In this article we consider what implications Brexit could have for current and potential ASEAN investors in the UK. We also consider whether it is likely that, going forward, the UK and ASEAN will enter into free trade agreements and the implications of such agreements.

Following the result of the UK referendum, held on 23 June 2016, the UK will leave the EU. The result created much speculation and commentary and culminated in then Prime Minister David Cameron stepping down.

Brexit has again been a hot topic of conversation following, Prime Minister, Theresa May's speech at Lancaster House on 17 January 2017 during which May confirmed, amongst other matters, that the UK will leave the EU single market and also that Parliament will vote on any agreement which the UK reaches with the EU. She also stated that any agreement should allow for the 'freest possible trade' between the UK and EU member states.

May has previously stated that article 50 of the Lisbon Treaty will be invoked by the end of March 2017. This will begin a period of two years of formal negotiations. Therefore, as it presently stands, the UK is likely to have exited the EU by mid-2019.

Brexit has created an unsettling time for those in the UK and Europe. Moreover, its implications are far-reaching and its repercussions have been felt across the globe.

Below, we consider what implications Brexit could have for those, in ASEAN, who currently have, or are considering making, investments in the UK. We also consider whether, going forward, the UK and ASEAN are likely to enter into free trade agreements (FTAs) and the implications of such FTAs on ASEAN and, consequently, those operating businesses within it.

What implications will there be for ASEAN investors in the UK?

1. Value of investments

Against most ASEAN currencies, the pound is currently at one of its lowest levels for a number of years and this could make investments within the UK attractive to ASEAN investors as they will effectively receive 'more for their money'. However, current and potential investors will also need to consider whether the value of their asset(s) will alter once the full terms of Brexit have been decided upon and again once Brexit actually occurs.

2. Free movement of goods

Goods can currently be transported across the EU without incurring any customs duties or quantitative restrictions. Following the announcement that the UK will leave the EU single market, ASEAN investors (and particularly those whose principal import/manufacturing operations are in the UK) should bear in mind that if, following Brexit, they start to incur customs duties or quantitative restrictions on goods which are exported from the UK to Europe (and vice versa) their operating costs, particularly those in the manufacturing sector, are likely to increase and hence this could lead to a decline in profits.

3. Free movement of employees

ASEAN investors with interests in the UK and/or Europe will need to consider that any new visa requirements following Brexit may mean that citizens of the UK will not be able to work in Europe with the ease with which they currently do (and vice versa). This could increase costs for businesses and also make the recruitment, movement and retention of employees more problematic. Given the level of worker migration that has occurred in the EU over the last 20 years or more, free movement of people is one of the main issues which the UK will have to negotiate with the EU and the outcome of such discussions is awaited by a variety of stakeholders.

4. Anti-trust approvals

The acquisition of a UK company which also has operations within the EU which are significant in nature (and vice versa) can require a notification to the European Commission. Whether such a notification is required is dependent upon the corporate profile of the acquirer and, subsequently, whether the relevant thresholds of the European Commission are met.

Post Brexit it is unclear what the process will be; separate filings may need to be made with the Commission as well as the relevant regulatory bodies within the UK. Therefore, ASEAN investors should bear in mind that this could increase both costs and time frames for all parties involved.

5. Intellectual property

The majority of laws in the UK in respect of IP are derived from European law. In order to ensure consistency and a smooth transition, it is hoped that the UK will implement new laws which significantly reflect the current EU ones.

ASEAN investors should be aware that rather than file EU-wide IP applications, businesses are likely to have to file separate applications for both the UK and the EU. This could lead to increased costs and time constraints for businesses.

Additionally, the Unified Patent Court (UPC) system, which will deal with all European patents, is expected to come into effect in the near future. The Chartered Institute of Patent Attorneys (CIPA) has published a paper on the impact of Brexit on IP rights, systems and transactions in which it states that it has a "strong preference" for the UK to remain part of the UPC system. It is hoped that CIPA's wishes will be adhered to in order to ensure consistency and clarity across the UK and the EU and to keep increased costs and time constraints for businesses to a minimum.

6. Tax

The UK's tax regime is based on domestic legislation; therefore, it is expected that the UK's corporate tax code will remain a draw to foreign investors. However, the EU Parent-Subsidiary Directive (the Directive) currently applies in the UK and means that UK companies do not currently have to pay withholding taxes on dividends which they receive from their associated companies in other EU member states. The UK does not charge withholding taxes on dividend payments so the Directive no longer applying should not be overly problematic, although tax could become due when dividends are received in other member states.

The Directive also means that parent companies are not subject to double taxation on the profits which they receive from their subsidiaries in other member states. The Directive no longer applying will mean that this benefit ceases and that UK parent companies instead need to rely on double taxation treaties between the UK and the relevant member state. This should again not be problematic as the UK has double taxation treaties in place with most EU member states.

7. Passporting

The current position is that regulated entities, such as banks and insurers, that have a subsidiary in the UK are able to offer their services across the whole of the EU through the regime of 'passporting'. Regulated entities from across the globe, including major American investment banks, currently use such a UK subsidiary as a way to provide services throughout the EU.

Passporting will not be possible following the UK's exit from the EU. It is hoped that appropriate arrangements can be reached in order to cause minimum disruption. However, the end result may be that regulated entities have to establish subsidiaries within EU member states in order to continue providing services there.

How will relations between the UK and ASEAN work going forward?

ASEAN is of increasing importance to the UK. This was demonstrated by ex-Prime Minister David Cameron's visit to South-East Asia during July 2015. It is further demonstrated by the UK's relationship with ASEAN member Singapore, which is currently one of the UK's largest trading partners in Asia. As a result, it is likely that the UK will wish to enter into FTAs with ASEAN (collectively), or with individual member states of ASEAN, as soon as possible after Brexit has taken place.

An FTA between the EU and Singapore was concluded in October 2014 (the Singapore FTA). It will be the first FTA within the ASEAN region (although it will only be finalised once the European Court of Justice has handed down its opinion on whether it needs to be ratified by all member states). While the UK is now unlikely to be a part of such an agreement within the confines of the EU, as the terms of the Singapore FTA have been agreed, the UK could use it as a basis for its own FTA with Singapore and other members of ASEAN going forward. As well as hopefully decreasing the time period for negotiations, ASEAN member states would have the added advantage of only having to negotiate with one party rather than 28 member states.

The prospect of FTAs creates an exciting opportunity for ASEAN as well as those operating businesses within it. They would create the ability to forge deeper relationships and economic ties with a country which has the fifth largest economy in the world. This could lead to large increases in trade and revenue.

What steps should ASEAN investors currently be taking?

  • Keep abreast of Brexit developments.
  • Prepare to review any planned or currently established corporate structures in light of Brexit developments.
  • It is still very unclear exactly how Brexit will pan out and a 'wait and see' approach is advised.


The UK's decision to leave the EU has created uncertainty both within the UK and across the globe. Current and potential investors into the UK will have to make careful considerations and may endure additional operating costs; however, they may also have the opportunity to make some savvy and cost-saving investments.

As well as uncertainty, it marks a time for change, hopefully for the better, between the UK and ASEAN member states, and successful and profitable FTAs are likely to arise. This could lead to huge benefits for ASEAN members and those operating businesses within it.