New Income TAX in Thailand & New Investments in

Thailand

The NCPO has gone along with recommendations to maintain the reduced VAT, corporate and personal income taxes for another year to boost the economy. The rates, which will see the VAT remain at 7%, the corporate income tax topped at 20% and the personal income tax remain divided into 7 rates; 5, 10, 15, 20, 25, 30 and 37 percent depending on the income of the taxpayer, this is changed from the old taxation rate of 7 levels and will help the majority low income-earners to pay less tax than before. Additionally the NCPO also acknowledged an agreement between the Mass Rapid Transit Authority and BTS Skytrain to maintain the fares of the Chalermratchamongkok route of the MRT service at a minimum of 16 baht up to a maximum of 40 baht for a trip.

The Stock Exchange of Thailand reached a record high of 1,504.91 for the year and closed the week out positive at 1,495.83. The all-time high was 1,639.49 on May, 5, 2013. The Construction Services Sector gained the most percentage-wise while the Food & Beverage sector saw the biggest points gain, reaching 11,759.01, or a 1.98% increase.

 The National Council for Peace and Order (NCPO) will be implementing several measures to boost GDP to 2% this year, up from the 1.5% predicted by the Bank of Thailand. These measures include accelerating investment on state projects which have been delayed or incomplete during the second half of 2014, and ensuring ministries implement projects that projects that have been approved and budget investment amounting about 50 billion baht remains. The water management program to prevent floods could see its budget increased by another 50 billion baht to spend this year and next, and the NCPO has given the green light on on some state projects which would require investments ranging between 100 million to 10 billion baht. Projects that have encountered serious problems will need to be revised so they can be implemented. The government also plans on assisting entrepreneurs struggling under the slow economy by asking government-run banks including the Government Savings Bank (GSB), the Bank for Agriculture and Agricultural Cooperatives (BAAC), and the SME Bank to provide soft loans and help solve bad debt issues.

South Korean businesses have reassured the government that they plan to continue investment in Thailand citing increased political stability and the NCPO’s push for transparency in the government and budget processes as encouraging factors for further investment. South Korea is Thailand’s 10th largest trading partner with bilateral trade amounting to US$ 14 billion; both countries have been aiming to push the value of bilateral trade to US$ 30 billion by 2016. Qatar has also expressed confidence in investing in Thailand as the country’s ambassador recently met with NCPO representatives to discuss offering oil expertise as well as energy sources and increasing trade and investment between the two countries.

The Centre for Economics and Business Forecasting of the Thai Chamber of Commerce reported last week that consumer confidence reached an 8 month high in June at 75.1 on the index citing increasing political and economic stability. The Centre projects that consumer spending will increase during the second half as payments to rice farmers will increase nationwide purchasing power and increased spending boosted by the World Cup 2014. The Centre’s Director predicts that economic growth could reach 5% next year.

The International Institute for Trade and Development (ITD) sees Thailand as one of the top five countries that can expect rising foreign direct investment (FDI) after AEC integration next year. The think tank said that Thailand should see rising investment with the implementation of the ASEAN Economic Community but needs to upgrade its soft infrastructure, specifically noting that the country would greatly benefit by an online customs system that would integrate with neighboring countries, implementation on rules and regulations on soft logistics and removal of uncompetitive trade incentives. Thailand fell last year on FDI due to political instability but Thailand still recorded US$13 billion in foreign direct investment and is expected to see continuous growth once the AEC is in place. Singapore led the region at $64 billion, Indonesia came second at $19 billion, Thailand third at $13 billion and Malaysia fourth at $12 billion. FDI inflows into South East Asia rose 7% year on year to $125 billion from $118 billion.

 

Thailand’s corruption index saw the first marked improvement in the first six months of this year for the first time in five years, the Economic and Business Forecast Centre of the University of Thai Chamber of Commerce recently reported. The score, of 46 out of 100, was based in part because under-the-table payment to officials and politicians by the private sector to secure procurement or development projects had declined to 15-25% of the project costs from an average of 25-35% previously. Additionally the survey was conducted when the National Council for Peace and Order began their cleanup campaign to get rid of corruption and all unlawful activities such as illegal parking by mini vans and increased examination of corrupt practices. The survey showed that 20.8 % of the corruption reported was in bribes and rewards while 13.8% in the form of was financial benefits paid in return for benefits.

 

The Department of Tourism has noted a rise in tourist arrivals after the removal of the curfew, particularly from China and now forecasts that tourist arrivals will rise to 26 million people and tourism revenue will jump to 1.9 trillion baht revenue this year in part due to the promotion “Thais travel Thailand” campaign boosting domestic tourism. The director of the Airports of Thailand (AOT) estimates that the number of passengers and flights will most likely increase by about 4.2% in 2014 and confirmed plans to speed up the second development phase of Suvarnabhumi International Airport that has already been planned. The number of international passengers dropped by 1.84% from October 2013 – May 2014 but total passengers using the six airports under the AOT increased by 4.2% to 60,342,046 people. Of that number, 24,584,953 people were domestic passengers while the other 35,757,093 were international passengers. The total number of flights increased to 419,363 but the AOT sees that number continuing to increase and so is pushing the expansion of Suvarnabhmi International Airport.

 

Although the Bank of Thailand sees export recovery as slower than previously expected it is still confident that Thailand’s economy will see a return to is growth potential by 2015, the export recovery is slowed by the economic slowdown in countries such as China, Japan and ASEAN although exports to the U.S. and EU are still doing well. The BOT believes that the return of government spending and political stability will boost the economy along with planned infrastructure projects. The BOT sees the approval of delayed BOI projects, lack of financial constraints, and appropriate interest rates will also contribute to the rise of investment in the second half of this year. The Bank has raised its projection of Thailand’s

2015 GDP growth from 4.8% to 5.5% in line with the country’s average potential annual growth of 5%.

 

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