01 Aug Dej-Udom & Associates Newsletter – July 2016Download PDF
The Dej-Udom & Associates Thailand ASEAN Newsletter for June 2016
ASEAN Economic Community News
Tourism Initiative Launched
Recognizing the importance of maximizing the region’s tourism market, ASEAN will launch the Mutual Recognition Arrangement for Tourism Professionals (MRA-TP) initiative in August. The initiative will set standardization and benchmarking skills for 32 hospitality and tourism job profiles, require 52 qualifications for different positions, and create 242 training “toolboxes” to help workers achieve the qualifications.
Work Forces Aging
A recent report by a global consulting firm says that Singapore, Malaysia, Indonesia, and Thailand account for over 75% of ASEAN’s US$2.45 trillion economy. However, population growth is down in the four countries and their work forces are aging rapidly. Singapore’s old-age dependency ratio is currently 16 for every 100 members in its work force and is expected to rise to 36 by 2030. In the same period, Indonesia’s is expected to grow from 8 to 12, Malaysia’s from 8 to 15, and Thailand’s from 15 to 29.
Real Estate Sales Growth
Industry professionals report continued growth in the sales of residential properties in ASEAN countries to foreign investors due to the region’s currencies staying weak against the US dollar and property prices remaining comparatively low. In Thailand, the weak baht and the ASEAN Economic Community integration have driven sales in condominium projects. Buyers are mostly from Mainland China, Hong Kong, and Japan who want a second home in the Kingdom. In Vietnam, new laws now allow foreigners to legally own property on 50-year leaseholds, but only up to 30% of the units in an apartment project or 250 houses in one administrative ward. The total number of apartments sold in Vietnam in 2015 was double that of 2014.
Debt Trading Framework
Vietnam’s first legal framework for debt trading activities became effective earlier this month. Companies that want to engage in debt trading must have at least US$4.4 million in charter capital and cannot use loans from credit institutions and foreign bank branches to buy debts from other borrowers of these lenders. All debt trading must be done under written contracts that specify the rights of the buyers and sellers.
New Minimum Wage
Malaysia’s government implemented a new minimum wage order in July. The new minimum wages are MYR 1,000/month or MYR 4.81/hour for Peninsular Malaysia and MYR 920/month and MYR 4.42/hour for Sabah, Sarawak and Labuan.
Construction Project Value Jump
The value of construction projects approved by the Cambodian government has risen considerably in 2016. In 2015, 2,305 construction projects worth US$3.3 billion were approved; however, in the first five months of 2016, 990 projects worth US$6.5 billion have been approved. The Minister of Land Management credits the surge in value to investor confidence in Cambodia attracting big developers and his ministry carrying out a government directive to improve the speed and quality of services.
Myanmar’s government will not build any new irrigation dams and plans to cut spending on existing facilities by 50% and dismantle 200 river pumping stations. Myanmar had spent a large sum on building irrigation dams over the last 30 years, but has seen little return on investment as rice exports have remained at the same level. Also, only 10% of the country’s rice paddy cultivation is under irrigation.
New Condo Law
Myanmar’s Parliament approved the Condominium Law that permits foreign individuals to own up to 40% of a condominium building.
Bilateral Trade Model
Thailand and Myanmar agreed to adopt the Mae Sot-Myawaddy model to expand trade, investment, and economic cooperation between the two countries. Under the model, the countries plan to double border trade, establish border-trade fairs, develop cross-border logistics, and develop retail and wholesale trading and service centers in the Mae Sot-Myawaddy Special Economic Zone. The countries want to increase bilateral trade from the current US$7.74 billion to US$10-12 billion in 2017.
Thailand’s Department of Intellectual Property (DIP) is asking copyright holders and copyright-fee collectors to exempt small and medium-sized businesses from paying fees for playing music to customers and to send warning letters before taking legal action. The DIP also plans to set up a one-stop service for the collection of copyright fees to prevent duplicate payments and decrease costs.
Upgraded IT System
Thailand’s Customs Department is upgrading its IT system so that product price-setting is fixed and not reliant on Customs officials’ individual judgment. 144 major import items will be implemented in the upgraded system at the end of the month and begin with goods shipped through the Kingdom’s two largest deep-sea ports. The change was prompted by the Customs Department’s expected tax collection shortfall for the current fiscal year.
In the Thai government’s continuing mission to stimulate the country’s economy, a new tax incentive has been issued under a Royal Decree. Now, companies planning to expand or make a major investment in specific assets are allowed a 200% deduction of capital expenditure and costs incurred for corporate income tax purposes. The period for the incentive is November 2015 to the end of December 2016.
Trademark Act (No.3) B.E. 2559 (2016)
Thailand’s new Trademark Act became effective on July 28, 2016. The new Act allows for the protection of sound marks and streamlines the trademark registration process. The Act also provides additional protection for registered marks appearing on the cover or packaging of goods. Previously, there was only a liability if the abused mark was on the goods. Under the new Act, Thailand is now a member of the Madrid Protocol, a central registration system for the international registration of trademarks and service marks via a single application. However, as the government has not completed the implementing regulations, registrations under the Madrid Protocol will not be available until the end of 2016.
Thailand’s national e-payment scheme was launched this month with the first phase of PromptPay pre-registration. PromptPay is an electronic payment system that will use a national identity or mobile phone number instead of a bank account number. When PromptPay goes into effect on October 31, 2016, money transfers of less than THB 5000 between PromptPay accounts will incur no fees.
Internet Revenue Growth
A global professional services provider reports that internet advertising revenue in Thailand is forecast to grow by 22.5% yearly over the next five years. Continuing household fixed-line broadband penetration is credited for the sizable growth. Internet advertising revenue in Thailand is expected to reach THB3.1 billion a year by 2020.
Assets as Collateral
The new Secured Transactions Act came into force earlier this month and now 3 million of Thailand’s start-ups and small and medium-sized enterprises (SMEs) will be able to use their assets as collateral when applying for loans. Instead of mortgaging or pawning their assets, businesses can use assets such as raw materials, inventories, and intellectual property as security for loans.