05 Feb Dej-Udom & Associates Newsletter – January 2016Download PDF
The Dej-Udom & Associates Newsletter for January 2016
ASEAN Economic Community News
The ASEAN+3 Macroeconomic Research Office (AMRO), a Southeast Asian version of the International Monetary Fund, is expected to be upgraded to an official international organization in mid-2016. AMRO was formed by the 10 ASEAN member states together with Japan, China, and South Korea in 2011 as an independent regional surveillance unit to monitor and analyze regional economies and support Chiang Mai Initiative (CMI) decision-making. One of its main tasks will be to issue recommendations to invoke the CMI for members to jointly supply hard currency in the event of a currency crisis.
External Risks Slow Growth
A major global bank believes that external risks will continue to slow economic growth in ASEAN. The bank says that negative growth factors for the region include the commodity price plunge, global demand slowdown, currency fluctuations, poor implementation of investment plans, and restructuring and macro-prudential measures. However, the bank says that GDP growth in the Philippines and Vietnam should remain high in 2016.
Officials from Cambodia’s Industry Ministry and Singapore’s Intellectual Property Office signed a memorandum of understanding (MOU) on patent registration that could serve as a template for patent protection in the ASEAN region. Currently, while it is possible to register a patent in Cambodia, no patents have been approved. Under the MOU, after a patent is successfully registered in Singapore, the patent can then be approved in Cambodia and receive intellectual property protection in both countries. The bulk of the registration work will be borne by Singapore’s Intellectual Property Office.
Under the ASEAN Economic Community agreements, Vietnam has to reduce all import and export tariffs from all goods in the ASEAN region to zero by 2018. By the end of 2015, over 90% of Vietnam’s tariffs had been cut to zero with another 7% expected by the end of 2018. However, some sensitive agricultural products will be allowed to remain at 5%.
Coal Phase Out
Vietnam’s Prime Minister announced that the country plans to phase out the use of coal-fired power plants and rely on natural gas and renewable energy instead. This is a surprising reversal to Vietnam’s stated plans for coal power plants where 44GW were planned and 17GW are already under construction.
New Arbitration Act
On January 5, 2016, Myanmar’s Parliament passed its new Arbitration Law which is based on the UNCITRAL Model Law on International Commercial Arbitration. Under the new law, courts in Myanmar must now recognize and enforce foreign arbitral awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).
Tourism and Visas
Tourist arrivals in Myanmar have been increasing since 2011 and 4.68 million people visited the country in 2015, up 52% on the previous year. Tourism generated US$1.8 billion in 2014. Myanmar’s Immigration Ministry released immigration regulations on January 6, 2015 that clarify visa options for long and short-term visitors. There are now 12 types of single entry visas and three types of multiple entry visas available.
New Taxation Agreement
Malaysia signed the Multilateral Competent Authority Agreement (MCAA) this month and will begin automatically exchanging financial account information with other member states from 2018. The MCAA provides a standardized and efficient mechanism to facilitate the automatic exchange of financial information in tax matters.
Tracking Devices Allowed
With a new amendment to the Procedural Penal Code coming into effect, those who have been accused of committing a crime or have become a defendant in court proceedings may be temporarily released after being fitted with an electrical device that will track their behavior. This will create more chances of bail being granted as officers will be able to track the movements and position of an arrested person.
New Procedures for Confinement
A new Act aims to enhance the protection of a detained person’s human rights. It prohibits the use of chains or shackles without a compelling reason. It also states that pregnant women shall be provided with proper and sufficient medical treatment by a doctor during their confinement and are allowed to give birth at a hospital. The new law was enacted to replace one that has been in use for more than 50 years.
The Revenue Department announced two emergency decrees with immediate effect earlier this month targeting small and medium-sized enterprises (SMEs). If an SME has the proper business accounts and enters the tax system from January 15 to March 15 2016, it will not be investigated for back taxes. For SMEs with less that THB 5 million in registered capital with revenue under THB 30 million a year, if they enter the tax system during the above time period, they will receive corporate income tax exemptions for 2016.
On February 1, 2016, property, stocks, automobiles and cash will become subject to inheritance tax. However, all other inherited assets including gold will not be taxable. The tax is 5% for heirs and 10% for others on assets over THB 100 million. Due to all of the new tax measures to help spur the economy, government revenues need to increase. Thus, the Revenue Department is planning to increase the volume of tax audits in 2016.
The Cabinet has approved the national e-payment master plan to promote electronic payments and help create a cashless society. The plan could save the country an estimated THB75 billion – 30 billion from reduced use of cash and checks and 45 billion from the reduction in paper billing and statements. The Any ID scheme will allow everyone to make financial transactions using their ID card, mobile phone, or email address.
Money Laundering Laws
To meet Thailand’s commitments to the Financial Action Task Force’s (FATF) money laundering standards, the Cabinet approved the Finance Ministry’s proposal to introduce the Exchange Control Act. Thailand plans to amend the country’s money laundering laws by May 2016 before the results of the FATF’s assessment in released in November.
Foreign Business Act
In the near future, foreign investors will no longer have to apply for permission from the Foreign Business Act committee to hold more than 50% shares in businesses in the banking, bank branches, life insurance, and non-life insurance sectors. Foreign investors will then be able to apply for an operating license directly from the authorities regulating these sectors
Securities and Exchange
Thailand’s Securities and Exchange Commission (SEC) announced that it has revised its investment policy regulations on mutual funds and provident funds to enhance flexibility and competitiveness and to better comply with international guidelines and market development.
New Loan Fund
The Stock Exchange of Thailand and the Government Savings Bank have jointly established the SMEs Private Equity Trust Fund that will supply low interest loans to small and medium enterprises (SMEs). The size of the fund was capped at THB2 billion.