06 Jul Dej-Udom & Associates Newsletter – June 2016Download PDF
The Dej-Udom & Associates ASEAN Thailand Newsletter for June 2016
ASEAN Economic Community News
The 13th Regional Comprehensive Economic Partnership (RCEP) Trade Negotiations Committee meeting took place earlier this month. The committee wants to finalize the RCEP agreement in 2016 and plans to present the draft agreement to the heads of the RCEP’s 16 member countries at the annual ASEAN summit in September. Issues that need to be finalized include the liberalization of trade in goods, services, and investment, intellectual property rights laws, rules of origin, customs procedures, trade facilitation, sanitary and phytosanitary standards, technical barriers, electronic commerce, finance, telecommunications, and economic cooperation.
At the inaugural ASEAN Ecotourism Forum, tourism heads from the ASEAN member states approved a declaration stating their common desire to boost tourism and align regional ecotourism destinations. The Pakse Declaration on the Roadmap for Strategic Development of Ecotourism Clusters and Tourism Corridors will be presented to the ASEAN summit in September. The declaration focuses on a partnership plan on the sustainable use of natural resources, benefits to locals in rural areas, and developing the sub-regional ecotourism network.
Patent Cooperation Treaty
Cambodia’s Ministry of Industry and Handicraft announced that it will register the country as a member of the Patent Cooperation Treaty (PCT) this month. Under the PCT, a patent application can be simultaneously filed in 148 countries. Cambodia and Myanmar are the only ASEAN countries that are not PCT members.
Yangon Stock Exchange
The Yangon Stock Exchange (YSX) now has two official listings and plans to add four more in the near future. Myanmar’s Securities and Exchange Commission announced it will soon allow foreign investors access to the exchange and local-foreign joint ventures to list. In other positive news for the YSX, its principal shareholder, the state-owned Myanmar Economic Bank, was recently taken off the US sanctions blacklist.
Logistic Sector Growth
Vietnam’s logistic sector has grown by 24% annually over the past few years and experts maintain that logistics and supply-chain management also improved significantly over the same period. The government has opened a number of institutions to promote logistics development and has invested into ports, highways, airports and electronic customs.
Skilled Labor Issues
The tech and ecommerce sectors in ASEAN are expected to attract USD 40-50 billion over the next ten year and will need skilled, educated workers. However, Indonesia has a severe shortage of skilled workers. Only 10% of total employment qualifies as skilled. To become more competitive in tech and ecommerce, experts say that Indonesia needs to resolve the problems of its education system and increase work force experience.
To help make Indonesia more business friendly, President Joko Widodo abolished 3,143 local laws that were hindering business and foreign investment.
Timber Export Ban
To combat the county’s problems with illegal logging, Laos banned the export of unprocessed timber this month. Laos’ Prime Minister acknowledged the effect the ban would have on the country’s timber industry, but argued that the conservation of Laotian forests serves as a fundamental factor in economic development and livelihood improvement of local people.
Online Business Licensing
To help support the digital economy, the Commerce Ministry (CM) will allow online traders and other e-commerce enterprises to register online. The CM says that when online businesses are registered, it will enable consumers to check the background of the companies and cut down on fraudulent transactions. Companies will acquire a legal business license and protection under the law.
New Special Economic Zone
A draft law governing the Eastern Economic Corridor that will create a separate special economic zone (SEZ) in Chachoengsao, Chon Buri, and Rayong to focus on foreign investment will be presented to the Cabinet in July 2016. Investors in the 10 targeted industry clusters will be eligible for maximum Board of Investment incentives. The government is also exploring the options of allowing investors to open foreign currency accounts and keeping their income in foreign currencies instead of Thai baht.
Research & Development Incentives
The Thailand Science Park and the National Science and Technology Development Agency are recommending that the public sector take advantage of the current government policies to stimulate research and development. One such policy is the 300% tax deduction for companies under Board of Investment privileges that invest in research and development in innovative Thai products.
New Property Tax Law
A new tax law was approved by the Cabinet this month and will replace the Property Tax and Local Maintenance Tax acts. The new law will levy taxes on property and land nationwide according to its use. A first home valued under THB50 million is exempt from tax. A home valued over that amount or a second home will be taxed at 0.5%. For undeveloped land, 5% will be levied for the first three years and then doubled if the land stays vacant after that period. Land tax revenues are likely to double immediately.
Nuclear Energy for Peace Act
The National Legislative Assembly passed the Nuclear Energy for Peace Act which lays down the regulations for the management of nuclear-related activities and radioactive materials in Thailand. The Act establishes the Nuclear Energy for Peace Commission and sets out the step-by-step licensing process to establish nuclear facilities in the Kingdom. However, Thailand is not planning to build any nuclear power plants in the next 15 years.
Asian Infrastructure Investment Bank Act
The Asian Infrastructure Investment Development Bank (AIIB) Act came into force on May 16, 2016. Thailand is a charter member of the AIIB which was formed to counter the US-led World Bank. The AIIB will concentrate on improving infrastructure throughout Asia and is part of China’s plan to extend their rail, road, and maritime links into the rest of Asia. The AIIB will focus on energy, power, transportation, telecommunications, rural infrastructure, agriculture development, water supply and sanitation, environmental protection, urban development, and logistics. As a charter member, Thailand’s initial participation in the Asian Infrastructure Investment Bank is THB53 billion.
New Transparency Index
A recent transparency index by a global real estate services firm shows that transparency in Thailand’s real estate markets has improved over the last ten years owing to increased access and availability of market data, improved enforcement of planning and land use regulations and the maturation of domestic investors and investment platforms such as Real Estate Investment Trusts (REITs).
Border Market Crackdown
The Thai government wants to turn a well-known Thai-Cambodian border market into an ASEAN trade and distribution center for consumer goods and food heading to Cambodia and Vietnam. Currently, the market is a hub for counterfeit goods, and 21 different agencies are joining forces to eliminate all illegal products from the market.