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Copyright SGA 2003

Thai-US Treaty of Amity Scheduled to Expire

In compliance with World Trade Organization rules requiring member nations to extend most favored nation status equally to all other WTO members, Thailand will not be authorized to grant national preference to U.S. citizens pursuant to the Thai-U.S. Treaty of Amity. Although there are other provisions of the treaty, the national provisions which allow American companies to operate in Thailand are considered the most significant. The 1966 Amity Treaty will soon be replaced by the Thailand-US Free Trade Area (FTA) agreement, scheduled to be unveiled at the October APEC summit in Bangkok. Existing privileges of the amity treaty will be extended to the new FTA agreement, and Thailand may even have to open up more of its services sector under the new agreement. The model for the Thai-US FTA agreement is the US-Singapore Free Trade Agreement, the first free trade agreement between the United States and an Asian nation. The Thai-US FTA agreement would be the 6th between the US and a foreign nation. In 2006, Thailand will be required to open up to all WTO member nations, as per WTO rules. Nevertheless, free trade talks have not yet been officially scheduled.

New Laws Aim to Control Compact Disc Piracy

In an attempt to further control the infringement of copyrights of compact discs, the Central Committee Governing Prices of Goods and Services has issued legal requirements for manufacturers and sellers of compact discs.

The regulations require all persons who possess machinery that could be used to illegally reproduce compact discs to report the quantity and location of said machinery. Furthermore, compact disc manufacturers must now submit monthly reports containing the quantity of manufactured product, the quantity they were contracted to manufacture, the quantity actually delivered, as well as the quantity remaining at the end of the month. The new requirements also will hold sellers of compact discs to greater levels of responsibility.

These additions to the Act Governing the Prices of Goods and Services were passed following a less than successful crack-down on pirated goods earlier in the year. At that time, the Commerce Ministry accused copyright owners and producers for not providing adequate assistance to state officials. Further, they claimed that some manufacturers were writing off up to 20% of their inventory as damaged goods, leading officials to suspect that manufacturers were distributing pirated goods.

Stock Exchange to End Corporate Tax Benefit

Following two years of reduced corporate income tax rates for new businesses listing on the SET, the exchange reported this May that it will voluntarily end the benefit. In 2001, the Finance Ministry agreed to allow companies listing on the SET to pay a corporate tax rate of 25% for 5 years following their listing approval; a tax rate 5% lower than the normal corporate rate. However, SET officials, citing other factors more important to businesses deciding on whether or not to go public, feel the reduced rates are no longer necessary. While the number of new listings on the SET and MAI (where businesses will no longer receive a 20% corporate tax rate) was lower than expected this year, officials point to SARS and the war in Iraq as major factors. With the tax incentives due to expire at the end of 2003, SET officials feel market atmosphere and sentiment will increase the number of new listings this year in time to profit from the existing benefits.

Rules for Reporting of Remuneration for Use of Copyrighted Music Specified

Because earlier regulations have been repealed regarding the issuance and control of granting rights to publish copyrighted music for trading purposes, new provisions were issued in June of this year.

These new regulations outline the requirements for the owners of copyrights, or their authorized agents, in regards to reporting their remunerations, costs, expenses, bases, procedures, and conditions for granting rights to publish their copyrighted music for trading purposes.

The new rules are specifically designed to make the collection of remuneration fair to the purchasers of said goods, namely operators of food shops, entertainment venues, hotels, and consumers. The provisions specifically require owners or their agents to report all the details of remuneration for each category of business in which they operate to the Secretary General of the Department of Internal Trade, Ministry of Commerce, 10 days prior to collecting any remuneration. Other information contained in the Act include instances whereby an owner may be granted an extension under special circumstances, and the method for reporting the required information.

Thailand Considers Ratifying Treaty to Restore Genetic Diversity in Crops

Thailand is considering ratifying the International Treaty on Plant Genetic Resources for Food and Agriculture, developed by the United Nations Food and Agriculture Organization. The goal of the treaty is to help farmers benefit by allowing them to share plant varieties from a pool of 64 foods, including maize, rice, and wheat, with other member nations. If the requisite number of nations sign on to ratify the treaty each member would contribute native plants to international gene banks for the use of other members. Furthermore, the treaty would prevent nations from claiming intellectual property rights on certain agricultural products that could be a benefit to farmers, particularly in developing nations. However, some in Thailand believe that the treaty would prevent the Kingdom from receiving benefits from its own genetic resources, namely cash crops such as rice, coconut, sweet potato, and cassava. A panel of Thai experts on agriculture is currently evaluating the costs and benefits of endorsing the treaty. As of May 2003, only 25 of the necessary 40 countries needed to ratify the treaty had signed on.

Protection of Indigenous Plant and Animal Strains in Dispute

The Commerce Ministry and the Natural Resources Ministry are at odds over the necessity of protecting indigenous plants and animals under the Geographical Indication (GI) Bill. The aim of the bill is to provide name protection for unique plant and animal strains in order to prevent imitations from sullying the reputations of the original products. The Natural Resources Ministry does not wish for certain Thai plants, such as jasmine rice, orchids, fruits, and herbs to be considered generic. Generic products would not be protected by the World Trade Organization's Trade-related Aspects of Intellectual Property Rights pact.

Price Increase for Visas and Residence Permits

As of August 26, the fees for visas and residence permits will increase substantially, in some instances tripling or quadrupling in price. Under the new fee structure a non-immigrant, single entry visa will cost 2,000 baht, and a multiple entry visa will cost 5,000. The fee for extending a visa will become 1,900 baht, while prices for single and multiple re-entry permits will rise to 1,000 and 3,800 baht respectively. Increases in charges for residence permits are as follows: application 7,600, approval 191,400 baht (95,700 for spouses and children of Thai nationals). However, individuals from the 39 countries who had been allowed a free 30 day tourist visa will be extended that privilege.

Amendment to Money Laundering Prevention Act to include Terrorism

The Money Laundering and Suppression Act B.E. 2542, Section 3 was amended in August, 2003 to include a new definition of a "basic offense". The 8th definition will now be: "Offenses relating to terrorism under the Penal Code." The inclusion is hoped to support enforcement of the Penal Code with regards to offenses relating to terrorism. The Royal Proclamation aims to bolster the security of the country by making it illegal to render financial support to terrorist organizations.

BoI Waives Export Rule

400 Board of Investment (BoI) promoted projects, primarily involving integrated circuit producers, will be able to sell more of their products locally after an April, 2003 BoI resolution waiving their 80% export requirements. The decision is in line with a WTO agreement that requires member nations to eliminate export subsidies. Under the agreement with the WTO, the BoI would have been required to rescind tax benefits for businesses exporting up to 80% of their products, but the BoI has negotiated with the WTO to procure an extension until 2005. Currently the BoI is considering waiving the requirements for other promoted projects, primarily electronics and other electrical related products. The BoI is also reviewing other privileges that are intended to extend beyond the new 2005 WTO deadline.

Foreign Land Ownership Extension Granted

The BoI has decided to extend the privilege initiated in 1997 that allows foreign investors to own land used for business offices and living residences. Originally intended to encourage development of industry in provincial areas, the privilege has resulted in the development of factories on over 10,000 rai of land and is considered to benefit business owners operating outside of urban areas who can build housing for their factory workers and themselves. The BoI has extended this benefit for an additional 5 years from April 2003.

New Zoning Prohibits Large Retailers from Opening in Town Centers

The Public Works and Town and Country Planning Department produced new rules for retail zoning in the 75 Thai provinces, excluding Bangkok. The new rules, passed in June, require large retail stores, ones with at least 1,000 square meters of retail space, to be built no closer than 15 kilometers from commercial town centers. The rules also specify the area of land these stores must occupy and the amount of setback and green space which surround them. Similar restrictions on plot size and setback were drafted for medium sized businesses, those with 300 to 1,000 square meters of space. In addition to specific zoning regulations, large retailers who wish to open such businesses will now require approval from a provincial planning subcommittee. Each committee will be chaired by the provincial governor and consist of 21 individuals, including members of the local chamber of commerce and the provincial branch of the Federation of Thai Industries.

Revenue Department Aims to Crack Down on Delinquent Taxpayers

In an effort to prevent delinquent taxpayers from hiding their assets, the Revenue Department is planning to create on-line links with local banks, to expedite the seizure of funds. Under the current system, a formal notification must be mailed to a taxpayers bank, allowing the taxpayer time to move their funds. The new system will allow the Revenue Department to e-mail the banks directly and send the formal notice afterward. In addition, the Land and Revenue Departments have initiated a new procedure that requires property sellers to pay taxes at the time of registering a transaction to prevent these individuals from later attempting to avoid paying such taxes.

Crooked Gem Shops May Face Closure

In an effort to protect both the image of the Thai gem trade and unsuspecting tourists, the government has targeted jewelry shops that are known to cheat visitors to Thailand. Plans were underway this summer to organize a special committee including members of the Tourist Police, the Revenue Department, the Anti-Money Laundering Office, and the Customs Department. Gem and jewelry shops that are repeat offenders are the main targets of the new initiative and will now be subject to assets seizure laws as well as anti-fraud and consumer protection laws. There are approximately 5-10 shops currently under watch and subject to asset seizure and permanent closure if found guilty again.

Study Concerning Post-1997 Crisis Economic Laws Completed

A government panel, organized to analyze the 11 economic laws initiated following the 1997 economic crisis, completed its study this past August. The panel concluded that, of the 11 laws, their recommendations for the future are centered around four principles. The four principles that the panel suggests the government focus on are in the following areas: privatization of state enterprises, bankruptcy, alien business, and land ownership.

They recommended that the corporatisation law be rescinded and replaced with one that boosts the efficiency of state enterprises. Further, it is the panels belief that state enterprises be separated into three categories. The first, containing industries such as utilities and railroads, must not be privatized. The second, including the telephone industry, may be privatized, but only up to 25%. The third, may be fully privatized.

In regards to bankruptcy law, the panel proposes that business rehabilitation be separate from bankruptcy so that financially lackluster businesses may recover more expeditiously, and that bad records should be cleared once businesses have fully rehabilitated.

The panels recommendations regarding alien business call for the government to put matters of national interest in front of those of foreign investors. This would include public hearings for large foreign investments in Thailand. Finally, the panel calls for land ownership laws to follow the lead of the new land reform policy.

Amendment to Penal Code outlines Terrorist Offenses

According to an amendment in the Penal Code, Section 7 now provides definitions for "Offenses Relating to Terrorism". Under Section 134/1 individuals who endanger or harm other individuals or their freedom, cause serious damage to public works or infrastructure, or cause economic damage to the property of a state or individual can be punished for committing terrorist acts. If any of the aforementioned actions are committed with the purpose of threatening the Thai or Foreign Governments or causing fear among the public an offender shall be punished with fines from sixty thousand to one million baht, and three years to life imprisonment or punishment of death. The amendment goes on to include other offenses relating to threats of terrorism, supporting or assisting terrorists, and even membership in known terrorist organizations as further criminal offenses.