The RPS will be set up to manage power projects with 250-300-megawatt biomass in Pattani, Yala and Narathiwat provinces.

Siri said that RPS will enhance cooperation of both PEA and Egat for higher work efficiency, particularly a balance between the main power transmission system and the power distribution system.

Patana Sangsriroujana, deputy governor for policy and planning at Egat, said that the operational pattern of this project must be discussed among stakeholders including the Ministry of Energy, Egat, Energy Policy and Planning Office, Department of Alternative Energy Development and Efficiency, Energy Regulatory Commission, Ministry of Interior, PEA, provincial governors, Southern Border Provinces Administration Centre and the Internal Security Operations Command to determine their respective roles in cooperation. This project will be forwarded to National Energy Policy Council to finalise the details.

RPS is jointly owned by Egat, 24.5 per cent; 24.5 per cent by PEA; and 51 per cent by community enterprises.

This comes in response to rumours that the National Legislative Assembly (NLA) may have proposed to postpone its legal enforcement to 2020. The bill is scheduled to come into effect in 2019.

Wisudhi said the Prime Minister wanted the drafted land and building tax bill to pass the NLA within his administration.

After it has come into effect on January 1, 2019, local administrative organisations will conduct a survey and tax collection will be made every April, Wisudhi said.

The eligible entities must notify the Director-General that they will use that functional currency to prepare their financial statements for tax purposes and to calculate their net profit, gross income and income tax payable or refundable.

The draft explains how eligible entities should transition to functional currency. Items in Thai baht in the entities’ financial statements (including currencies, assets and liabilities) on the last day of the accounting period before the transition must be converted to functional currency in accordance with accounting principles under the rules, methods and conditions prescribed by the Minister which has not yet been released.

Other items including losses carried forward must be converted by using the average of the buying and selling rates of commercial banks, as ascertained by the Bank of Thailand, for the last day of the accounting period before the transition to functional currency. Currencies, assets and liabilities that are received/acquired or spent/incurred during the accounting period and are not in functional currency must be converted into functional currency by using the market rate on the date of receipt or payment.

At the end of each accounting period, any currency, asset and liability balances that are not in functional currency must be converted into functional currency using one of two methods ie (1) The average of the buying and selling rates of commercial banks as ascertained by the Bank of Thailand or, if this is not viable (eg where converting a non-Thai currency into functional currency), another method approved by the Director-General. Once a method has been approved, any subsequent changes must also be approved by the Director-General. (2) Another method in compliance with accounting principles under the rules, methods and conditions prescribed by the Minister (has not yet been released).

For tax payment and refund, the eligible entities are still required to pay tax and will receive tax refund in Thai baht. The payment or refund amount must be converted from functional currency to Thai baht by using the average of the buying and selling rates of commercial banks, as ascertained by the Bank of Thailand, for the day before the date of the tax payment or the date of approval of the tax refund. In computing net taxable income for payment of tax, foreign exchange gains or losses from conversions to functional currency (or from changes between different functional currencies) will not be taxable income or deductible expenses.

The proposed amendments will be effective from 1 January 2019. This amendment may solve a number of problems faced by many entities using functional currency for accounting purposes.

Contributed by Benjamas Kullakattimas, Tax Partner, KPMG in Thailand

The Stock Exchange of Thailand (SET) Index started this year at 1,753.71 points before hitting 1,838.96 points, the year’s highest so far. After that, the SET has continued its corrections, falling 12.70 points to 1,622.28 points yesterday. Its market capitalisation has decreased from a high of Bt18.08 trillion to Bt16.5 trillion. A number of investors, who do not hold energy stocks, have suffered losses. Energy stocks have outperformed the market and helped sustain the SET Index and Reits, which have also outperformed the market with high dividends.

Investing in Reits is making investment in assets in forms of buildings, hotels or warehouses. Presently, there are 60 Reits, whose strength lies in high dividends, in the stock market.

From the beginning of this year, prices of Reits have declined slightly, while dividend yields have increased. Average return of Reits stays in a range of 6-7 per cent. Given declines in some Reits’ prices, their dividend yields have touched 8 per cent.

An anonymous trust manager expected Reits to have bright prospect as there are assets ready to raise capital in Thailand and investors will likely be attracted to Reits due to their higher return than bank deposits.

Aside from their regular return from asset rents, investors will earn more from higher prices of land where assets are situated. Typically, land prices continuously increase which will help add value to assets in the future.

Meanwhile, investors may have to consider types and quality of assets. For example, if assets are hotels, this type normally follows tourism festivals and are sensitive to political developments.

On the other front, the baht touched its weakest in seven months. Bank of Ayudhya’s Global Markets noted that the baht has depreciated faster and sharper than estimated, while investors continued selling emerging-market assets as the Federal Reserve signaled that it will raise its benchmark rates higher than market expectations while international trade conflicts tend to pressure stock markets across the world as well as emerging-market currencies, including the baht. The baht is expected to move in a range of 32.80-33.20 per US dollar, compared to last week’s close of 32.92 per US dollar, it said.

Excessive foreign exchange volatility may not give positive impacts to the business sector, while Thailand’s Monetary Policy Committee said after its decision to maintain the policy rate that the Fed’s rate hike and capital outflow have not yet affected the real economic sector, the research house said.

In fact, the world is about to change even faster by the second and this is not just about the speed at which disruption caused but also the acceleration in the pace of change.

To give you some astounding figures, Vala Afshar, chief digital evangelist at Salesforce tweeted last year that it took airplanes 68 years, the automobile 62 years, light bulbs 46 years, and television 22 years to hit the same user milestones. But YouTube, Facebook and Twitter hit that 50-million user mark in four, three and two years, respectively.

What’s the underlying implication from this information?

It shows that with the current disruptive trend, it’s not a matter of ‘if’, rather about ‘when’ that you should be worried about. As business leaders, it is absolutely critical in this age we live in that we understand the magnitude that disruption and change has on our businesses. For this, failure to keep up can cause dire effects.

An article from IBM suggests that the failure to keep up with technological trends can affect the way organisations react to the technological shifts in the marketplace. This can pose significant risks for businesses and jeopardise the organisation’s competitiveness or any future growth.

In our fast changing world today, how do we, as business leaders, keep up with the change? How can we harness these disruptive trends to create much needed business opportunities?

For this, I’d suggest that the starting point for every executive is to understand where their industry sits. Then, ask yourselves these following questions.

First, when was the last time you questioned or re-thought about your own business model?

In today’s world, the business model become radically different. It becomes much more complex and it relies heavily on sharing reward and massive cross-collaboration. Part of the reason is because people are living differently, their working habits, their lifestyles are greatly affected by advanced technology; hence, you cannot implement the same business model that was once beneficial when conditions are now changed.

Second, when was the last time you built a structure and corporate culture to accelerate innovation?

For innovation to happen, it is critical that leaders build a structure and culture that allows everyone to innovate, celebrate failures and learn from past mistakes because only those who never try, never fail.

Third, when was the last time you really tried understanding your markets and customers?

There’s no surprise that comfort zone can be tempting to stay in and so you would opt for running business as usual, but can such approach still apply in the disruptive world where everything is constantly changing at a fast pace. The answer is an obvious no; hence, you need to spend time trying to gain new market and customers insights in order to advance in today’s world.

Fourth, when was the last time you re-examined your customers’ journey?

Total customer experiences have become the unique selling point for a lot of companies as everyone desires for amazing experiences. We build our bucket lists based on what we think will give us the best experiences. So, when customer journey has become the determining factor, for companies the customer journey itself must be evaluated and changed overtime to fit with the changing conditions.

Fifth, when was the last time you leveraged and looked for opportunities from your ecosystem?

In the current business climate in which ecosystems and platforms form a greater role for our innovation outcomes by opening up boundless possibilities of interactions and exchanges, companies that can change their thinking and make the most of these offering benefits from ecosystems will likely to win more than others.

Lastly, when was the last time you inspect your customer dynamics?

In the so-called battle of attention era, we must become customer-obsessed. Not just ‘customer first’ as in the past but now we need to know our customer’s needs, passion and their ways of live. We need to put in a lot of effort in trying to understand and retain them. All in all, to take advantage of disruption, business leaders must deploy a comprehensive strategy – begin with having a growth mindset, then lead innovation with design thinking, empathise your customers to truly understand their needs to grow your businesses.

Arinya Talerngsri is Chief Capability Officer and Managing Director at SEAC (formerly APMGroup) Southeast Asia’s leading Executive, Leadership and Innovation Capability Development Center.

She can be reached by email at ARINYA_t@seasiacenter.com or https://www.linkedin.com/in/arinya-talerngsri-53b81aa

Chokedee Kaewsang, deputy secretary-general of the BOI, said that of the total overseas investment by Thai business operators, about 50 per cent have been in the Asean region. Vietnam is the top choice, followed by Myanmar and Cambodia.

Outside the region, Bangladesh is a popular investment destination for Thai companies, which are drawn to its large market, low wages and its gateway role for South Asia. In Africa, Thai investors like Kenya, Nigeria, South Africa and Sudan.

“Among Asean countries, Thailand comes third in overseas investment after Singapore and Malaysia,” Chokedee said.

The main reason for Thai investment overseas was to reduce production costs in wages and raw materials, while expanding markets. Thai investors, mostly large companies, have invested in the Europe and the United States to secure technologies.

Chokedee said that the BOI previously trained 479 SME operators, about 104 of which have established businesses overseas.

Of 104 Thai business overseas, 25 are in the food and processed agriculture sector, 14 are in the construction, decorative items and furniture sector, and 12 are in textiles and garments. Most of the investment has been directed to Asean countries including Vietnam, Myanmar, Cambodia, Indonesia and Laos, followed by South Asian countries including India, Bangladesh, and China.

According to the Bank of Thailand (BOT), in 2017, of total Thai direct investment overseas of Bt3.48 trillion, Bt1.03 trillion was made in Asean, led by Singapore (Bt628 billion), Vietnam (Bt107 billion) and Malaysia (Bt77.8 billion).

About Bt393 billion of total Thai direct investment overseas was made in the European Union (EU), led by the Netherlands and Britain, while Bt444 billion was in Japan, Bt242 billion in Hong Kong, Bt139 billion in mainland China, and Bt298 billion in the US.

In the first quarter of this year, of total Thai direct investment overseas of Bt724 billion, Bt198 billion was made in Asean, Bt120 billion in Japan, Bt60 billion in the EU, Bt57 billion in Hong Kong, Bt57 billion in the US and Bt27 billion in mainland China.

Don Nakornthab, BOT senior director, said that Thai private sector was likely to continue making investments overseas, taking advantage of economic recoveries. However, the investment amounts may be lower compared with the past one to two years.

“We see the upward trend but not much as we have seen relatively many big deals in the past one to two years. There may be no much chance to see such giant deals,” he said.

Naris Sathapholdeja, executive officer at TMB Analytics of TMB Bank, said that in the past one to two years, Thai business operators have made more overseas investment due to low returns on investment in Thailand in light of the weak economy.

Thai businesses have found investment opportunities in new markets, while seeking cheaper resources, raw materials and wages to reduce their production costs, he said.

From now, Thai investment overseas is expected to remain steady after improvement of the local economic recovery and easing political situation, which could attract Thai investors to invest and expand businesses more in the country. Naris cited the revised regulations to support business activities in the Eastern Economic Corridor (EEC).

Roongrote Rangsiyopash, president of Siam Cement Group (SCG), said that SCG’s Asean businesses in Asean accounts for a quarter of the group’s total businesses and the proportion is estimated to increase to 40-50 per cent of total income in no more than seven years. The company is Thailand’s largest industrial conglomerate,

Somporn Vongvuthipornchai, chief executive officer at PTT Exploration and Production (PTTEP), said that the company may have to increase its weight of overseas investment if it wins auctions for one or both local petroleum fields to be in line with the company’s 2025 business plan.

The regions that PTTEP focuses on are Asean, where it has production bases, and the Middle East.