Dej-Udom & Associates Newsletter – May 2015


The Dej-Udom & Associates monthly newsletter covering Thailand and the ASEAN region for May 2015

COUNTDOWN 2015 – ASEAN Economic Community

ASEAN Economic Growth
The Association of Southeast Asian Nations (ASEAN) announced that the ASEAN economy grew by 4.4% in 2014, despite the turbulent global economy, and is expected to grow by 4.9% in 2015. Private consumption kept domestic demand resilient and investments into the region rose to US$136.2, up 15.7% from 2013. Total trade stayed stable at US$2.53 trillion. ASEAN also reported that the implementation of the ASEAN Economic Community (AEC) Scorecard was at 90.5% of the 506 measures and that the establishment of the AEC remained on track.

Indonesia Update
Foreign Currency Ban
On July 1, 2015, Indonesia will ban the use of foreign currency in domestic transactions to build confidence in the national currency. Indonesia wants to control onshore demand for US dollars and ease downward pressure on the rupiah. Due to Indonesian’s distrust of the volatile, poor performing rupiah, the dollar is extensively used in everyday business transactions, loans, payrolls, and rents. Bank Indonesia estimates that 10% of all domestic transactions are conducted in dollars, US$ 6 billion monthly.

Tax News
To stop companies from booking profits in low-tax countries and to boost the country’s tax revenue, Indonesia plans to cut its current corporate income tax rate from 25% to 17.5%. Economists believe that if Indonesia offers enough investment opportunities, companies will keep their earnings onshore. The government also plans to raise the income threshold level at which individuals start to pay personal income tax by 50% to help boost purchasing power and economic growth.

Brunei News
Stock Exchange Planned
Brunei intends to open a securities exchange in the near future in order to diversify the country’s oil-focused economy away and to catch up with the more mature capital markets in the rest of ASEAN. Brunei is one of the richest countries in the world, but with no stock exchange, risks trailing in the ASEAN Economic Community integration. Oil and gas exports make up 66% of Brunei’s economy.

Myanmar Watch
New Census
In 2014, Myanmar undertook its first census in 30 years and released the census data earlier this month. The country’s current population is 51.5 million people. According to the census, population growth is 0.89%, but slowing down. Life expectancy is 66.8 years and half the population is under the age of 27 with only 93 males to every 100 females.

Singapore News
Top Ranked City
In a yearly study on city performance by a global real estate company and a London intelligence and strategy firm, Singapore was ranked as the top city in Asia and third in the world behind New York and London, but rated the world’s most business-friendly city.

Vietnam Update
Poor Profits for Agricultural Goods
Vietnam is one of the world’s top exporters of certain agricultural goods, but profits are low because the producers use obsolete technologies and business strategies. For example, Vietnamese coffee accounts for 20% of global coffee exports, but only makes up 3% in terms of value. The World Bank says that Vietnam’s agricultural export values could grow by 20-50% with better control over the quality of seedlings, the growing process, and post-harvest storage, and 150% if automation was used in processing.

Dong Devalued
For the second time in 2015, Vietnam devalued its official currency. The first devaluation was to stabilize foreign exchange, and this month’s adjustment was to stimulate exports and inhibit imports to counter its rapidly growing trade deficit.


New Laws
Civil Class Action
Civil class actions will be available in Thailand’s Courts of Justice in December 2015. The Civil Procedure Code has been amended to allow class action suits in the Courts of Justice, previously not a procedural option in the legal system.

Debt Collection
Thailand’s first debt-collection law will become effective in September 2015 and protect debtors from abusive and unfair debt collection practices. Violators will be subject to either a prison term or a fine from THB 300,000 to 500,000, or both.

Guarantee and Mortgage
An amendment to the guarantee and mortgage law in the Thai Civil & Commercial Code became effective on February 11, 2015. The amendment will offload a guarantor’s burden and mitigate a mortgagor’s liability to a certain degree. The amendment will also require a review of current guarantees, suretyships, and third-party mortgages.

New Investment Incentives
The Revenue Department issued the tax incentives for the Board of Investment’s (BOI) new international headquarter (IHQ) and international trading company (ITC) promotion schemes. Under the new schemes, a corporation can now act as a treasury center for a group of companies and the conditions to qualify as an IHQ have been relaxed. A separate company is now no longer needed to receive an ITC’s tax incentives. Additionally, qualified expatriates working for an IHQ or IHC will be eligible for a 15% personal income tax rate for the life of the company.

VAT Collection
An International Monetary Fund assessment found that Thailand should be collecting 10-14% more VAT revenue, a gap of THB 10 billion. The Revenue Department is pressing all revenue offices to be more efficient in collecting VAT tax, especially from well-known restaurants, big brand stores and malls, and all sellers of construction materials.

Thailand-Cambodia Trade Increase
Trade volume between Thailand and Cambodia keeps increasing and reached THB 175 billion in 2014, compared to THB 155 billion in 2013. This improvement is attributed to Thailand’s strengthening of its cross-border trade with Cambodia. Thai exports to Cambodia are mostly petroleum, vehicles, fruits, vegetables, and construction materials.

Digital Economy
New Ministry
The new Ministry of Digital Economy and Society will commence operations in June 2015 and will have five offices: the new Digital Economy Office and four existing offices from soon to be abolished Ministry of Information and Communications Technology.

Funds Disbursed
Over 50% of the 2015 fiscal budget of THB 2.75 trillion has been disbursed or is contractually committed at this time. 36% of the THB 449 billion investment budget has also been disbursed with 90% expected disbursed by the end of the 2015 fiscal year.

Securities and Exchange
Bonds for Laos
To assist with Laos’ continuing economic development, Thailand’s Finance Ministry approved the Lao government’s fourth issuance of baht-denominated bonds worth THB 12 billion. Monies raised from this issuance will be invested into the local economy and infrastructure and used to assist the country with the coming ASEAN Economic Community integration. Thai commercial banks will begin offering the bonds in June 2015.

SET Digital Exchange Strategy
The Stock Exchange of Thailand (SET) is celebrating its 50th anniversary this year and is implementing a new digital exchange strategy in line with the country’s new digital economy. As part of its new strategy, the SET recently launched a new website with fully integrated online resources for investors and a new smartphone application.

No Comments

Sorry, the comment form is closed at this time.