Thailand

ASEAN Market Watch: Korean Investment in Laos, Cambodia Infrastructure, and Thailand Retail Sector

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Laos: Korean businesses seek local franchise partners

Korean businesses are increasingly looking to launch their products in the Lao market through the franchise route. At least seven prominent Korean brands recently participated in the K-Franchise Business Meeting 2017 organised by the Korea Trade Investment Promotion Agency (KOTRA) in Vientiane, where they met with potential Laotian partners. The franchise brands represented at the event include Well-Being Pizza, Elli Cel, Didim (Mapo Seagull), Street Churros, Chicken Derby, Beaupeople and Y Entertainment.

With about 257 projects worth US$ 800 million, Korea is the sixth largest foreign investor in Laos. Bilateral trade between the two countries reached US$ 199 million in 2016. Laos’ exports to Korea were valued at US$22.9 million in 2015. The country’s main exports to Korea include potassium fertilizers, coffee, lead bullion and scrap, fabrics and ingredients for oriental traditional medicine. In 2015, Korea’s exports to Laos were valued at US$ 170 million. The main items of export from Korea to Laos include vehicles, trucks, automotive parts, construction equipment and electronics.

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ASEAN Regulatory Brief: Malaysia GST, Thailand Foreign Labor Regulation, and Myanmar FDI

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Malaysia: GST exempted for supplies directly related to exported goods

Malaysia’s finance ministry recently issued an order exempting suppliers from the need to charge Goods and Services Tax (GST) on certain goods and services directly connected to exports. The GST relief, which came into effect from July 1, 2017, will apply to four broad categories of services and supplies directly connected to exports and export processing. These include handling or storage services related to goods for export; services provided by a company with licensed manufacturing warehouse status or a business operating in a free zone; research and development (R&D) services related to goods for export; and tools or machines which are highly specialized in nature and used for the manufacture of goods in Malaysia for export.

To qualify for the GST waiver, the recipient of the goods and services must be an overseas customer of foreign nationality, who is resident abroad at the time of receiving the goods and services, and who does not own a business entity in Malaysia. Certain categories of the aforementioned goods will require the approval of Malaysia’s Director General of Customs to avail of the GST waiver. Further, the goods for which the supplies are made must be exported within a period of 60 days from the date of the completion of the services.

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ASEAN Regulatory Brief: Myanmar Trade Liberalization, Thailand Excise Tax, and Cambodia Fintech Sector Regulations

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Myanmar: Trade in construction materials, hospital equipment and agricultural goods opened to foreign companies

Foreign companies will now be allowed to engage in both retail and wholesale trade in construction materials, hospital equipment, and agricultural goods such as seeds, fertilizers and pesticides. Previously, overseas firms were allowed to trade in these commodities only if they entered into a joint venture with a local company. The Myanmar ministry of commerce’s latest decision to open these sectors to foreign wholly foreign-owned enterprises (WFOEs) comes as part of its bid to make the domestic market more competitive.

According to the commerce ministry, there have been complaints from local traders about the presence of poor quality products smuggled from across the country’s land borders. The liberalization of trade in these sectors is expected to lead to the availability of better-quality equipment and materials in Myanmar. However, foreign companies have been urged to comply with prescribed health and safety codes and internationally accepted trade procedures. They will also be required to open bank accounts in Myanmar with foreign capital.

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ASEAN Market Watch: Malaysia Growth Outlook, Thailand EEC Investment, and Singapore-Myanmar Relations

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Malaysia: World Bank forecasts positive growth in 2017

According to the Malaysia Economic Monitor, launched by the World Bank, the country’s growth rate for 2017 is forecast to increase to 4.9 percent. Malaysia registered a 5.6 percent year-on-year growth in the first three months of 2017, its highest quarterly growth rate in two years. According to the report, Malaysia’s positive growth outlook is driven largely by strong private consumption, supported by improving labor market conditions. Increasing private investments and major government-led infrastructure projects also contributed to it.

According to the report, an upturn in the US was reflected in the rising external demand, and stabilizing commodity prices as well as a recovery in global trade further helped to boost growth. The report also includes a special section on the importance of good data and effective data management, and how this can inform policy-making and improve service delivery. The Malaysia Economic Monitor series provides an analytical perspective on the policy challenges facing the country as it develops into a high-income economy.

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ASEAN Regulatory Brief: Malaysia Tourism Tax, Thailand Land Windfall Levy, and Philippines Excise Tax

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Malaysia: Tourism tax comes into effect from August 1

Malaysia’s customs department has announced that with effect from August 1, foreign visitors as well as domestic tourists will have to pay a tourism tax to operators of different types of accommodation. The tax, which has to be paid regardless of business or leisure travel, has been fixed at RM20 (US$5) for five-star hotels, RM10 (US$2.5) for four-star, RM5 (US$1.25) for three-star, and RM2.5 (US$0.62) for non-rated accommodation.

Accommodations such as traditional kampong stays and homestays as well as premises with less than 10 rooms are exempted from the new tax. The tourism tax will be levied over and above the goods and services tax and service charges.

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ASEAN Market Watch: Malaysia Capital Market, Cambodia Construction Sector, and Thailand Automotive Industry

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Malaysia: Capital market one of the most developed among emerging economies

According to a recently released McKinsey report, Malaysia’s capital market is one of the most developed among emerging economies. The country ranked fifth with a score of 3.25 out of 5 in the McKinsey Asian Capital Markets Development Index, behind Japan (4.0), Australia (3.95), South Korea (3.45) and Singapore (3.40). According to the report, Malaysia is outperforming other emerging economies in the development of its capital market.

Among the factors giving the country an edge are: issuers have access to sufficient debt and equity financing; there is predictable funding from foreign institutional investors; the real cost of equity and debt is quite competitive; and investors get a good mix of equity and debt investment opportunities.

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ASEAN Market Watch: Thailand GDP Growth, Malaysia Manufacturing Sector, and Singapore Retail Sales

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Thailand: First quarter GDP growth fastest in four years

The Thai economy recorded its fastest growth in four years during the January-March 2017 period. This has been propelled by stronger exports, consumption and growth in tourist arrivals despite weaker private investment and public funding. According to a poll conducted by Reuters, gross domestic product (GDP) is expected to have expanded a seasonally-adjusted 1.2 percent in the January-March period from the previous quarter, when growth was 0.4 percent – the best pace since the final quarter of 2012. As per the poll, growth is expected at 3.3 percent in 2017, up from 3.2 percent in the previous year.

According to data from Thailand’s central bank, exports grew at 6.6 percent in January-March, private consumption at 2.9 percent and farm income grew at 20 percent. Exports comprise about two-thirds of the Thai economy. Tourist numbers rose to 9.2 million in the January-March period from 7.8 million in the previous quarter, when some tourism-related entertainment activities were curtailed following the death of King Bhumibol Adulyadej in October 2016.

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ASEAN Growth to Remain Resilient Despite Regional Vulnerabilities

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By Bradley Dunseith

In April, 2017, the World Bank (WB) released their biannual East Asia and Pacific Economic Update, entitled, “Sustaining Resilience.” As the title suggests, the WB anticipates growth in East Asia and Pacific, including ASEAN states, to remain resilient despite risks from global and regional vulnerabilities. In this article, we go through “Sustaining Resilience” and summarize the WB’s forecast for developing ASEAN states generally as well as their country specific predictions for economic growth.

About the report

The WB predicts that large developing economies will continue to grow moderately while smaller regional economies will benefit from the rapid growth of their neighbors as well as high commodity prices. The WB marked that poverty has continued to decline in most countries and will continue to fall with sustained growth and rising labor incomes. However, the WB report noted that global policy uncertainties means that countries must address macroeconomic vulnerabilities so as to prepare for external shocks to the economy. External shocks – such as changes in US policy – disproportionately affect smaller countries; as such, the WB report strongly recommends small economics to improve the efficiency of their public spending in preparation of needed structural changes.

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Trade Fairs in Thailand – Steps to Protect Your Intellectual Property

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By: South-East Asia IPR SME Helpdesk

Trade fairs are now a well-established part of the business calendar in Thailand, particularly in Bangkok, with a number of high-tech industries represented, as well as areas of the creative sector such as furniture and design. Trade fairs provide foreign businesses with the opportunity to present their innovations and ideas to potential business partners and customers, and allow them to learn from and collaborate with other innovators. There is, however, a risk, in that disclosing your innovations to the public leaves you exposed to copying and infringements of your IP.

Infringement of innovations may not necessarily be straightforward ‘counterfeiting’ – i.e. exact product, packaging and brand imitation. It is more likely that competitors could be using, intentionally or otherwise, a certain part of your product or innovation. It is therefore advisable to be as diligent as possible and to get to know competitors’ products well. In the light of this, a practical and realistic approach must be taken when preparing for and attending trade fairs in Thailand. IP owners must also be patient and pragmatic, as it is unlikely that immediate action can be taken against an infringer. There are, however, steps that IP owners can take before, during and after the event to best protect their IP.

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Thailand’s Eastern Economic Corridor – What You Need to Know

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By Bradley Dunseith

With the Eastern Economic Corridor (EEC), Thailand hopes to develop its eastern provinces into a leading ASEAN economic zone. The EEC straddles three eastern provinces of Thailand – Chonburi, Rayong, and Chachoengsao – off the coast of the Gulf of Thailand and spans a total of 13,285 square kilometers. The government hopes to complete the EEC by 2021, turning these provinces into a hub for technological manufacturing and services with strong connectivity to its ASEAN neighbors by land, sea and air.

The government expects US$43 billion (Thai Baht 1.5 trillion) for the realization of the EEC over the next five years. This funding will come from a mix of state funds, public-private partnerships (PPPs), and foreign direct investment (FDI). The government has identified four “core areas” essential in making the EEC a renowned economic zone: (1) increased and improved infrastructure; (2) business, industrial clusters, and innovation hubs; (3) tourism and; (4) the creation of new cities through smart urban planning. The government predicts the creation of 100,000 jobs a year in the manufacturing and service industry by 2020 through the EEC.

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