03 Dec Dej-Udom & Associates Newsletter – November 2015

The Dej-Udom & Associates Newsletter for October 2015

COUNTDOWN 2015 – ASEAN Economic Community

Community Declaration Signed
The leaders of the 10-member Association of Southeast Asian Nations (ASEAN) signed the declaration which established the ASEAN economic, political, security, and socio-cultural community at the annual summit this month. One of the pillars of the new community, the ASEAN Economic Community (AEC), will be launched on December 31, 2015 and will allow freer movement of workers, trade, and capital and remove barriers that impede growth and investment. ASEAN’s current combined GDP of US$2.6 trillion is expected to grow to US$4.7 trillion by 2020, and the new community is expected to be the world’s fourth largest economy by 2030.

Transport Ministers Meeting
At the annual ASEAN Transport Minister’s Meeting, the Kuala Lumpur Transport Strategic Action Plan (KLTSAP) was adopted by the transport ministers from the ASEAN member countries. The 10-year master plan focuses on the connectivity, efficiency, integration, safety, and sustainability of the ASEAN region’s various transport sectors. The ministers also signed protocols to aid in the formation of the ASEAN Single Aviation Market and to liberalize air transport ancillary services.

Myanmar News
Yangon Stock Exchange
The Yangon Stock Exchange (YSE), Myanmar’s first stock exchange, will launch on December 9, 2015 and start trading securities for up to ten listed companies. The YSE will begin operations as an equity market and then expand into a derivatives and futures market. The YSE will be operated by the state-owned Myanmar Economic Bank in partnership with the Tokyo Stock Exchange and a Japanese securities group.

Cambodia News
Trademark Registrations
The Ministry of Commerce says that the number of trademark applications in Cambodia keeps rising and that the Kingdom has the shortest time to complete trademark registrations in Southeast Asia. It takes 3-4 months to register a trademark in Cambodia, compared to most ASEAN countries where it can take up to 18 months.

Diversification Warning
In its recent assessment of the Cambodian economy, the International Monetary Fund (IMF) says that despite the country’s strong economic growth, there is not enough diversification in its business sectors. The IMF warns this could cause future volatility. Garments and tourism are the country’s major industries and are highly dependent on overseas demand.

Laos News
Surplus Electricity Sales
Laos is strongly increasing its total electricity generation capacity, up 70% in 2015 from 2014, by opening multiple large-scale hydropower stations this year. The country plans to sell its surplus electricity to neighboring countries to help boost its GDP to 7.5% per annum. At this time, Laos has the lowest rates per kilowatt-hour in the region for businesses.

Singapore Watch
SME Challenges
The Singapore Business Federation conducted its annual Small and Medium Enterprise (SME) Development Survey with Singaporean SMEs. The survey found that most SMEs were not expecting revenue growth in 2015 due to productivity challenges such as cash flow management difficulties and rising labor costs. To solve this, the survey shows that SMEs are increasingly using information technology and automation to help increase productivity.

Vietnam Update
Minimum Wage Increase
Starting in January 2016, the monthly minimum wage for Vietnamese workers will increase by up to 13% depending on the region, VND2.4 to 3.5 million (US$107-156).

THAILAND UPDATE

Legal News
Business Security Act
The new Business Security Act will take effect in July 2016 and make it easier for small and medium enterprises (SMEs) to access loans from financial institutions. The law will allow enterprises to use their assets, such as raw materials, inventories and intellectual property, as collateral, instead of a mortgage or pledge to acquire funds the banks.

Security Service Business Act
As the number of security companies in Thailand continues to increase rapidly, the services provided by the companies may not meet quality standards. Under the new Security Service Business Act which comes into force in March 2016, a supervisory committee will have oversight and control over the security providers. The Act also sets out certain requirements on licensing, nationality of the company, and qualification of the security guards.

Trade
New Thailand-Chile FTA
The new free-trade agreement (FTA) between Thailand and Chile came into force this month and annual trade between the countries is expected to double in the next five years. This is Thailand’s seventh FTA and second with a South American country. Under the FTA’s service-sector liberalization, Thai companies can now hold 100% ownership in service sector businesses in Chile. The Thai rice industry will also benefit as import tariffs for produce will go to zero within five years. Thailand’s trading competitiveness with rivals China and Vietnam will also be enhanced due to better benefits from the FTA.

Business
Company Registrations
Thailand’s Business Development Department (BDD) believes that the ASEAN Economic Community implementation will spur new company registrations in 2016. The BDD expects over 65,000 new registrations next year in the construction, trading, and service industries. Benefits from the AEC integration and the strengthening of Thailand’s economy are the main factors for this expected growth.

Tax
Personal Income Tax
As part of the Thai Finance Ministry’s 10 key issues for tax reform to help broaden the tax base, the personal income tax rate will be reduced. The Cabinet approved an extension of the current personal income tax rates due to expire this year until the end of 2016. The goal of the tax reform is to bring tax-revenue proportion up to 20-21% of GDP and improve social equality and care for the elderly.

Securities and Exchange
CLMV Bonds
Starting in January 2016, to encourage the CLMV (Cambodia, Laos, Myanmar, and Vietnam) countries to issue bonds in baht on a monthly basis instead of quarterly, the Thai Finance Ministry has shortened the approval process. Currently, Laos is the only CLMV country that has issued baht bonds.

Oil & Gas
New Bidding Round Expected
Thailand’s Energy Minister announced that the 21st bidding round for petroleum concessions would take place in mid-2016 after being cancelled in 2014. The amended Petroleum Act has been sent to the Cabinet and is expected to be considered before the end of the year. The new law will allow concessions and production-sharing regimes or a combination of both. Previously, only concessions were allowed.

Insurance
Expanding Market
The new head of the Office of Insurance Commission (OIC) announced four plans to increase the competitiveness of Thailand’s insurance industry. The OIC wants to expand the country’s insurance business into the CLMV (Cambodia, Laos, Myanmar and Vietnam) markets and to strengthen the presence of Thai insurance companies throughout the ASEAN Economic Community.

Commerce
Foreign Business Act
The Commerce Ministry will remove banking, bank branches, life insurance, and non-life insurance businesses from Annex III of the Foreign Business Act by the end of 2015.