Integrity Legal

Posts Tagged ‘ASEAN’

24th April 2017

In recent weeks it has come to this blogger’s attention that some significant changes with respect to the duration of leases in Thailand have been not only proposed, but are apparently nearing a point where they might be implemented. While The Nation has taken note of the fact that various stakeholders in the Thai real estate sector have welcomed the possibility of 99 year leases for foreign investors in the Thailand property market (a proposal which has many restrictions in and of itself, including the requirements that such lease may only be possible in large industrial developments operating with the proposed Eastern Economic Corridor or EEC). Meanwhile the Bangkok Post has reported that various activist groups in Thailand are opposed to the proposal that 99 year leases be implemented. In this blogger’s view the more important issue is the fact that the implementation of new laws regarding Thai commercial leases appears very near at hand. To quote directly from the aforementioned Bangkok Post article:

[T]he government approved the land rental extension to 99 years, a policy change that will affect about 10 million people who are in need of land, he said. The cabinet’s resolution was made in a bid to promote the eastern special economic development zone to draw international investment linking the country more closely to the Asean community and beyond…

It should be reiterated that the leases at issue are of a commercial nature and appear only to be possible within specified zones, but the change is notable since for years 30 year leases were the norm in Thailand and the recent changes seem to mark a substantial shift in policy thinking. It should be noted that recently proposed changes may make it possible for foreign nationals to obtain a 50 year lease in Thailand on residential property. Clearly, all of these developments bode well for those wishing to invest in the Thailand property market.

Not everything is developing in a positive manner for everyone with respect to the use of real estate in Thailand. In recent weeks, there has been a great deal of clamor arising from the fact that officials affiliated with the Thai government have announced plans to severely curtail, if not outright ban, street food vendors in the Kingdom. To quote a recent article on the Voice of America website quoting an assistant to the Governor of Bangkok:

“The street vendors have seized the pavement space for too long and we already provide them space to sell food and other products legally in the market,” the assistant said. “So there will be no let-up in this operation – every street vendor will have to move out.”

It should be noted that what may appear to be “street food vendors” may in fact just be sellers of food in an open air environment, but occurring on private property in Thailand. Therefore, this blogger does not expect that outdoor dining on traditional Thai fare will disappear any time soon. However, it seems logical to infer that street vendors will likely be making deals with owners of Bangkok property to use their land in order to sell food. A question posed by many: why are authorities in Thailand doing this? Many of those posing this question do so for different reasons. Some note that street food is part of the tapestry of Bangkok life. Meanwhile, others note that restricting street food could have a detrimental impact upon tourism. Although this blogger does not necessarily agree with all of the restrictions being proposed with respect to street food two things should be noted. First, the thoroughfares of Bangkok have a tendency to become crowded and street food vendors had more than a tendency to exacerbate this crowding. Second, Thai authorities have continued to note issues related to the raising of government revenue and it is this blogger’s opinion that the restrictions on street food may be the government’s initiative to, at least indirectly, encourage some vendors to engage in the more regulated economy. The Value Added Tax accounts for a significant portion of Thailand’s overall revenue. Therefore, if authorities can encourage more businesses to become part of the VAT system then it stands to reason that the government could raise further revenue. This blogger knows for a fact that there are those street vendors who do pay VAT, but the percentage of such individuals in relation to the overall number of street vendors is quite small. Therefore, it seems likely that while on the one hand Thai authorities are making the streets in Bangkok more easily accessible the upshot may be a benefit to government coffers in the long run.

more Comments: 04

11th July 2016

In a previous posting on this blog the issue of single person incorporation of Thai companies was discussed. Back in September of 2015 it was revealed that the officials with government offices such as the Ministry of Commerce and the Department of Business Development were reviewing the possibility of amending the existing corporate laws in Thailand so as to allow an incorporated entity such as a limited company to be owned by one individual person. This would be similar to legislation in countries such as the United States which allows individuals, acting alone, to set up structures such as limited liability companies on their own.

It recently came to this blogger’s attention that some new developments have taken place with regard to this topic. To quote directly from the website of The Nation Newspaper:

THE Business Development Department has reviewed a new draft law and added in the document that a foreign individual cannot register a business in the Kingdom. The move aims to prevent |foreign enterprises from competing against Thais in many businesses that should be preserved for Thais. The original draft, known as “one person, one company,” states only that a single person can register a business in Thailand.

As readers of this blog and website may be aware there are many provisions enshrined in Thai law designed to protect Thai enterprises from foreign competition in Thailand. Most notable is the Foreign Business Act which specifically designates the type of business activities which are restricted to foreign nationals. As the website of Coconuts Bangkok noted:

This addition to the draft is designed to keep foreign businesses from competing against Thai companies in the long list of industries that the government has deemed reserved for Thai nationals only.

The aforementioned list of industries is detailed in the provisions of the Foreign Business Act. Currently, Thai law requires that a limited company have at least 3 shareholders in order to be registered pursuant to Thai law. This proposed law would change those provisions. It appears that Thailand would be the third country in the Association of Southeast Asian Nations (ASEAN) to adopt this type of change while Malaysia is apparently reviewing similar legislation.

The final draft of this proposed law remains to be seen, but it seems logical to assume that easing of corporate regulation of Thai company structures will result in increased business activity.

It should be noted that pursuant to the terms of the US-Thai Treaty of Amity, it is possible for American citizens to own virtually 100% of their companies in Thailand notwithstanding the provisions of the Foreign Business Act. It remains to be seen how these changes to the law will impact the registration of so called Amity Treaty Companies.

more Comments: 04

2nd February 2016

In a recent article in the Bangkok Post it was noted that the Prime Minister of Thailand is poised to travel to the United States to attend a summit between the United States of America and the Association of Southeast Asian Nations (ASEAN):

[H]e will join Asean leaders attending the first stand-alone US-Asean summit in the United States on Feb 15-16 in response to US President Barack Obama’s invitation… The meeting was called when Asean and the US upgraded their level of cooperation from dialogue partner to strategic partner in November last year…

This news comes upon the heels of a recent study which found that Thailand has major issues with skilled labor when compared to other jurisdictions in the region. To quote directly from The Nation newspaper:

According to the World Bank (WB), Thailand will face the biggest shortage of skilled labour in the Asean region…Yongyud Wongpiromsarn, director of the committee on education reform, said area-based education was key to redesigning the education system so it meets local demands…

Although it would appear that education reform remains key to creating more appropriately skilled labor in the Thai market, Thai officials also seem to be implementing legislation in order to improve the overall competitiveness of the Thai business sector. To quote from another article in the Bangkok Post:

The cabinet yesterday approved the draft amendments to the Trade Competition Act aimed at enhancing competition and reducing business monopolies and political meddling…

Notwithstanding the fact that Thailand has competitiveness issues it seems to this blogger that the current moment may be an auspicious time to invest or start a new business venture in the Kingdom. Although many news outlets have covered the fact that Thailand has been dealing with political and economic hurdles in recent years, this blogger’s opinion is that Thailand remains one of the best places to conduct business in Southeast Asia. While other countries may have more room for growth, Thailand has the advantage of substantial infrastructure and  can act as a corporate headquarters for a regional operation which could encompass places like: Laos, Myanmar, Cambodia, and even Malaysia or Vietnam. Meanwhile, Bangkok may soon be the entrepot for overland trade between China and the other ASEAN nations. This seems especially likely in light of the fact that a high speed rail system will be put in place linking China, Laos, and Thailand by rail. Bangkok appears set to act as the focal point for the exchange of goods and services between all of ASEAN and Southern China.

Clearly, Thailand has obstacles to overcome economically, but it would be unwise to discount Thailand as a place to do business, especially as getting into this market presently could compound later economic benefits.

more Comments: 04

8th January 2016

The Association of Southeast Asian Nations (ASEAN) was initially formed in 1967 and now includes the jurisdictions of Thailand, Vietnam, Laos, Cambodia, Indonesia, the Philippines, Malaysia, Singapore, Brunei, and Myanmar. Initially, ASEAN was a sort of loose coalition which generally acted in cooperation on matters of trade facilitation and various forms of international law and regulatory enforcement. The ASEAN Community which came into being on January 1, 2016 is a different type of entity. The AC is more akin to the European Union. Although, in many respects the AC and the EU are markedly different, most notably in the fact that the AC is unlikely to see anything resembling a unified currency any time soon. However, this blogger would posit that it is not an impossibility that a coordinated currency policy could come to exist in the AC region in the future.

One of the interesting aspects of the AC is the so-called ASEAN Economic Community or AEC. This is the economic infrastructure of the new community. At present completely free movement of people and labor is not being implemented by the community, but there are signs that such a scenario could come to pass in later phases of the AC. For example, there are 8 occupations which will be allowed freer movement within the AEC framework and they are: accounting, dental services, architecture, surveying, nursing, tourism, engineering and medical services. Those who hail from one of the ASEAN jurisdictions and engage in the aforementioned endeavors could see their career prospects improved as a result of new markets opening for their specific skill set. In Thailand it appears AC passport holders will still be required to obtain a Thai work permit, notwithstanding the creation of the AEC .

As can be seen from the various ceremonies marking the creation of the AC it is clear that many of the respective ASEAN governments welcome the establishment of the AC with open arms. In Thailand, the establishment of the AC coupled with the plans to make Bangkok the rail hub for trade between Eastern Southeast Asia, Western Southeast Asia, and Southern China could mean that Bangkok will become a central entrepot for trade and travel. Meanwhile, Thai officials are still studying the provisions of the Trans Pacific Partnership.

How the AC will ultimately function remains to be seen as the union brings together disparate political systems and jurisdictions with radically differing economies, but one thing is clear: the AC is poised to be the most dynamic economy worldwide as the region is a crossroads for trade and the economies throughout the region appear ready to significantly expand in the future.  As of the time of this writing there does not appear to be a coordinated plan to create unified ASEAN visa structure akin to the Schengen system, but in time such a development may come to fruition

more Comments: 04

6th May 2014

In recent articles in the Financial Times the argument has be made that the Peoples’ Republic of China will economically overtake the United States of America in the year 2014. It  should be noted that Chinese economic outpacing of the United States is only measured in terms of statistical purchasing power and little more. In any event, this revealation is significant as it shows the increasing dominance of China in the world economy. The authors of the two articles (which can be found on the Financial Times official website here and here) appear to disagree as to the importance of these developments. The  author of the first article seems rather alarmist about the fact that China will overtake the USA in statistical purchasing power while the second author notes that this should not be viewed as China overtaking the USA in all facets of comparative economics. Furthermore, the second article notes that the United States still remains politically the most powerful nation in the world despite the fact that the world is evolving from a state of unipolarity with the United States as the lone Superpower able to effectively and virtually unilaterally project its power throughout the world, to a state of multipolarity in which many nations have increasing regional (or even global) dominance in certain spheres of economics as well as politics.

The notion that the world is moving toward a state of multipolarity leads this blogger to posit: how will the Association of Southeast Asian Nations (ASEAN) fit into the framework of a multipolar world? It seems reasonable to infer that ASEAN will become an increasingly important economic bloc following the integration of the various member states’ economies under the framework of the ASEAN Economic Community (AEC) which is set to take effect on January 1, 2015. The creation of a single economic platform which will include approximately 400-500 million people, some of the fastest growing economies in the world, and some of the most strategically important geographical locations will likely lead to greater economies of scale for businesses in the region, a larger market for goods and services for the member states, and greater leverage to trade with countries outside of the bloc. However, these issues are not entirely pertinent to the question posited above. The differences between China and an integrated ASEAN economic platform will be substantial. First, some members of ASEAN rank amongst some of the largest economies in the world, in their own right. Meanwhile other economies within the region are still developing. This could lead to a “best of both worlds” scenario for ASEAN, China, and the USA. Case in point, Thailand has seen difficulties in recent years competing with cheaper Chinese labor, but the movements of labor and capital which will come hand-in-hand with ASEAN economic integration could lead to a situation where Thai companies could utilize labor pools in developing ASEAN member countries to offset the low cost of Chinese labor and thereby mitigate previous competitive disadvantages. Furthermore, the United States may find new markets for US goods in an integrated ASEAN and new venues for the manufacture of low cost goods in developing ASEAN nations that would allow for some economic de-coupling from China by the USA, thereby allowing the United States a freer hand in making foreign policy decisions vis-a-vis China. Finally, China stands to gain due to the increase in trade between China and the ASEAN nations which has recently been evidenced by the evolving nature of the geography of the Chinese economy. In recent years, increasing economic activity has been noted in Southern China across the border from Laos, which acts as a kind of entrepot for trade between China and Thailand as well as the Greater ASEAN community. Recent discussions of a high speed rail link connecting China, Laos and Thailand have also been cause for optimism that one day this region could play host to a booming economy which will bring large numbers of people out of poverty and create wealth for the peoples of all nations concerned.

Following ASEAN economic integration, there are likely to be myriad legal challenges for those businesses in ASEAN nations and abroad wishing to gain a foothold in this burgeoning market. The legal challenges posed will likely require the assistance of legal professionals in the region familiar with new ASEAN regulations as well as the internal regulatory frameworks of the various member states.

more Comments: 04

23rd April 2014

It recently came to this blogger’s attention that the President of the United States is set to visit Japan in order to begin a multi-nation trip around North and Southeast Asia. Currently on the itinerary are South Korea, Malaysia, and the Philippines. Apparently, the trip is being undertaken in an effort to strengthen ties with those nations and to further showcase the administration’s commitment to the “pivot” policy whereby the United States will further concentrate upon ties with the nations of the Asia-Pacific region.

It is interesting to note that this recent trip comes during a time where there are perceived to be increasing tensions between the United States and the Peoples’ Republic of China. Moreover, recent Chinese claims to territories in the Eastern and South China seas have caused further tensions between China, Japan, Singapore, Vietnam, and Malaysia (to name only a few). The issues surrounding dealings with China, which is one of the United States’ largest trading partners as well as a competitor for influence in the Asia-Pacific region, are likely to be at the forefront of discussions between the American President and his counterparts in the various countries to be visited. As economic growth in Southeast Asia continues, it stands to reason that building long-lasting economic ties with the region is a substantial concern. Meanwhile, smaller Asian nations may seek support from the United States in an effort to counter what some view as an overly expansionist China. All of these issues arise at a time when the Association of Southeast Asian Nations (ASEAN) is preparing for further economic integration in the form of the ASEAN Economic Community (AEC) which is set to come into effect in 2015. How ASEAN integration, Chinese expansion (both militarily and economically), and American foreign policy will interact in the months and years ahead remains to be seen, but clearly Southeast Asia remains at the forefront of geopolitics.

With respect to the Kingdom of Thailand, it appears that Thai officials are preparing for ASEAN economic integration by encouraging the creation of an ASEAN trading hub in Southern Thailand. As Hat Yai is currently a significant trading center in the Southern region of Thailand and boasts of an international airport along with multi-cultural demographics it is a logical location to capitalize upon ASEAN economic integration which would result in significant benefits for Thailand domestically as well as Malaysia and ASEAN as a whole. The economic benefits which could arise from ASEAN economic integration are virtually limitless and perhaps one day the ASEAN trading bloc could be as economically dominant as the economies of the USA and China.

 

more Comments: 04

28th February 2014

As of the time of this writing, the “Shutdown Bangkok” campaign is scheduled to end on Monday, March 3rd. However, from initial reports it is not clear whether the movement will be fully dissolved in all locations. Apparently, leaders of the movement have scheduled an end to the blocking of key intersections throughout the city while consolidating the movement’s location at Lumpini Park. Meanwhile, it remains unclear whether the protest site at Chaeng Wattana will be closed as well.

Apparently, this decision was made as a result of concerns that the protest has had a dampening effect upon the Thai economy. As protests intensified many people from all sectors of the Thai business community raised concerns that the situation was causing losses in the tourism industry as well as possibly leading to decreases in future foreign direct investment.

The recent news will likely come as a welcome surprise to the Thai business community especially the tourism sector as it could be a portent of a future lasting compromise leading to a maintenance of stability in the country. Those living and working in Bangkok will likely also be glad to hear of the reopening of major intersections since doing so will undoubtedly lead to less traffic congestion in the city.

Hopefully, this announcement will encourage foreign governments around the world to lift their travel warnings and travel bans regarding Thailand. As a consequence, tourists will return to Thailand on a scale that is relatively commiserate with tourism numbers prior to the outset of protesting.

Notwithstanding recent political tension there are many who feel as though Thailand still represents one of the top tourism destinations in the world. Furthermore, Thailand is also considered a prime destination for foreign direct investment as the Kingdom remains one of the strongest economies in Southeast Asia. Couple this with the fact that as of January 2015 the ASEAN Economic Community (AEC) will come into being creating a wide range of business opportunities in Thailand and throughout the region, and there is good reason to believe that Thailand will remain strong economically. Should the AEC also herald the coming of a single unified ASEAN visa scheme Thailand as well as the rest of Southeast Asia could see an increase in the numbers of both business and leisure travelers. Only time will tell how all of these developments will play out, but cautious optimism is apparently called for under the present circumstances.

more Comments: 04

5th November 2013

In recent postings throughout the internet, speculation regarding the future of Southeast Asian economics abound. Meanwhile, further analysis of the Thai economy in particular is rife. In a recent article on Forbes’ official website evidence has been cited which would appear to point to the possibility that Thailand may experience an economic bubble burst akin to the crash of 1997. Various Thai government officials as well as Thai businesspersons were quoted as saying that certain aspects of the Thai economy are troubling. Notably, inflows of foreign capital specifically targeting the Thai property market as well as signs that Thai people are engaged in what could be described as conspicuous consumption are leading some experts to believe that Thailand could be headed for a new economic downturn.

Concurrently, the article went on to note that Thailand, ever susceptible to negative economic consequences arising from nations which maintain significant trade relationships with the Kingdom, may see problems in export sectors resulting from decreased demand in both China and the other nations which comprise the Association of Southeast Asian Nations (ASEAN). Should there be an economic problem in one of these countries then there could be a sort of negative ripple effect in the export sector in Thailand.

The points made in the article are compelling and certainly there may be cause for concern that the Thai economy may be placed in a difficult position in the future, especially if Thailand’s main export markets experience an economic downturn. However, the situation may not be as dire as some are predicting. Instead, this blogger would argue that Thailand’s economy may be simply in something of a state of flux due to changes in the ASEAN region and China. The dynamics of global economics are changing. American monetary policy along with economic problems in Europe have caused many to look toward Asia as a beacon of possible future growth.

In a recent article on the official website of Bloomberg it was noted that there appears to be a “boom” of sorts occurring in the Eastern province of Rayong and the region of Northeast Thailand known as Isan. As automobile manufacturing has increased in Rayong, so too has the purchasing power of residents of that province. Meanwhile, Isan is experiencing an upsurge economically as a result of increased domestic income and also concomitant demand for consumer goods from the local population. All of this news comes closely upon the heels of announcements that Thailand, Laos, and China will one day be connected via a high speed rail system. In fact, China has recently noted their commitment to that project and Thai officials have asked China to assist in the design of a rail system between Bangkok and Udon Thani (a city of 400,000 which sits close to the border and capital of Laos). There is an argument that should this rail system go into place the resulting economic boon to Thailand, particularly Northeast Thailand, could be tremendous as there could be a substantial increase in trade and tourism from China via this rail link. Moreover, Thailand could see itself becoming the entrepot for trade between South China and the rest of the ASEAN jurisdictions.

Presently, it is difficult to say whether Thailand will continue a trend of uninterrupted prosperity. However, there is strong evidence to suggest that increased economic integration with ASEAN as well as new, less logistically difficult, trade opportunities with China could usher in an era of prosperity and counter some of the negative factors currently worrying experts analyzing the current state of the Thai economy.

more Comments: 04

15th October 2013

At a recent summit held to discuss relations between China and the Association of Southeast Asian Nations (ASEAN) the Prime Minister of Thailand stressed the importance of the ASEAN-China Strategic Partnership as a component necessary to bolster mutual prosperity in both China and the ASEAN region. Thai Prime Minister Yingluck Shinawatra noted that ASEAN approved of China’s efforts to improve the ASEAN-China Free Trade Area. Upgrading the free trade area would likely result in an increase in Sino-ASEAN trade.

Based upon information announced by the ASEAN Secretariat, in the year 2014 ASEAN appears poised to focus on quickly implementing targets for 2015. It also appears that ASEAN will be working towards unifying the community pillars of ASEAN, notably the ASEAN Economic Community (AEC), the ASEAN Socio-Cultural Community, as well as the ASEAN Political-Security Community. Post-2015, ASEAN may undertake initiatives to reinforce these efforts while also attempting to further engage other outside actors in the Asia Pacific and East Asia regions.

A recent joint statement from the visiting Chinese Premier and the Thai Prime Minister also noted that efforts are being made to improve relations between the Kingdom of Thailand and the Peoples’ Republic of China. The two leaders expressed their desire to see closer cooperation between their two nations in the form of investment in industry (with specific emphasis upon investment in the bio-plastics, green, and rubber industries).

Thailand and China renewed their commitment to promoting improved transportation infrastructure in the form of railway links between Thailand, Laos, and China. The two countries also discussed improved transportation channels in the form of roads, airports, and ports which could increase trade and tourism for both Thailand specifically and the region as a whole. The Chinese representatives reiterated their desire to assist in the building of a high speed railway system between Ban Phachi and Nong Khai, noting that payment for such endeavors may come, at least in part, in the form of agricultural goods.

The two countries also wish to strengthen cooperative efforts in the banking and financial spheres by promoting the use of the two nations’ currencies in matters involving Sino-Thai trade and investment. It also appears that the two countries are poised to discuss methods of improving RMB clearing services in matters pertaining to trade.

Most notably, at least for this blogger, was the announcement that China as well as Thailand are amenable to discussing, and possibly signing, a Memorandum of Understanding on exemption of visas. Apparently, a prospective Sino-Thai visa exemption scheme would allow holders of regular Thai and Chinese passports to enter each of these countries on a visa exemption stamp not unlike the current visa exemption stamps currently issued to travelers from many countries entering Thailand. The promulgation of a visa exemption scheme between China and Thailand could lead to increases in trade and tourism between the two nations.

more Comments: 04

7th October 2013

China’s Premier, Li Keqiang is set to make an official trip to Thailand between the 11th and 13th of  this month. The Premier will be present in the Kingdom of Thailand as a guest of the Royal Thai Government. This visit will be the first time the Premier of China has visited Thailand since taking up office. During his stay the Premier is slated to meet with Prime Minister Yingluck Shinawatra in an effort to seek methods of improving the Thailand-China Comprehensive Strategic Cooperative Partnership through mutually beneficial cooperative endeavors.

Apparently, the official representatives of the Peoples’ Republic of China and the Kingdom of Thailand are also poised to sign various agreements exclusively pertaining to the Sino-Thai relationship. These agreements will deal with matters such as investment between the two nations, development of infrastructure, technology, education, and energy to name just a few areas which will be covered. As of the time of this writing, Thailand is the coordinator for relations between the Peoples’ Republic of China and the Association of Southeast Asian Nations (ASEAN) and in that capacity it appears likely that the Thai PM and the Chinese Premier will discuss matters relating to the ASEAN-China Strategic Partnership.

Meanwhile, in related news Transport Minister Chadchart Sittipunt has recently made comments regarding the linkage of the Kingdom of Thailand, Laos, and China via high speed rail systems as well as other transportation initiatives under the aegis of the Thailand 2020 program. It would appear that plans are being implemented to construct a high speed railroad linking Bangkok to Nong Khai, the Northeastern Thai province bordering Viantiane, Laos. Construction of such a railway is expected to begin in the latter half of 2014. Upon completion of the project travelers will be able to make the trip between Bangkok and Nong Khai in approximately 3 hours. The system will then link up with Yunnan, China via Laos. Furthermore, enhanced roadworks are expected to be constructed, including new four-lane roadways, in order to streamline transportation both within Thailand as well as in Laos and China.

Clearly, these efforts are likely to fundamentally change the landscape of Northern Thailand both physically and economically. The linking of Northern Thailand, Laos, and Southern China will have a significant impact upon the economies of all three jurisdictions while simultaneously changing the way in which business is currently being conducted in this region. These developments are occurring as the ASEAN countries prepare for the coming integration of the ASEAN Economic Community (AEC) and it stands to reason that further cooperation between Thailand and China bilaterally and China and ASEAN multilaterally will see economic benefits not only for Thailand, but for the other ASEAN jurisdictions as well.

more Comments: 04

The hiring of a lawyer is an important decision that should not be based solely on advertisement. Before you decide, ask us to send you free written information about our qualifications and experience. The information presented on this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.