03 Mar ASEAN Today – Regional Legal and Business News – February 2017
ASEAN Today – Regional Legal and Business News for February 2017Download PDF
Scaling-Up Nutrition Movement
The ASEAN Secretariat met with the United Nations (UN) Scaling-Up Nutrition (SUN) Movement Coordinator earlier this month to address food security and malnutrition in the region. The UN hopes that ASEAN will be a gateway for the sharing of best practices and knowledge to help end malnutrition in the region and in all SUN countries. The SUN Movement’s operating principle is that everyone has the right to food and good nutrition. The Regional Report on Nutrition Security in ASEAN Volume 2 published in 2016 shows that stunting and wasting in children five and under is a severe public health problem in the ASEAN member states. An estimated 5.4 million children suffer from low weight-for-height and 17.9 million suffer from low height-for-age.
Digital Economy Growth
In a new report, the US-ASEAN Business Council (UABC) together with a multinational professional services firm maintain that digital data management is essential for the growth of digital economies within the ASEAN member states. The UABC also says that the growth of the digital economy will play a strategic role in expanding regional integration and drive domestic growth for startups and small and medium-sized businesses (SMEs).
Intellectual Property Plan
At the 52nd ASEAN Working Group on Intellectual Property Cooperation (AWGIPC), representatives met to discuss the ASEAN Intellectual Property Rights (IPR) Action Plan 2016-2025 and the implementation of 19 key initiatives and deliverables over the next ten years. These initiatives will help ASEAN achieve a robust and highly integrated intellectual-property ecosystem.
New Business Survey
Myanmar’s Ministry of Planning and Finance and the United Nations Development Program released the Myanmar Business Survey 2015 (MBS) this month. 15,000 businesses in the manufacturing, trade, and services sectors were surveyed. The MBS found that Myanmar’s private sector still has low levels of diversification, low levels of productivity, and is dominated by small businesses with less than 10 workers.
Japanese Business Growth
According to the Japan External Trade Organization (JETRO), 70% of Japanese companies in Vietnam plan to expand their business operations this year. JETRO says Japanese companies favor Vietnam due to its political and social stability, market size, and growth potential. The only seen drawback to expanding in Vietnam is the country’s limited supporting industries.
Cambodia plans to establish a corporate bond market and issue its first government bond by 2018. The Director-General of the Securities and Exchange Commission of Cambodia (SECC) says that, with corporate bonds, private companies will soon have more options to raise funds through equity or debt securities which will bolster confidence in Cambodia’s market and help attract investors.
Currently, banks in Cambodia only make smaller loans, US$1 million or less, but with debt security in the capital market, the banks will be able to substantially increase the loan amounts.
New Construction Services Law
Indonesia’s legislature passed a new draft Law on Construction Services which will update all guidelines regarding the organization of construction services. For construction service business categories, there is a new business category and the law now sets clear specifications and requirements. The new law also details the establishment requirements for local and foreign construction companies.
Gem and Jewelry Exports
Thai gem and jewelry exports are expected to rebound this year after exports dropped in 2016. Gold exports did rise over 20% in 2016 however. The Cabinet recently approved measures including tax incentives to help Thailand become a jewelry trading hub. The measures include import tariff waivers for imported raw materials used in jewelry and tariff cuts for imported finished products from 20% to 10%.
The Commerce Ministry wants to open 140 central markets nationwide that will allow local vendors and farmers from rural areas to access buyers directly. The ministry plans to develop four types of markets: 1) community markets selling locally-made products; 2) markets targeting tourists; 3) fruit and vegetable markets; and 4) markets for products unique to each province.
New Personal Income Tax
Thailand’s personal income tax (PIT) structure has changed with the recent amendment to the Thai Tax Code. The new PIT is effective for 2017 incomes filed in 2018. Under the new rules, general expenses can be deducted at 50% of taxable income, up to 100,000 baht, and allowances have been doubled. Additionally, rates have changed for higher incomes. Now, a 30% rate applies to income of 2-5 million baht and 35% for income over 5 million baht. The government hopes the new tax structure will increase disposable incomes.
Bangkok Office Market
A global real estate services firm reports that due to limited supply and little vacant land in commercial areas, demand in Bangkok’s office market will remain robust over the next 3 years. Offices continue to be an attractive property segment for investors as rents keep rising and occupancy rates are strong. However, except for the luxury segment, Bangkok’s condo market is saturated with demand falling and prices deteriorating.
The Tourism Authority of Thailand and the Myanmar Tourism Federation signed a memorandum of understanding to stimulate tourism between the two countries and raise the number of visitors between the two countries to 1.5 million by 2020. Thais are Myanmar’s biggest source of foreign visitors.
The Export-Import Bank of Thailand wants to expand its loans for overseas investment by 15% this year to increase the success of Thais investing abroad. Additionally, the bank will focus on loans for the government’s 10 targeted clusters that include next-generation cars, affluent medical and wellness tourism, robotics for industry, and biofuels and biochemicals.
The Finance Ministry approved six picofinance licenses this month with half the approved licenses in Thailand’s Northeast. Picofinance will give low income earners access to certified financial sources and keep them away from loan sharks. Loans are limited to THB 50,000 per borrower with a maximum rate of 36% a year.
Securities & Exchange
Short-Term Investment Growth
The Bank of Thailand (BOT) reports significant growth in short-term foreign investment into Thailand’s capital and bond markets. This is due to the baht being seen a safe investment as it is backed by solid foreign reserves amidst global market fluctuations. However, the BOT may take measures to curb baht fluctuation if it believes capital flows are not beneficial to the economy.
New Minimum Wage Rate
Thailand’s 2017 minimum wage rates have been adjusted to match the cost of living, inflation, and work efficiency in each province. For skilled labor, the new minimum wage is between 360-600 baht a day.
Thailand Legal Review
Computer-Related Crime Act
The Act Amending Provision of Laws Prescribing Criminal Liabilities of Representatives of Juristic Persons B.E. 2560 (A.D. 2017) was enacted in compliance with an unprecedented decision of the Constitutional Court’s made in 2012. The court ruled against the statutory provision of the Direct Sales and Direct Marketing Act 2002, Section 54 which de jure presumed that the managing director, the manager, or any person responsible for the operations of a juristic person shall be liable for criminal punishment jointly with the offences committed by the juristic person, even though there was no action nor intention committed or expressed by the said representative relating to the said offences of the juristic person. Therefore, such provision was ruled against or contradictory to the Constitution of the Kingdom of Thailand 2007, Section 39, Paragraph 2, and is therefore not enforceable according to Section 6 of the Constitution. Subsequently, there were Constitutional Court decisions which ruled in a same manner, i.e., the Copyrights Act (1994), Section 74; the Telecommunication Business Operations Act 2001, Section 78; the Entertainment Establishments Act 1996, Section 28/5; and the Fertilizers Act 1975, Section 72/5. All these Acts had similar provisions contradictory to or inconsistent with the aforesaid Section 39, Paragraph 2 of the Constitution, and are not enforceable under Section 6. Therefore, in order to rectify the provisions of the said laws and other laws containing the same provisions so they conformed to the Constitution, it was necessary for this Act be enacted accordingly.
Under the new Act, all 76 existing laws which have these unconstitutional provisions will be replaced and superseded by the following:
“In the case that the offender is a juristic person, if the wrongdoing of such juristic person is caused by the order or action of the director or manager or responsible person of such juristic person; or in the case such person has a duty to order or act, but omits to order or act against what caused such juristic person to commit the offence, such person shall then be punished accordingly for such offence.”
Please note that while representatives of juristic persons may now feel safer in managing their day-to-day duties and responsibilities, the Act cautions the executives of juristic persons to be more attentive to their responsibilities and to act accordingly and carry out their duties with fiduciary care and good corporate governance.”
New BOI Incentives
With the recent amendment of the Investment Promotion Act, the BOI launched its new investment incentives for projects involved with advanced technology and innovation or research and development. The amendment to the Act focuses on investment encouraging mechanisms in deficient industries including:
1) A Corporate Income Tax (CIT) exemption not exceeding 13 years (previously 8 years) for projects in the fields of advanced technology and innovation or research and development;
2) A Personal Income Tax (PIT) deduction of a maximum of 50% of the normal rate not exceeding 10 years for projects that qualify for the Income Tax deduction requirements substituted for the Corporate Income Tax exemption;
3) An Investment Tax Allowance (ITA) allowing the amount of investment capital in the promoted projects to be computed as an allowance from the annual net profit within 10 years from the date of the first income was made under the promoted projects; and
4) An Import Tax exemption for imported materials in order to promote research and development.
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.