ASEAN Today – Regional Legal and Business News – October 2019

ASEAN Today – Regional Legal and Business News for October 2019 including a summary of Thailand Immigration’s new tax receipt and document requirements for long-term visa extensions, an overview of the soft opening to facilitate the implementation of Myanmar’s Trademark Law of 2019, and updates on the new income tax deduction for first time residential property buyers and  the new contract controls for the residential property leasing business.


ASEAN Economic Community News

2019 ASEAN FDI Report
The ASEAN Secretariat and the United Nations Conference on Trade and Development (UNCTAD) released the ASEAN Investment Report 2019 – FDI in Services: Focus on Health Care this month. The report states that foreign direct investment (FDI) inflows into ASEAN increased for the third consecutive year and reached US$ 115 billion in 2018, up 11.5% on 2017. This trend in FDI growth is expected to continue in coming years due to region’s dynamic industrial development and improvement of the investment and business environment. ASEAN’s services sector received the largest share of FDI, primarily into financial services, and wholesale and retail, and real estate activities. The report says that demand for health care in ASEAN and the need for investment in the regional health care market will increase rapidly. In 2016, health care expenditures in ASEAN were US$99 billion, 4% of ASEAN GDP and significantly less than the global average of 10% of GDP. However, ASEAN health care expenditure is expected to reach US$270 billion a year by 2025.

Infrastructure Spending
While infrastructure development is booming in ASEAN, experts say there is a clear gap in spending. A regional development bank reported that ASEAN will need US$2.76 trillion in infrastructure spending from 2016-2030 or about 5.7% of each member country’s GDP. Currently, ASEAN states only spend 2.3% of GDP on infrastructure. Much of ASEAN’s infrastructure has been supported and financed by major overseas funders, namely Japan and now China. In 2018, Japan’s infrastructure investments in ASEAN totaled US$367 billion and China’s totaled US$255 billion.

Digital Revolution
Experts say that while digital technologies are transforming the way goods are produced, the US-China trade war is redesigning global supply chains and forcing companies to look for alternatives to manufacturing in China. To benefit from the flight of manufacturing from China, ASEAN must look beyond low-cost labor and adopt new technologies. Long-term competitiveness in the ASEAN will only be achieved by an enthusiastic embrace of the digital revolution. Manufacturing is expected to double to US$1.4 trillion by 2028 and new technologies could add US$250 billion in incremental value. However, most ASEAN countries and manufacturers are not ready for the digital revolution. A recent report by the World Economic Forum argues that there is a high risk of disruption for all ASEAN economies except for Singapore and Malaysia. This is partly due to the difference in levels of economic development, but the slow adoption of digital technologies over concerns that machines will replace human workers is also a major factor. As most regional governments are still in early stages of developing digitalization strategies, the slow uptake of digitalization will undermine ASEAN’s ability to capture the investments leaving China and maximize future manufacturing growth.

Malaysia News
Trade Mark Act of 2019
Malaysia’s new Trade Marks Act of 2019 (the Act), which replaces the current Trade Marks Act of 1976, will come into force on December 27, 2019. Accession to the Madrid Protocol is part of the new Act; however, implementation will not occur as the rules have not yet been completed. Under the Act, Malaysia moves from its current single-class filing system to a multi-class system where multiple classes of goods and services can be registered in a single application. Additionally, the new Act recognizes collective trademarks and non-traditional trademarks such as sound and motion marks, holograms, shapes or product wraps, colors, smells, and patterns or positions of merchandise. The trademark filing date is no longer the date a new application was filed; now it is the date when all formality requirements have been met. Punishments are also more severe under the new Act. Fraudulent or trademark infringements are liable for a fine of up to RM1 million (US$ 240,000), up to five years imprisonment, or both.

Cambodia Update
Record Economic Growth
The International Monetary Fund (IMF) says that Cambodia is projected to have the highest economic growth in ASEAN this year despite some challenges. Economic growth is predicted to be 7% for 2019 and ease to 6.8% in 2020. The US-China trade war will have a limited negative impact on Cambodia as many companies currently situated in China are interested in moving their factories to Cambodia. One major economic hazard the country faces is the threatened withdrawal of the “Everything but Arms” (EBA) trade partnership with the European Union that would challenge Cambodia’s regional competitiveness, especially in garment manufacturing. The World Bank says that the booming real estate and construction sectors are the engines of Cambodia’s economy, but as they are fueled by Chinese investment, a slowdown of the Chinese economy could seriously damage the Cambodian economy.

Indonesia Watch
New Halal Law
Indonesia’s Halal Law came into effect on October 17, 2019 and now many consumer products entering or being traded in Indonesia must be halal certified. The new law will regulate the processing, materials, and certification of halal products. Compulsory halal labeling will initially only apply to food and beverages with cosmetics, drugs, and other consumer goods having until 2022 to comply. Halal certificates are valid for four years. The law also established the new Halal Products Certification Agency (BPJPH) under the Ministry of Religious Affairs. The penalties for non-compliance are severe, up to five years’ imprisonment and a maximum fine of IDR2 billion (US$ 140,000).

Vietnam News
Global Supply Chains
The head of a leading global business association for open and sustainable trade says that Vietnam needs sustainable supplies of goods and products in order to join the global supply chain. While there are many global supply chains for the EU and USA in Asian countries, Vietnamese enterprises are not participating in them. Some of the challenges Vietnamese businesses face from participating in a global supply chain include origin of goods, trade barriers, trade defense mechanisms, and sustainable development. Vietnamese manufacturers need to focus on sustainability in order to take a bigger stake in the global supply chain.

Singapore Bulletin
Green Investment
The Monetary Authority of Singapore (MAS), the country’s central bank, plans to expand green financing incentives for financial services companies. The MAS says financial institutions need to be more resilient to the economic impacts of climate change and be prepared for potential changes in assets values and policies. Southeast Asian countries are highly vulnerable to climate change and the region will need an estimated US$200 billion a year in green investments until 2030.

Myanmar Update
Yangon Stock Exchange
As part of the process of opening the Yangon Stock Exchange to the international market, foreigners living in Myanmar will be allowed to buy and sell on the exchange. Myanmar’s new Companies Law allows for up to 35% foreign ownership in domestic companies, and companies listed on the Yangon Stock Exchange can sell up to 35% of their shares to foreigners.


Immigration Update
New Document Requirements
Effective October 17, 2019, the Immigration Authority now requests additional documents to support long-term visa extension applications at both the One Stop Service Center (OSSC) and the Immigration Bureau at Chaengwattana. If a visa applicant does not submit the additional documents to support their visa extension, the visa application will be declined. The additional documents that Immigration now requires are listed below.

A. Original Tax Receipts
1. If filing at the OSSC, the original tax receipt for the monthly salary withholding tax (P.N.D. 1) for the latest month for all Thai and foreign employees. If filing through the regular process at the Immigration Bureau at Chaengwattana, the original tax receipt for the last 3 months is required.
2. If filing at the OSSC, the original tax receipt for the monthly Value Added Tax (VAT) return (Phor Por 30 form) for the latest month. If filing through the regular process at the Immigration Bureau at Chaengwattana, the original tax receipt for the last 3 months is required.
3. The original tax receipt for the updated yearly corporate income tax return (P.N.D.50 form).
4. The original tax receipt of the updated yearly personal income tax return for the visa holder, i.e., the employee who wishes to apply for the visa extension (P.N.D.91 form).

-If filing tax through the regular process at the counter of the Revenue Dept, the tax payer will receive the yellow tax receipt after filing the tax form. The original yellow tax receipt is required to be presented when filing the visa extension.
-If filing tax via the internet, the tax payer will also receive a tax receipt. However, this has to be printed from the system after successfully filing through the E-Revenue System. Such printed-out receipt is required to be presented when filing the visa extension.

B: Original payment receipts for fees paid for document certification at the Ministry of Commerce for the following documents:
1. Fee payment receipt when obtaining a Company Affidavit.
2. Fee payment receipt when obtaining a List of Shareholders.
3. Fee payment receipt when obtaining a certified copy of the form for submission of audited financial statement for the previous accounting year acknowledged by the Department of Business Development, Ministry of Commerce (Sor Bor Chor 3 form).

C. Original payment receipt for fees paid for tax certification at the Revenue Department for the following documents:
1. Fee payment receipt when obtaining a certified copy of the monthly salary withholding tax (P.N.D. 1) for the latest month (or 3 months if needed) for all Thai and foreign employees.
2. Fee payment receipt when obtaining certified copy of monthly Value Added Tax (VAT) return (Phor Por 30 form) for the latest month (or 3 months if needed).
3. Fee payment receipt when obtaining a certified copy of the updated yearly corporate income tax return (P.N.D.50 form).
4. Fee payment receipt when obtaining a certified copy of the updated yearly personal income tax return for the visa holder (P.N.D.91).

Medical Certificate Requirement
According to an unofficial announcement of the Employment Department, as of October 9, 2019, a Medical Certificate is no longer required for work permit applications filed under special cases and laws including applications filed under Board of Investment privileges, the Industrial Estate Act of Thailand, and the Petroleum Act. This effectively cancels the new regulation which came into effect in August 2019 requiring a Medical Certificate for work permit applications filed under the above. The Medical Certificate requirement was cancelled due to numerous complaints to the BOI by foreign investors about the difficulties arising from the new Medical Certificate requirement in order to renew or obtain new work permits.

Intellectual Property News
Soft Opening to Facilitate Implementation of Myanmar’s Trademark Law of 2019
According to Dr. Moe Moe Thwe, Deputy Director General of Myanmar’s Intellectual Property Department, on November 1, 2019, before the official implementation of the Trademark Law in Myanmar, there will be a soft opening which refers to the procedure to collect online trademark applications for the marks previously registered through the current registration process or the marks that have already been used in Myanmar. The objective of the soft opening is to prevent any problem that may occur due to the rush in obtaining a filing date upon the official implementation. The soft opening is expected to start around six months before the official implementation. As the official implementation is expected to be in mid-2020, the soft opening may then be expected in late December 2019 or January 2020. The guidelines regarding the soft opening will be subsequently issued. However, the procedure and the cost information are not available at this stage. Nevertheless, for marks registered under the current system in Myanmar or marks that have already been used in Myanmar, preparation of the information on the registration and/or use is recommended in order to be ready for the soft opening. Please note that a multi-class application is expected to be available in Myanmar; however, class heading is not likely to be acceptable under the Trademark Act to be implemented.

Dej-Udom & Associates can assist you in preparation without cost at this stage. If there are the marks registered or used in Myanmar that you wish to protect, please provide us with the preliminary information:
• Name and address of the owner of the mark
• Depiction of the mark
• Class(es) along with the information of goods/services
• Registration information and a copy of the registered declaration and/or the information on the use of the mark in Myanmar (i.e. the date of first use and the evidence of use)

Corporate Law News
Special Deductible Allowance
Under a new Revenue Department Notification (No. 353), an income tax deduction of up to THB 200,000 is available for individual taxpayers who are first-time buyers of real estate or condominium units for residential purposes in 2019. To be eligible for this deduction, the following conditions must be met:

1) The taxpayer shall be an ordinary person.
2) The value of the acquired real estate or condominium unit shall not exceed THB 5 million (No separation of land purchase agreement and construction agreement is allowed).
3) Payment and the registration of transfer of real estate or condominium unit shall be made between 30 April 2019 and 31 December 2019.
4) Taxpayers shall exercise such right for tax year 2019 in which tax return filing and tax payment will be made in 2020.
5) It must be the taxpayer’s first-time having ownership of a real estate or condominium unit for residential purposes.
6) The amount of tax deduction shall be in accordance with the actual amount paid, but not exceeding THB 200,000
7) The eligible taxpayer must remain as the owner of the real estate or condominium unit for at least five consecutive years from the date of registration of transfer. This excludes the taxpayer’s deaths or the cessation of the real estate or condominium unit status

New Contract-Controlled Business for Residential Property Leasing Business
The previous notification on the prescription of residential property leasing business to be a contract-controlled business of February 12, 2018 will be replaced by the new notification which becomes effective on January 29, 2020. The law will only apply to business operators with at least 5 units, situated within the same building or spread out in various locations. The definition of residential property includes rooms, houses, condominium units, apartments, or any other category of residence except dormitories and hotels. Any residential lease agreements made after such effective date must conform to this new Notification as follows:

(1) The residential lease agreement shall be clearly made in Thai language and contain the following terms and conditions:
 Name and address of lessor / authorized person
 Name and address of lessee (that can be reached)
 Name and location of building
 Details of building conditions including assets and appliances of building
 Term of agreement
 Rental rate and rental payment period
 Rate for public utilities (such as electric bill, water bill or phone bill) showing calculation, including term of payment
 Service charges (Actual and reasonable payment) showing calculation, including term of payment
 Amount of security deposit and advance rental payment

(2) The rental invoice as set forth in (1), item 1) – 8), shall be submitted to the lessee at least 3 days in advance prior to rental due date

(3) Evidence related to the acceptance of the building inspection, including facilities (if any) shall be attached to the lease agreement, as well as providing a copy of such to the lessee

(4) Due to termination of the agreement, the security deposit shall be immediately returned to the lessee, unless investigation of any damages will be required by lessor. If there are no damages caused by the lessee, the security deposit shall be returned to the lessee within 7 days from the termination date and possession of the residence being taken back by the lessor

(5) In the case of a fixed-term lease, the lessee is entitled to terminate the agreement prior to the end-date, provided that the lessee shall stay in the residence for not less than half of the lease term. In addition, the lessee shall notify the lessor in writing in advance of not less than 30 days, and no outstanding debt to the lessor

(6) Any material breaches in which the lessor is entitled to terminate the residential lease agreement shall be clearly made in, for instance, red, bold, or italic that is underlined.

(7) It is required to give 30 days’ advance notice to the lessee for termination caused by any general breach

However, a 7 days’ prior notice shall be given in the case of a termination caused by the lessee becoming a nuisance or causing interruptions to the neighbors.

In the case of a lessee’s non-compliance with laws involving public order or public morals, the lessor is entitled to terminate without giving any prior notice

The following types of clauses cannot be part of the agreement:
 Exemption or limitation of liability of the lessor from a breach of contract or infringement in an essential part without reasonable cause
 Collection of advance rental payment and security deposit, totaling more than 3 months of monthly rental rate
 Granting the lessor the right to change rental rates, public utilities and service charges prior to the termination of the agreement
 Granting the lessor the right to forfeit a security deposit or advance rental payment due to no fault on the part of lessee
 Allowing the lessor or its authorized person to enter a lessee’s rental property without giving prior notice, except in case of emergency
 Granting the lessor the right to charge electric and water cost exceeding the rates in which the electricity and water suppliers charge the lessor
 Granting the lessor the right to obstruct the lessee’s access into the property for its benefit, or to seize or move the lessee’s belongings, without first exercising the lessor’s right to legally terminate the agreement.
 Granting the lessor the right to request a lease renewal fee
 Granting the lessor the right to terminate an agreement due to no fault on the part of the lessee in essential clauses of the agreement
 Prescribing the lessee to be responsible for normal wear and tear of assets and appliances of the building
 Prescribing the lessee to be responsible for damages to the building, assets and appliances due to no fault on the part of the lessee and force majeure

The Contract shall be made in duplicate, each copy being equally authentic, and submitted to the lessee as soon as such contract is signed by the lessor


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.

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