The Dej-Udom & Associates monthly newsletter covering Thailand and the ASEAN region for November 2014
COUNTDOWN 2015 – ASEAN Economic Community
ASEAN Safe School Initiative
This month, the ASEAN member states launched the ASEAN Safe School Initiative (ASSI) Phase II. The initiative’s goal is to strengthen collaboration among the member states so they will continue to build safer schools and strengthen education services so children will be more resilient to disasters. In Southeast Asia, over 100 million children live in areas prone to disasters caused by natural hazards. 14,500 schools in the ASEAN region were fully or partially damaged by natural disasters over the last five years.
Vietnam News
Foreign Ownership of Property
Vietnam approved legislation that will allow limited ownership of property by foreigners. Starting in July 2015, foreigners with valid visas and foreign companies operating in Vietnam will be permitted to buy and own residential properties. There are two major restrictions. One is a 50-year leasehold, but that is possible to renew. The other is a cap on the number of units collectively owned by foreigners – a maximum of 30% of any apartment building or condo project and 250 houses in one administrative ward.
New Business Law
Under Vietnam’s recently amended Business Law, the list of banned investments in the country shrank from 51 to 6: prostitution, narcotics, rare minerals, wildlife, endangered plants, and humans and human reproductive materials. Additionally, licensed businesses can now participate in or expand into any legal business activity. Previously, a business could only engage in the work activity listed on its business license. The new Business Law will allow for more flexibility as the old law was outdated due to the changing global economy.
Indonesia Update
Capital Market Complications
A major regional bank says that the success of capital markets in the ASEAN Economic Community (AEC) will depend on the depth of Indonesia’s participation in the region’s integration. Indonesia makes up 40% of ASEAN’s US$ 2.1 trillion economy. At present, foreign companies cannot list on the Indonesian Stock Exchange and cross border offerings are not possible. Also, Indonesia opted out of the Asia Region Funds Passport under the ASEAN Collective Investment Scheme. Indonesia’s reservations about the market-integration plan stem from its lack of domestic infrastructure and supporting laws and regulations.
Myanmar Watch
Foreign Investment Growth
The new ASEAN Investment Report claims that Myanmar will continue to attract more foreign investment than Cambodia, Laos, and Vietnam due to the country’s low wage costs for manufacturing and foreign interest in the extractive and infrastructure sectors. The report says ASEAN was the largest investor into Myanmar in 2013 and that most future foreign investment into the country will come from ASEAN sources.
Laos News
Single Window Inspection
Laos and Vietnam will begin single-window inspection services for customs and immigration at the strategic Dansavan-Laobao border checkpoint in 2015. The two governments say the new service will help boost trade and investment between the countries and have set a target of US$2 billion in trade by 2015.
Malaysia Update
Small and Medium Enterprises
Malaysia’s Ministry of International Trade and Industry (MITI) plans to increase the country’s small and medium enterprise (SME) market from 6.3% to 9.3% a year and wants SMEs to contribute at least 41% of the country’s gross domestic product by 2020. One way the government will do this is by providing funds directly or through the country’s central bank.
RM14.3 billion has also been budgeted for SME development in the 2015 budget.
THAILAND UPDATE
Tax
New Incentives for Foreigners
This month, the cabinet approved generous tax privileges for companies setting up international headquarters and international trading centers in Thailand. Those setting up headquarters in the Kingdom will be entitled to 10% reduction in corporate income tax coming from services, rights, and dividends from local affiliate companies; exemption of withholding tax on dividends received from and paid by the local headquarters to foreign entities; exemption from income tax for sales available through purchasing and selling goods abroad; and a 10% cut on income tax charged on sales of certain raw materials sold to affiliates abroad and used in production.
New Property Tax Bill
A new land tax bill is expected to be presented to the Cabinet in January 2015. The bill calls for land and buildings valued at more than one million baht to be subject to tax at a maximum rate of 0.5%. Taxes on vacant or unused land will be charged at a progressive rate that increases every three years, but not exceed a maximum of 4% of the assessed value of the property.
Inheritance Tax Draft Bill
A bill that imposes a 10% tax on inheritances of more than 50 million baht has been endorsed by the cabinet and forwarded to the National Legislative Assembly. The new tax is expected to take effect in June 2015 and will be levied on those who inherit assets worth more than 50 million baht.
Tax Break Extension
The one-year personal income tax reduction scheme that was introduced during the previous administration has been extended for an additional year.
Industry
Aircraft Industrial Estate
Nakorn Ratchasima (Korat) has been declared the likely location for an aircraft industrial estate and maintenance center. The local Nakorn Ratchasima airport was designated as the best location to develop the estate.
Transportation
Railway with China Approved
The cabinet has approved the proposal to construct a railway between China and Thailand. The new rail system will link the border town of Nong Khai with the coastal Map Ta Phut industrial site in Rayong. Trains will travel at speeds of up to 180 kph.
Nine New Chao Phraya Bridges
Plans have been announced to build nine new bridges across the Chao Praya River in Bangkok and other neighboring provinces. An additional bridge, the Tha Namnon, is now under construction and will be completed next month.
Japan Proposes New Highway
Japan is planning to partner with Thailand to create an East-West Economic Corridor Project. As part of the plan, the Japanese will construct a 1,450 kilometer highway from the west of Mawlamyine in Myanmar to Tak in Thailand. The highway will then continue on to Mukdahan and enter Laos in the Savannakhet province and follow on to Danang City in Vietnam.
Commerce
Discussion over FBA Changes
The government’s proposal to amend the Foreign Business Act (FBA) has raised concern from many members of the foreign business community due to questions about the definition of a foreigner, voting rights, and shareholding structures. The Commerce Ministry says that the changes are intended to reach four key objectives: promote foreign investment, minimize license application steps, facilitate trade and investment, and not create any impact on existing businesses.
Investment Event
Investment Promotion Seminar
The Board of Investment (BOI) is inviting interested parties to attend a seminar entitled “New Investment Promotion Strategies: Towards Sustainable Growth” on Monday, December 15, 2014 at Muang Thong Thani, Grand Diamond Ballroom. Obtain an invitation for two persons per organization at http://www.boi.go.th/upload/Service_Center/Invitation_en.pdf
The post Dej-Udom & Associates Newsletter – November 2014 appeared first on Dej-Udom & Associates: Law Firm | Thailand | Bangkok.
