Dej-Udom & Associates Business and Legal Update – October 2013


The Dej-Udom & Associates monthly business and legal update for Thailand and the ASEAN region for October 2013

COUNTDOWN 2015 – ASEAN Economic Community |

Banking Readiness Concerns –
At a recent World Capital Markets Symposium, Datuk Seri Nazir Razak, a highly respected Malaysian banking expert, raised serious concerns about the readiness of banks to operate within the ASEAN AEC. He noted that the ASEAN Banking Integration Framework (ABIF) does not yet have enough information about what is being planned. The ABIF will set the qualifications for which banks can be classified as “Qualified ASEAN Banks.” This classification will provide them with a special status to help them expand in the region. The banker added that the legal framework and infrastructure of the ASEAN Secretariat are still not adequately in place.

Integration Needed
Experts from the Asian Development Bank (ADB) note that the ASEAN Economic Community needs to strengthen regional integration. National governments are being warned that they must ratify regional agreements that will counter domestic protectionist pressures. Barriers to trade in areas such as the steel, automotive and agriculture industries must be reduced.

Railway Meeting
Seven railway authority heads met in Thailand to discuss rail links between ASEAN countries. Once the AEC comes into effect, more efficient rail service will be required. The rail heads also discussed ways to better accommodate travelers so that they would not waste time while in transit between countries.

Laos Update
Increase in Trade
The value of imports and exports during the first six months of 2013 increased in Laos by 5.4% over the same period last year. Trade with Thailand counted for 41% of the exports, while exports to China accounted for 27.5%. Mineral exports made up approximately 48% of the total exports.

Myanmar Watch
New Investment Laws Planned
New laws are being drafted in Myanmar to create a more favorable investment climate and eliminate inequalities. A new Myanmar citizen investment law recently came into effect; however, the rules and regulations for the law have not been announced. The foreign investment law was also recently amended, and new special economic zone regulations are also being enacted.

Airport Construction
In order to handle the increasing number of visitors to Myanmar, construction of the new Hantharwady International Airport will begin in early 2014. Yangon International Airport, its present airport, cannot be expanded due to a lack of space for additional runways.

Thai-Myanmar Visa Exemption
Following the signing of an agreement in December, Thai and Myanmar air travelers will be exempted from obtaining visas for 14-day stays. The exemption will only apply for visas issued at airports.

Indonesia News
Move to Cut Expatriates
Indonesia is encouraging companies to hire locals over foreigners. Last year, the government created a list of 19 human resource related positions that foreigners are banned from taking. The government plans to still welcome foreign professionals who can assist with the transfer of knowledge. The majority the expatriates come from China followed by foreigners from Japan, South Korea, India and Malaysia.

Singapore Trends
Thai Singapore AEC Cooperation
Singapore and Thailand have agreed to boost mutual commerce and investment strengths to prepare for AEC integration. Targeted areas for cooperation are agriculture and food products, cruises, infrastructure development, trade and customs facilitation, and information technology.


Encouraging Overseas Investment
The Bank of Thailand (BOT) is urging Thai companies to invest overseas. The central bank sees direct investment abroad as a way to help balance the influx of offshore capital flows into Thailand.

Consumer Protection
The Bank of Thailand (BOT) has instructed commercial banks to provide clearer and more comprehensive information about financial products. In the past, banks have only concentrated on providing information about the real borrowing costs for mortgages, but now BOT has instructed banks to be more explicit about other financial products.

Securities & Exchange
Increased Use of Derivatives Warrants
The Stock Exchange of Thailand has noted that derivative warrants are increasing in popularity among investors. At present, 11 out of 40 securities companies are offering derivative warrants. Trading of derivative warrants is normally most active during periods of a market’s upward trends.

Intellectual Property
More Police Raids
During recent months, the police have stepped up their raids on companies suspected of using pirated software. With added personnel and growing investigations, the police department has been able to expand raids to more geographic locations. The Department of Intellectual Property declared 2013 to the “Year of IPR Protection in Thailand.”

Airport Rail Link Check-in
The government is planning to introduce airport check-in at the Makkasan Airport Rail Link Station by early next year. The aim is to ease congestion at Suvarnabhumi Airport by permitting travelers to check-in for their flights and leave their luggage at Makkasan Station. The frequency of express trains to the airport will also be increased.

Higher Tax on Unused Land
The Finance Ministry has proposed that the tax on unused land be increased from not more than 0.5% to more than 0.5% in order to discourage land speculation. The final rate of the proposed tax increase has not been fixed. The definition of unused land would be land where less than half of the plot is used.

Board of Investment
New Industrial Estates
The Board of Investment (BOI) has reduced the number of small and medium size enterprises (SMEs) categories eligible for investment privileges from 57 to 39. BOI eliminated certain business types that are labor intensive, but retained activities that have been divided into four different groups: value-added farm production, industries that use manufacturing skills, creative industries, and service industries including those related to tourism.

New Treaties with Chile and Peru
Thailand is entering into trade agreements with two South American countries. A free trade agreement was signed with Chile which eliminates tariffs on 90% of the goods traded between the two countries. Details are also being finalized on a bi-lateral trade agreement between Thailand and Peru.

Food Exports Increase
The Thai Chamber of Commerce predicts that food exports will increase by between five and seven percent next year. Food exporters have been warned that an emphasis must be placed on quality in order to succeed in the European market.

More Internet Use
The Information and Communication Technology Ministry announced that 35 million people or close to half the Thai population is using the internet. The increase is attributed to less expensive equipment and broader availability of access.

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