10 Aug Dej-Udom & Associates Newsletter – July 2015
The Dej-Udom & Associates monthly newsletter covering Thailand and the ASEAN region for July 2015
COUNTDOWN 2015 – ASEAN Economic Community
New European Union Initiatives
In a new policy paper, The EU and ASEAN: A Partnership with a Strategic Purpose, the European Union (EU) launched new initiatives to strengthen economic and security ties between the EU and ASEAN. The initiatives include growing trade and investment links, enhancing connectivity, promoting smarter, greener growth, and increasing collaboration in political and security areas. At this time, the EU is the largest investor into ASEAN with inflows of 156 billion euro in 2013, of which Singapore received 60%. The EU is ASEAN’s second largest trading partner after China with trade growing at 4.7% a year from 2004-2014. Singapore is the EU’s strongest trading partner in ASEAN followed by Malaysia, Thailand, and Vietnam.
ASEAN Marketplace Development
A recent report by a global professional services firm maintains that ASEAN is developing into a consumption-driven regional marketplace with increasing merger and acquisition (M&A) activity fueled by the growing number of consumer goods firms in the region and ASEAN’s growing middle class. The report also noted that competitive regional firms are consolidating instead of diversifying and that M&A activity is also increasing globally.
New Derivatives Regulations
Cambodia’s government approved new regulations on the licensing and supervision of derivatives trading. Now, individuals or firms can apply for an official derivatives broker licenses. The minimum registered capital required to register for a license is 20 billion riel (US$ 5 million) of which 10% must be dedicated to derivatives trading and 15% deposited with SECC.
E-Visa for Business Travelers
Effective July 1, 2015, business travelers to Myanmar can now obtain an e-visa online. The e-visa program is running concurrently with the business visa-on-arrival program and both have the same registration requirements. To apply for a business visa from either program, the applicant must submit an invitation letter from a Myanmar company together with a photograph and proof of identity. Nationals from 51 countries are eligible for an e-visa and a business visa on arrival.
New Fair Trade Laws
Two new fair trade laws were signed into law this month by the Philippines’ President. The Competition Act seeks to promote free and fair trade by preventing companies from forming cartels and monopolies and fixing prices and other anti-competitive practices. The Foreign Ships Co-Loading Act will help reduce shipping costs, create an efficient import and export system, and lower the prices of consumer goods.
In association with the United Nations Conference on Trade and Development (UNCTAD), Vietnam launched the third phase of its e-Regulations system which offers information and guidelines on investment procedures in English, Japanese, and Chinese. For each investment procedure, there is a summary which details all institutions involved, the expected results, all requirements, average duration, and legal justification. For each step in the process, the potential investor is shown the contact details of bureaucrats in charge, the needed forms and requirements, costs, duration, and legal provisions.
Travel Ban for Tax Avoiders
At this time, company representatives who owe outstanding taxes will not be allowed to leave Vietnam. This will only apply to the chairmen, directors, and directors generals of companies that owe more than 1 million dong (US$45,000) in company tax or over 50 million dong (US$ 2,300) in personal income tax.
Vocational Graduate Shortage
Researchers say that Thailand’s education system is providing a surplus of university graduates and a shortage of vocational school graduates and that Thailand needs more vocational graduates in the workforce. More skilled graduates from vocational schools are required in the motoring, food and tourism, communication technology, consumer goods, construction, and engineering sectors.
The Commerce Ministry and representatives from Thailand’s steel industry met and agreed on measures to promote sustainable growth and prevent cheap steel from overseas, most especially China, from flooding the Thai market. The Commerce Ministry also agreed to open negotiations with China on the reduction of their export subsidy for Chinese steel and steel products being exported into Thailand.
Office Market Growth
A global commercial real estate firm says that the Bangkok office market will grow by 10% in 2015 despite Thailand’s economic challenges and that growth in 2016 will be even stronger. The firm says that Thailand’s low office rents will continue to attract foreign investors who want to expand into ASEAN. For the same quality office, rent in Singapore in THB 3000 sq/m, but only THB 870 sq/m in Bangkok.
Securities and Exchange
New Funds Approved
Thailand’s Securities and Exchange Commission (SEC) is expanding the Kingdom’s mutual fund industry and will allow the launch of hedge funds and junk bond funds in September. Currently, investors are seeking riskier investment instruments with higher yields, so the SEC hopes these new funds will keep Thai investors investing in Thailand rather than abroad. Thailand’s mutual bond industry is valued at THB 3.5 trillion of which 70% is bond funds and 30% equity funds.
New WTO Agreement
Thailand and 53 other countries entered into a World Trade Organization agreement that will abolish duties on 201 technology products. 90% of the world’s trade in the 201 products comes from the 54 countries and annual trade in the 201 products is valued at US$1.3 trillion a year.
Vietnam Trade Increase
Thailand and Vietnam have agreed to increase trade between the two countries to US$ 5 billion in the next five years. Vietnam was also asked to join Thailand-Malaysia-Indonesia committee on rubber cooperation that helps stabilize rubber prices on the global market.
Tax Requirements for Visas
New immigration regulations came into effect for Non-BOI companies at the One Stop Service Center. The regulations concern the required personal income tax documents for work permit holders who apply for a first-year application long-term visa (new employee) and for a visa renewal (existing employee) at the One Stop Service Center (OSSC). The Immigration Department at the OSSC put these new regulations into place because it discovered that some companies had made fraudulent tax filings in the past in order to avoid withholding tax payments for foreign employees.
Visa Exemption Agreement
Thailand signed a visa exemption agreement with Myanmar earlier this month. Beginning August 27, 2015, travelers from both countries are eligible for 14-day visa exemptions, but only when traveling through one of 23 Thai airports and three airports in Myanmar: Naypyidaw, Yangon & Mandalay.
A global professional services firm says that businesses in Thailand are falling behind in production automation and, that due to the country’s aging population, the Kingdom could fall behind even further. The firm says that only 36% of Thai businesses plan to automate a key operational process in the next year, while the regional average is 66%.
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