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.
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.
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.
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.
Singapore: ISO 37001 Anti-Bribery Systems Management Standard adopted
In order to enable Singapore-registered companies to implement and manage anti-bribery best practices, the city-state recently adopted the ISO 37001 Anti-Bribery Systems Management Standard. The Standard is being launched jointly by SPRING Singapore, an agency under the Ministry of Trade and Industry, and Singapore’s Corrupt Practices Investigation Bureau (CPIB). The two organisations released a joint statement saying ISO 37001 “is based on internationally recognized good practices [and] provides guidelines to help Singapore companies strengthen their anti-bribery compliance systems and processes [to] ensure compliance with anti-bribery laws.”
An accreditation mechanism for certification bodies is expected to be rolled out by the end of 2017. The majority of people prosecuted for bribery and corruption in Singapore in 2016 were private sector employees. According to the CPIB, 808 corruption complaints were filed in 2016, down from 877 complaints filled in the previous year.
Singapore – Ghana sign Double Taxation Avoidance Agreement
Singapore and Ghana have signed a Double Taxation Avoidance Agreement (DTA) on March 31, 2017. The agreement aims to reduce double taxation and tax disputes by clarifying the taxation rights on all types of income flows arising from cross-border business between the two countries. The DTA aims to reduce trade and investment barriers and increase trade flows between the two countries.
The agreement stipulates that withholding taxes on dividends, interest, and royalties will not exceed seven percent, while withholding taxes on services will be capped at 10 percent. All rates will come into effect on or after January 1, following the year when the DTA comes into force. The DTA will come into force after its ratifications by the two countries.
By: Dezan Shira & Associates
An Introduction to Doing Business in ASEAN 2017, the latest publication from Dezan Shira & Associates, is out now and available for complimentary download through the Asia Briefing Publication Store.
What happens in and around ASEAN is one of the key factors increasingly impacting upon China and India trade flows, as well as the rest of Asia. While the ASEAN trade bloc has been in existence since 1967, it has really shown its importance in trade and commercial business flows since the rise of China over the past three decades, and through its response to China’s changing domestic demographics. Those changes – an aging and increasingly consumer demanding China – have been skillfully adapted by ASEAN to place the future of global manufacturing, and where it takes place, firmly within its own orbit.
Simply put, free trade agreements that came into effect with China and India in 2010 changed the face of Asian trade and production, and are continuing to do so. For example, bilateral trade figures between China and ASEAN’s Big Five of Indonesia, Malaysia, Philippines, Singapore, and Thailand have multiplied by factors of 500 percent since the agreement was signed. With the smaller ASEAN nations of Cambodia, Laos, Myanmar and Vietnam coming into line with their own compliance of ASEAN customs duty reductions at the end of 2015, the entire bloc offers close to zero import-export tariffs for much of emerging Asia, including the giant markets of China and India, possessing some 500 million middle class consumers between them. ASEAN therefore represents a massive trade bloc possessing free trade agreements of global strategic importance. The question of accessing ASEAN for the benefit of North American, European and other global purchasing and manufacturing executives is a key function of this report.
An Introduction to Doing Business in ASEAN introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment and taxation. We also include the latest development news in our “Important Updates” section for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each. Additional research and commentary on ASEAN’s relationships with China, India and Australia is also provided.
- An introduction to ASEAN
- Country profiles
- Case studies: ASEAN as a platform for Asian growth
Our practice, Dezan Shira & Associates, has taken giant steps into the ASEAN market through the establishment of offices throughout the region, in addition to the creation of a unique alliance of firms. That, coupled with our existing long experience of handling foreign investment into China and India, puts us in a unique position of truly understanding how Asia works and how to maximize its free trade benefits.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in ASEAN 2017
An Introduction to Doing Business in ASEAN 2017 introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment, and taxation. We also include the latest development news for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each.
Human Resources in ASEAN
In this issue of ASEAN Briefing, we discuss the prevailing structure of ASEAN’s labor markets and outline key considerations regarding wages and compliance at all levels of the value chain. We highlight comparative sentiment on labor markets within the region, showcase differences in cost and compliance between markets, and provide insight on the state of statutory social insurance obligations throughout the bloc.
By Dezan Shira & Associates
Editor: Alexander Chipman Koty
Thailand’s updated personal income tax (PIT) structure officially came into effect on January 1, 2017, with the aim to ease tax burdens and boost disposable income. The revision, Revenue Code Amendment Act (No 44) BE 2560, was gazetted on January 27, officially instituting the changes. The new rates apply for all income collected as of January 1 for filing in 2018. The revised income tax scheme was initially approved by the Thai Royal Cabinet on April 19, 2016.
The new structure revises the income tax bands subject to 30 percent and 35 percent tax, and increases deductibles, and doubles allowances. The lower income tax bands and their respective rates remain unchanged. The revision also raises the minimum thresholds for mandatory tax filing.
By Harry Handley
2016 was a challenging year for Thailand, both economically and socially. The death of the much-loved King, His Majesty Bhumibol Adulyadej, clouded a year also blighted by political instability, water shortages, and bearish domestic business sentiment. Although official figures have yet to be released, Thailand’s GDP growth for 2016 is expected to be 3.2 percent, the third lowest in the ASEAN bloc (after Brunei and Singapore).
Despite low business confidence from locals, foreign businesses continue to be attracted by Thailand’s strategic position between China and India, access to the ASEAN free trade area, and the incentives offered by the Board of Investment (BOI). 2017 has been touted by some as a pivotal year for the Thai economy and ‘the year of concrete national reform’, with a major election on the horizon, either at the end of 2017 or the beginning of 2018 dependent of the progress of the royal succession. As such, it is important to review the state of the market at present and identify the key factors that may affect foreign businesses, both incumbents and potential entrants, in Thailand in 2017.
Thailand: Strong growth expected in e-commerce market
Analysts say that Thailand’s e-commerce market is expected to grow around 20 percent this year as more consumers shop online. At present, only three percent of consumers shop online, underlining the significant growth potential for the online market. Thai retailer Central Group only had one percent of its revenue come from online sales. The increased online sales expected this year are attributed to growing internet and smartphone use as well as improved logistics and e-payment systems. Quality and reliability of online shopping services will further help the sector.
The Electronic Transactions Development Agency predicted that the e-commerce market in Thailand will be worth US$7.1 billion (THB 2.52 trillion) this year. Thailand has around 41 million internet users, and 41 million Facebook, 33 million Line, 7.8 million Instagram, and 5.3 million Twitter users. Analysts have further stated that omni-channel strategies, meaning a balance between physical retail stores and online shops, would benefit the country.