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Copyright SGA 2001

Monopoly Gets A New Definition

Pursuant to changes to be presented in Thailand's competition law, businesses who control a 50% or greater share in their respective markets will be considered a monopoly if their annual sales generate more than one billion baht. Under the earlier version of the Act, the definition of a dominant business was one with a 33.33% share in its market and one billion baht in sales, but such definition was never formally approved by the previous government. With the implementation of the 50% market share requirement significantly less businesses would be subject to the effect of the Act. The new law still requires ministry and cabinet approval.

Only operators in the industrial, commercial and agricultural sectors will be affected and not the service sector. Companies meeting the new criteria would be subject to regular scrutiny by the Trade Competition Board. Penalties include up to three years in jail and/or a six-million-baht fine. The Ministerial announcement was made in late August 2001.

Private Telecom Operators Worried Over Bill

On October 10, 2001, the House of Representatives passed the heavily criticized telecommunications service bill. The bill passed in a 276-76 vote despite concerns of private telecom operators who fear small operators will vanish from the industry.

The outcome of the vote allows for the bill to be submitted by Prime Minister Thaksin Shinawatra to His Majesty the King for signature within 20 days. Once the bill has been signed it will then be announced in the Royal Gazette becoming effective in 90 days.

The new law will limit foreign shareholdings in telecommunications companies to 25%. One aspect of the new law that remains unclear is whether the 25% restriction applies to operators already in existence. Under the new law, telecom operators must change their concession contracts and then reapply to the National Telecommunications Commission.

It is widely accepted that foreign shareholders hold more than 25% in most Thailand based telecommunications enterprises. Concerns were also raised that the passage of the bill would conflict with Thailand obligations for trade liberalization under the World Trade Organization.

Companies Decline To Participate In TAMC Program

The first lot of a total of 900 billion baht worth of bad loans was expected to be transferred to the Thai Asset Management Corp in mid-October with the remainder to be transferred by the end of 2001.

Although eligible to participate, twelve financial institutions including, UOB Radanasin, Standard Chartered Nakornthon, Kiatnakin Finance have declined to participate in the TAMC program. These twelve institutions had a total of 38.8 billion baht in bad loans eligible for transfer.

The TAMC is also considering establishing a separate property fund for TAMC assets according to Finance Minister Somkid Jatusripitak.

In related news, a two-year extension has been given for tax exemptions for asset transfers relating to debt restructuring up to the end of 2003.

The central bank's Corporate Debt Restructuring Advisory Committee (CDRAC) estimates that it has assisted in restructuring1,013 large cases with debts totaling 128.7 billion baht.

Parliamentary Approval For
E-Transaction Law

Parliamentary approval has been given to the Electronic Transaction Law and the law is expected to be enforced in February 2002. There are concerns being voiced regarding the power to be vested in an Electronic Transaction Committee.

According to the National Electronics and Computer Technology Center (NECTEC) the bill is now awaiting the signature of His Majesty the King becoming law 120 days after being announced in the Royal Gazette.

The Juridicial Council has drafted a decree establishing which types of transactions will be excluded from the law. The new law will apply to all civil and commercial transactions using electronic data unless otherwise stated in the Royal Decree.

The bill would also apply to transactions with government agencies. NECTEC would work with government agencies to update regulations to conform to the new law. A 12 member Electronic Transaction Committee will be established to oversee the governmental policy and regulation of electronic transactions.

Critics of the government have suggested that the Committee's mandate was too broad and jeopardized principles of free trade and an open market economy.

Taxes Eased For Foreign Investors

In December news, Thailand's Finance Minister announced wide ranging tax breaks and incentives for the purpose of attracting foreign companies to set up regional headquarters in Thailand. According to Mr. Jatusripitak the package offers sweeping incentives surpassing benefits offered by Singapore and Malaysia.

Under the new measure, regional headquarters operating in Thailand will qualify for a 10% corporate tax rate, just one-third of the standard rate currently charged.

A waiver will be offered regarding taxes on dividends paid to the headquarters by domestic and foreign subsidiaries.

Also waived would be taxes on dividends paid by the headquarters to its overseas parent firm 25% of the investment cost can also be charged immediately by regional operating headquarters for depreciation on fixed assets.

TAX Incentives For Foreign Film Makers

According to an October press release, the Revenue Department will propose tax incentives to foreign filmmakers to promote tourism and attract more foreign film production in Thailand. Pursuant to the new proposals, the taxable earnings of foreign actors will be given a ceiling. The department collects taxes at rates between 5% and 37% currently, which is the same rate applied to all personal incomes.

The Revenue Department is also considering a new scheme of tax rebates for tourists which is intended to boost tourism.

According to the Revenue Department, tax cuts will also be given to local companies who incur expenses in organizing seminars for their employees.

Disclosure Violates The Right of Debtors

Amid criticism of the lack of transparency in the government run Thai Asset Management Corporation (TAMC) a spokesperson of the TAMC asserted in October 2001 that the names of debtors whose loans are transferred to the Thai Asset Management Corporation (TAMC) would not be made public because it would violate their rights.

Economists had earlier expressed concerns that the state-owned TAMC might experience meddling and political pressure from those with vested interests. However TAMC's spokesperson stated that the TAMC organization was in good order and was subject to rigorous examination by an auditor committee appointed by the TAMC board.

The first tranche of non-performing loans, estimated to be 300 billion baht will be transferred to the AMC on 15 October 2001. TAMC spokesperson stated that it would take about two years to know which business will be liquidated and which may survive.

New Statute Allows Accused Compensation

Under a new statute taking effect in November 2001, persons accused of a crime may be entitled to compensation for damages incurred to them at the hands of the government. The new law allows for persons hurt or injured to be recompensed for their damages based on wrongful actions of the government.

The new law would also allow for those acquitted of a crime to sue for lost earnings, compensation for time while incarcerated and legal expenses.

Visa On Arrival Law Changes

Cabinet has agreed to keep China and India on the list of countries with the visa-on-arrival privilege and remove Russia and Uzbekistan from it. Russia and Uzbekistan are among 79 countries to be removed from the list, bringing the number down to just 17 from 96.The measure is being introduced to curb widespread crimes by foreigners and prevent terrorism. The removal of Russia and Uzbekistan is based on information their citizens were linked with illegal activities such as prostitution and forgery. Those countries to be cut will be announced shortly.

New Fines for Failure to send in Year end Financials

New Rules have been put in effect beginning May 2001 and issued by the Commercial Registration Department require juristic persons to file their balance sheets with the Department within five months of the end of the financial year or risk increased fines of up to 50,000 Baht.

New BOT Rules on Reporting Foreign Exchanges

Bank of Thailand has set out new and more stringent regulations concerning incoming money transactions to Thailand from abroad. Under the new rules incoming money in excess of 5,000 USD to be used in a number of specified purposes must be reported to the Bank of Thailand. Additionally, incoming baht transactions or transaction originating from foreign baht accounts may have similar restrictions. The intent of the law is to control foreign exchange speculation and other abuses. Bank customers have reportedly been aggrieved by the additional paperwork.

Expat Corner

Expatriate reports indicate that it seems easier to get a non-immigrant "B" visa the farther you are away from Thailand and the richer the country is. Whereas in the past all that was needed was an employer letter, embassies and consulates in countries contiguous with Thailand have been increasingly strict about issuing B visas. The recent crackdown has reportedly been attributed to the September 11 tragedy in America.

Reports from the Thailand Embassy in Laos suggest that officials there are being increasingly difficult about issuing non-B visas. Officials have denied requests for non-B visas based on Company registration papers that are not complete. In sme cases, officials have reportedly also requested copies of lease documents to prove a business is actually in existence.

Penang has been reported to be requesting a work permit if you want a multiple "B" visa. If you own a limited partnership or company, Penang may issue you only with a single entry non immigrant B visa if your able to establish ownership in a company or limited partnership. Visa seekers are advised to bring complete sets of papers along with their company stamp.

Travelers Must Claim Money Over US$10,000

Under new draft rules pursuant to the Money Laundering Act issued in late November, travelers in and out of Thailand will soon have to report amounts of money exceeding US$10,000 cash in foreign currency to customs officials or risk having those funds seized. According to a representative of the Money Laundering Commission, a declaration was compulsory under a new rule of the commission and the Finance Ministry. Currently, the draft is awaiting endorsement by the Finance Minister.

Presently, no restrictions exist concerning the amounts of foreign currency cash a foreigner may take in and out of Thailand. Conversely, 50,000 baht remains the maximum amount of Thailand currency that persons may take out of the country (except for travel to Burma, Laos, Cambodia and Malaysia which have a higher maximum).