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Posts Tagged ‘ASsociation of Southeast ASian Nations’

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.

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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.

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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

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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.

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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.

 

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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.

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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.

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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.

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30th September 2013

Thailand’s Deputy Prime Minister and Foreign Minister Surapong Tovichakchaikul in conjunction with his ASEAN counterparts as well as US Secretary of State John Kerry discussed the American relationship with the Association of Southeast Asian Nations (ASEAN) at the Informal ASEAN-US Foreign Ministers’ Meeting. The informal Ministers’ Meeting was conducted while the 68th Session of the United Nations General Assembly was held in New York City, the Thai Government Public Relations Office reported.

The Thai Foreign Minister noted his approval of efforts being made in the United States to encourage green energy initiatives as such programs could prove beneficial in the Southeast Asia region especially as climate change becomes an increasingly important concern. The Foreign Minister also appears to have commented positively regarding American efforts with respect to Syria citing his desire to see a political solution to those issues being promulgated through a forthcoming United Nations Security Council resolution. It should be noted that, Thailand has officially stated its intention to seek a non-permanent seat on an upcoming UN Security Council. Meanwhile, The Foreign Minister also pointed out the significant positive impact that the United States has on the ASEAN region as cooperative efforts between the United States and the jurisdictions which comprise ASEAN have resulted in greater security and economic gains for all parties concerned.

The US-ASEAN Expanded Economic Engagement Initiative was cited as a particularly encouraging development which could result in further trade and foreign investment for the ASEAN region. The Lower Mekong Initiative was also noted as a program which has improved the region academically, agriculturally, and environmentally. The Foreign Minister also urged the United States to assist in improving regional law enforcement capabilities by further mutual cooperation and increased training. One method of increasing training capability would be through establishment of a series of International Law Enforcement Academies

Further US-ASEAN cooperation could also lead to better security for the Southeast Asia region. The Foreign Minister noted that further ASEAN-US cooperation in the realm of cyber security may assist in inoculating the region from dangers arising in cyber space. The Foreign Minister also expressed his desire to see the United States continue its support for ASEAN’s endeavor to see an expeditious completion of the Code of Conduct in the South China Sea.

Relations between the United States and ASEAN have become of recent interest to many who follow foreign policy issues. As ASEAN’s eventual economic integration draws nearer the United States seems to acutely realize that there is a strong prospect of future benefits which may be derived from substantial ties to the region.

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18th September 2013

Officials at Thailand’s Ministry of Labor are currently in the process of promulgating guidelines pertaining to the issuance of Thai work permits for ASEAN citizens, according to an official report from the Government Public Relations Department. These measures are being implemented in an attempt to better manage what are perceived to be substantial future inflows of skilled and professional labor coming from the other jurisdictions which comprise the Association of Southeast Asian Nations (ASEAN). For those unaware, the ASEAN economic community (AEC) is currently poised to economically integrate in 2015.

According to officials at the Ministry of Labor, initially work permits may be issued for citizens of other ASEAN nations in twenty-five career fields. This prospective policy is in keeping with the provisions of the ASEAN Agreement on the Movement of Natural Persons (MNP). Professionals operating in areas involving: computers, advertising, marketing research, research and development, agriculture, telecommunications, management, education, finance, health, translation services, construction, engineering, and transport services (to name a few areas) may be eligible for a Thai work permit. Labor Ministry officials are apparently poised to utilize the National Skill Standard in order to ascertain whether approval of a work permit application for an ASEAN citizen is warranted. This measure is being undertaken in an effort to insure that only qualified workers are granted a work permit. Meanwhile, the Ministry of Labor and the Ministry of Commerce are preparing to work in conjunction with the Management System Certification Institute (Thailand) in an effort to set policies aimed at providing temporary status for qualified ASEAN citizens wishing to enter the Kingdom of Thailand.

All of these measures appear to be designed to provide ASEAN citizens with the rights and privileges that come with work authorization in Thailand. It is thought that as ASEAN becomes increasingly integrated larger numbers of foreign workers will descend upon Thailand as increasing numbers of Thai nationals seek employment opportunities in other ASEAN countries.

At the time of this writing, virtually all foreign nationals working in the Kingdom of Thailand are required to obtain work authorization in the form of a Thai work permit. Except in the case of a foreign national married to a Thai, such individuals are also required to obtain a Thai business visa in order to be eligible to apply for a work permit. As can be inferred from the information noted above, notwithstanding the integration of the ASEAN economies, foreign nationals from ASEAN countries are also likely to be required to obtain business visas and work permits before being able to legally undertake employment in the Kingdom.

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