06 Sep Dej-Udom & Associates Newsletter – August 2016Download PDF
The Dej-Udom & Associates Newsletter for August 2016
ASEAN Economic Community News
Economic Ministers Meeting
At the annual ASEAN Economic Ministers Meeting held in Laos earlier this month, the meeting declared that economic growth in ASEAN was expected to drop to 4.5%. The decline from 4.7% in 2015 was due to China’s slowdown and uncertainties surrounding Britain’s vote to leave the European Union. Recovery is expected in 2017. With 15% of total trade, China is ASEAN’s top external trade partner. The meeting also reported that for intra-ASEAN trade, 99.2% of import duties have been eliminated in Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand, and 90.9% have been eliminated in Cambodia, Laos, Myanmar and Vietnam.
New Trade Initiative
A new ASEAN trade facilitation initiative, ASEAN Solutions for Investments, Services and Trade (ASSIST), was launched in August. ASSIST is a non-binding, consultative mechanism aimed at delivering practical solutions for operational problems encountered by ASEAN-based enterprises on cross-border issues relating to the implementation of ASEAN economic agreements and within the framework of the ASEAN Economic Community (AEC). ASSIST is internet based and free of charge.
Real Estate Stimulus
The Indonesian government’s latest economic stimulus package is aimed at helping its lower income citizens instead of businesses. The package will cut property licensing costs by 70% on lower income housing and also streamline the licensing process. Currently, the licensing process for low income homes has 33 stages and can take up to 981 days. The government plans to decrease this to 11 stages and 44 days.
Top Financial Market
Vietnam’s government announced that the country’s financial market is one of the five best performing financial markets worldwide due to Vietnam’s bright economic outlook and strong foreign capital inflows. Total market capitalization has reached US$71 billion which is equivalent to 38% of Vietnam’s GDP, up from 34% in 2015. The country is also working on plans to move Vietnam’s stock market from a frontier to an emerging market.
To help increase revenue collections, Laos’ Ministry of Finance is carrying out stronger measures that include directing the country’s small and medium-sized enterprises (SMEs) to open bank accounts and collect value added tax. One of the country’s current financial challenges is that the demand for budget expenditures is higher than its capacity to source needed revenue.
Indefinite Tax Exemptions
Myanmar will soon offer indefinite tax exemptions to companies that export 100% of their products in order the boost the country’s exports and decrease its current-account deficit. The possible lifetime exemptions will be available to both local and foreign-owned companies.
Myanmar’s Ministry of Commerce published a list of 267 items that can now be imported without a license. The items include cotton, iron products, steel and stainless steel, copper, brass, aluminum, electric appliances, vehicle parts, and trains. Another 500 items are expected to be removed from the 4405 item master list in the near future.
Independent IP Association
The Intellectual Property Association of Cambodia (IPAC) was officially launched this month and is Cambodia’s first independent association for the promotion of intellectual property (IP). At this time, IPAC has 58 intellectual property agents and lawyers and plans to cooperate with 13 state ministries.
Border Trade Strategies
The Commerce Ministry wants to increase the value of border trade by 15% in 2016 and has established three new strategies to meet this goal. The strategies are to increase purchasing power, increase the volume of trade in goods, and eliminate non-tariff barriers. Other points of interest include streamlining customs procedures, raising the maximum amount for hand-carried goods from THB 7000 to THB 35,000, and extending the visa-exemption period for border passes.
Under its digital community center project, the Information and Communication Technology Ministry (ICT) plans to create 10,000 community online shops. Currently, the ICT is upgrading 600 of its 2280 community ICT centers around Thailand. The digital centers will promote community products like rice, silk, crafts, food, and tourism and be community knowledge centers. Each center will provide free Wi-Fi and offer access to computers for graphic design, printers, and provide TVs to watch educational channels.
Thailand Trust Mark
To strengthen Thai exports, the trademark, Thailand Trust Mark, has been successfully registered in 47 countries. Now, Thailand’s International Trade Promotion Department has filed the trademark for registration in 58 more countries. The Thailand Trust Mark emphasizes quality in terms of production and environmental and labor standards and is also meant to internationalize the image of Thai goods and services.
The Thai Bankers’ Association (TBA) launched a THB10 billion soft-loan scheme to help Thai small and medium-sized enterprises (SMEs) with liquidity problems. The program will run through the end of 2016 and SMEs are eligible for a credit line of THB2 million. However, the loans must not be used for refinancing.
New Specialized Court
The Act on the Establishment of the Corruption and Misconduct Court took effect on August 16, 2016. This new specialized court’s remit is to specifically deal with cases concerning illegal activity by government officials who commit criminal offences under the scope of their duties. The new court will be located throughout the country.
Decree on Cross-Border Foreign Workers
A new Decree on the import of foreign workers into the Kingdom became effective on August 16, 2016. The law lays down the regulations for the employer, whether a natural or juristic person, who engages in the employment or arrangement of foreigners under Thailand’s Immigration Law. The said activities must be carried out under the consent of a competent official. A cross-border employer who operates without such permit or not in accordance with this Act will be liable to a fine and imprisonment.
New Incentives Approved
As part of its plan to turn Thailand into a medical hub, the Board of Investment (BOI) approved a number of new promotions including a 5-year waiver on corporate income tax for pharmaceutical firms. The BOI says that the value of applications for investment in medical products has jumped to THB5 billion in the first seven months of 2016, up 252% from the same period in 2015.
New Airport Terminal
Airports of Thailand opened a new terminal at the U-Tapao Airport to help ease congestion at Don Mueang and Suvarnabhumi airports. U-Tapao is located south of Pattaya in Rayong Province and is 173 kilometers from Bangkok. The new terminal will be able to handle up to 3 million passengers a year.
Thailand’s national electricity rate will stay the same until the end of 2016 according to the Energy Regulation Commission (ERC). Lower fuel costs contributed to this decision, but the ERC warned that the rate would rise in 2017.