24 Sep ASEAN Today – Regional Legal and Business News – August 2021
ASEAN Today – Regional Legal and Business News for August 2021 including an Immigration Update on the Three Day Rule Being Lifted and Corporate Law News on Reduction of Fees and Costs for Debt Collection
ASEAN Economic Community News
ASEAN Labor Market Challenges
A new report by the United Nations International Labor Organization says that the ASEAN regional economy contracted by a negative rate of -3.3% in 2020, down from 4.5% in 2019, and that this is causing disruption and hardship among workers and employers in ASEAN and around the globe. The report notes that in the course of 2021, ASEAN has become one of the global epicenters of the pandemic. Due to lockdowns, loss of tourism, and decreases in domestic consumption, ASEAN is expected to see working-hour losses of 7.4% after suffering working-hour losses of 8.4% in 2020. In 2021, 9.3 million fewer workers are projected to be in employment in the region than expected in the absence of the pandemic, compared to 10.6 million fewer workers in 2020. Women and young workers have been most impacted by the pandemic. Overall, 7.8% of labor income was lost in the ASEAN region in 2020. To help ensure regional recovery, the ASEAN member states adopted the ASEAN Comprehensive Recovery Framework (ACRF) in November 2020 and further adopted the Global Call to Action for a Human-Centered Recovery at the International Labor Conference in June 2021 which provides a framework for proposed actions within the ASEAN Member States.
Digital Trade Ecosystem
At a recent conference on digitizing trade in ASEAN, experts emphasized the need for a connected, inclusive and multilateral digital trade ecosystem. The global pandemic has accelerated the adoption of digital technology, and ASEAN predicts that the digital economy will contribute US$1 trillion to regional GDP. Currently, 132% of Southeast Asia’s population has a mobile connection and 463 million people are internet users. Experts stressed the importance of collaboration on building the digital trade ecosystem and to support common goals such as regional economic recovery and tackling the climate crisis. However, challenges to the digital trade ecosystem include the information and communication technology (ICT) infrastructure gap, uneven rate of ICT adoption, and decoupling.
AusCham ASEAN Business Survey
The sixth edition of the Australian Chamber of Commerce’s ASEAN Australian Business in ASEAN Survey 2021 was released earlier this month. 44% of the surveyed businesses reported increased trade and investment since 2019 which highlights the potential buffering effect of ASEAN’s economic dynamism as the region’s economy starts to recover. While 2021’s trade and investment results show 11% deterioration, it is much better than the 55% deterioration seen in 2020. The survey also showed that Australian businesses investments were highest in Malaysia (62%), Vietnam (59%), and the Philippines (54%). The survey found that the three greatest business challenges faced by Australian businesses since that start of the global pandemic were the sudden decrease in demand for goods and services, increased logistical challenges, and regulatory uncertainty about lifting of trading restrictions.
Proposed Tax Reforms
Tax experts say that Malaysia must initiate reforms in the country’s tax system in order to broaden its tax base instead of continuously increasing its debt ratios and debt limits and running a budget deficit. To address these issues, the Ministry of Finance is evaluating different measures to increase tax revenue and enhance tax compliance. These include the Special Voluntary Disclosure Program (SVDP) for indirect taxes, a Tax Compliance Certificate (TCC) as a pre-condition for tenderers to bid for government contracts, a Tax Identification Number (TIN) system and review of tax treatments which have resulted in revenue leakages or harmful practices, and support for the Organization for Economic Cooperation and Development (OECD)’s Base Erosion and Profit Shifting (BEPS) 2.0 initiative to address cross-border tax leakages and aggressive tax planning.
The Intellectual Property Office of Singapore (IPOS) is launching more intellectual property resources to help enterprises to strengthen and grow their business during the challenges presented by the global pandemic. IPOS and the China National Intellectual Property Administration will extend the Patent Prosecution Highway pilot for five years until August 31, 2026, and will integrate the PPH-Mottainai model that allows patent applications to be expedited by relying on relevant examination result that were first established by either IPOS or China. In September, enterprises will be able to access a larger pool of IP practitioners for advice in IPOS’s business and legal clinics. A list of Singapore-based IP expert witnesses who can assist in court proceedings on IP and technology-related disputes to improve IP dispute resolution proceedings is also being compiled.
National Debt Repayment Plans
The Lao government announced that it will use revenue earned from potential mining operations, revamped state enterprises and other untapped sources to pay US$14 billion in debts. At present, Laos has accumulated US$13 billion in foreign debt and almost US$1 billion in domestic debt. The government wants to repay the debts over the next 10 years and plans to boost revenue from new sources and explore untapped potential sources to generate the necessary funds.
Phase II of Single Portal
Cambodia’s government announced that it will deploy Phase II of its online business registration platform, the Single Portal, on September 1, 2021. Four new agencies, the Non-Bank Financial Services Authority’s Real Estate Business and Pawnshop Regulator (REBPB), and the industry, tourism and telecoms ministries, joined the Single Portal in Phase II. This has allowed for the addition of more classes of business licenses and permits available for application on the platform with an emphasis on priority sectors to help support national economic growth during the Covid-19 crisis. In July 2020, the Finance, Interior, Commerce and Labour ministries as well as the General Department of Taxation (GDT) and Council for the Development of Cambodia (CDC) were integrated into Phase I of the business registration portal.
Indonesia has released tax incentives to further promote the island nation’s 19 special economic zones (SEZs) and has pledged to make the SEZs a policy priority to attract foreign investment, boost industrial activity, and promote job creation. The tax incentives include exemptions from income tax, value-added tax (VAT), import duties, sales tax on luxury goods, and excise duties. Bank Indonesia (BI) issued a new regulation that will require all banks to disburse more loans to micro, small and medium enterprises (MSME) by expanding an earlier regulation with a similar aim. The new regulation now requires banks to disburse at least 20% of their loans to either MSMEs, MSMEs’ supply chains, or low-income earners, and will raise the mandatory MSME credit ratio to 25% in 2023 and to 30% in 2024.
THAILAND LEGAL REVIEW
Three Day Rule Lifted
Due to the relaxation of lockdown measurements announced by the Centre of COVID-19 Situation Administration (CCSA) effective September 1, 2021, the Immigration Bureau announced that the rules for filing 3 days in advance before the visa expiration date have been lifted. The rules for filing visa extensions return to the same rules previously used before the lockdown.
For Non-BOI applications:
OSSC process: Visa extension applications can be filed at the OSSC no longer than 45 days before the expiration date.
Regular process: Visa extension applications can be filed at the Immigration Bureau at Chaeng Wattana no longer than 30 days before the expiration date.
For BOI applications:
Visa extension applications can be made when the applicants have received the queue booking reservation from the BOI-Single Window System.
Corporate Law News
No Change to VAT Rate
Under the Royal Decree regarding the reduction of the VAT rate (No. 724) which will become effective on October 1, 2021, the VAT rate of 7% (VAT 6.3% with local tax 0.7%) will remain unchanged for 2 more years until September 30, 2023, for the sale of goods, services, and imports. The standard VAT rate is 10% as prescribed in the Revenue Code.
Reduction of Fees and Costs for Debt Collection
The Notification of the Debt Collection Supervisory Committee regarding the prescription of fees and costs for debt collection, dated August 9, 2021, will come into force on September 12, 2021. The significant points are as follows:
1) Fees and costs for debt collection include any amounts prescribed as fees or costs in collecting debts from a debtor or any person who has been specified by the debtor. However, proof or documents relating to debt collection is required for inspection.
2) Such fees and costs in Clause 1 exclude expenses incurred from any follow-up on and recovery of properties.
3) The period for debt collection shall start from the date of default on any installment payment to the following due date. Such period shall not be less than 1 month.
4) In the event that any debtor fails to make a debt payment, and such debt has been claimed, the debt collector may charge fees and costs as follows:
– If the debtor has outstanding debt for one installment payment, the fees and costs shall not exceed 50 Baht per period
– If the debtor has outstanding debt for more than one installment, fees and charges shall not exceed 100 Baht per period
– For debts relating to hire purchase or leasing of vehicles under the laws concerning automobiles, fees and costs may be additionally charged from Clause 4, but no more than 400 Baht per period.
5) No fees and costs for debt collection are allowed to be charged if the debtor has outstanding debt of less than 1,000 Baht
6) No fees and costs for debt collection are allowed to be charged after repayment is made in full, or the agreement is terminated legally.
The material contained herein is only provided for information purposes. No part thereof may be deemed to constitute legal advice or the opinions of this law firm or any of its attorneys. Whilst every effort has been made to verify the contents of the material contained herein, we do not represent, warrant, undertake, or guarantee that the information contained in this newsletter is correct, accurate, or complete. Legal advice must be sought before acting on any information contained herein.