions (Articles 43-2 to 43-6)
Category:
Expansion of Employers Subject to Providing Wage Default Data (Article 43-3, Paragraph 1)
Establishment of Habitual Wage Defaulting Employer Criteria
and Restriction of Subsidies and Support for Habitual Wage Defaulting Employers (Article 43-4)
Current
The Minister of Employment and Labor shall provide the following information regarding employers who have been convicted twice or more within three years prior to the date of provision of wage arrears data, and whose total wage arrears amount within one year prior to the date of provision exceeds 20 million won:
and the amount of unpaid wages, etc. (hereinafter referred to as “unpaid wages data”). However, this shall not apply in cases specified by Presidential Decree, such as when the provision of unpaid wages data is ineffective due to the death or business closure of the delinquent employer.
<Newly Established>
Revised Bill
The Minister of Employment and Labor may provide data concerning the personal details and amount of unpaid wages, etc., of an employer in arrears (hereinafter referred to as “unpaid wages data”) to a comprehensive credit information agency as defined in Article 25(2)(i) of the Credit Information Use and Protection Act, when requested by such agency, if deemed necessary to prevent the non-payment of wages, etc. However, this shall not apply in cases where providing the data is ineffective due to the employer’s death or business closure, or for other reasons specified by Presidential Decree.
- An employer who has been convicted twice or more for wage arrears within three years prior to the date of provision of the wage arrears data, and whose total amount of wage arrears within one year prior to the date of provision exceeds 20 million won.
- A habitual wage arrears employer as defined under Article 43-4.
① The Minister of Employment and Labor may designate any person (including the representative in the case of a corporation) falling under any of the following items as a habitual wage defaulting employer (hereinafter referred to as a “habitual wage defaulting employer”) after deliberation by the committee.
- An employer who has failed to pay wages, etc. (excluding retirement benefits, etc. under Article 12(1) of the Workers’ Retirement Benefits Security Act) to workers for three months or more during the year immediately preceding the year in which the data on unpaid wages, etc. was provided.
- An employer who has failed to pay wages, etc., to workers five or more times during the one-year period immediately preceding the year in which the data on unpaid wages, etc., was provided, and whose total unpaid amount is 30 million won or more.
② When designating an employer as a habitual wage defaulting employer pursuant to Paragraph 1, the Minister of Employment and Labor shall provide the employer with an opportunity to explain within a period of three months or more.
③ The Minister of Employment and Labor may request the head of a central administrative agency, the head of a local government, or the head of a public institution designated by Presidential Decree (hereinafter referred to as “head of central administrative agency, etc.”) to take the measures listed in the following subparagraphs against habitual wage defaulting employers and may provide them with wage default data. The head of central administrative agency, etc.
③ The Minister of Employment and Labor may request the head of a central administrative agency, the head of a local government, or the head of a public institution designated by Presidential Decree (hereinafter referred to as “heads of central administrative agencies, etc.”) to take the following measures against habitual wage defaulting employers and may provide them with wage default data. Furthermore, if the heads of central administrative agencies, etc. request wage default data from habitual wage defaulting employers for the purpose of taking the measures listed below, such data may be provided.
③ The Minister of Employment and Labor may request the head of a central administrative agency, the head of a local government, or the head of a public institution designated by Presidential Decree (hereinafter referred to as “heads of central administrative agencies, etc.”) to take the following measures against habitual wage defaulting employers and may provide them with wage default data. Furthermore, if the heads of central administrative agencies, etc. request wage default data from habitual wage defaulting employers for the purpose of taking the measures listed below, such data may be provided.
③ The Minister of Employment and Labor may request the heads of central administrative agencies, heads of local governments, or heads of public institutions designated by Presidential Decree (hereinafter referred to as “heads of central administrative agencies, etc.”) to take the measures listed in the following subparagraphs against habitual wage defaulting employers and may provide them with data on unpaid wages, etc. Furthermore, when the heads of central administrative agencies, etc. request data on unpaid wages, etc., of habitual wage defaulting employers for the purpose of taking the measures listed in the following subparagraphs, such data may be provided.
- Exclusion from participation in or restrictions on receiving various subsidies or support projects under the Act on the Management of Subsidies, the Act on the Management of Subsidies for Local Governments, or individual laws.
- Disadvantageous measures such as point deductions during pre-qualification screening for bidding participation or during the review and determination of successful bidders under the Act on Contracts to Which the State is a Party or the Act on Contracts to Which Local Governments are a Party.
(Omitted for brevity)
The existing Korean Labor Standards Act limited employers subject to wage arrears data disclosure to “employers who have been convicted twice or more for wage arrears within the three years prior to the disclosure date, and whose total wage arrears within the one year prior to the disclosure date amount to 20 million won or more.” It did not stipulate restrictions on subsidies or support for habitual wage defaulting employers. The amended Korean Labor Standards Act establishes a new standard for habitual wage defaulting employers by adding Article 43-4 (employers who defaulted on wages equivalent to at least three months’ pay [excluding severance pay] within the preceding year, or who defaulted on wages totaling at least 30 million won [including severance pay] on five or more occasions). designates habitual wage defaulting employers as subjects for providing wage default data, and establishes disadvantageous measures against them, including: exclusion from participation in or restrictions on receiving various subsidies and support programs, point deductions during pre-qualification for bidding participation or during the review and determination of successful bidders.
Accordingly, employers who habitually fail to pay wages as defined under Article 43-4 of the revised Korean Labor Standards Act may have their personal information and records of unpaid wages provided to the Comprehensive Credit Information Agency. They will also face adverse measures such as exclusion from participation in various government subsidy and support programs, restrictions on receiving benefits, and point deductions during pre-qualification reviews for bidding participation or during the review and selection of successful bidders.
- Strengthening Legal Liability for Employers with Wage Arrears (Article 43-7, Article 43-8, Article 109 Paragraph 2 proviso)
Category:
Request for Travel Ban on Employers with Unpaid Wages
(Article 43-7)
Worker’s Claim for Damages (Article 43-8)
Exclusion of Exception to Non-Punishment for Unintentional Crimes (Article 109, Paragraph 2, proviso)
Current
<Newly Established>
<Newly Established>
② No prosecution may be instituted against a person who violates Article 36, Article 43, Article 44, Article 44-2,
Article 46, Article 51-3, Article 52(2)(ii), or Article 56 contrary to the explicit will of the victim.
Revised Bill
① The Minister of Employment and Labor may request the Minister of Justice to prohibit the departure of employers with unpaid wages whose names have been disclosed pursuant to Article 43-2, in accordance with Article 4(3) of the Immigration Control Act.
② ∼ ④ (Omitted)
① An employee may petition the court to order the employer to pay an amount not exceeding three times the wages, etc., that the employer is required to pay, if the employer falls under any of the following items:
- Has failed to pay all or part of the wages, etc. (excluding wages under Article 2(5) of the Workers’ Retirement Benefits Security Act
Article 2(5) benefits are excluded. The same applies hereinafter in this Article)
- When the total number of months during which all or part of wages, etc., were not paid within one year is three months or more
- When the total amount of unpaid wages, etc., corresponds to three months or more of regular wages
② When determining the amount under Paragraph 1, the court shall consider the following matters:
- The period, circumstances, and frequency of the unpaid wages, etc., and the amount of unpaid wages, etc.
- The extent of the employer’s efforts to pay the wages, etc.
- The amount of late interest paid under Article 37
- The employer’s financial status
② No prosecution may be instituted against a person who violates Article 36, Article 43, Article 44, Article 44-2, Article 46, Article 51-3, Article 52(2)(ii), or Article 56 against the explicit will of the victim. However, this shall not apply if an employer whose name has been publicly disclosed pursuant to Article 43-2 violates Article 36, Article 43, Article 44, Article 44-2, Article 46, Article 51-3, Article 52(2)(ii), or Article 56 during the period of public disclosure.
The revised Korean Labor Standards Act strengthens sanctions against employers with unpaid wages by allowing the Minister of Employment and Labor to request the Minister of Justice to impose travel bans on such employers whose names have been publicly disclosed (Article 43-7). Wage arrears due to clear intent, wage arrears exceeding three months, wage arrears where the total unpaid amount equals three months or more of regular wages. This allows workers to claim damages from the employer for up to three times the amount of the unpaid wages (Article 43-8), thereby strengthening workers’ rights remedies.
- Effective Date and Implications of the Revised Korean Labor Standards Act
The revised Korean Labor Standards Act and its Enforcement Decree, effective as of October 23, 2025, were enacted to strongly reaffirm the fundamental principle of ‘timely and full payment of wages’ and to effectively guarantee workers’ right to livelihood.
Under these amendments, employers who withhold wages may face multiple sanctions, including exclusion from the application of the principle of non-prosecution upon complaint, punitive damages, credit sanctions, restrictions on government support, and limitations on public bidding. Consequently, habitual wage withholding can become a significant threat to overall business operations, extending beyond mere civil debt default.
Therefore, employers must thoroughly understand the revised Korean Labor Standards Act aimed at eradicating habitual wage non-payment and reorganize their wage management systems to establish practical countermeasures to prevent future wage defaults.
—
Ihr Ansprechpartner in Korea: Joachim Nowak
DAERYOOK & AJU LLC
7 – 16F, Donghoon Tower
317, Teheran-ro, Gangnam-gu
Seoul 06151, Republik Korea
CELL: +82 10 9001 6430
TEL: +82 2 772 5948
FAX: +82 2 3016 5222
THAILAND: Thailand Opens the Market for Affordable Housing to Foreign Investment with BOI Investment Incentives
Thailand’s Board of Investment (BOI) has, in its Announcement No. Sor. 1/2567, classified social housing as promoted infrastructure, thereby opening up new opportunities for private and foreign investors to contribute to solving the affordable housing crisis while simultaneously benefiting from structured tax advantages.
Key Investment Incentives:
Qualified projects receive A4 benefits, including a three-year exemption from corporate income tax on eligible infrastructure costs, exemptions from import duties on machinery, and simplified work permits for foreign experts in accordance with Section 25 of the Investment Promotion Act.
Eligibility Requirements:
Projects must offer units at a maximum price of THB 1.5 million (including land), with condominiums having a minimum size of 24 m² and houses at least 70 m². At least 80% of the units must meet these criteria and include essential facilities such as 24-hour security, video surveillance, and communal areas.
Application Procedure:
Developers must first obtain approval from the Government Housing Bank (GHB) before submitting an application to the BOI by the last working day of 2025. Foreign investors can, through BOI promotion, bypass traditional restrictions on land acquisition, provided they have a paid-up capital of THB 50 million.
Strategic Significance:
By classifying affordable housing alongside roads and utilities as public infrastructure, Thailand signals its commitment to sustainable urban development and social inclusion. This creates an interesting intersection between CSR/ESG objectives and commercial opportunities in the second-largest economy of Southeast Asia.
Time-Sensitive Opportunity:
Given the rapid urbanization and increasing income inequality driving demand, as well as the upcoming 2025 application deadline, investors should engage early with the BOI, the GHB, and legal advisors to position themselves appropriately in this emerging market segment.
—
Ihr Ansprechpartner 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