17 Dec ASEAN Today – Regional Legal and Business News – November 2019
ASEAN Today – Regional Legal and Business News for November 2019 including an update on the reduction of the immovable property transfer fee and mortgage fee.Download PDF
ASEAN Economic Community News
Southeast Asia E-Money Market
A global financial services company released their inaugural report on Southeast Asia’s e-money market and finds that e-money wallets are more popular than debit and credit cards in the region. There were 10 billion aggregate e-money transactions in 2018, up 31% from the previous year, of which 34% occurred in Singapore. Indonesia had the second-largest number of transactions and the fastest year-on-year growth. In Singapore, Thailand, Malaysia and Indonesia, e-money instruments were used twice as much as debit and credit cards in 2018. Non-banks account for the majority of e-money licenses, mostly e-wallets, in the region, except for the Philippines which has more e-money licenses held by banks. The report states that Indonesia and the Philippines have the greatest potential for non-bank e-wallet growth due to the high availability of smart phones and the high percentage of their populations without bank accounts.
ASEAN Integration Report 2019
According to the recently released 2019 ASEAN Integration Report from the ASEAN Secretariat, ASEAN is currently the fifth largest economy in the world. ASEAN’s GDP was USD3 trillion in 2018, up from USD2.5 trillion in 2015. Total trade for the region rose to USD2.8 trillion in 2018, a 24% increase on 2015 total. ASEAN attracted USD155 billion of investment in 2018, the highest in its history, and a 30% increase from 2015. The report states that while the region’s economic performance is expected to remain robust, certain elements continue to be threats including widespread protectionism, growing pressure on multilateralism, and the risk of an upcoming recession.
The 3rd Regional Comprehensive Economic Partnership Summit was held in Bangkok this month. While India announced that it would no longer join the trade pact, all 10 ASEAN member states plus China, Japan, South Korea, India, Australia, and New Zealand have committed to signing the RCEP in 2020 with the agreement coming into force in January of 2021 or 2022. Some of the expected benefits from the RCEP include a common set of rules on intellectual property (IP) and e-commerce and a new scope of trade for tele- communications services. Standardized rules for IP protection and enforcement will help streamline intellectual property transactions, support transparency, and lower the costs of doing business. The e-commerce rules will support businesses when they transfer data across borders and limit the scope of governments to impose restrictions including requirements to store data locally. Under the rules governing telecommunication services across the region, RCEP members will commit to allowing the portability of mobile phone numbers and setting reasonable international mobile roaming rates.
Tax Revenues Down
Vietnam’s impressive economic growth continued in 2018 with a 10-year high of 7.1% and higher growth possible in 2019. However, while the country’s tax incentive policies have boosted investment, overall tax revenues are down. Revenue from corporate income tax dropped from 6.9% of GDP in 2010 to 4.3% in 2017 and budget revenue decreased from 27.3% in 2010 to 23.7% in 2016. Critics of Vietnam’s investment incentives also say that the incentives mostly benefit foreign investors who will not stay in Vietnam and not local companies. Experts estimate that Vietnam’s current revenue loss is 1% of GDP, US$2.15 billion.
A recent survey found that Singapore’s consumer confidence has slipped to the lowest in two years amidst recession concerns, a slump in the electronics sector, and rising food prices. However, experts say that manufacturing which makes up a fifth of the economy is showing signs of recovery and expected to expand in 2020. Consumer demand is also spurring gradual growth in the electronics sector and healthy growth is expected in the information and communications sectors and the finance and insurance sectors due to sustained demand for IT and digital solutions and payment processing services.
New Startup Law
Through its new Innovative Startup Act, the Philippine government expects to see the formation of at least 1000 new innovative businesses in the country by 2022. The Act defines the benefits for startups and startup enablers and provides a framework for the government to assist in the processing of permits. The Department of Science and Technology will develop the Startup Philippines web portal which will serve as the primary source of information on information on statistics, events, programs, benefits and incentives for startups and their enablers.
Insurance Licenses Awarded
Myanmar’s Financial Regulatory Department awarded the country’s first-ever licenses to five fully foreign-owned life insurers this month. Three life and three-non life joint ventures were also granted licenses. Insurance liberalization is one of the flagship reforms of the government as Myanmar’s market has some of the lowest insurance penetration in the world. In the past, the insurance market in Myanmar has been monopolized by its state-owned insurance company.
Digitized Land Bank
The head of the Myanmar Investment Commission announced that the country’s land bank will be fully digitized and online access will be given to investors applying for land targeted for doing business in Myanmar. Obtaining suitable land is the main challenge for both local and foreign investors when setting up a business in Myanmar.
Patent Cooperation with Singapore
Laos and Singapore signed an agreement to collaborate on intellectual property this month. Under the memorandum of cooperation, the Laos Department of Intellectual Property (DIP) will be able to make use of the Intellectual Property Office of Singapore’s (IPOS) patent search and examination expertise and services to grant quality patents in Laos. Additionally, patents granted by Singapore can now be re-registered in Laos.
Indonesia’s Finance Minister says the government in planning tax reforms including relaxing income tax for foreign expatriates and overseas Indonesians, eliminating the dividend tax, and reducing corporate income tax. The planned reforms would change the country’s tax regime to a territorial tax system where expatriates and local Indonesians would not be taxed for income earned outside Indonesia. The government also plans to gradually reduce the corporate income tax for 25% to 20% by 2023.
MOU with European Patent Office
The head of the Indonesia’s Directorate General of Intellectual Property (DGIP) and the president of the European Patent Office (EPO) signed a Memorandum of Understanding (MOU) on the Reinforced Partnership between the two countries. Indonesia is the second ASEAN country to launch a Reinforced Partnership with the EPO after Malaysia did so in October 2019. The EPO’s Reinforced Partnership program seeks to establish long-term partnerships with the intellectual property offices of the world’s emerging innovation hubs and integrate and strengthen the global patent system by extending the network of partner offices that increase their capacities, productivity and quality through the systematic utilization of EPO work products, tools and practices.
THAILAND LEGAL REVIEW
Corporate Law News
Reduction of Immovable Property Transfer Fee and Mortgage Fee
The fee for the transfer of immovable property has been reduced from 2% to 0.01% and the mortgage registration fee from 1% to 0.01% for registrations made simultaneously in the period between November 2, 2019 and December 24, 2020. To be eligible for this reduction, such immovable property must be under the scope of two new Notifications issued by the Minister of the Interior, dated November 1, 2019, as follows:
(1) Land with building which includes (i) Detached house, (ii) Semi-detached house, (iii) Terrace house, or (iv) Shop house, and purchased from a land developer with a purchase price not exceeding THB 3 million and mortgage loan limit of not exceeding THB 3 million
(2) Condominium unit with transferred ownership from a condominium developer with a purchase price of not exceeding THB 3 million and mortgage loan limit not exceeding THB 3 million
VAT Rate Remains at 7%
The Royal Decree regarding VAT reduction (No. 684) became effective on October 1, 2019, and the VAT rate of 7% (VAT 6.3% with local tax 0.7%) will remain for one more year from October 1, 2019 to September 30, 2020 for the sale of all goods, services, and imports. The standard VAT rate is 10% as prescribed in the Revenue Code.
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