03 Feb ASEAN Today – Regional Legal and Business News – January 2017
ASEAN Today – Regional Legal and Business News for January 2017Download PDF
ASEAN Economic Community News
Chiang Mai Initiative
The ASEAN member countries and Japan, China, and South Korea (ASEAN+3) plan to expand the Chiang Mai Initiative, an emergency multilateral currency swap arrangement that helps manage regional short-term liquidity problems and prevent another currency crisis. Currently, the overall pool is US$240 billion, but only 30%, US$72 billion, can be authorized for release under ASEAN+3’s authority. ASEAN+3 wants to move this amount to 40%, a US$24 billion increase.
At the World Economic Forum in Davos, the head of a large ASEAN bank warned that the ASEAN member countries could not rest on past achievements and must find solutions for the remaining barriers in transforming ASEAN into a true competitive regional market. He highlighted problems with cross-border integration, the challenges of educating the region’s youth to be the skilled worker of tomorrow, and the need to encourage the development of entrepreneurship and small and medium sized enterprises (SMEs).
New Companies Act
The new Myanmar Companies Act was sent to Parliament and is expected to be enacted in 2017. The new Act simplifies requirements for small businesses, improves corporate governance standards, and removes outdated regulations. The new Act will replace the Burma Companies Act of 1914. Additionally, the definition of a foreign company will change. Previously, a company with any shares held by a foreigner was deemed a foreign-owned company. Now, a company will only be considered a foreign-owned company if foreigners hold more than 35% of its shares
Laos expects to generate 10,000MW of electricity by 2020 and plans to export 75% of production. The first phase of a pilot project begins this year with Laos selling 100MW of electricity to Malaysia via Thailand’s national grid. Laos already sells electricity to Cambodia, Vietnam, and Thailand and plans to expand sales to Singapore by 2020.
Financial Research Regulation
As a response to negative investment commentary on Indonesia’s stock and bond market, the Indonesian government will change its regulations for primary bond dealers. The dealers will be required to prove that their assessment of Indonesia comes from research that is credible and corresponds to factual data. Primary bond dealers are banks and securities firms that are authorized by the government to buy government bonds and resell them on the secondary market.
Vietnam’s Ministry of Industry and Trade (MoIT) plans to continue removing barriers for the business community in 2017; specifically, by making restructuring and administrative procedure reforms for the industry, energy, and trade sectors. The MoIT wants to shift the economy’s structure and improve growth, quality, and competitiveness in the chosen sectors.
EU Patent Agreement
Cambodia’s Minister of Industry and Handcrafts signed an agreement with the European Patent office, and now Cambodia will be the first ASEAN country to recognize and protect European patents. Additionally, when the agreement comes into effect in July 2017, Cambodian companies and individuals will be able to register patents in 43 countries with one European Patent Office application. Officials say this proves Cambodia is strengthening its intellectual property protections and will improve European investor confidence.
New Initiative with Japan
The government announced that more than 700 companies under a Thailand-Japan joint initiative to promote small and medium-sized enterprises (SMEs) have started real investment in Thailand this year. Under the initiative, Japanese SMEs from the country’s major prefectures are being encouraged to expand their businesses and investment into Thailand. The Thai government expects this to generate billions of baht. Japan is Thailand’s biggest foreign investor.
At a recent symposium organized by Thailand’s Central Intellectual Property and International Trade Court, the director general of the Thai Department of Intellectual Property and other experts warned that disruptive innovation is changing how people live and affecting traditional industries. And at the same time, current laws and regulations do not reflect the changes and address existing and potential future problems. The disruptive technologies include the Internet of Things, robotics, artificial intelligence, 3-D printing, virtual reality and big data.
The Bank of Thailand (BOT) announced that financial technology firms can now test their innovations in a regulatory sandbox. The sandbox is a safe space where banks and non-bank businesses can test their products and conduct trials without putting their customers at risk. However, the innovations must be new to be eligible and must be related to transactions supervised by the BOT.
Securities and Exchange
The Securities and Exchange Commission (SEC) of Thailand announced that there will be an over-the-counter (OTC) platform for startup businesses set up on the Stock Exchange of Thailand later this year. However, the OTC platform will only be available to limited accredited investors in startups.
New PPP Projects
The Public-Private Partnership Committee approved seven large scale infrastructure projects worth THB712 billion to begin operations this year and sent the projects to the Cabinet for final approval. The projects include the east and west sections of the Orange Line, a continuation of the Purple Line, two high-speed rail networks, and a motorway.
The local managing director of a global social media network believes that digital marketing opportunities in Thailand could reach THB50 billion over the next few years. At this time, however, Thais spend 48% of their time online, but digital ad spending is only 1% of the total. He says this huge gap between consumption and spending could be a vast opportunity for Thailand’s ad industry. The proportion of digital ad spending in most developed countries is 20-30% of the total.
A key point of Thailand’s digital economy is the development of smart cities. The government wants businesses in the provinces to form city development companies to help transform cities into smart cities by managing assets and promoting innovation. Currently there are three development companies creating model cities in Phuket, Chiang Mai, and Khon Kaen.
The Cabinet approved an increase to the excise tax on jet fuel. Additionally, lubricants will now be liable for excise tax. The Finance Ministry expects the new excise taxes to increase revenue by THB8 billion a year.
The Fiscal Policy Office may let companies who hire senior citizen workers take triple corporate tax deductions on expenses incurred from hiring the elderly workers. The Cabinet has already approved multiple measures including double tax reduction on expenses and reverse mortgages for this.
Thailand Legal Review
Computer-Related Crime Act
Under the amended Computer-Related Crime Act 2007 (B.E. 2550), the authority of officials has been broadened in the combatting of cyber and computer-related crimes. Under the amended Act, the appointed Computer Data Screening Committee will have the power to permit officials to file for a court order to block, suspend, or eliminate any data considered a violation of the law and contrary to public order, regardless of any violation of Thailand’s Criminal Law. The amended Act also grants greater authority to officials to act against any action which is subject to national security, public safety, national economic stability, or the infrastructure for public benefit. An authority will be set up to help combat crimes relating to forged data including dishonest information provided in bad faith. Email or data composed by companies which contain no option to opt out or reject such information will also be criminalized. The amendments to the Act will also grant absolute power to the Department of Intellectual Property to close down or block any website considered infringing on intellectual property without any intervention from the stakeholder, whereas the exposure provided by the pre-amended Act only gave the authorities the right to intervene following a petition filed with the court by the copyright owner under the Copyright Act.
Mandatory Provident Fund
On November 8, 2016 the cabinet approved in principle the draft Mandatory Provident Fund Act B.E.2559 (the Act) that will cover employees of private companies and the government sector and government and state enterprise employees. Under the Act, companies in the government sector not covered by the government pension fund, concessionaires, promotion companies, listed companies, state enterprises, and public organizations with 100 or more employees have to implement the mandatory provident fund scheme in the first year the Act is enacted. Consequently, enterprises with up to 10 employees and enterprises with one employee will have to offer the mandatory provident fund scheme to their employees from the fourth year and sixth years respectively.
Employers and employees will each be required to contribute 3% of the employee’s salary to the fund with a maximum monthly contribution of Baht 1,800. The rate will be increased to 5%, 7%, and then 10% within ten years. However, the maximum contribution by the employer and employee shall not exceed 15% of the salary. The employee who earns a monthly salary of less than Baht 10,000 will not be required to contribute to the fund, but the employer must still make the contribution. For employees who are members of the provident fund under the Provident Fund Act B.E. 2530, if the contribution rate of the employer and employee is lower than the prescribed rates of the new mandatory provident fund, they must increase the contribution to comply with the Act.
Members of the fund will be entitled to select payment from the fund in one lump sum or installments when the member reaches 60 years of age. In the case the member becomes disabled before maturation, the member shall be entitled to claim for all or part the employee’s contribution and benefits from the fund. In addition, members of the mandatory provident fund shall be entitled to tax benefits: the contribution shall be deducted from income, the employee benefit will not be taxable, and payment from the fund according to the maturation period, disability, or death will be exempted in the computation of personal income tax.
The material contained herein is only provided for information purposes. No part thereof may be deemed to constitute legal advice or the opinions of Dej-Udom & Associates 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.