At a conference on Monday called “US-Myanmar Economic Relations: The Next Phase”, Maung Maung |Lay, vice president of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), said Myanmar was in a new era. A newly elected government is now setting people-centred policies, promoting good governance and transparency.

“The long wait is now over. Now we can proactively engage with the US business community. Our new government is making efforts for inclusive economic growth. In this regard, it is really important to undertake the reforms freely without any barrier. We want sanctions to be completely lifted and the trade preferences back,” he said.

“We would like to regain our past glory. We understand engagement with the US is crucial. The UMFCCI is committed to ensuring all possible assistance to promote bilateral economic cooperation.”

John Goyer, the US Chamber of Commerce’s senior director for Southeast Asia, said the US business community fully supported Myanmar’s efforts to modernise and open the economy, and was willing to be a partner in these efforts.

“There is great potential for trade and investment between Myanmar and the US. But the potential is just a potential. It is yet to be realised. We want to realise that potential,” he said.

“Myanmar has an ambitious and daunting economic-reform agenda. For our part, we will continue to advocate for the normalisation of the US-Myanmar relationship.”

A white paper that includes policy recommendations for both the US and Myanmar governments was released at the event. The paper calls for the lifting of economic sanctions under the International Economic Emergency Powers Act, the law that underlies most US sanctions against Myanmar.

It also calls for the inclusion of Myanmar in the GSP, a duty-free programme meant to support economic growth in developing countries, as well as exploratory talks on a bilateral investment treaty and various types of technical and capacity building support.

Their calls were met with a positive response.

US Ambassa-dor to Myanmar Scot Marciel reiterated his country’s support for Myanmar’s transition to democracy and the government’s efforts to promote inclusive economic growth.

He said he saw huge opportunities for US companies in power, transport, services, telecommunications and many other sectors. He said US companies could bring the best practices to Myanmar and help it fight corruption and promote transparency and the rule of law.

Marciel said the sanctions were being discussed in Washington, taking Myanmar’s mining sector into serious consideration.

“US companies have a lot of opportunities here and a lot of things [they] can contribute to Myanmar. That is why our colleagues in Washington are reviewing the GSP opportunities for Myanmar. We are eager to support and encourage our companies [that] are already here or that are considering coming here. We want more American companies here.”

Goyer said US businesses had invested more than US$226 billion (Bt8 trillion) in Southeast Asia to date and less than 1 per cent had been directed to Myanmar.

According to the Myanmar Directorate of Investment and Company Administration, the country has approved $248 million in US investment as of June 7. Last year, US exports to Myanmar were worth $227 million while imports from the country reached $144 million.

A report notes seven key challenges for US companies looking to invest in Myanmar – access to finance, access to land and the uncertainty of who actually has title to the land, access to electricity, access to skilled and healthy workers, the rule of law and corruption, regulatory and taxation uncertainty, and severely underdeveloped infrastructure.

In each of those areas, the report provides actionable, specific recommendations to encourage reforms and promote sustainable economic growth.

During a meeting with farmers in Chiang Mai and other provinces in the North, Winichai Chaemchaeng, vice commerce minister, said the government understood their concerns and would not allow any imports of GM plants or the registration of Thai plant varieties by TPP signatory states.

Before reaching a final decision on whether to join the TPP, the government would continue to conduct public hearings to learn about the concerns over potential membership among involved sectors, he said.

The Commerce Ministry and the Agriculture Department’s meeting with around 300 northern farmers was part of the hearing process, he added.

Allowing the import of GM plants is the top issue of concern among farmers in the North, mainly from the provinces of Chiang Mai, Mae Hong Son, Lampang, Lamphun, Nan, Prayao, Chiang Rai and Phrae.

“The ministry has stressed to farmers that the government will not allow GM plant imports, as some might have feared. The TPP pact only aims [for member states] to learn about each other’s farming policy, and to exchange information.

“Thailand already has a specific law to control GM plant imports. If we joined the TPP, GM plants would not be allowed into the country,” Winichai reaffirmed.

As to longan farmers’ concerns about the registration of the plant variety in other countries, the government would not allow any country to go down such a path as the Thai fruit variety is protected under the Plant Variety Act, he added.

The vice minister also explained that the international ISDS (investor-state dispute settlement) mechanism should benefit Thai investors overseas in the event of any dispute.

During the hearing in the North, farmers also called for the government to help prepare them and develop their competitiveness for future liberalisation.

They requested help in reducing the cost of production, promoting the use of solar energy, the development of plant varieties and the handling of residual substances, and the mutual-recognition arrangement on product standards in order to facilitate trade growth and reduce inspection costs, Winichai said.

Moreover, in response to farmers’ concern about the rising cost of seeds, he said the government would help develop good-quality, affordable seeds.

In his keynote address to the EIC Conference on the “Future of Thailand under the New Era of Infrastructure Investment”, Somkid said the private sector had been reluctant to pull the investment trigger because it did not have confidence in the speed of the government’s investment measures to revive the economy.

“But they must dare to invest, because overseas, private companies dare to invest even though their economies are also not showing a recovery. Those companies look at long-term investment, while Thai companies need a sure [bet], so private investment has not happened,” he said.

Private companies park their cash in banks instead of spending it until liquidity in the banking system overflows, forcing banks to lower their deposit interest rates.

The ratio of private investment to gross domestic product at present is only 19 per cent, against 35 per cent before the 1997 financial crisis, Somkid said.

Injecting money to boost the economy is not the right solution for the current military-led regime, he said. Reform to boost competitiveness is essential.

The government is well aware that what it is doing may not bring the economy to recovery, but it wants to ensure that the momentum of the economy does not fizzle out, he said.

To sustain the economy, the government has relied on three points.

The first is major reform with the aim of reducing social inequality and strengthen competitiveness.

The second is investment in both physical and social infrastructure.

Thailand has not made much investment in its physical infrastructure for a long time, Somkid said.

Now, there are the projects of the Energy Ministry, which has a budget of Bt2.5 trillion until 2022. The Transport Ministry has a similar budget.

A Bt500-billion budget for digital infrastructure over five years will help the economy grow, he said, so the private sector should prepare to get involved with those government investments.

Pracha Rath

The third point is the support of external factors, which in this context is the Pracha Rath project, by collaborating with big private companies.

From now on, the government’s projects will be launched gradually. For example, three mass-transit lines are ready to open bidding this month. Somkid will start to follow the progress of the tendering process tomorrow with Transport Minister Arkhom Termpittayapaisith.

PTT and the Electricity Generating Authority of Thailand have huge budgets for investment – PTTwith more than Bt300 billion and Egat with Bt200 billion, Somkid noted.

Vichit Suraphongchai, executive chairman of Siam Commercial Bank, said the uncertain recovery of the global market was challenging to all countries including Thailand.

Quantitative-easing policies have not proved as efficient as expected.

The key for Thailand right now is government and private investment.

The government has attempted to encourage private investment by incentives and the public-private partnership fast track, Vichit said. Infrastructure investment is not only reviving the economy but also nurturing a new normal for Thailand, which is shifting to domestic consumption from exports.

Keeree Kanjanapas, chairman of Bangkok Mass Transit System (BTS), said during the panel discussion on “Investment Potential – Leverage the New Infrastructure” that the private sector should not leave the role of investor to the government, because it is too slow in making investments to revive the economy.

For example, in China, the private and public sectors have invested jointly for 30 years until China today has become a high-growth market.

However, to encourage the private sector to speed up investment with the government, the terms of reference (ToR) must be fair to them.

In his experience from joining the bidding for a subway project in Beijing, which his company failed to win, the ToR guaranteed a certain income to the bid winners.

Under the ToR, the Chinese government said the number of passengers per day must reach 850,000 in the first year of operation and go to 1.3 million in the following years.

He said he was happy that the Thai government was lending importance to the private sector joining in investing in infrastructure. BTS is interested in bidding for mass-transit projects including the Pink Line.

The government should be careful about the arrival of foreign investors to join the infrastructure projects, as their intention might only be to sell raw materials, Keeree said.

Overall government spending from October to May was Bt1.79 trillion, or 65.77 per cent of the Bt2.72-trillion budget, Manas Jamveha, director-general of the Comptroller-General’s Department, said yesterday.

The largest proportion of the revenue came from value-added tax at Bt50.81 billion, or 17.36 per cent of all tax revenue received, followed by corporate income tax at Bt30.44 billion or 10.40 per cent, personal income tax at Bt24.67 billion or 8.43 per cent, and tax on oil and oil products at Bt12.99 billion or 4.44 per cent.

Other non-tax revenue comprised Bt27.71 billion in contributions from state enterprises and Bt30.13 billion in off-budget funds.

The department expects tax revenue last month will exceed that of May last year thanks to the slight improvement in the economy.

State disbursements in the period accumulated to Bt1.79 trillion, or 65.77 per cent of the Bt2.72-trillion budget.

State agencies expedited their spending to help boost the economy in line with the government’s economic stimulus measures.

Manas said the stimulus measures were raising the standard of living in sub-districts (tambon) and at the village level, investing in small stimulus schemes nationwide and upgrading villages’ potential to help expand the economy.

The higher tax revenue via the information system and state spending in the period over the same period last year helped stimulate the economy in line with the government’s objective to ensure sustainable economic growth and stability, he said.

Expected to come into force in 2017, the bill sets the tax-ceiling rates at 0.2 per cent of the appraisal value for land used for agriculture purposes, 0.5 per cent for residences, 2 per cent for commercial uses and 5 per cent for undeveloped land.

The land and building tax is designed to expand the national tax bases, especially asset-based taxation, in a bid to reduce inequality and improve land distribution and increase the use of land nationwide.

The tax would be levied only on homes and land used for agriculture, with the appraisal price starting from Bt50 million, and they would be taxed on the amount exceeding that figure.

The tax would cost payers around Bt1,000 per Bt1 million over Bt50 million.

For real estate companies, land banks awaiting development would be exempt from the tax for the first three to four years.

Somchai said only 1 per cent of farmers would have to pay the tax as most owned on average 30 rai (4.8 hectares) of land each worth only Bt1 million on average.

The tax charged on residences would be progressive, so homes appraised at Bt60 million would be taxed at a higher rate than those valued at Bt50 million. Common areas in all housing projects would be exempt from the tax.

Issara Boonyoung, Business Housing Association adviser and chief executive of Kanda Group, said 90 per cent of homeowners would be unaffected by the latest version of Land and Building Tax Act. The tax’s focus was the rich, he said.

Impact on homeowners

And he said the impact of the tax on homeowners would be lessened by the maximum tax rate being 0.5 per cent.

“This will be better for undeveloped land nationwide because this Act will force land owners to develop their land or sell it,” he said. “If they still hold onto the land, they will have to shoulder the tax cost.

“This [the Act] is also better for land developers, who will have more choice to develop land in the future.”

“The broadcasting committee has not yet concluded this matter but we intend to support essential national policies,” Pakdee Manaves, deputy secretary-general of the National Broadcasting and Telecommunications Commission, said yesterday.

The NBTC has received the letter from the Prime Minister’s Office.

The station would also air public relations campaigns aimed at deepening the government’s engagement with the public.

In the application, the government asked to use a national radio frequency to broadcast TV programmes related to key national policies.

However, the broadcasting committee needs more details about the plan, so it is expected to ask the government within 30 days explaining how to acquire a free-to-air digital-TV licence.

According to broadcasting rules, the NBTC has reserved 12 of the 48 digital-TV licences for public service, of which four have been granted to public stations in this category.

National security

They are the Army’s TV5 for national-security purposes, the Public Relations Department’s NBT, Thai Public Broadcasting Service, and Thai Parliament Television Station.

The broadcasting regulator has also reserved eight spectrum slots for other purposes, such as a public channel for democratic promotion, under the categories for public broadcasting service.

The NBTC will hold a “beauty contest” bid for each four-year TV licence.

Pakdee suggested that in this case, the request could be made for Category 3, which is related to government communications.

However, Supinya Klangnarong, a vocal member of the broadcasting committee, said that instead of acquiring the digital-TV licence for public purpose, there were other media the Cabinet could use to communicate and promote its key policies to the people.

For example, the government can use its existing public TV networks such as NBT and Thai Parliament TV or coordinate with commercial free-to-air TV stations to help support its PR blitzes.