07 Jun ASEAN Today – Regional Legal and Business News – May 2017
ASEAN Today – Regional Legal and Business News for May 2017Download PDF
ASEAN Economic Community News
Sustainable Development Partnership
At the World Economic Forum (WEF) on ASEAN held in Cambodia this month, the WEF and the Organisation for Economic Cooperation and Development (OECD) launched the Sustainable Development Investment Partnership (SDIP) ASEAN Hub to support infrastructure development in the region. ASEAN needs US$26 trillion in infrastructure investment over the next 15 years. The SDIP ASEAN Hub will help local infrastructure projects obtain funding and will also promote blended finance. Blended finance is the strategic investment of public, private, and philanthropic funds into development projects in emerging and frontier markets. Cambodia is the first ASEAN member to join the SDIP ASEAN Hub.
At the 30th ASEAN Summit in Manila, the issue of migrant workers in ASEAN stalled again and was postponed to the next summit in November this year. An ASEAN instrument on the rights and protections of migrant worker was mandated by the 2007 Cebu Declaration. In 2013, there were 10.2 million migrants working and living in ASEAN region, with 60% from within the region. There has also been significant growth of intra-ASEAN migration over the last 20 years. The large number of intra-ASEAN migrant workers is believed to be an important factor in ASEAN’s economic success.
ASEAN announced that the Regional Comprehensive Economic Partnership (RCEP) between the ASEAN member states and Australia, New Zealand, China, Japan, Korea and India should be finalized by the end of 2017. The RCEP will cover an integrated market of 3.5 billion people.
A new report by the American Chamber of Commerce (AmCham) says that Vietnam is actively making itself more attractive to investment. In the past year, Vietnam has made significant improvements to the country’s business environment. Over 95% of the 4,700 tax and administrative procedures needed to conduct business have been simplified. 36% of the report’s surveyed US companies want to expand into Vietnam with 21% into Thailand and 19% into Malaysia.
Import Restrictions Lifted
Restrictions are currently being lifted and foreign businesses in Myanmar will soon be able to import seeds, fertilizers, hospital equipment, and building materials. As a result, the government expects the local marketplace to become more competitive and that fairly priced, high-quality products will become more readily available.
Bank Indonesia (BI), the country’s central bank, wants the government to concentrate on inflation control. Indonesia’s inflation rate is at 4.17% year-on-year (YoY). However, administered prices, e.g., electricity and fuel, inflated by 8.68% YoY. The BI will work with the government and local administrations to set inflation control measures.
Thailand Future Fund
The IPO process for the Thailand Future Fund, which will be used to promote infrastructure investment, is underway. The Thai Ministry of Finance expects to submit the filing to the Securities and Exchange Commission in September 2017 and expects the permit of tender to be available to the public in October 2017. An anonymous source believes that the expected return of investment will be between 4-4.5%. Two expressways will be used as underlying assets with 45% of future revenue from the expressways used as security for the fund.
China announced that it plans to impose heavy penalties on sugar imports because of an ongoing anti-dumping probe. As Thailand is the world’s second largest sugar exporter, this could have serious implications for the Thai sugar industry. China plans to add 45% to the 50% duty already levied on out-of-quota sugar imports. However, this will not affect sugar imports that come under China’s WTO commitments.
The Thai government believes that the development of digital innovation parks and smart cities will attract more Chinese direct investment into Thailand. The Shenzhen municipal government signed a memorandum of understanding (MOU) with the Digital Economy and Society Ministry to support the development of Thailand’s digital economy. The MOU covers the development of digital parks, smart cities, the Internet of Things, local tech startups, and national broadband infrastructure.
The government wants to create a new policy to support the lending of funds to Thai micro small and medium-sized enterprises (micro-SMEs). Micro-SMEs are defined as businesses with less than five employees that do not register as companies. Due to their size, it is difficult for micro-SMEs to secure bank funding. The government lending support will start initially in eight provinces in the largest cities with the most economic activity.
Illicit Business Crackdown
Thailand’s Customs Department is cracking down on illicit businesses avoiding taxes when bringing goods into the country. The Customs Department is focusing on companies using fraudulent manifests or easy to falsify manifests, persons, including tour guides, who bring in goods from their travels for commercial use, and online goods sold at suspiciously low prices.
Lawmakers would like to increase Thailand’s value-added tax (VAT) by 1% and only use the additional revenue to fund education and healthcare. The extra 1% would generate another THB60-70 billion a year. Thailand’s official VAT rate is 10%, but has been kept at 7% since 1997.
The government is considering more tax incentives to encourage Thais to have more children and boost the population. Thailand is considered an aging society and has been resolving its growing labor shortage by using migrant labor. There is no longer a 3-child maximum for the tax credit. The allowance per child has been doubled to 30,000 baht and may be doubled again to 60,000 baht.
The Bank of Thailand and the Bank of Japan signed a Bilateral Swap Arrangement (BSA) that will allow the two countries to exchange their currencies. The BSA will allow both countries to swap their currencies against the US dollar if there is a need for short-term liquidity support and to maintain the balance of payments between Thailand and Japan.
Thailand continues to stay in the top 10 globally for social media network use and consumer adoption. Thailand has 47 million Facebook users, up 15% year-on-year (YoY), 11 million Instagram users, up 41% YoY, and 9 million Twitter users, up 70% YoY. Bangkok remains the world’s biggest city for Facebook users.
Securities and Exchange
Thailand’s Securities and Exchange Commission has relaxed its regulations on crowdfunding portals (CPs). Now, CPs can use blockchain and smart contract technology instead of the few, high priced escrow agents available in Thailand. Share trading platforms on the secondary market will also be allowed.
Thailand Legal Review
Computer Crime Act
Following the 120-day publication period in the Government Gazette, the Computer Crime Act (No.2) B.E. 2560 (A.D. 2017) (the Act) came into force on May 24, 2017. This amendment empowers the competent officer to implement tougher measures on National Technological and Communication Security by incorporating new categories of computer crimes, increasing penalties, adding new measures to counter hackers, and updating the plea bargaining process for the accused.
Under the new Act, placing online advertisements on another person’s profile page through social media is now considered spamming and subject to a maximum 200,000 baht fine. An ‘opt-out’ feature must be in place for any sent data or email which allows the recipient of any data or email to easily deny accepting the data or email. Failure to comply with this provision is subject to maximum fine of 200,000 baht.
Online advertisements through e-mail are now considered spamming and subject to a maximum 200,000 baht fine. Clicking the ‘Like’ button on any content regarding the Monarchy or Royal Family may be subject to §112 of the Act. Sharing online content that violates the rights and liberty of other persons and/or third persons is a felony under the Act.
Possessors of electronic devices that contain content that violates the Act will be prosecuted. Providing information regarding deceased persons must be in compliance with good morals and not cause insult or stir up hatred. Relatives of the deceased are now allowed to file suit against the provider of such information.
Direct Sales and Direct Marketing Act
The amendment of the Direct Sales and Direct Marketing Act (the Act) helps strengthen consumer rights in transactions with direct sales marketing businesses. The Act covers the remote presentation of information, offers, products or services for sale directly to consumers.
As per the precedent Constitutional Court Decision No. 12/2555 on the violation of the Thai Constitution §39 para 2 which assures the legal doctrine of presumption of innocence, the provisions of the amendment stipulate that a person responsible for any action or inaction resulting in any wrongdoing committed by the juristic person shall be punished.
The Act §20 stipulates that all direct sales and direct marketing businesses must be registered with the Registrar in order to ensure the validity of the businesses. Additionally, consumer rights are now protected by a cool-off period of seven days during which time consumers may return the purchased products or services if they are not satisfied. The consumers are guaranteed a full refund after returning such unsatisfactory products or services, and the refund must be completed within 15 days from the termination of the sale.
The Constitutional Court Regulation prescribing justice procedures and judgments, enacted on May 3, 2017, outlines provisions that broaden the jurisdiction of the Constitutional Court. The Court’s broader powers now cover any acts by a person seeking to eliminate the monarchy and the expulsion of members the parliament or senate, among others.
The Regulation also emphasizes the power of the Constitutional Judiciary by extending the Rule of Law doctrine where the constitution guarantees the independence of the judiciary. Rule of Law refers to the legal principle that law should govern a nation as opposed to being governed by the decisions of individual government officials. The Rule of Law is a safeguard against arbitrary governance and a defense against both dictatorship and anarchy. Moreover, Article 21 of the Regulation stipulates that any person whose protected right or liberty is lessened may directly file a request with the Constitutional Court.
NCPO Executive Order No. 21/2560
Under the NCPO’s Executive Order No. 21/2560, there have been changes to the Corporate and Partnership Laws, the Civil and Commercial Code, the Labour Law, the Bankruptcy Act, and Social Security. For companies and corporations, all registrations or alterations of any prior-registered statement must now be carried out at the office of the Registrar as prescribed in the ministerial regulations of the Ministry of Commerce. The amendment of Civil and Commercial Code (CCC) §1108(1) sets new guidelines for alternate dispute resolution among the board of directors or shareholders as specified in the articles of association. Also, share certificates must be endorsed by at least one member of the board of directors. The addition of CCC §1201 para 4 prescribes that a dividend payment must be made within a one-month period from the final resolution or the board of directors’ resolution. The Order also grants greater power to the court for the dissolution of a company when the cause of establishment of such company ceases to exist. CCC §100 was amended so that shareholders amounting to not less than 10 percent of the total issued shares are entitled to call an extraordinary shareholders’ meeting at any time.
Changes to the Labour Law strengthen the rights of employees by stipulating that employers with ten or more employees must provide work rules written in Thai language and that such rules must be publicly declared and a copy must be kept at the workplace at all times. Additionally, any amendment to the prior-announced work rules must be declared within 7 days after the first announcement.
For Social Security, the Minister, with a cabinet resolution, is granted power to extend or postpone the deadline in cases where the contribution has been paid by the Insured Person or where the contribution has been deducted by the employer of such Insured Person and filed with the Social Security Office Registrar.
Significant amendments to the Bankruptcy Act §90/12(6) include the prohibition of the execution of the debtor’s collateral by the Secured Creditors unless permission is granted by the Court where the request was filed or has passed the one-year period from the filing date. The Court is granted power to approve no more than two additional 6-month extensions. The Bankruptcy Act §90/14 states that if the seized collateral is perishable or exposed to damage upon long-term possession or incurs expenses for reservation (higher than its value), the Secured Creditors may sell the seized collateral given that the money received from selling such collateral shall be retained.
On May 22, 2017, the Department of Intellectual Property adopted the administration guidelines for the effective enforcement of intellectual property rights infringement suppression to efficiently cover the notorious markets in various areas including Patpong, Hatyai, Koh Samui, Phuket, and Pattaya. Active enforcement of the guidelines will be ongoing. The Department of Intellectual Property is also considering the establishment of an internal systemic network where large-scale cyber intellectual property rights infringement can be effectively tackled, i.e., listing websites that contain violating content in order to block sponsors via commercial advertisement.
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.