Dej-Udom & Associates Business and Legal Update – April 2014

The Dej-Udom & Associates monthly business and legal update for Thailand and the ASEAN region for April 2014

COUNTDOWN 2015 – ASEAN Economic Community ||

ASEAN Stars Index –
The Stock Exchange of Thailand, the Bursa Malaysia, and the Singapore Exchange have taken an active role in strengthening the ASEAN Exchanges, an alliance of seven ASEAN bourses, through greater collaboration and the launch of the ASEAN Stars Index (ASI). To promote asset classes in ASEAN trading, the ASI is made up of the top 30 stocks from each country in the ASEAN Exchanges. Companies listed on the seven exchanges can raise capital in one another’s markets, and the combined exchanges account for US$ 2 trillion in market capitalization.

ASEAN Tourism Professionals
The ASEAN Mutual Recognition Arrangement on Tourism Professionals (MRA-TP) is set to implemented at the end of 2015. It will allow tourism professionals in ASEAN countries access to jobs by way of training and certification programs. As its programs were not being completed on schedule, a regional secretariat for tourism professionals will be established in Indonesia where a group of master trainers and master assessors will assess member country’s competency standards against ASEAN standards. The MRA-TP will not allow free job movement across ASEAN; instead, it will act as a job recruitment service where companies can choose from certified candidates who register with it.

Auto Sector Growth
A leading research firm expects the aftermarket auto parts sector in Indonesia, Thailand and Malaysia to sustain a compound annual growth rate of 12.9% from 2010 to 2018. Malaysia’s recent auto market liberalization will also drive industry growth. The different policies for green cars, low emission, high mileage vehicles, in Thailand, Malaysia, and Indonesia, are also expected to influence demand patterns and create future growth.

Myanmar Watch
Logistics Hub Intended
Myanmar’s Minister of Transport says that the government aims to make the country one of Asia’s major logistic hubs by developing and strengthening its aviation industry. To achieve this, the government’s four strategic goals are to liberalize economic regulations, create air linkages to global destinations, promote national airlines, and improve infrastructure.

Support Use of Financial Services
To allow people better access to financial services throughout the region, ASEAN finance ministers agreed to help Myanmar enhance its financial inclusion system. Even though the country’s economy is expected to grow by 7% in 2014 and 2015, the local population is inexperienced in using financial systems. This is considered a challenge to the upcoming regional integration.

FDI Barriers Lifted
Myanmar’s government is removing barriers to foreign direct investment (FDI) starting in the special economic zones (SEZ). This will expand investment opportunities for foreign firms in the manufacturing, oil and gas, mining, and construction sectors. Myanmar is also inviting tenders from independent power producers to help its power sector become more competitive.

Indonesia News
Shipping Sector Worries
The chairman of the Indonesian National Shipowners Association (INSA) says that until the government implements pro-shipping transportation policies, Indonesia’s shipping industry will have difficulty competing after ASEAN Economic Community implementation in 2015. She says the biggest problem is the tough competition between private companies and state-owned enterprises seeking to make a profit.

Philippines Update
Fastest Growing Economy
The International Monetary Fund (IMF) reported that while economic growth in Southeast Asia slowed in 2013, the Philippines had the region’s fastest growing economy. The expansion rate was 7.2% – even after the devastation of Super Typhoon Haiyan.

THAILAND UPDATE

Board of Investment
Board Appointments Approved
The appointments of 13 new Board of Investment (BOI) directors were approved by the Caretaker Prime Minister. The BOI Board of Directors will hold its first meeting on May 1, 2014 to start processing the over 400 pending projects that have a combined value of THB 660 billion.

Strong Application Growth
The BOI reported that the value of applications for investment privileges in Q1 2014 was THB 234 billion, despite the political turmoil. While overall value fell 10% from Q1 2013, investments in the automotive, car components, and machinery sectors grew by 265% year on year because of eco-car Phase 2 projects.

Trade
Target US$ 15 billion
Thai officials say that Thailand was Vietnam’s biggest trade partner in ASEAN in 2013 and that economic ties between the two countries will continue to grow. Two-way trade rose to US$9.4 billion in 2013, and the two countries plan to increase their trade to US$15 billion over the next six years.

New Border Checkpoint Opened
The fourth new permanent border checkpoint between Ranong and cities in Myanmar is now open. The checkpoints are intended to increase trade, investment, and tourism with Myanmar and help prepare for the coming economic integration. Ranong’s trade value was THB 24 billion, up 12% on 2012 and 2013.

Thai SMEs in Myanmar
To be successful in Myanmar, experts recommend that Thai small and medium-sized enterprises find reliable local distribution partners instead of using traders or cronies and that trade products should not depend on Myanmar’s underdeveloped infrastructure.

Taxation
Diesel Tax Cut Extended
The Cabinet extended the excise tax waiver on diesel for an additional month until the end of May 2014.

Banking
Commercial Banks Remain Strong
The Bank of Thailand (BOT) announced that Thai commercial banks remain strong despite the economic slowdown and political turbulence. Even if these problems continue for a year or more, commercial banks are expected to remain strong as they have robust credit and high provisions. The BOT says that the supervision of debt quality remains at a good level, excess provision is at 157%, and commercial banks are still making profits.

Business
Life Insurance Premiums Up
Thailand’s life insurance sector generated THB 442.5 billion in premiums for 2013, up 13.1% on 2102, and experts anticipate 12% growth for this sector in 2014.

Film Industry Threatened
The Thailand Film Office (TFO) says that due to the political unrest, several film productions postponed their shoots in Thailand in Q1 2014. At the same time, Malaysia is taking advantage of the situation and offering tax holidays and incentive packages to attract foreign film makers considering Southeast Asia.

Employment
A global professional-services company says that salaries in Thailand will increase by 6% in 2014. In their annual survey, they assessed a wide range of Thai industries and found that employee retention is the top human resources challenge. The survey also asked companies about their employment strategies for the ASEAN Economic Community and found that language training and leadership development were the top answers.

Securities
Personnel Rules Revised
The Securities and Exchange Commission approved standardizing its existing rules for capital-market personnel. The guidelines will be compiled into a single notification and will contain the guidelines for all capital-market personnel and the new personnel categories that must now gain SEC approval, especially for positions with high financial impact on clients.

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