The economic pact will liberalize the investment and service fields, completing a deal that took effect over a decade ago. Negotiations for the ASEAN Japan Comprehensive Economic Partnership (AJCEP) began in 2005. The elimination of tariff barriers to trade in goods began to gradually take effect in 2008, while issues related to opening up investment and service fields were tabled.

In Myanmar, where liberalization lags, the completion of AJCEP will loosen restrictions on foreign capital in the construction, education, communications, finance and shipping industries. Companies must keep foreign ownership below 35% to operate as a domestic business, which are not tightly regulated. Overseas companies will be able to expand their stakes under the amended agreement.

In Laos, the equipment-leasing industry will be among the fields up for liberalization. Indonesia’s restaurant and environmental industries will also open further. In addition, foreign companies will be able to use an investor-state dispute settlement framework for the first time when facing discrimination, reducing business risks for Japanese companies.

The deal will also improve government transparency. Emerging countries often unilaterally reject foreign companies’ new business operations, but the updated agreement will require authorities to state their reasons.

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