Bilateral investment treaty helps to resolve the disputes of intellectual property between Indonesia and SingaporeAAA IPRIGHT2
Within the next 5 years, the investments between Indonesia and Singapore are predicted to climb by 18 to 22 percent because the Indonesia-Singapore Bilateral Investment Treaty (BIT) has officially entered into force on March 9, 2021.
The Indonesia-Singapore Bilateral Investment Treaty was signed by Singapore’s Minister for Trade and Industry Chan Chun Sing and Indonesia’s Foreign Minister Retno Marsudi in 2018. The signing was witnessed by Prime Minister Lee Hsien Loong and President Joko Widodo.
This treaty’s purpose was to replace a former treaty signed by Indonesia and Singapore in 2006 (expired in June 2016).
The Indonesia-Singapore Bilateral Investment Treaty has given us a settlement mechanism for a multi-tiered dispute between investors. This mechanism is especially important if, and when disputes arise including the suspension of intellectual property protection through compulsory licensing.
This mechanism is composed of mediation, consultation, and international arbitration under the International Centre for Settlement of Investment Disputes or any other arbitral institution or rules.
A bilateral investment treaty’s benefits
Article 6(6) of the Treaty allows the issuance of compulsory licenses granted in accordance with TRIPS without liability under the same Treaty for expropriation.
A key highlight of the Treaty is that it enables investors the chance to request to review the arbitral tribunal’s draft award and give their comments.
Moreover, the BIT also gives more supports to investors in both countries (Indonesia and Singapore) by expanding the standards for the protection of their investments. The scope of the expansion also includes existing investments as of March 9, 2021, and other investments made after this date.
The investments covered in the article include stocks, shares, other forms of equity, claims to money in connection with any business and under a contract, and others.
Mutual development of Singapore and Indonesia
Trading between the two countries has been strong in the last several years. In 2020, bilateral trade reached US$36.3 billion. Based on these mutual benefits, Singapore has been Indonesia’s number one source of foreign investments despite the pandemic.
In addition, the BIT complements the updated Double Taxation Avoidance Agreement (DTAA) signed by Indonesia and Singapore in February 2020. With other treaties and agreements between the two countries, the DTAA lowers the tax rate on royalties for copyrighted works of literature, arts, and film from 15 percent to 10 percent.
Other key features under the Treaty include restricting specific transfers of investments from and into the host country such as securities, futures, options and derivatives, bankruptcies and insolvencies, criminal offenses, and the like; elimination of the privileges under the most-favored-nation treatment clause stipulated in previous BITs between Indonesia and Singapore and other investment agreements prior to March 9, 2021; safeguarding of the countries’ balance of payments and strengthening of their currencies, and others.
Endra A. Prabawa, an IP partner at Roosdiono & Partners in Jakarta expressed his confidence about the two countries’ mutual development:
“Hopefully, the ratification of the Indonesia – Singapore BIT which regulates and provides protection for investors will encourage the economic recovery of Indonesia and Singapore amidst this pandemic situation. The BIT also may encourage Indonesian investors to invest and develop their business network in Singapore. Specific for IP matters, provisions in the BIT may also encourage the business actors and creators to invest more in the IP sector,” said Prabawa.
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