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

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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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Thailand: Preferential excise tax introduced to promote electric vehicles

In its bid to promote the country’s electric vehicle (EV) industry, Thailand’s Board of Investment (BOI) has introduced preferential excise tax rates for the sector. Under the new tax regime, the excise tax for hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) will be cut from 25% to 5% based on CO2 emissions, while battery electric vehicles (BEVs) will be taxed at 2%, a sharp drop from the former 10% rate.

These tax incentives will only be available for vehicles produced locally and up to 2025. EVs are among the government’s 10 targeted industry clusters, proposed to be developed in the country’s upcoming Eastern Economic Corridor (EEC). In addition, the BOI announced corporate income tax (CIT) exemption for firms manufacturing 10 key EV components. These include batteries, traction motors, battery management services, DC-to-DC converters, inverters, portable electric vehicle chargers, electrical circuit breakers and EV smart charging systems.

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Cambodia: Central Bank announces new rules to regulate fintech sector

The National Bank of Cambodia (NBC), the country’s central bank, has issued new regulations for the country’s emerging fintech sector. As per a Prakas released on 20 June, all payment service providers (PSPs) will now be required to obtain a licence before operating in the country. This will apply even to banks and other financial institutions, which provide digital payments services in the country. The licence will be valid for six years, and will be subject to an annual fee of Riel 20 million (US$ 5000).

Previously, even non-financial companies were allowed to offer digital payments services on the basis of a third party processor (TPP) licence. Now companies will have to demonstrate a minimum registered capital of Riel 8 billion (US$ 2 million) and deposit 5% of their paid up capital with the NBC to qualify for the new operating licence. The government’s latest move comes as part of its bid to regulate the country’s fintech sector and make digital payments more secure by reducing the role of intermediary third party processors.

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