A recent report by a global business consulting firm argues that ASEAN will be the top investment destination in the region by 2025, replacing China, and that disruptive trends in the logistics sector will boost ASEAN’s position as a leading business hub. The report states that it expects blockchain to influence ASEAN’s supply chain management the most. A blockchain facilitates secure online transactions and is a continuously growing list of records linked and secured using cryptography. Blockchain use in the ASEAN region will help boost the logistics industry, accelerate trade growth, and support the rapid adoption of digital technology.
ASEAN Investment Report 2017
The ASEAN Secretariat and the United Nations Conference on Trade and Development (UNCTAD) released the “ASEAN Investment Report 2017: Foreign Direct Investment and Economic Zones in ASEAN” at the 31st ASEAN Summit in Manila this month. The report states that even with the drop in global foreign direct investment (FDI) into developing economies, FDI flows into ASEAN in 2016 remained high. However, inflows into ASEAN did decline to US$97 billion in 2016 due to divestment,. This was due to ASEAN companies acquiring foreign assets in their home countries, and repayment of intracompany loans. Intra-ASEAN investment made up 25% of the total FDI inflows, an all-time high.
ASEAN Fintech Network
The ASEAN Fintech Network (AFN) launched this month and will be a platform to promote cross-border collaboration amongst members and help boost the region’s position as a Fintech hub. The AFN’s founding members are non-profit Fintech industry organizations from Indonesia, Malaysia, the Philippines, Thailand, and Vietnam. Fintech is an innovativeon and new technology, and is used to deliver financial services as an alternative to traditional financial methods. ASEAN has great potential for Fintech companies as it has a rapidly growing online population together with low banking penetration.
01 NOV ASEAN TODAY – REGIONAL LEGAL AND BUSINESS NEWS – OCTOBER 2017
In Memoriam – H.M. King Bhumibol Adulyadej
December 5, 1927 – October 13, 2016
The cremation and ceremonies for our beloved departed King have now concluded. We sincerely thank everyone for all the kind words of support and thoughtful sharing with us during our difficult times.
ASEAN Business Survey
The Australian Chamber of Commerce released its Australian Business in ASEAN Survey 2017. The survey findings show that the top attraction for Australian businesses investing into the region is ASEAN’s growing consumer market, not the economic integration of the ASEAN Economic Community. Corruption is rated the top challenge for Australian companies doing business in ASEAN. Over 60% of the surveyed firms expanded their trade and investment in the region in the past two years and 85% plan to expand their investment in the next five years. Singapore is the favorite spot to operate a regional hub and Vietnam is the most popular market for expansion. Two-way investment between ASEAN and Australia was US$224 billion at the end of 2016.
Thailand’s Board of Investment (BOI) announced that it is launching a new system for online work permits and visas for BOI Companies. The BOI will phase in an E-service channel that will allow BOI companies to electronically file work permit and visa applications and renewals for expatriates. Furthermore, with the new Single Window for Visa and Work Permit System, the foreign national employees will receive digital work permits instead of the hardcopy work permit booklet currently issued. The BOI partnered with the Immigration Bureau (IMM) and the Department of Employment (DOE) to allow foreign national employees of BOI-promoted companies to apply for their visas and work permits through a one-time online application. The expatriate employee will have to use a smartphone or other electronic device to register and download their Digital Work Permit from the DOE. Any change in an employee’s work status will automatically be updated and shown on their Digital Work Permit.
50 Years of ASEAN
The Association of Southeast Asian Nations (ASEAN) turned 50 this month. In the last half century, the region has become the world’s sixth-largest economy with intra-regional trade totaling US$550 billion in 2015. To date, ASEAN’s greatest economic achievement is tariff reduction. The average percentage of tariff elimination for all ASEAN member countries was 96% in 2016 and is expected to be 98.7% in 2017. However, the growth of non-tariff measures has tripled in the last 15 years. To address the challenges in completing the implementation of the ASEAN Economic Community (AEC), ASEAN will pursue trade liberalization and behind-the-border reforms, policy harmonization, and integration of national single windows for cargo clearance into the ASEAN Single Window.
Thailand and the US first signed a free trade treaty 184 years ago and continue to have a unique relationship. Both countries benefit from increased trade and eased foreign direct investment regulations. Thailand gives the US access to the ASEAN market and proximity to both China and India, and the US is a prime destination of Thai exports. However, changing economic and political climates as well as domestic law in both countries pose challenges to Americans wishing to do business in Thailand and Thais wishing to do business in the US. A summary from both perspectives is provided in four key areas: corporate, intellectual property rights, litigation, and immigration/employment.
An update on the new Immigration arrival and departure card and news about Thailand’s accession to the Madrid Protocol
Immigration Arrival and Departure Card
On October 1, 2017, a new Immigration Arrival/Departure Card will replace the current TM6 form. The proposed new form will have only one side for visitors to record both arrival and departure information together with an “automatic channel” barcode. However, the new form still contains much of the requested information on the old TM6 form, now just on one side. So, its effectiveness is being debated by the Ministry of the Interior, the Immigration Bureau, and the Tourism Authority of Thailand. With the international spotlight on immigration procedures and long waiting times at Thailand’s international airports, the government is also exploring canceling the use of the TM6 form entirely. While the process of studying and exploring the pros and cons (facilitation vs national security) is underway, filling out the Immigration Arrival/Departure Card is still required.
Acts and regulations posted in the Royal Gazette in June 2017 including amendments to the Petroleum Act, new regulations under the Consumer Protection Act and from the National Anti-Corruption Commission.
1. Amendments of the Petroleum Act and Petroleum Income Tax Act
To comply with the national energy stability plan and secure Thailand’s petroleum reserves, the amended Petroleum Act and the Petroleum Income Tax Act came into force on June 23, 2017. Now instead of just concessions, the government can implement joint-production ventures (JPVs) and hire of service contracts.
ASEAN Economic Community News
Regional Economic Outlook
The ASEAN Secretariat reports that ASEAN in 2017 will continue to see strong economic growth that should match its 4.8% growth in 2016. The Secretariat attributes the growth to the strengthening of private consumption and private investment in the region. In 2018, they expect domestic demand growth to be driven by 1) consumption, backed by stable labor market conditions and wage growth, and 2) demand, backed by public spending on infrastructure projects and fiscal stimulus. Downside risks include potential disruptions due to global trade policy adjustments and changes in monetary policies.
ASEAN Power Grid
At the ASEAN Ministers of Energy meeting in September, Thailand, Laos, and Malaysia plan on signing a tripartite electricity-trading agreement which could initiate the start of the ASEAN Power Grid. The agreement covers the sale of 100 megawatts of electricity generated in Laos and transferred to Malaysia using Thailand’s transmission system. The planned ASEAN Power Grid will be a secure, reliable integrated electricity infrastructure that will help stimulate regional economic growth and development.