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Copyright SGA 2003

Rice, Silk, Wine, and Liquor Subject to Specific Geographic Origin Registration

Early in July 2004 new ministerial regulations were enacted regarding protection for goods from specific geographic origins. Rice, silk, wine, and liquor which have identical or similar geographic indications as products already registered, as well as those products which are already registered but are from different geographic origins, must clearly specify the geographic origin and country of manufacture at the end of their geographic indication. The regulations govern the rules for both applying for registration and protesting against previously registered goods. Submissions must be made to the Department of Intellectual Property, Ministry of Commerce or relevant Provincial Commercial Office. In evaluating applications, the Ministry will evaluate, among other things, details concerning quality, reputation, relationship between the goods and the geographic origin, and location of the geographic origin.

Cabinet Rejects Definition of "Dominant Player" for Trade Competition Purposes

After the Trade Competition Board agreed upon a new definition for "dominant player" in May 2004, a cabinet screening committee subsequently rejected the definition in mid July. The new definition would have raised the market share requirement from 33% to 50% for individual companies and up to 75% for any three separate companies combined. The reason behind the denial was its potential to limit the growth of large companies and state enterprises. An official from the Trade Department conceded that the business environment had changed since the Trade Competition took affect in 1999. However, without a clear definition of "dominant player" there is expected to be continued difficulty enforcing the law against large companies that unfairly impair competition as a result of their strong market position.

Thailand's Agricultural Commodity Futures Market Open for Trading

After more than 10 years of planning, on May 28, 2004 Thailand's first agricultural commodity futures market opened for trading. The main objectives of the futures market is modernizing and strengthening farming as well as encouraging farmers to reduce risk by diversifying their crop output. The first commodities to be traded are rice and rubber, while tapioca and shrimp are slated to be listed soon.

New Regulations for Damages Related to Personal Injury in Vehicle Accidents

New ministerial regulations were passed in May that fix preliminary damages that can be paid to individuals injured in vehicle accidents. According to the regulations, some of the types of costs that would be entitled to preliminary damages include medical expenses, examinations, fees for machines used in treatment (including organ transplants), room and food, and transportation to the medical facility where treatment was provided. The regulations place a 15,000 baht cap on the amount that can be awarded for bodily injury and 50,000 baht in the event of loss of life for preliminary damages.

Corporate Tax Incentives to be Extended Indefinitely

In an effort to keep Thailand competitive with neighboring countries the Board of Investment (BoI) considered in May 2004 to extend its current corporate tax breaks from 8 to 10 years. In June it appeared that the corporate tax waiver would be extended indefinitely. A BoI representative, citing neighboring countries' flexibility in providing foreign investors with favorable tax conditions believes that the current Thai regulations are insufficient. While the Thai government now gives tax breaks for investors in specified areas, the new plans are designed to promote incentives in other regions of Thailand so as to coincide with the government's current initiative to develop outlying areas of the countryside. By deciding to extend the tax breaks indefinitely on a case by case basis with a consideration for the business venture's potential benefit for the country the BoI believes it will have greater flexibly to lure foreign investors who are currently drawn to the 20 year periods granted by China, Singapore, and Malaysia.

"Hollywood of Asia" Proposed via Incentive Package.

In an effort to promote Thailand as the "Hollywood of Asia" the Board of Investment (BoI) has agreed to a new film related incentive package. Thailand's movie industry is expected to draw nearly 40 billion dollars in new investment this year and the new incentives may increase that amount up to 25% more. The plan calls for including the industry in its corporate tax waiver program and waiving import duty on equipment used for filmmaking. In order to qualify for the current waivers documentary, feature film, commercial, and animation projects must be made at a studio with both indoors and outdoors facilities that include post-production. An eight billion baht joint venture by Australian producer RGM group (whose credits include Lord of the Rings) and Thailand's Kantana Group is expected to be one of the first to qualify under the plan.

Local Rubber Producers may Receive Tax Benefits

In June 2004, the Thailand Rubber Association had succeeded in convincing the Board of Investment (BoI) to discuss providing the Thai rubber industry with tax breaks in order to maintain the its competitiveness. The association had originally petitioned the government to end tax incentives to foreign businesses operating in the rubber business. The situation has appeared to worsen for local producers as two foreign tire makers have decided to produce their own rubber in Thailand rather than continue to purchase the materials from Thai sources. While Thailand is currently the world's largest rubber exporter, the rubber association warns of potential production cuts and factory closings. As a result the BoI is considering extending tax privileges to local rubber producers.

Regulations Enacted as Guidelines for Foreign Banks to Set Up Thai Subsidiaries

On May 27, 2004 The Ministry of Finance passed ministerial regulations regarding foreign banks that desire to establish subsidiary commercial banks in Thailand. The regulations specify that foreign banks may apply for permission to set up subsidiary companies in the form of commercial banks under certain guidelines that fall under the Commercial Banking Act (No. 2) B.E. 2522 (1979). In particular, the regulations provide for the specifications for foreign banks that wish to either set up a branch in Thailand to operate commercial banking operations or to open and operate international banking facilities in the Kingdom.

Packaging Waste Management Law Under Development

In response to increasing levels of trash produced in the Kingdom, researchers at Chulalongkorn University have been commissioned by the Pollution Control Department to draft a packaging waste management law. As approximately 30% of Thailand's 14.5 million tons of annual garbage are a result of packaging materials, the government hopes to encourage both producers and consumers to contribute to a reduction and recycling oriented program. Manufacturers would be lured by tax relief and investment incentives to use more disposable materials, take back packaging materials, and/or dispose of those materials. Consumers would be required to sort plastic and foam in order to facilitate recycling. Models for the proposed concept are European countries, the United States, and Japan.

Financial Requirements Raised for Foreigners Extending One-Year Visas

Expatriates married to Thai citizens and those who are legal guardians of Thai children are now subject to new financial regulations when applying for one-year extensions to stay in Thailand. Previously the requirement was providing proof of 200,000 baht deposited in a bank account or an income of 20,000 baht per month. As of June 10, 2004 the rates doubled to 400,000 in the bank or 40,000 per month income. The new regulations apply to new applicants as well as those who are applying for renewals. In addition, authorities made it clear that the requirements of the bank deposit or income are separate, and that only one of the two qualifications need to be met. Finally, authorities claim to be focused on checking bank records of individuals who appear to have suspicious looking bank activity, but claim that innocent people should have little difficulty with their applications.

New Tax Law Designed to Boost Local Government Revenues

A new tax law, proposed in June 2004, is expected to be submitted to Parliament soon. The new tax framework that would include schools, land, and buildings could expand tax revenue from 25 billion baht to 90 billion baht per year within 5 years. The major change to the framework would be to compel residents that depend on public services to pay taxes. School and land taxes would now be required for all residents, set at a maximum rate of .1% of the value of the land or building, and property left unused for more than three years would be subject to higher rates. According to government officials, a major aim of the new tax code would be to increase revenues for local governments while reducing the burden on the central government.