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


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

COUNTDOWN 2015 – ASEAN Economic Community |

Chemical Industry Opportunities –
According to academics, Thailand’s chemical industries have the potential to benefit from the ASEAN Economic Community’s formation. The country’s rich chemical resources and relatively easy logistical access are both important factors. For example, Thailand has the highest production capacity for ethylene. Experts also believe that the Thai government needs to encourage more research and development into chemical resources.

Regional F&B Cooperation Required
The Asean Food & Beverage Alliance (AFBA) is calling for regional governments to create new legislation that harmonizes food standards amongst the ASEAN countries. The regulations should be in line with international standards and based on scientific principles.

Laos News
Border Demarcation Agreement
Thailand and Laos have agreed to meet and resume discussions on border demarcations between the two nations. A border survey and demarcation project that began in 1997 was never completed. The two countries have now agreed to resume this project including surveying the Mekong River and new islands that have appeared.

Laotian Labor Staff
The Ministry of Labor announced that Thailand plans to hire more Lao staff to work at immigration and labor offices to deal with the large number of Lao workers. At least 66,000 Lao are working in Thailand, but only 2,300 have official documentation.

Fourth Friendship Bridge
The Lao-Thai Friendship Bridge which crosses the Mekong River to the Lao province of Bokeo is almost complete. The bridge will link Chiang Rai Province in Thailand to Yunnan, China via Laos.

Myanmar Watch
Improved Rate of Growth
According to the International Monetary Fund (IMF), Myanmar’s economy expanded 6.5% last year and is expected to continue making modest gains. IMF experts say that foreign direct investment in Myanmar will outweigh a widening current account deficit. Myanmar’s reform program has encouraged macro-economic stability and high investor interest.

New Tax on Military-Owned Businesses
The Myanmar government has announced that it will tax military financial operations at the same rate as other companies. This will end two decades of tax exemption for Myanmar Economic Holdings Ltd., the military’s main investment body, and other military controlled firms. Military held companies are involved in a wide range of businesses across Myanmar.

Yangon Master Plan
At a recent conference, the Myanmar government announced a new master plan for Yangon’s urban development. The Asian Development Bank (ADB) has projected that by 2050 over 60% of Myanmar’s population will be urbanized. Urban planners are modeling the future development of Yangon after Singapore and intend to decentralize the central business distract and create an outer green belt around the center-city.

Power Projects
Myanmar is rushing to complete power plants to keep up with demand for Yangon. Six projects for gas-fired plants are underway. The country also announced that the nation will develop the world’s third largest solar pant to operate within 21 months.

Indonesia Update
New Tax Breaks
The Indonesian government has announced that it will introduce a new package of tax incentives next year in order to reduce reliance on imports and encourage innovation. Tax incentives will also be given to encourage research and development.


Securities & Exchange
Funds “Supermarket”
The Securities and Exchange Commission (SEC) of Thailand plans to revise security regulations so that brokers can feature the products of different fund companies at the same time. Companies with at least 10 million baht paid up capital will be able to apply for a “Type D” license to offer a “supermarket” selection of brokerage investments offerings including mutual funds.

Countering Manipulation
The Securities and Exchange Commission (SEC) is taking stronger measures to stop share price manipulation; although it admits that such cases are complicated. The SEC has filed its first complaint this year against parties alleged to be involved with share manipulation. Last year the SEC filed 70 complaints including 21 against persons alleged to have manipulated share prices.

Intellectual Property
US Priority Watch List
Despite Thailand’s efforts to step up software copyright enforcement this year, the nation remains on the US’s Priority Watch List. The Office of the US Trade Representative (USTR) released its annual Special 301 Report in which it identified Thailand and nine other countries as not doing enough to stop intellectual property piracy. However, the US stated that it will review the Kingdom’s status if Thailand passes key legislative initiatives and improves enforcement.

Public Partnership Act
The Office of the Attorney-General is promoting the new Public-Private Partnership Act which came into effect on April 3, 2013 and explaining that the act is designed to speed up public-private cooperative contracts. The new legislation provides that the period between winning a government tender and signing the contract must not exceed 180 days. Members of the state subcommittee considering qualifications of bidding companies will not be permitted to serve on the Board of Directors of the winning company. Experts say the new act will ensure more transparency.

European Free-Trade Agreement
Members of the European business community are encouraging the Thai government to speed up negotiations to create a Thai-European Union (EU) free trade agreement (FTA). Thailand is being warmed that if it does not finalize an agreement, it will lose out to other Asean countries. The EU is the largest investor in ASEAN and ranks second after Japan in Thailand. Trade talks between Thailand and the EU took place in Brussels this month, and further talks will continue in Bangkok in September.

Closure Raises Concerns
In April a reported 29 export companies went out of business due to the strong baht. The Business Development Department called on the government to take strong action to control the baht.

Increase in Hiring
A recent report cites Thailand as ranking second in the world for planned new jobs. Based on a survey of businesses in 44 countries, the report noted that intended hiring in the Asia-Pacific increased to 43% from 38% last year. Among Thai businesses surveyed, 72% reported that they planned to hire new staff.

New Bangkok City Plan
The Cabinet has approved a new “green” Bangkok City Plan to replace the one used since 2006. The new plan includes provisions for wastewater management, drainage and solid waste disposal, which were not included in the previous plan.

New Medical Goods Production Zone
A plan to set up an industrial estate for the production of medical equipment has been approved in principal by the Industry Ministry. Under the plan, the Industrial Estate Authority of Thailand (IEAT) would partner with the private sector to build the new industrial zone. The Federation of Thai Industries has been assigned to create a one-stop medical equipment testing service.

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