Singapore: Government Implements New Bankruptcy Laws
Singapore’s new bankruptcy laws have been in effect since 1 August 2016. The rules were created to enable a more rehabilitative environment for bankruptcies. Under the new laws, the minimum debt owed by a person before being declared bankrupt has been increased to SGD $15,000 (US$11,158) from SGD $10,000 (US$7,438).
The new laws also provide a timeline for resolving bankruptcies. A first-time bankruptcy will now be discharged in five years, once creditors have been paid off. The payout to creditors is based on the bankrupt individual’s earning potential. The new laws also mandate that institutional creditors nominate private trustees when applying to make a debtor to be declared bankrupt.
The news laws seek to improve the business climate in the country through the streamlining of the bankruptcy processes. Changes are also touted as means of improving the quality of debt available in the market.
By: Dezan Shira & Associates
Editor: Cameron Gilchrist
The IMF projects Myanmar to be the world’s fastest growing economy in 2016, with GDP forecast to advance by 8.6 percent. Still considered a frontier economy, Myanmar is at a young but developing stage for foreign direct investment (FDI) within ASEAN. Not only does the nation offer fertile land, bountiful resources, and a strategic geographic location, but the Government is increasingly committed to encouraging foreign investment through major economic and political reforms. The reform process began in 2011 and has successfully increased trade and FDI, contributing to 8.3 percent real GDP growth in the 2013/14 fiscal year, which topped the preceding year’s 7.3 percent growth.
Although reforms have been successful in augmenting Myanmar’s economic growth and attracting foreign investment, the regulatory environment remains complex. In 2012, Myanmar released the Myanmar Foreign Investment Law to address the rights and duties of foreign investors. More recently, Myanmar has seen the passage of the Special Economic Zone Law which was passed in 2014, offering numerous FDI incentives. Further, the 102 year old Companies Act, which serves as the country’s foundation for investment, is currently under revision in parliament.
Myanmar: Tourism Industry Expected to Grow to See 7 Million Annual Customers by 2021
Projections indicate that Myanmar’s tourism industry will attract around 7 million tourists by 2021. This increased footprint is expected to generate revenue of around US$9 billion by 2021. The projections are based on the 2nd National Development Plan (2016-2021). The Ministry of Hotels and Tourism plan to grant more licenses for guesthouses, tours and tour guides to cater to the increased demand.
The projections bode well for businesses that intend to invest in the tourism sector in Myanmar. The increasing demand coupled with the government initiatives will enable investors to make significant gains in the market. The latest projections follow a trend of steady growth seen over the past five years. The industry’s earnings in 2013 were US$926 million and reached US$21 billion in 2015.
RELATED: Corporate Establishment Services from Dezan Shira
Thailand: PM Releases Details of Thailand 4.0 Policy
General Prayut Chan-o-cha, the Thai Prime Minister, recently released details of the Kingdom’s Thailand 4.0 policy. The policy is structured to convert Thailand into a value-based economy through adopting a new economic model for development. The policy aims to convert the country’s traditional farming techniques to smart farming, SMEs to smart SMEs, and traditional services to high-margin services. The policy also sets out to encourage innovation and boost integration with technology.
To implement these strategies, Thailand 4.0 targets 10 industrial groups as new engines of growth, of which around seven industries are expected to form the crux of the digital economy. The new policy’s primary objective is to pull Thailand out of the middle-income trap and assist in creating a high-income society. The policy highlights the government’s attitude towards to mechanization and digitization. These developments bode well for technology-oriented businesses that wish to invest in Thailand in the coming years.
RELATED: ASEAN’s Sharing Economy: Understanding Your Opportunities
Singapore: Economy Witnesses Service-Sector Driven Growth
The economy of Singapore grew at a blistering pace in the second quarter (Q2) of 2016. Growth comes on the heels of a rally in the service industry, which recovered and posted strong growth in Q2. The Gross Domestic Product (GDP) of Singapore increased by 0.8 percent from the first quarter (Q1). Singapore is dependent on the service industry which contributes nearly 69 percent of its GDP.
The service industry grew at 0.5 percent in Q2, compared to a 4.8 percent contraction in the previous three months. This marks an upturn in the economic environment in the country. However, economic analysts note that the growth of the services industry did not factor in the Brexit referendum. Businesses interested in the services industry in Singapore should ensure that they regularly monitor global economic changes and keep an eye on the economic growth to optimize their operating strategy in
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.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Annual Audit and Compliance in ASEAN
For the first issue of our ASEAN Briefing Magazine, we look at the different audit and compliance regulations of five of the main economies in ASEAN. We firstly focus on the accounting standards, filing processes, and requirements for Indonesia, Malaysia, Thailand and the Philippines. We then provide similar information on Singapore, and offer a closer examination of the city-state’s generous audit exemptions for small-and-medium sized enterprises.
The Trans-Pacific Partnership and its Impact on Asian Markets
The United States backed Trans-Pacific Partnership Agreement (TPP) includes six Asian economies – Australia, Brunei, Japan, Malaysia, Singapore and Vietnam, while Indonesia has expressed a keen willingness to join. However, the agreement’s potential impact will affect many others, not least of all China. In this issue of Asia Briefing magazine, we examine where the TPP agreement stands right now, look at the potential impact of the participating nations, as well as examine how it will affect Asian economies that have not been included.
An Introduction to Tax Treaties Throughout Asia
In this issue of Asia Briefing Magazine, we take a look at the various types of trade and tax treaties that exist between Asian nations. These include bilateral investment treaties, double tax treaties and free trade agreements – all of which directly affect businesses operating in Asia.
Myanmar: Government Plans Policy to Pursue Tax Evaders
Myanmar’s Internal Revenue Department plans to implement a policy that will increase taxes and penalize tax evaders. Government officials have stated that over several years tax evaders have not been penalized. The department has now approached the relevant ministries to find ways to prosecute such evaders. Tax authorities are presently collecting taxes that have not been paid in years. With more foreign investment in the country, companies are reminded to keep a track of their activities and file taxes to avoid penalties for non-compliance.
Companies that are found to evade tax will face a monetary penalty of not more than 10 percent of the tax, detainment for questioning, or prosecution as prescribed under the Income Tax Law. Similarly tax evaders will face a penalty of not more than 10 percent of the tax, imprisonment, and/or a US $85 (Ks 100,000) under the Commercial Tax Law. Under the Law for Special Goods, tax evaders will be penalized US $4,257 (Ks 5 million) and the goods will be kept for public welfare. Myanmar collected over US $3 billion (Ks 4 trillion) in taxes in 2014-15. Around US $1.7 billion (Ks 2 trillion) has been collected in the first half of the 2015-16 fiscal year.
Myanmar: Commerce Ministry to Ease Import License Regulations
The Ministry of Commerce recently announced plans to ease import-licensing regulations. Under the proposed changes, the Ministry plans to exempt import licenses for over 250 products. A member of the ministry said that 267 commodities will be exempt and the decision has been discussed with the relevant ministries as well as the customs department. While import licenses will be abolished, a tax payment will still be applicable after declaring the goods to customs.
The measures are part of the government’s plan to stimulate trade by creating liberal economic policies. The government wishes to attract more foreign investment into Myanmar by creating a suitable business environment. The development bodes well for companies that are planning to enter or are currently operating in Myanmar. The changes will facilitate easy external trade and improve the ease of doing business in the country.
Malaysia Strengthens Alchohol Regulation
Malaysia has amended the Food and Regulation Act 1985, introducing a slew of changes to alcohol products. Amendments were introduced May 27 and will become effective December 1 of this year. Highlights of the changes are:
- Legal drinking age raised to 21 years from 18 years
- Warning labels need to be displayed on alcoholic drinks
- Alcoholic drinks must be displayed separately from other drinks in shops
- New standard to control availability of Compounded Hard Liquor (CHL) or cheap liquor; such products will be required to be sold in glass bottles with a minimum 700ml content
Authorities have stated that amendments are in line with the Global Strategy to Reduce the Harmful Use of Alcohol, which was signed by the health ministry during the World Health Assembly in 2010. In the near future, authorities have stated plans to raise tax on cheap liquor to US $9.6 (RM40) per liter. Failure to comply with the regulations are expected to attract a maximum fine of US $2,411 (RM 10,000) or up to a jail term of two years.
By: Maxfield Brown
Indonesia has announced its intention to propose a regional minimum wage for ASEAN during a recent World Economic Forum event held on the first and second of June in Kuala Lumpur. During the event, Indonesian officials cited wage disparities between low cost production hubs such as Vietnam and those economies with more expensive labor forces, and expressed concerns that these differences could result in a race to the bottom and ultimately lead to the exploitation of workers. The specifics of Indonesia’s proposal are expected to be released at the upcoming ASEAN manpower ministers’ meeting.
Surprisingly, there has been considerable fanfare behind the idea of an ASEAN minimum wage, with Cambodia and Vietnam among those showing support. However, the extent of regional commitment remains to be seen as nations continue to compete for capital inflows brought on by a number of pending trade agreements and relatively competitive workforces. Beyond doubts over the willingness of nations to implement a minimum wage, questions also arise over the current capacity of ASEAN as a whole to institute regional standards of this magnitude.
From the perspective of investment, collective commitments to a regional wage minimum bring up important questions over the structure of wage floors within ASEAN. With regard to regulation as a whole, talk of a minimum wage also necessitates reflection on the ability of ASEAN’s current treaty structure to institute and enforce regulations of this magnitude.
By: Dezan Shira & Associates
Editor: Maxfield Brown
Thailand – Business Collateral Act
Starting on July 2, 2016, small and medium sized enterprises in Thailand will be provided greater access to loans within the Kingdom. As part of the Business Collateral Act, passed in November of 2015, the scope of currently available credit lines will be broadened while at the same time ensuring those providing loans with the ability mitigate increased risk exposure.
For businesses currently seeking financing, restrictions on collateral within Thailand have been a serious impediment to the acquisition of funding. Under existing laws, the only collateral options available include mortgaging under very limited circumstances or a pledge system that surrenders assets to the lender during the duration of repayment.
Myanmar: Mobile Phone Tax from April 1
The Ministry of Finance’s Internal Revenue Department will impose a 5 percent tax on mobile phone subscribers from April 1. The government attempted to impose the tax from June 2015 but delayed it after strong public opposition. The tax was earlier meant to be imposed on top-up recharge cards. However, the government clarified that the levy would be imposed on phone calls, text messages, and internet usage; the user’s credit balance will reflect the new tax. A mobile phone user will be charged on their total usage amount and not when they top-up. The opening up of the telecommunications industry caused a significant decline in the price of mobile phone sim cards to less than US $2 following the transition from military to semi-civilian government in 2011. The number of sim cards has also increased to 18 million from just around one million, three years ago.
Myanmar has three telecommunications operators: Qatar’s Ooreoo, Norway’s Telenor, and MPT – a joint venture between the telecommunications ministry and Japanese-owned KDDI group. While mobile phone operators do not agree with the tax, they have said that there is not likely to be much impact on usage as sim cards are now much cheaper than they were earlier. The imposition of the tax comes on the same day as the transfer of power from the country’s semi-military government to the civilian-led National League for Democracy administration.
Myanmar: Government Approves Licenses to New Foreign Banks
The government recently gave approval to four new foreign banks to operate in the country. The four banks are as follows:
- Bank for Investment and Development – Vietnam
- SUN Commercial Bank – Taiwan
- Shinhan Bank – South Korea
- State Bank of India – India
With the issuance of these licenses, the total number of foreign banks now allowed to operate in Myanmar has risen to thirteen. A number of banks that have been approved have not opened branches yet, as they fulfill their regulatory compliance obligations. In addition, a number of banks will operate under temporary licenses for a year, and will only become permanent, once they fulfill their obligations to the government. Once the banks have been operationalized, foreign companies will find it easier to access financing, which the World Bank stated was the largest problem for business in Myanmar. The approval for the banks is a part of the government’s larger plan to attract foreign investment into Myanmar.