The International Disputes in Thailand - Essay Example

International Disputes The international disputes in Thailand is the result of predominately, Muslim southern provinces. The separatist violence forced border closures due to control over Malaysia. Border surveillance has been enhanced in the Southeast Asian states, checking for the spread of the avian flu. In Mekong River, disputes have continued to arise in several islands, and this has halted the completion of the demarcation with Laos. Even though there have been talks about continuing the border committee, Thailand is in a continued battle with Karen, ethnic rebels, refugees, and illegal immigration. Economic System Thailand’s economic system is based primarily on exporting, which accounts for greater than two-thirds of the Gross Domestic Product (GDP). The exchange rate for exporting is Baht 33.00/USD. The GDP has an average worth of 8.5 trillion Baht, equivalent to $627 billion dollars. Thailand is classified as the second largest economic country in Southeast Asia. However, it ranks halfway in the spread of wealth in Southeast Asia, the fourth richest nation. Its economy supports neighboring, developing economies, such as Laos, Burma, and Cambodia. Thailand had a financial crisis in 1997-1998, forcing the country to depend on exports. Its economic system is influenced by the automotive and manufacturing of electronic good for exports. Thailand focuses on agriculture but has decreased due to exporting goods and services. Corporate Ownership Corporate Ownership in Thailand is established by registering as a Thai limited company. After registration, the registered applicant can acquire land. The structure of this ownership consists of a minimum of seven permanent, distinct shareholders. The director of the corporate ownership must be a foreigner. However, initially, the director is Thai because the Thai individual has to apply for a Tax ID and VAT registration for the company. In the Thai Law or Land Code, Thai nationals have at least 51% of the shares. A maximum of 49% of shares can be owned by foreign shareholders. This rule is also in the Land Code Prohibition of foreign land ownership. Since Thai Law does not restrict one share equaling one vote, the company is allowed to issue classified shares, which are the A-Shares or Ordinary Shares and the B-Shares or preferred Shares. The A-Shares or Ordinary Shares states that the holder of one share is entitled to one vote. However, the B-Shares or Preferred Shares state that only a shareholder of multiple shares obtains a vote. Foreign shareholders are assigned A-Shares, and B-Shares are assigned to Thai shareholders. The foreign minority shareholder has fewer shares but control of the voting rights. An off-shore entity, such as the British Virgin Island Company, can be used by foreign shareholders, since the shareholders of the Thai Company can be a natural or juristic individual. American Treaty Companies Even though there are specific rules in the Thai Majority Ownership, American citizens have been granted the option of establishing American Treaties. An old bilateral treaty that was negotiated during the colonial times in Thailand’s non-colony region when U.S. was an ally allowed for the establishment of American Treaties. The treaty was kept during the years of the Vietnam War. America was a major investor in Thailand. The American Treaty Company is more complex than a regular company, but it has common characteristics. The application of the treaty has been difficult to honor after it expired in 2004 because Thailand wants to discontinue the American Treaty Company and establish laws and regulations for foreign businesses. Little to no progress has been made in this effort. How do I register for the Treaty of Amity Benefits as an American Company? The registration of the Treaty of Amity Benefits as an American Company Application Process is as follows: The registration process begins by registering the business at the Ministry of Commerce. The applicant must obtain a “Certification Document” at the United States Commercial Service in Bangkok. The applicant must submit a “Certification Document” along with all required documents to the Ministry of Commerce. Patents Property rights are recognized in Thailand based on three categories: Patents, Copyrights, and Trademarks. Patients were established in Thailand in 1979, and it was amended in 1992. The purpose of the Patent Act is to protect inventions, product designs, and pharmaceuticals. A new intellectual property and international trade court was established in 1997 to improve enforcement of patents and trademarks. The appeals division at the trademark and patent offices has improved their procedures to greatly improve the enforcement of trademarks and patents. Copyrights © Works Subject to Copyright The copyright Act of 1994 was designed to protect literary work, artistic work, and performance rights. The act made it unlawful to reproduce or publish copyrighted works without consent from the owner. Copyright is defined as having an exclusive or sole right in the work created by the inventor. The works subject to copyright protection is literary work, such as computer programs, dramatic, artistic, and musical work, such as audiovisual material, cinematic film, recorded material, disseminated pictures or sound, and works in the field of literature, science, or fine arts. Computer software is protected against reproduction, publicity, and rental. Algorithm formulas do not have protection under copyright laws. Trademarks ™ Registration Procedure & Period The Trademark Act of Thailand of 1991 governs the registration and protection of trademarks. A trademark is a symbol used with goods to show that the goods belong to the owner. The trademark is distinctive from other registered trademarks. In Thai, a trademark application must be completed by the proprietor or agent. It must be filed on official forms with the Trademark Office. The information included must be the place of business or address in Thailand for contacting purposing by the Trademark Office. The trademark is granted by the Trademark Registrar if no dispute arises within 90 days of publication in the official journal. The registration period is for ten years. A renewal application is required within 90 days of the expiration date of the trademark. The renewal is for ten years. Certification Marks In order to apply for certification marks, the applicant must attach a copy of the regulations for the use of the certification mark and an application for registration. However, the applicant must be qualified for the certification of the requested goods or services. The owner who is granted registration for the certification mark cannot use it for personal purposes on goods or services. The owner cannot license a third party to grant certifications to use the certification mark. However, they can grant the third party to use the certification mark assigned to the owner. Violation of this rule results in a maximum fine of 20,000 baht. The owner must state the origin, composition, manufacturing process, quality, and the various characteristics of the goods and services. The owner must state the rules, procedures, and conditions for granting a license to use the certification mark. Information and Communication Technology The information and communication technology is recognized by the Thai government by having an important role in enhancing economic productivity and transforming Thailand into a knowledge-based society. In 2007, the Constitution of Thailand addressed the Information and Communication Technology, telecommunications, broadcasting, and innovation issues. In 2007, the Computer-Related Crime Act was designed to produce a safer internet environment for citizens. The second information and communication technology plan for 2009-2013 for Thailand is in the drafting stage. The challenge faced with the development of this plan is the establishment of a fair and competent regulatory body that will help telecommunications and broadcasting, enclosing the digital divide, and building confidence for e-commerce. Business “Law” of Interest Taxation The Corporate Income Tax is a direct tax rate imposed on a juristic company or partnership established within the guidelines of Thailand or foreign law. The company or partnership has business relations in Thailand, resulting in acquiring income from Thailand. A Thailand company is taxed under the Law of Thailand. The taxes are levied based on a 12 month, accounting period. However, a foreign company that engages in international transport has to pay taxes on its’ gross tax receipts. The Corporate Income Tax of a company in Thailand that has business relations is taxed based on the company’s net profit, taxed on an accruing basis. One half of dividend incomes are excluded from Thai taxation if the income comes from another Thai company. When calculating Corporate Income Tax, the deductible expenses are as follows: A special rate is allowed on ordinary and necessary expenses. The rate is a 200% deduction of the Research and Development Expense, job training expense, and expenditures on provisions of equipment designed for the disabled. Interest is deductible as long as it is not interest on company, capital reserves or funds. Taxes are deductible, excluding tax for Corporate Income Tax and Value Added Tax that is paid to Thailand’s government. Net losses are deductible from the last five accounting periods. Bad debt is deductible. Wear and tear is deductible. 2% of net profit donations are deductible. Provident fund contributions are deductible. 0.3% of gross receipts of entertainment expenses are deductible. This should not exceed ten million Baht. Public donations for public education institutions are deductible as well as maintenance for public parks, playgrounds, and sport grounds. Customs Duties The customs duties are regulated by the Customs Tariff Decree of 1987. This decree amended previous tariff codes. It was designed to conform to the Harmonized System of the Customs Cooperation Council. The tariff duties imposed on goods are levied based on the ad valorem or specific rate basis. The majority businesses, imported goods are subject to rates that range between 0 and 80%. The majority of articles that are imported are subject to a tariff duty and a VAT or Value Added Tax. The duty is included in the value of the goods with reference to the CIP price. The Value Added Tax is levied based on the total sum of the CIF value, duty, and excise tax. Re-exporting imported goods are exempt from the import duty and Value Added Tax. The following items have duties imposed: rice, hides, skins, leather, scrap iron and steel, rubber or latex, rubber waste, tree and lump scraps, earth rubber, rubber tree bark shavings, and teak and various woods. Upon judgment, the Minister of Finance can lower the tariff duties with the Cabinet’s approval. Two exceptions are made for the obligation to pay customs duties, applying to the importation of machinery, equipment, materials for use by oil and gas concessionaires and their contractors, and the Board of Investment promoted companies. The BOI’s Investment Promotion Program makes provisions for the BOI-promoted companies that are eligible to receive exemptions or reductions from import duties on raw and essential material and machinery. Companies belonging to the BOI’s Investor Club Association or IC have eligibility to use the IC’s Raw Materials Tracking System or RMTS, and the Machinery Tracking System or MCTS. The release of the raw materials and machinery totals three hours or less if companies take advantage of using this service. Board of Investment (BOI) The Board of Investment was designed to promote investments in Thailand. It grants privileges to local companies as well as foreign businesses that plan on incorporating a business under the Thai Law based on select activities. Eligibility requirements may be granted permission by the Ministry of Commerce or concerned government agencies. The eligible activities and industries for promotion include the following: It controls and advertises affiliated companies. It promotes all types of consulting services expect buying and selling securities, foreign currency exchange, accounting, advertising, legal affairs, architecture, and civil engineering. It promotes information services that relates to source and procurement as oppose to brokerages or agencies. It promotes engineering and technical services except architecture and civil engineering. It promotes testing and certifying standards of products, production, and service standards. It promotes exporting all types of products. It promotes all product types of wholesaling in the country except local agriculture products, second-hand products, arts and crafts, antiques, and natural resources. It promotes wholesaling and retailing machinery, engines, tools, and equipment. It promotes the provision of training on using machinery, engines, tools, and equipment. It promotes the installation, maintenance, and repair of machinery, engines, tools, and equipment. It promotes the calibration of machinery, engines, tools, and equipment. It promotes computer software program, design, and development. Projects that have direct involvement in technological and human resource development are according to the following: Research and development Scientific laboratories Calibration services Human resource development Infrastructure, public utilities and basic services, specifically the following Public utilities and basic services Mass transit systems and transportation of bulk goods Environmental protection and conservation in Industrial zones for environmental preservation and Waste water treatment, disposal services of refuse, industrial waste or toxic chemicals Targeted industries are in the following: Manufacture of steel casting using induction furnace Manufacture of forged steel parts Manufacture of machinery and equipment are in the following areas: Manufacture of molds and dies and parts Manufacture of jigs and fixtures Manufacture of industrial machinery is as the following: Turning Machines Drilling Machines Milling Machines Grinding Machines Machine Centers Gear Cutting & Finish Machines Die Sinking EDMs Wire EDMs Laser Beam Machines Plasma Arc Cutting Machines Electron Beam Machines Broaching Machines ASEAN The Association of Southeast Asian Nations or ASEAN is a geographical-political and economic organization, consisting of ten countries that are located in Southeast Asia. It was formed on August 8, 1967 by Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Since the formation of the ASEAN, the membership has increased, and it now includes Brunei, Burma or Myanmar, Cambodia, Laos, and Vietnam. The mission of the organization is to increase economic growth, social progress, cultural development among members, protection of peace and stability in the region, and provide peaceful discussions of member countries’ discrepancies. What is the Free Trade Area (FTA)? The Free Trade Area or FTA is a second instance of favored trading arrangement. Economic integration consists of the following five forms: Preferential Tariff Arrangement, Free Trade Area, Customs Union, Common Market, and Economic Union. In order to adopt the free trade area agreement, member countries have to remove tariff and non-tariff trade barriers. They must continue to individually establish their own trade barriers with non-member countries. Intra-regional trade and reducing dependence from outside the regions is an expectation of this agreement. Foreign direct investors will hold the interest of free trade area members due to the expansion of the market. The foreign direct investors have a choice of establishing plants in the region to produce products for the regional consumer market. What are the Impacts of the Free Trade Act? The impacts of the Free Trade Act will cause regional trade arrangements to affect the national welfare of countries that participate. Static effects that are measured on the basis of increasing the effectiveness of production and the means of the impact of dynamic effects on the overall national welfare have to be combined to determine the economic impact of regional trade block on member countries. What is the ASEAN Free Trade Area (AFTA)? With the agreement to the establishment of an ASEAN Free Trade Area (AFTA), the regional trade development of the Association of the Southeast Asian Nation (ASEAN) is moving forward. Thailand’s former Prime Minister, Mr. Anand Panyarachun, proposed the establishment of this agreement. It was signed in 1992 during the fourth ASEAN Summit Meeting in Singapore. The current international economic situation of Thailand has sparked the free trade area as an interesting issue, since the signing of the ASEAN Free Trade Area (AFTA) agreement in 1992. What is the Common Effective Preferential Tariff (CEPT)? The Common Effective Preferential Tariff or CEPT is known as the main agreement of the AFTA. It has stipulations on its member countries to reduce tariffs among the members and goods traded in the Southeast Asian region. This is an effort of meeting the 40% ASEAN local content requirement. The members of the CEPT organization are Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Laos, Myanmar, and Cambodia. The United States-Thailand Free Trade Agreement In 2004, The United States and Thailand established negotiations for a Free Trade agreement. However, the negotiations were suspended in 2006 because of the dissolution of the Thai Parliament and military-led coup. The United States and Thailand official have continued to discuss the bilateral issues even though the negotiations for the FTA are suspended. They have continued to discuss ideas to advance the World Trade Organization Doha negotiations and the APEC and ASEAN agendas. In June 2008, informal consultations and formal dialogue regarding trade and investment issues was held in Washington D.C, and informal meetings were held in Washington D.C. in March 2009. Reference Archieves. The Impacts of the ASEAN Free Trade Area on Thailand. Retrieved from http://www.thailandoutlook.com/thailandoutlook1/top+menu/special+topic/The+Impacts+of+the+ASEAN+Free+Trade+Area+on+Thailand.htm Archieves. What is AFTA? Retrieved from http://www.thailandoutlook.com/thailandoutlook1/top+menu/special+topic/WHAT+IS+AFTA.htm Business-in-Asia.com. Updates: Thailands Free Trade Agreements with Asian Countries. Retrieved from http://www.business-in-asia.com/asia/fta_thailand.html Koanantakool, Thaweesak., Udomvitid, Kalaya., and Thuvasethakul, Chadamas. The International Development Research Centre: Science of Humanity. Retrieved from http://www.idrc.ca/en/ev-140997-201-1-DO_TOPIC.html NationMaster.com. Government. Retrieved from http://www.nationmaster.com/country/th-thailand/gov-government Office of the United States Trade Representative: Executive Office Of The President. Thailand. Retrieved from http://www.ustr.gov/countries-regions/southeast-asia-pacific/thailand Saim Legal. Thailand’s Largest Legal Service Network. Retrieved from www.siam-legal.com Thailand Board of Investment. Eligible Activities. Retrieved from http://www.boi.go.th/english/about/eligible_activities.asp Thailand Board of Investment. Patents, Trademarks, Consumer Protection. Retrieved from http://www.boi.go.th/english/how/patents_trademarks_consumer_protection.asp Thailand Board of Investment. Taxation in Thailand. Retrieved from http://www.boi.go.th/english/how/taxation.asp Wikipedia: The Free Encyclopedia. Economy of Thailand. Retrieved from en.wikipedia.org/wiki/Economy_of_Thailand World Map Maker. International Relations with Thailand. Retrieved from http://www.worldmapmaker.com/countries/thailand/international-relations Wikipedia: The Free Encyclopedia. ASEAN. Retrieved from http://en.wikipedia.org/wiki/ASEAN Read More