ASEAN Market Watch: Tech Taxes in Indonesia, Digital Policy in Thailand, and Singapore’s Manufacturing Uptake

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Indonesia: U.S. tech firms Under Scanner for Additional Taxes

Indonesia authorities plan to collect additional taxes mainly from U.S. technology firms such as Facebook, Google, Twitter and Yahoo after allegedly finding evidence that such companies have been avoiding corporate tax for years.

The Communication and Information Technology Ministry on March 31 laid out guidelines for Internet-based services and stated that they would have to incorporate themselves and pay local taxes. Facebook, Google and Twitter all have representative offices in Indonesia, though they have asserted they have paid all applicable taxes.

Under the proposed law, companies providing movies, music, TV shows, and text would have to set up local companies, self-censor as per Indonesian cultural norms, and use Indonesian payment gateways. The authorities want tech companies to comply before the rules take effect, though no date has been given.

The development comes as the country attempts to meet its tax-collection target of US$117 billion this year – a goal aimed at funding infrastructure projects throughout the country. Finance Minister Bambang Brodjonegoro stated that tech companies can now be subject to local taxes since such companies were using representative offices that enjoyed lower taxes than traditional corporations. Tax agencies say they plan to collect back taxes from as early as 2011, including companies such as Yahoo, which closed its representative offices a few years ago. Analysts say that such fast changing regulations could scare U.S. tech companies and investors.

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Thailand: Government Approves Digital Economy Policy

The Thai government approved two plans concerning the Digital Economy and Digital Governance for the next three years in an announcement on April 6.  Government agencies are now required to submit operational plans in order to acquire their budget for digital development projects. The Digital Economy is the first phase in the country’s 20-year Digital Thailand Plan which makes rural infrastructure a priority. As per the plan, over 30,000 villages are set to receive broadband connections, including free Wifi for 10,000. Meanwhile, around 600 digital community centers are expected to be set up for training purposes.

The second plan will restructure the country’s public services. Authorities aim to bring all services to a single government portal, starting with business registration. Rather than taking documents from one office to the other, a smart card will be issued for transactions across agencies allowing access to all services required for starting and running a business on just one website. The government hopes to implement the digital development plan especially among SMEs, which are the county’s key economic drivers.

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Singapore: Manufacturing Improves in March

The Singapore Institute of Purchasing & Materials Management (SIPMM) released its results on the manufacturing sector with a Purchasing Managers’ Index (PMI) reading of 49.4 for the month of March; a 0.9 increase from February. A reading above 50 means that the manufacturing sector is expanding, while a reading below 50 indicates contraction. Although the local manufacturing sector continued to remain in contraction for the ninth straight month, the slight improvement was attributed to new export orders.

Manufacturing, employment, and input prices also did better. Imports, inventory, and stocks of finished goods also had good results. Analysts have said that the improvement in the manufacturing sector, while marginal, was in line with other global and regional areas – namely the U.S., Eurozone, China and selects markets across Asia. Analysts have stated that while there was some improvement, a full recovery of the manufacturing sector is not expected in the near term.


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