The Brief, Issue 2/2012

The Brief Issue 2/2012 1

Magazine of the British Chamber of Commerce ThailandIssue 2/2012 www.bccthai.com

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Issue 2/2012

CONTENTS

Front cover: HRH The Duke of York meets Prime Minister Yingluck Shinawatra during

his trade visit to Thailand.

BCCT Board of Directors 2012

ChairmanSimon Landy

Colliers International Thailand T: 02 656 [email protected]

Vice Chairman & TreasurerJohn Sim

KPMG Phoomchai Holdings T: 02 677 [email protected]

Vice ChairmenMatthew Lobner

HSBC T: 02 614 [email protected]

Simon Matthews

Manpower Thailand T: 02 634 [email protected]

Dean ThompsonBoots Retail (Thailand) Ltd T: 02 694 5900

[email protected]

DirectorsJane Bailey

Equitech (Thailand) Ltd T: 02 259 [email protected]

Gary BiestySouth Asia Law Co., Ltd T: 02 636 0585

[email protected]

David CummingAmari Orchid Pattaya T: 038 418 418

[email protected]

Richard GreavesGrand Hyatt Erawan Bangkok T: 02 254 6239

[email protected]

Colin HastingsThe Big Chilli Co., Ltd T: 02 235 0170

[email protected]

Andrew McBeanGrant Thornton T: 02 205 8222

Email: [email protected]

Sriram NarayanBritish Airways PLC T: 02 627 1723

[email protected]

Chris ThatcherIndividual T: 085 064 [email protected]

Toni WeberTNT Express Worldwide (Thailand)

T : 02 257 [email protected]

This Edition

18

10

16

40

14

10Royal visit raises trade hopes

14UK Trade Minister in upbeat mood

16ASEAN Secretary General gives BCCT annual lecture

20Myanmar star on the rise

30Action time for UK pensioners

32Analysis of Chancellor of the Exchequer George Osbornes latest Budget statement

40Future unclear for Olympics Stadium

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PUB_KOMPASS_A4_feb2012.indd 1 22/03/12 10:25


Issue 2/2012

CONTENTS

The views expressed by individual authors are not necessarily those of the British Chamber of Commerce Thailand or of the publisher. Reproduction in whole or in part without written permission from the British Chamber of Commerce Thailand is strictly prohibited.

The Brief is published by: British Chamber of Commerce Thailand For advertising and editorial enquiries, please contact Greg Watkins Executive Director - BCCT Production: Scand-Media Corp., Ltd Bangkok

British Chamber of Commerce Thailand7th Floor, 208 Wireless Road Bangkok 10330, ThailandTel: 02-651 5350/3 Fax: 02-651 5354Website: www.bccthai.com Email: [email protected] Watkins, Executive Director

Every Edition

7Message from Chairman Simon Landy

9 Updates from Executive Director Greg Watkins

42Latest news from the British Council

47Member news: Record profits for Standard Chartered

57 By the Numbers

60Chamber events in Thailand 68The Last Word

42

6865

47

60 65

50


Sterling Partners

SIMON LANDy

Other Major Partner

Chairmans Message

Annual Airline Partners

Whats black and white and read all over? Well, not last months Chairmans Message, judging by the deafening silence that greeted my call for input from members.Maybe Im just stubborn, but by the time this message is printed we will have had a second go at eliciting your views through a more structured process: a free members discussion forum in early April. As we move into the Songkran holidays, the Chamber continues to thrive. Our financial position is refreshingly healthy, although to make sure that accounting balance is really bankable I appeal to any members who havent paid their dues yet to do so as soon as possible.

The last two months have been punctuated by a number of interesting events. We were graced with high-profile visits and talks by Lord Stephen Green, the UK Minister of State for Trade and Industry who gave an impassioned talk on the direction of British business, Dr Surin Pitsuwan, Secretary-General of ASEAN who delivered our Annual Lecture and HRH the Duke of York. In addition, the Chamber held a well received Life & Style Party at the Embassy and a wide range of business and social events.

We have made an increased effort to co-operate more with other bodies with similar or overlapping missions to ours so that we can offer our members a greater range of services while minimising event overload from different providers. Our Eastern Seaboard events have been particularly successful as we now have a clear structure for alternating the hosting function with AustCham and AMCHAM. At the March event, AMCHAM organised a briefing in Myanmar before the event, which gave many members a good business-related excuse for turning up, in case they needed it. In a similar vein, we organised a 3-hour session in the British Councils CSR event on March 27th.

Internally, weve agreed to create some new groups and shuffled a few others. The purpose of the reshuffle is to help us focus on areas where we can deliver more integrated services to members. The new groups cover Advocacy (chaired by me), Legal & Tax (Stephen Frost), Membership (Chris Thatcher) and Policy (Dean Thompson), while the Charity Group has been combined with our Child Protection initiative into a CSR Group with a wider brief under Matt Lobner. Our members in Chiang Mai are also in the process of establishing a more formal structure under a Northern Thailand Group. All of these groups as well as many of the existing ones, such as the Communications/PR Group under Colin Hastings, are open to more members, so please let us know if youd like to contribute. Other options for members to get involved are provided by the various advocacy groups under the EABC (European ASEAN Business Centre).

Sadly, we lost four long-term members of the British community early in 2012. Many of you will have known Judy Fitzgerald, Liam Ayudhikij of PCS, Norman Denning of Yorkies and David Levy of Dhamniti Law Office, all of whom were great supporters of the Chamber and the British community. They will be greatly missed.

On a brighter note we were pleased to announce that another long-time supporter of the Chamber, Khun Sukhavichai Dhanasundara, joined our team of Honorary Advisors and continues to give invaluable support to the seminars organised by Richard Greaves Management Development Group.

As we approach that time of year when the government blesses us with an abundance of planned and unplanned holidays, Id like to wish all our members all the best for the Easter and Thai New Year break and look forward to meeting you at future BCCT events.

Corporate Partners

Supporting Partners


GREG WATKINS

Executive Directors Message

The BCCT office has just completed a very busy first quarter of the year exemplified by the team organising seven events in the last week of March. I write this message the day before a major gathering of members to provide what I know will be very valuable feedback on where BCCT is going wrong and hopefully provide some excellent new ideas for us to work on. The Songkran break also provides time to look back and see how we in the office may engage more effectively with members.

When a company joins the BCCT all employees may access the benefits of membership and attend events. For Thai-speaking employees this includes the management skills workshops organised by BCCTs Management Development Group. However, some principal representatives do not pass information on such events to their colleagues.

If you see value in these workshops/seminars please support them by sending the appropriate staff from your company and encourage them to provide detailed, qualitative feedback in order that we may continue to improve and develop the curriculum. Such feedback is also very welcome from those who have already attended management skills workshops

Participating in BCCT Groups (aka Committees) is a good way of contributing more to the work of the BCCT for the wider benefit of members. They are also a good forum for keeping up to date with developments in the business community through specific events and information reports. Details on BCCT Groups are managed by members with support from the BCCT office.

All Members are welcome to participate in Group activities. Simply email me at [email protected] for full details if you would like to join a Group. Most recently, the Communications & PR and Legal & Tax Groups have sought participation from members.

Current BCCT Groups are: CSR (Charity & Child Protection); Communications & PR (BCCT website/The Brief/Annual Handbook/social media); Eastern Seaboard; Events; Human Resources; Information & Communications Technology; Legal & Tax; Management Development; Manufacturing; Northern Thailand (e.g. Chiang Mai); Professional Women; Property & Infrastructure; Safety & Security; Small & Medium Sized Enterprises (SMEs); and Travel & Tourism.

Using its working knowledge on many doing business issues, and its wide network of business and government contacts, your BCCT team can make business introductions for and to BCCT member companies. Please email [email protected] for further information.

The BCCT office is physically located in the centre of Bangkok at 208 Wireless Road, 7th Floor (opposite All Seasons Place). It has a meeting room that can accommodate up to 16 people for meetings and up to 20 people theatre style. The room is fully equipped with Wi-Fi internet access, multi-media projector, screen and large whiteboard.

Members are very welcome to make use of the meeting room during normal office hours for presentations, meetings and interviews free-of-charge. To make your booking please email [email protected]. Refreshments can be provided on request. Frequent or regular use of the meeting room may attract a small charge. We look forward to welcoming you.

10 The Brief Issue 2/2012

Duke of York raises visa issues with PM Yingluck By Bradley Jones

The last few months have been an outstanding period for high-level engagement be-tween the UK and Thailand. Lord Powell, the Chairman of the Asia Task Force, visited shortly before Christmas (see last edition) and we have seen visits by former Prime Minister Tony Blair, Trade and In-vestment Minister Lord Green and HRH The Duke of York in the last two months alone.

The Duke of Yorks four day visit to Thailand was originally scheduled for November 2011 but was postponed due to the floods. The timing of his rescheduled visit fitted well with the

All smiles from HRH The Duke of york and Prime Minister yingluck Shinawatra.

Thai government having to adopt eco-nomic stimulus policies to enable the country to recover and deliver some of its election pledges.

The Duke was able to engage with Ministers on our key issues at the ear-ly stages of decision making - a case in point being EU-Thailand FTA nego-tiations. The Commerce Minister told us that scoping work would begin in April after which time a Parliamenta-ry mandate to pursue formal negotia-tions would be sought.

The Duke of York had substantive bilateral meetings with the Foreign and Commerce Ministers and also

met with Prime Minister Yingluck Shinawatra (his second since she was appointed Prime Minister last year) and other key Ministers. During these meetings the Duke raised all of our priority interests: promoting the UK education sector, extension of land ownership, Thai visa and work per-mit needs of business, labour market deregulation, the impact of Burma on the region and ASEAN integration.

Prime Minister Yingluck dwelt on the need to close the income gap be-tween rich and poor, the difficulties of financing major, long term infra-structure projects (an issue which the Lord Mayor will pick up on in his visit

Cover Story


The Duke of york met a very broad cross-section of business leaders during his recent trade visit.

to Bangkok in May), the reconcilia-tion process, and difficulties faced by Thais applying for visas to the UK. She cited the recent cut in Corpora-tion Tax, from 30 percent to 23 per-cent as evidence that the Government was back on track in delivering its election promises.

Trade and investment featured heav-ily in the programme. The Duke vis-ited a British Council sponsored eco-design project and met leading Thai corporates as well as the British busi-ness community in Bangkok. He also fulfilled a long standing commitment to visit Sahaviriya Steel Industries head office. The company is planning to restart production at the Redcar fa-cility in the spring. It is also looking to source as much of its raw materials as possible from within the UK, in-cluding up to 800,000 tonnes of coal from mines in South Wales that are

currently closed. The company plan to build two more blast furnaces on the Redcar site once its current expansion needs are met in two years time.

The Duke also visited the Eastern Sea-board to open Tescos flagship zero carbon store, (its first in Asia) and to visit Reckitt Benckisers Nurofen and Strepsils plant. Reckitt have impressive plans to expand its footprint in Thai-land over the next two years. The Duke also took time to meet Royal British Legion members and leading British companies operating in Thailand.

Our next VIP visitor will be the Lord Mayor of London, whose visit on 23-24 May will focus upon legal services and dispute resolution, banking and insurance. There will be an opportu-nity for Chamber members to meet him at a special lunch being hosted by the BCCT during his visit.

Bradley Jones is Director UK Trade & Investment in Thailand, based at the British Embassy, 14 Wireless Road, Bangkok 10330Tel: 02 305 8256Fax: 02 255 8619 Email: [email protected]

Cover Story

Advertorial


Every year, on 8th March, nu-merous events and activities are organised to celebrate In-ternational Womens Day, honour-ing the economic, political and social achievements of women around the world.

This celebration has now been run-ning for over one hundred years and is an official holiday in many countries. BCCTs Professional Womens Group (PWG) chose this auspicious day to celebrate the achievements of our own female entrepreneurs in Thailand.

The event was held at the Pacific City Club in Bangkok, attracting almost 100 guests to meet some of our local entrepreneurs, to hear their stories and to see samples of the products and services offered by their different busi-nesses. BCCT Director Gary Biesty also gave an overview of the practicalities of setting up a business in Thailand.

More and more countries are intro-ducing quotas for women in senior management. The UK Government recently announced its aim to have 25 percent women serving on the boards of FTSE 100 companies by 2015. And yet there is an increasing number of women leaving the corporate world to set up their own businesses.

We felt the subject of female entrepre-neurship was therefore very topical for our March event. The entrepreneurs on show included Vibeke Lyssand Leirvag, who founded Felicia (Jewel-lery) Designs in 1995 and now employs 150 people; Nina Heyer, who has been designing and producing high quality leather handbags since 2009: Janet Panita Promfang, who trained in Italy and now owns Madame Flamingo of-fering handmade designer shoes; and

Top business tips for PWG members

Pakinee Jiwattana Paiboon, who used her university training to transform her mothers fledgling company into Xongdur Organic Foods.

These entrepreneurs were asked to provide their top tips in setting up and managing a business here. Laksasu-bha Kridakon, owner of Baan Lak-sasubha Resort, told us to make sure that you know all the basics of your business from scratch. Start from the bottom and learn what all the jobs within the company involve. There were also many excellent tips about how to find the right staff.

Success will depend on the quality of the staff you hire screen well and you should be able to hire quality and committed people, said Sally Cowley, owner of Desert Diamonds.

There is also the age-old question of work-life balance for women. Renu Bhatia, owner of Indian Host restau-rant, said, Before opening your busi-ness, ask yourself whether you are ready for such a stressful situation, particularly if you are a wife and a mother.

From Fay Pansringarm, who has been teaching both children and adults at her Rising Star Dance Studio since

1996, we heard the important message do something that you enjoy.

The Professional Womens Group has been organising events for BCCT members and guests since 2007 and its key objective is to provide professional women (and men) of all nationalities the opportunity to learn and network in a friendly and inclusive atmosphere.

This was our second PWG event in 2012, the first being a highly enjoyable speed networking event in January. Previous events have included Wom-ens Health and Fitness, 50 Years of the Pill and a sparkling evening with Miss Tiffany, where we got to meet both the highly capable lady who runs the famous Tiffanys Show in Pattaya and also the reigning Miss Tiffany and the two runners up.

We have five events planned for 2012. Our next event will be held on 10th May with the unusual theme of a per-fume tasting. It promises to be a great event when we will learn about scent, our sense of smell and what our choice of perfume says about us. Of course, there will be plenty of time to network with both new and familiar faces over a glass or two of wine.

If you would like any more details about the PWG and upcoming events please check the BCCT website.

By Toni Weber

Toni Weber is Director, Corporate Initiatives - Asia Pacific with TNT Express Worldwide (Thailand) Ltd. She is Chairwoman of the Professional Womens Group and a BCCT Board Director. Tel: +66 2 257 6555 Fax: +66 2 257 6588Email: [email protected]

Toni Weber


UK Trade Ministerin upbeat mood

Britains relationship with Thai-land goes back some 400 years - and it is one that Lord Stephen Green, Minister of State for Trade and Investment, expects to flourish and prosper for decades to come.

Lord Green, formerly Group Chair-man of HSBC Holdings, was in Thai-land recently to promote British inter-ests in a series of meetings with Thai government ministers and represen-tatives of the private sector.

In an article preceding his visit, pub-lished in The Nation newspaper, Lord Green wrote that British visitors have long admired the resilience and en-ergy of Thailands businesses, and their reaction to the floods last year is something that we can all learn from a combination of moving generos-ity, working alongside government to help the most affected, and impres-sive resilience, with many quickly re-establishing their businesses even after devastating damage. They have shown that, in times of adversity, adaptability is key to recovery.

He continued: On this visit, my first to Thailand in my role as Minister for Trade, I will be looking at where Thailand and the UK can work to-gether, combining our respective skills through partnership work and the exchange of expertise. Thailand has long been a key partner to the UK, and we want to build on these ties and respective strengths. We are already making good progress. In 2010, bi-lateral trade was worth three billion pounds and between 2006 and 2010 UK goods exports to Thailand dou-bled. We are also Thailands leading EU investor, with major companies enjoying a strong presence here in-

cluding HSBC, Standard Chartered, GlaxoSmithKline, BG Group, Boots and Tesco, the latter of which has over 1,000 stores - the largest number out-side the UK.

Lord Green also stated that Thai in-vestment in the UK is equally impor-tant and we want to continue to at-tract more innovative Thai companies to choose Britain as a place to do busi-ness. An important example of Thai investment is Tata Steels Teeside Cast Products in Redcar by Thai-based Sa-haviriya Steel Industries. Up to 1,000 jobs will be created and 700 saved.

Lord Greens schedule in Thailand included discussions with UK engi-neering consultancy Halcrow to look at the opportunities for partnership work. The UK has extensive global expertise in construction and infra-structure, working on major interna-

tional projects from designing green airports to building new cities from scratch. We are also home to a water and wastewater industry - serviced by over 500 companies - with experience of renovating buildings appropriately to cope with future floods, and devel-oping robust systems for irrigation and better water drainage, he wrote.

Lord Green also visited an eco-design exhibition in Bangkok that was sponsored by the British Council and which showcased the best in British and Thai sustainable design by contemporary UK and Thai designers and architects.

Lord Green stated his belief that edu-cation was another area where the two countries could work together. He added that Thailands neighbours, Malaysia and Singapore, boast a large English-speaking population that is

Lord Green (left) makes a powerful case for British business.


expanding rapidly. Emerging markets like Vietnam and Indonesia are fol-lowing suit. As with any country look-ing to maintain international compet-itiveness, proficiency in English is at the heart of global business. As Thai-land moves from a manufacturing-led to a high-tech, high-value economy, English will become integral to this transition.

During his visit to Thailand Lord Green was examining ways in which the UK can work with Thailand to support more of its companies do business globally. Our colleges and universities offer a wide range of voca-tional training and can meet any oc-cupation-based learning requirement as well as providing world-class train-ing to the business world. I am de-lighted that the University of Central Lancashire is planning to establish the UKs first private university cam-pus in Bangkok, where it intends to receive its first students in June 2014, he stated. He also looked at areas where the UK can support Thailands efforts to provide affordable and effec-tive healthcare for all of its citizens.

Lord Greens article concluded: I am a strong believer in free trade, which in my view benefits all countries and

stimulates competition. Thats why I would like to see Thailand follow in the footsteps of its neighbours and seek an early parliamentary man-date to commence negotiations for an EU-Thailand Free Trade Agree-ment (FTA). We only need to look at the benefits of the EU/Korea FTA, which came into effect last summer, which saw hundreds of tariffs fall away and significantly improve the

Deputy Bangkok Governor Teerachon Manomaiphibul presents a gift on behalf of Bangkok Governor M.R. Sukhumbhand Paribatra to Lord Green, UK Minister for Trade & Investment.

way business is undertaken between the two countries.

We now need to build on our strong re-lationship and provide the best environ-ment for business to flourish. We face similar challenges, adapting our econo-mies to an uncertain global environ-ment. But we also share a vision for the future that will unlock opportunities, foster talent and stimulate knowledge.

Lord Stephen Green is Minister of State for Trade and Investment in the UKs Depart-ment for Business Innovation and Skills. He took up his appointment after a 28-year career with HSBC that culminated in his appointment as Group Chairman of HSBC Holdings in 2006.

Stephen Green began his career with the British Governments Ministry of Overseas Development. In 1977 he joined the man-

agement consultancy McKinsey & Co with whom he undertook assignments in Europe, North America and the Middle East.

He joined The Hongkong and Shanghai Banking Corporation Limited in 1982 and became Group Chief Executive in 2003.

He was created a life peer as Baron Green of Hurstpierpoint in November 2010.

Lord Green is responsible for ensuringthe delivery of a cross-Government strat-egy for trade and for attracting interna-tional investment. He is accountable to both the Secretary of State for Business and the Foreign Secretary

TheUKiscurrentlytheworldssixthlarg-est exporter and second largest investor in foreign markets. Many world-beating business sectors have built up a strong presence in the worlds biggest devel-oped markets, in the rest of Europe, the US and Japan. The challenge will be to succeed over the coming decades as global incomes grow in other markets

Lord Greens focus at the FCO is tohelp achieve a more commercially-mindedofficethateffectivelysupportsthe governments growth agenda. He oversees the new Commercial and Economic Diplomacy Group tasked with delivering a more commercial FCO in practice

AsheadofUKTrade&Investment,LordGreenhelpsUKfirmstoexportabroadand promote inward investment. As part of this role, he will support UKTI Defence and Security Organisation (UKTI DSO). He also has responsibility for the Export Credits Guarantee De-partment and acts as spokesman for the Government on trade and invest-ment issues in the House of Lords

LordGreenchairstheCouncilofBusi-ness Ambassadors and is a member of the Prime Ministers Business Advisory Network. He has also chaired the Brit-ish Bankers Association and the Prime Ministers Business Council for Britain. Lord Green has also served as a trustee of the British Museum


Thailand faces some major challenges in the lead-up to the ASEAN Economic Com-munity in 2015. Thats the view of ASEAN Secretary General Surin Pit-suwan, who was addressing Chamber members at the BCCT annual lecture, sponsored by Standard Chartered Bank (Thailand).

Secretary General Pitsuwan said that one of the biggest challenges was the move from ratification to implementa-tion. He expressed concern that nation-al parliaments will adopt protectionist measures that contradict the principles of the ASEAN Economic Commu-nity, hindering progress and nullifying many of the broad principles enveloped in the wide-ranging framework.

He began his address by recall-ing the words of Thailands former Prime Minister Anand Panyarachun (1991/2) who had stated during his tenure that the region needs to de-velop a free trade area to prevent the Chinese taking everything.

He also recalled the original aspira-tions of the ASEAN founding fathers, the Foreign Ministers of Indonesia,

Malaysia, the Philippines, Singapore and Thailand when they signed the ASEAN Declaration in 1967. These aims and purposes were about coop-eration in the economic, social, cul-tural, technical, educational and other fields, and in the promotion of region-al peace and stability through abiding respect for justice and the rule of law and adherence to the principles of the United Nations Charter.

Forty five years later and we are now talking about an ASEAN economic

community in a region of some 600 million people where political and economic stability is our number one priority. With that in mind we were worried when Thailand and Cambodia were fighting over an Hindu religious ruin (Preah Vihear temple), he joked.

The Secretary General was encour-aged by the fact that there would be a 99 percent tariff free zone by 2015 and that they were on course to se-cure major agreements on goods, ser-vices and investment. But his message to Thailands politicians and business leaders was clear: change your mind-set and explore the possibilities.

He stated that multinationals were doing much better than Thai companies in taking advantage of the new deregulation across the ASEAN region. Thailands manufacturers are reluctant to open up because they have so many vested interests to protect. We have the potential to create a new centre of growth in East Asia. Our connectivity makes us very attractive. We have a master plan that embraces road, rail and air transport, with north-south rail links and east-west corridors.

ASEAN chief calls for better English language skills

Dr Surin Pitsuwan (third from right) with distinguished guests and BCCT Board Directors at the Chambers Annual Lecture.


Referring to the Europe as a significant trading zone for ASEAN nations Dr Pitsuwan said that more investors were considering their options. ASEAN is a sexy subject now because it offers jobs, growth and profits.

The Secretary General clarified the is-sue of labour mobility across ASEAN borders. We cannot have total free movement, he said. It is restricted to skilled labour covering such profes-sionals as dentists, architects, accoun-tants, surveyors and doctors.

He said that the speed of progress in developing the ASEAN Economic Community is determined by the pace of the slowest moving member. On the issue of immigration its a matter of member nations talking to each, people to people.

The Secretary General, mindful of the major problems affecting the euro-zone, all but ruled out a single curren-cy within the ASEAN Economic Com-munity. Its difficult to have monetary union without countries monitoring each others macro-economic poli-cies, he said.

Mindful of the importance of inward investment from Europe and the USA Dr Pitsuwan said that ASEAN must make sure that the West is comfort-able with our direction.

Asked about the threats to and oppor-tunities for Thailand, the Secretary General highlighted the need to im-prove English language skills (English being the official language of ASEAN) and the importance of reform in the states education system.

The original ASEAN Declaration was a short, simply-worded document containing just five articles. It declared the establishmentof an Association for Regional Cooperation among the Countries of Southeast Asia to be known as the Association of Southeast Asian Nations (ASEAN) and spelled out the aims and purposes of that Association.

These aims and purposes were about co-operation in the economic, social, cultural, technical, educational and other fields andalso in the promotion of regional peace and stability through abiding respect for justice

and the rule of law and adherence to the principles of the United Nations Charter.

It stipulated that the Association would be open for participation by all States in the south east Asia region subscribing to its aims, principles and purposes. It pro-claimed ASEAN as representing the col-lective will of the nations of Southeast Asia to bind themselves together in friendship andcooperationand,throughjointeffortsand sacrifices, secure for their peoplesand, for posterity, the blessings of peace, freedom and prosperity.

Thailand is not comfortable with change but it faces a tremendous chal-lenge. English proficiency is extremely low across the country. The quality of our people depends upon the quality of their education. Our students must

develop analytical skills if they are to compete effectively.

He concluded by welcoming input from members of the British business community in Thailand.

The ASEAN Secretary General was welcomed by Standard Chartered Thailand CEO Lyn Kok (left) and thanked by Simon Matthews, Manpower Country Manager and BCCT Board Director.


Tilleke & Gibbins Partner and close ASEAN watcher Cynthia Pornavalai gives her latest assessment of the ASEAN Economic Community.

The ASEAN Free Trade Area has made great strides in re-moving tariffs between mem-ber countries. When the ASEAN Economic Community (AEC) takes effect in 2015 it is expected that tariffs will be removed on all intra-ASEAN goods in line with the relevant agree-ments and protocols. In addition to these zero tariffs the AEC aims for the removal of non-tariff barriers and increased trade facilitation.

The main focus as we edge closer to 2015 is the elimination in full of non-tariff barriers by enhancing trans-parency of non-tariff measures and formulating regional rules and regu-lations consistent with international best practices, explains Cynthia Por-navalai, a Partner in the Corporate and Commercial group at leading south east Asia law firm and BCCT member Tilleke & Gibbins.

The AEC aims to simplify, harmon-ise and standardise trade and customs processes, procedures and related in-formation flows by establishing the essential trade facilitation cooperation mechanism and customs integration. The ultimate goal is the ASEAN Single Window (ASW). But its not that easy. To create the ASW each individual member must first make operational its National Single Window.

The AEC envisages the complete re-moval of restrictions to the provision

Outdated laws prove stumbling block to ASEAN integration

capital market development and inte-gration through the harmonisation of capital market standards in areas such as offering rules for debt securities and cross-border capital raising activities.

The free and unhindered movement of labour within the region is a major element in the work leading up to 2015. The AEC is moving towards managed mobility or facilitated movement of natural persons by creating employment passes for ASEAN professionals and skilled labour, adds Cynthia Pornavalai. The aim by 2015 is to have a complete free flow of services and, to this end, ASEAN member countries are seeking harmonisation and standardisation by enhancing increased mobility of students and staff within the region.

They also wish to develop core com-petencies and qualifications for occu-pational trainers skills and strength-

of services and the establishment of companies across national borders with the ASEAN region by 2015 (sub-ject to national regulations).

There are separate and very significant discussions taking place concurrently on issues relating to air transport and financial services. ASEAN also aims to establish mutual recognition arrange-ments for professional services provid-ed by architects, accountants, dentists, surveyors and doctors.

The AEC is also striving to establish a free and open investment regime that enhances ASEANs competitiveness in attractive foreign direct investment and that also promotes intra-ASEAN investment. The goals include enhanced investment protection, facilitation and cooperation as well as progressive liberalisation of member countries investment regimes.

The AEC aims to strengthen ASEAN


en the research capabilities of each ASEAN member country through the promoting of skills and job place-ments in the region.

The AEC Blueprint, adopted in 2007, outlines the measures to be taken and the schedule of implementation. A scorecard mechanism monitors this schedule and, in 2010, the first results were made public. The results suggest that Thailand is off the pace in some respects.

The country has established its Na-tional Single Window, along with Brunei, Indonesia, Malaysia, Phil-ippines and Singapore. Thailand has also ratified the ASEAN Trade in Goods Agreements (ATIGA), de-scribed by ASEAN Secretary Gen-eral Dr Surin Pitsuwan as a major achievement towards the establish-ment of a single market under the ASEAN Economic Community 2015.

Thailand, along with Indonesia, has not yet ratified the ASEAN Compre-hensive Investment Agreement. All

other member countries have ratified this important agreement.

Most ASEAN countries, including Thailand, no longer place restrictions on inward and outward foreign in-vestments. However, work continues on the key issue of financial integra-tion in capital market development, liberalisation of financial services, capital account liberalisation and ASEAN currency cooperation.

AD SAMITIVEJ (HP)SIZE : 210 x 148 mm

Thailand ratified the ASEAN Frame-work Agreement on Mutual Recog-nition Arrangement (MRA) some 10 years ago but has yet to endorse the specific MRAs relating to profession-al services such as accountancy and dentistry. Overcoming national legal obstacles is a major challenge when addressing bilateral or multi-lateral agreements.

Thailand has always oscillated be-tween protectionism and liberalisa-tion. Recognising the importance of foreign investment for its economic growth, Thailand has relaxed relevant laws and regulations. At the same time, however, it has stubbornly held on to antiquated laws that restrict for-eign participation in industries where Thai nationals are deemed to be un-competitive, says Cynthia Pornavalai.

For Thailand to fulfil its commit-ments to various AEC agreements and protocols it must revamp the two major legal stumbling blocks, name-ly the Foreign Business Act and the Alien Employment Act.

Cynthia Pornavalai


A recent issue of the Insurance Journal carried an overview of a briefing covering the floods in Thailand released by the credit rating company A.M. Best Company. Poli-cyholders refer to Bests ratings and analysis as a means of assessing the fi-nancial strength and creditworthiness of risk-bearing entities and investment vehicles.

The overview stated that overall, in-dustry wide insurers loss estimates from the floods have increased by 50 percent to US$15 billion since Bests last briefing on this event (published on 23rd November 2011). Such a loss would place the Thai floods in a tie for the fifth costliest insured loss event in the past 31 years.

Most economists agree that, once all the insurance claims are settled, the floods in Thailand will likely be the worlds fourth costliest insured loss ever. This was supported by Lloyds of London in a statement on 14th Febru-ary estimating that claims may reach US$20 billion, with the Thai floods constituting Lloyds third biggest loss in its 324 year history. It was, notably, the worlds largest ever fresh-water flood disaster. Even more painful for insurers were that they had only col-lected an estimated US$4.5bn in pre-miums with 70 percent of the losses being shouldered by international In-surers, 20 percent regional and only 10 percent local.

It could have been much worse for in-surance companies. A study from Aon Benfield estimated that the floods in Thailand damaged or destroyed more than four million homes, businesses and manufacturing facilities. The study added that the amount of structural damage is actually four times greater

than what resulted from Japans earth-quake and tsunami in March 2011, but only half of the total insured loss due to a low rate of insurance adoption. So what does this mean?

In the short term, apart from a vast financial impact for many people and businesses due to underinsurance, it means that those with policies are gen-erally wholly unprepared and inexpe-rienced regarding claims of this size and type and how to deal with insur-ance companies. This has resulted in a tendency to rely too much upon what the insurance company representatives have put forward as a settlement.

As can be seen from above, even though your insurance broker may be Thai, the money very likely is not. When we look at our cover we have to understand the international world of insurance. This is something Thai companies tend to struggle with, firstly from a language perspective and secondly from a per-spective of being reluctant to pay for expertise deemed to be not tangible.

Recently I heard claims expert Patrick Bickford, CEO of Adjusters Interna-tional Colorado, tell a seminar audi-ence how the first 60 percent-plus of the money owed on your claim may be the more obvious baht that should be issued on your claim with little to no disagreement. The other monies to be paid are more subjective. The policy has so much language that seems to be in this grey area and the adjustment is-sues can be interpreted through differ-ent vantage points.

A key to success with any claim is be-ing able to interpret this grey area to your benefit. The more knowledge you have about the policy and the intent behind the language, the better posi-

tion you will be in to obtain favourable results with your claim. The A.M. Best briefing illustrates that even now these grey areas remain difficult in Thailand, even for insurance companies, stating that how to assess business interrup-tion (BI) claims and contingent busi-ness interruption (CBI) claims, which are based on supply chain interruption rather than actual property losses, re-mains a conundrum. The long term implications concern future insurance policies with potentially prohibitive premiums and delays in returning to normal production.

In January Dr. Virabongsa Raman-gura, head of the Strategic Formula-tion Committee for Reconstruction and Future Development, said that he was confident Thailand would be able to prevent any further flood by at least 75 percent. If you were an insurance company, would you be pricing to the 75 percent or the 25 percent? The A.M. Best study was sobering when it con-sidered the long term impact on Thai-land. It underscored that the unprec-edented flooding has forever changed the perception of risk in Thailand and brought about significant changes to the Thai insurance industry.

The Thai commercial insurance in-dustry will likely begin facing sharply contracted capacity, higher pricing and tighter terms for coverage with the Asian and Japanese reinsurance re-newals in April. In 2012, flood coverage will be separated from IAR policies.

This will have serious financial impli-cations for hundreds of thousands of business and home owners who now have to pay more attention to insur-ance, many for the first time. This is especially the case for flood-related damages given the backdrop of dire

SMEs in deep waterafter Thailand floodsBy Andrew McBean


warnings from the Science and Tech-nology Minister that, in 2012, we may be hit by 27 typhoons and four tropical storms in the coming months and sea levels will be higher than last year by 15cm. This will not lend confidence to the insurers and underwriters.

There is already very strong anecdotal evidence that the floods have already destroyed the business of many SMEs. On 23rd March Khun Chanin Jit-komut, president of the Thai Business District Federation, said there was a high possibility that the number of SMEs forced to close (because of the floods) will exceed 50 percent. How-ever, this will be further exacerbated by two more factors:

Khun Vallop Vitanakorn, a vice-chairman of the Thai National Shippers Council, added that of the 2.3 million SMEs in Thailand, 20-30 percent will have to close down as they will be incapable of adapting to rising labour and energy costs

Future insurance premiums will be prohibitive for any catastrophe not just floods

Khun Vinod Krishnan, chief executive of Aon Benfield Asia, a leading global reinsurance intermediary adviser, told a recent seminar titled Critical Les-sons from the Thai Floods that inter-national reinsurers were demanding high premium rates, varying between five and 10 percent, for catastrophe in-surance coverage. He added that he did not expect the premium rate to return to normal next year as insurers had lost money, compared with the very small amount of premiums they had re-ceived before the floods struck in 2011.

Finally, why do we need insurance pay-ments? Ideally, these are to help the re-turn to production as quickly as possible. In the USA, the Small Business Associa-tion conducted a study and found that over 50 percent of companies go out of business in the 24 months that follow the filing of a major claim (borne out by our experience in Thailand).

There are two reasons for this. The first is that customers treat their insurance payment and operational readiness as a serial process rather than doing both in parallel. The second is not consider-

ing the disaster as an opportunity to improve processes and operations that have become dated. This is probably the only legal way to actually make money out of an insurance claim.

This should be a lesson for Thai com-panies to be prepared to invest more in intangible services such as expertise, (for example in how to make an insur-ance contract), how to interpret such a contract in the event that it has to be used, and how to resume operations.

Andrew McBean is a Partner at Grant Thornton,18th Floor, Capital Tower, All Seasons Place, 87/1 Wireless Road, Bangkok 10330 Thailand. Email: [email protected] Tel: +66 2 205 8222.


Ice cool LCS aids postflood clean upLast years flooding was, as we all know, devastating and predom-inantly negative. However, as with all such events, there were some positives. Efficient technologies sur-faced from relative obscurity to play a major role in getting Thailand back to work. One such technology is dry ice blasting. LCS, a young company and new BCCT member, delivers dry ice cleaning services to Thailands food and automotive industry. Its a dry and non-abrasive process that is well suited when restoring factories hit by the flooding.

The pervasive damage caused by months of inundation meant that normal cleaning routines could not be applied effectively. Facilities were damaged wall to wall and needed ex-haustive restoration. Tasks included the removal of rust from metal parts; removing water-borne debris stains and contaminants from walls and sur-faces; cleaning chemical spills, corro-sion and stains; removing corrosion and sediment from terminals and elec-trical wiring on main and sub distribu-tion boards. Replacement parts and maintenance teams were in short sup-ply and both mould and rust were on-going problems after lengthy exposure to abnormal levels of humidity.

Normal cleaning procedures such as high pressure water spray and the use of solvents are too slow, prohibitively expensive only ever appropriate in a limited number of applications. Dry ice, however, is extremely flexible, non-conductive and non-abrasive so that it may be used to clean delicate compo-nents such as printed circuit boards, precision moulds and electric compo-nents. Dry ice is also used in food and pharmaceutical installations because it is non-toxic, requires no secondary cleaning and often achieves results ex-

ceeding the sanitisation standards of these regulated industries.

Dry ice blasting may also be used to clean high-pressure moulds for en-gines and tyres to ensure product qual-ity; turbines in power plants to comply with safety regulations and increase efficiency; and storage silos to prevent cross-contamination of chemicals. Dry ice is projected and can often access the hard-to-reach interior of machines. Being dry means no new moisture is introduced into a system - a big plus after rust prevention work.

Nestle Waters, located just north of flood-affected Ayutthaya, contracted LCS to clean the entire facility over a period of three weeks. The scope of

requirements allowed LCS to show-case the flexibility of dry ice by clean-ing both sensitive electrics and wires in the distribution cabinets as well as the bottle moulds, conveyors, filling, cap-ping and labelling stations on Nestls four lines. Nestle Waters has capacity to bottle two million bottles of water a day of various sizes.

LCS would not have been able to service Nestle were it not for the as-sistance of the BCCT. Two of Thai-lands dry ice pellet facilities were submerged, bringing the work of LCS and its competitors to an immediate stop. The BCCT quickly connected our company with PTT and, through PTTs flood restoration team, we had a reliable source of pellets.

We were contacted by PTT within two days of talking to BCCT, and had access to pellets just four days later. Without that supply, we would not have been able to restore Nestle Waters in the time we did. We are grateful to BCCT for their support. The net result of the flooding to the dry ice cleaning indus-try in Thailand has been positive. More companies are aware of its speed, qual-ity and flexibility. We have seen an in-crease in the number of enquiries and now that our partnership with PCS is finalised we expect 2012 to be a busy year, floods or no floods.

By Simon Birkett

Simon Birkett is Chief Executive Officer of LCS. He can be reached at: [email protected].


The last 12 months has been an astonishing time for the people of Myanmar with the arrival of huge numbers of potential investors from countries which have sanctioned Myanmar. The sanctions are mostly still in place, so what has changed? Are things really so differ-ent and what realistically can be achieved in the near future.

This year has seen remarkable shifts in political positions both within Myanmar and from the rest of the world. From a global perspective in recent years there appears to have been a sea change with pressure groups raising questions regarding the effectiveness of sanctions.

Experience in Iraq, Iran, North Korea and Zimbabwe show that sanctions rarely seem to significantly impact on the persons at whom they are aimed. Most likely they have an indirect yet significant impact on the body of per-sons for whom sanctions were initial-ly imposed, namely the poorer, disen-franchised sections of society.

One commentary which carried more weight than most was the position paper produced in 2011 by the Inter-national Crisis Group that brought into severe question the effectiveness of sanctions against Myanmar and this from a group financed by mostly western governments and chaired by Thomas Pickering, a former US Am-bassador to the UN.

During early 2012 the internal changes in Myanmar began to crys-talise. The Government began to ease restrictions and tried to reach out to certain of the minority groups. No one sees the process as something which will bring peace and harmony immediately but the developments and any improvements must be wel-

comed and further encouraged. In parallel the Myanmar government announced intentions to further lib-eralise the political scene by holding another round of elections. True to their word the elections have taken place and have received wide acclaim.

At this point, one should pause and reflect upon occurrences elsewhere in the world during the same pe-riod. Pictures on the international news channels showed the violence and widespread chaos unleashed on the countries of Libya, Egypt, Tuni-sia, Yemen and, latterly, Syria. These countries are paying a very high price to seek to bring about change, simi-lar to that which Myanmar has wit-nessed in 2012.

Aung San Suu Kyi has taken a char-acteristically brave stance and decid-ed to engage in this gradual change and the world was watching with in-terest in the build up to the election of 1st April.

International political leaders have queued for the opportunity to visit

Myanmar and enjoy photo opportu-nities with the lady. On each occasion there was dialogue with the govern-ment and strong expressions of sup-port for the changes being introduced.

Investors from the West have been jealously watching the growth of Chi-nese, Thai and other investor influ-ence in Myanmar. There is a reservoir of investment money available for Myanmar which is coupled with huge good will toward the people and a de-sire to help the country move forward.

Encouraged by the actions and words of their western political leaders Eu-ropean, US and Japanese companies and entrepreneurs have been filling the aircraft seats and hotels of Yan-gon for the last nine months. Positive sentiment within and outside Myan-mar is very strong and optimism is at an all-time high that a successful and peaceful election will result in the withdrawal of some or, indeed, all of the present sanctions.

The legal structure to allow such in-vestment is generally in good order

Hope looms large for investment in MyanmarBy Gary Biesty


and so the immediate issue is where to locate the investment and which, if any, legal or commercial constraints might inhibit such investment.

Whatever ones views may be regard-ing English colonialism there is rare-ly criticism of the legal draftsman-ship of the comprehensive nature of the laws. All those laws are embodied in the 13 volumes of the Burma Code that covers laws introduced from 1841 1954. Significant amongst these, so far as new investors are con-cerned, are the Companies Act 1914, supplemented by 1957 regulations, and the Arbitration Act 1944. Newer legislation of significance includes the Foreign Investment Law 1988.

Assuming that investors have identi-fied the areas of economic activity in which they wish to engage they must next decide which legal vehicle they wish to adopt to implement their in-vestment.

It is not uncommon for investors to seek to use Myanmar nationals as nominees to front potential invest-ments. The prohibition on foreign-ers owning land or owning shares in Myanmar companies means that

such a method of investment is based entirely upon trust. One might char-acterise such investors as having a very high risk appetite. The more sensible investor will adopt one of the established approaches.

The next step depends upon the size of the investment, to an extent the type of investment and, importantly, the likely profit to be generated in Myanmar. The Myanmar Investment Commission is designed primar-ily to assist and encourage foreigners investing large amounts of money. Such projects provide Myanmar with capital knowhow influx and likely generate foreign currency as well as employing nationals in large num-bers. In return for this investment the MIC will provide a basket of benefits ranging from 100 percent foreign ownership through to extended land rights, tax holidays and exemptions. A minimum investment threshold is between US$ 300,000 - 500,000 de-pending upon the proposed activity.

If the investment is rather more mod-est, then the easier approach would be to simply incorporate a company (or partnership/branch/represen-tative office) under the Companies

legislation. The limited company may be 100 percent foreign owned and the thresholds for investment are significantly lower than those for MIC promotion. A pre-requisite to incorporation, and which is applied for in parallel, is to seek a Permit to Trade which as a foreigner is subject to approval by the MIC. Applications must be lodged by hand in Nay Pyi Taw, located about 190 miles north of Yangon.

Once incorporated, the vehicle may seek permission of the MIC to use property. Qualifying foreigners may enjoy leases of 30 years (plus exten-sions of up to 30 years) and indeed longer for special cases of investment in less popular locations. Any pru-dent investor will also assess risk by reviewing the processes for resolving disputes with contracting parties or relevant authorities.

Litigation in most countries is not for the faint hearted and it will come as no surprise that in a market such as Myanmar the challenges for the prospective litigant are dispropor-tionately high. The Arbitration Act of 1944 offers a comprehensive frame-work within which one may seek

British Foreign Secretary William Hague pictured with Aung San Suu Kyi during his recent visit to Myanmar.

Pathway to Exam Success A5 ad.indd 1 4/5/12 8:43 AM

alternative dispute resolution. The Company Law also provides that contracting parties may at the time of entering a relationship stipulate that they submit to an ADR process. The Myanmar Chamber Commerce has a reputation for delivering impartial decisions between parties in dispute.

There are no recorded precedents involving foreigners but the Cham-ber does have the power to sanction a party who fails to meet an award by reporting them to the Ministry of Commerce which, in turn, has the power to suspend the recalcitrants Permit to Trade. Myanmars increas-ing role in ASEAN must inevitably result in a tightening of the processes for ADR.

Sadly there are inevitable hurdles which will slow progress. This ar-ticle deliberately makes no comment of substance concerning politics in Myanmar. There is very considerable world support for the efforts to lib-eralise and that these will involve all the ethnicities in Myanmar. The com-mercial hurdles included the value of

the Kyat. The economy desperately needed a realistic revaluation of the domestic currency and the recent float of the currency at 818 - 1 USD is a huge step in removing some of the hurdles.

As regards infrastructure and prop-erty, domestic energy needs are a huge issue as is the availability of commercial and residential accom-modation. There is significant work being done in the energy, logistics and development sectors but realistically one cannot expect more resources to be available in the course of the next two to three years. In the important field of human resources great efforts are being made to train and educate Myanmar nationals with new skills. English language skills are high but technical training is urgently needed.

On a positive note, we now have a Myanmar government that is chang-ing for the better and we have op-positions groups that are cautiously optimistic. We also see foreign gov-ernments engaging in positive and constructive dialogue.

Myanmar has a population of 50 million people seeking change for the better. Historically, they have been highly educated and are hard working. It is a country rich in natural resources. We see global investors eager for new markets to provide competitive labour and raw materials and a population with huge consumer potential. Many investors rightly believe that now is the time to establish their credentials by investing in Myanmar but they should, however, proceed in a deliberate manner and curb expectations with considerable patience.

Gary Biesty is a Partner at South Asia Law. Email: [email protected]: +66 2 636 0587


Dr. Virachai Techavijit, Honorary Consul General of Estonia in Bangkok and BCCT Honorary Advisor (second from left), hosted the celebration of 94th Independence Day of the Republic of Estonia at his Regents School Bangkok Campus. Over 100 diplomats, senators, academics and business leaders joined the celebrations.

Also pictured are ( from left to right) BCCT Executive Director Greg Watkins, Khun Thiphavan Techavijit, Pattara Sim and BCCT Treasurer John Sim.

Thailand Prime Minister yingluck Shinawatra made a strong case for inward investment during recent talks with her Japanese counterpart yoshihiko Noda.

Boxing clever with new investment campaign

Unbeatable Thailand, Unparalleled Opportunities, which emphasises not only the strong spirit of Thais and Thailand itself but also Thailands incomparable key strengths such as the strategic location, world-class in-frastructure, cost-effective workforce, strong economic fundamentals and diverse resources.

These key strengths are still evident and make Thailand an unbeatable in-vestment destination that offers un-paralleled opportunities in trade and investment, said M.R. Pongsvas Svasti.

A press release issued by the BOI stat-ed that the campaign, for the first time in its history, highlights Thailands renowned signature Thai Fighting Spirit or Muay Thai as a gimmick to symbolise the indomitable spirit of Thais to overcome the challenges. The key message we would like to convey to all investors is that the fight-ing spirit is embedded in the DNA of all Thai people. We are tough and resilient. We have risen above all the obstacles and come back stronger than before. This led to the campaign,

Thailands Board of Investment has announced its Unbeat-able Thailand, Unparalleled Opportunities campaign to enhance Thailands image as Asias key invest-ment and tourist destination. The campaign kicked off in Japan during Prime Minister Yingluck Shinawatras recent trade visit.

M.R. Pongsvas Svasti, Thailands Minister for Industry, said that the Ministrys mission was to enhance Thai industrial sectors potential to compete in the global arena and to ensure a conducive environment for business operation and investment. This included the Ministrys full sup-port to help investors coping with var-ious challenges in the past few years.

He added that the Ministry has intro-duced various policies and measures that help mitigate the impact from challenges such as natural disasters on businesses while enabling inves-tors and business operators to recover and bring their businesses back to normal as fast as possible. The Min-istry realised the urgency in restor-ing Thailands image as the preferred trade and investment destination, as well as strengthening investors confi-dence in Thailand.


Action time for UK pensionersImagine you are British and de-cided to live in Thailand when you retired in the late 70s. If you had faithfully paid all your National Insurance contributions you would have been entitled then to an income of around 10 per week.

But that is the amount you would still be receiving today, now the equivalent of around THB 500 a week or THB 2,000 a month. The same would ap-ply had you moved to any one of over 150 countries. Yet had you moved to countries not on that list, as diverse as the US, Barbados or Spain, you would now be enjoying the current UK based pension of 102.15 per week.

Had you retired to Australia you would suffer the same frozen pension as in Thailand but at least the govern-ment there would provide some addi-tional support rather than allow you to descend into abject poverty. Under-standably this is a sore point in Aus-tralia as around a quarter of a million UK pensioners affected by the policy worldwide live there.

What is the problem?

Under regulation 3 of the Social Secu-rity Benefits Up-rating Regulations, British pensioners retiring to any one of over 150 countries, including many in the Commonwealth, have their rightful state pension frozen. Meanwhile, those who retire to other countries have their pension uprated annually, just as though they never left the UK. This curious policy currently affects the lives of over half a million British pensioners worldwide.

These actually represent no more than four percent of approximately 12 million pensioners but successive

By Eric Jordan

governments have steadfastly re-sisted bringing them into line on the grounds of cost. The issue has been brought to the courts but while they have acknowledged the injustice they have concluded this is a political issue and not a judicial one.

Imagine if a financial institution were to sell a private pension plan to an in-dividual and then told him they were reducing his benefits if he chose to live in any one of 150-plus listed coun-tries. That financial institution and its executives would probably be given a rough ride by politicians.

What can affected pensioners do about it?

The International Consortium of British Pensioners (ICBP) has ar-ranged an online petition that may be signed by simply visiting the website: http.bit.ly/BritPensions.

You may also visit www.pension-parity-uk.com that includes a link to a Thailand-specific petition at www.pensionparitythailand.com.

A direct approach to the Member of Parliament representing a persons last constituency will also help to con-vey the message.

A return to the UK is a solution in desperate cases. But it is not that easy for someone who has lived overseas for much of his or her working life. Many have a local spouse and even young families. Imagine if large num-bers of such families decided to move to the UK. The fact is the country saves a large amount of money when pensioners move overseas since the cost of social services, healthcare and long term care is likely to far exceed the cost of pensions.

Should other nationalities be concerned?

While the issue raised affects a rela-tively small group, the matter of a comfortable retirement or even just surviving in retirement affects all westerners. The position is a little dif-ferent for most Asians where strong family support ensures the survival and care of the elderly although, even


here, things are changing and em-ployers need to adjust.

The situation is more critical in the case of expatriates because many no longer contribute to state schemes and are unlikely to have any active oc-cupational schemes. Even these can-not be relied upon; many companies are no longer able to sustain the crip-pling costs of such schemes. American Airlines, which has recently entered bankruptcy, is proposing to abandon its pension scheme. Others are likely to follow.

What are the solutions?

The first priority is to make a realis-tic assessment of what income would be required to provide an acceptable standard of living in retirement.

Lets say you determine you can live comfortably on a pension of US$3,000 a month in todays money. Assuming an annual return on assets of five percent (close to current annu-ity rates at 65) you would need to have income-generating assets equivalent to $720,000 to produce this monthly income. You would need to revise both the $3,000 and the $720,000 up-wards each year in line with inflation until the year you retire. Even then at some point after retirement you will have to start dipping into your capital (not possible with an annuity) to pre-serve your monthly purchasing power. If you have unexpected large expenses such as medical care you could see your capital diminishing at an alarm-ing rate.

The ideal objective is to accumulate sufficient assets to ensure that the re-turn on investments is significantly higher than the income being drawn so that the capital value continues to grow.

How can this objective be achieved?

The situation is eased if you can expect at least one source of regular income in retirement such as a state pension (preferably unfrozen!) and ideally an occupational pension related to final salary (although unlikely if you have worked overseas most of your life). If you have cash that you can turn into

an annuity this would guarantee you a fixed income for life.

All the above provide the comfort of a regular income. But they also have one thing in common. They die with you, or there may be only limited pro-vision for a surviving spouse.

To build up wealth that has the po-tential to grow and which will become part of your estate upon death you should be looking at the following: One or more private pension plans

(investing in a wide range of assets such as stocks, bonds, gold and other commodities)

An offshore lump sum portfolio (again with a wide range of assets)

If you hold a frozen pension (not state) in the UK it may be possible to convert it to an approved QROPS which can provide a regular income and also become part of your estate upon death, without inheritance tax liability

Real estate, investment property etc (valuable asset but beware of possible illiquidity and mainte-nance costs)

Forestry funds/products

The annual NPC Pensioners Parliament is widely regarded as one of the most important activities in the pensioner movements calendar. There is nothing else like it in the country and over the years the event has developed a number of key roles:

Education enabling people to find out new information that they can then use in their campaigning

Networking offering the chance to get together, share ideas and build friendships

Debate providing a forum for people to discuss ideas and have their say

Rally inspiring the movement to continue its united campaign on key issues

Pensioners Parliamentto meet in Blackpool

The opportunity to build a united pensioners movement, under the co-ordination and leadership of the National Pensioners Convention is what the Pensioners Parliament is all about.

This years NPC Pensioners Par-liament will take place from 19-21 June 2012, Winter Gardens, Black-pool. Tickets are now available, priced 5 for the three-day event (including entertainment on the evening of 20th June).

National Pensioners ConventionWalkden House10 Melton StreetLondonNW1 2EJ

Structured bank products (linked to financial markets but with downside protection). Typically take five years to maturity

Short term asset-backed lending (funds that pay high returns for loans to farmers, property devel-opers, law firms, new energy com-panies, etc.). Many opportunities now exist in this area since banks have become reluctant to lend

It is important to diversify and not put all or most of ones eggs in one basket.

The call for action is for everyone

While the headline theme has been the plight of British expatriates whose pensions have been unfairly frozen we all need to address the reality of a fu-ture that could be bleak without prop-er planning and early action. In Bang-kok recently I was taken aback to see a westerner begging on the sidewalk alongside local beggars. I hope it was not a sign of things to come but we have to accept that the days of count-ing on others to take care of us are dis-appearing. We have to take ownership of our own destinies.


UK Budget for 2012: an expatriate perspective

This article highlights aspects of the UK budget for 2012 that may affect expatriates living in Thailand who have UK earnings, assets or investments, or who may want to buy property in the UK.

Stamp Duty Land Tax: SDLT on the purchase of a residential property (free-hold, lease premium or assignment) will be charged at 7% of the chargeable consideration where this exceeds 2 million. The measure will have effect on transactions where the effective date (normally the date of completion) is on or after 22 March 2012.

SDLT regarding purchases by certain non-natural persons: 15% SDLT

By Stephen Frost

will apply to residential properties over 2 million purchased by certain non-natural persons, and will take ef-fect from 21 March 2012.

In addition, the Government will con-sult on the introduction of an annual charge on residential properties val-ued over 2 million owned by certain non-natural persons, with the inten-tion of introducing legislation next year and the measure coming into ef-fect in April 2013.

Capital gains tax: The annual exempt amount for individuals for 2012/13 will be 10,600.

Gains that fall within an individuals otherwise unused basic rate income tax band are taxed at 18%; any re-

maining gains above the basic rate band limit are taxed at 28%. The rate of CGT for trustees or personal repre-sentatives is 28%.

CGT on foreign currency bank ac-counts: From 6 April 2012, currency gains and losses on the withdrawal of funds from foreign-denominated bank accounts for all individuals, per-sonal representatives and trustees will be exempt from CGT.

Inheritance tax: The IHT threshold is frozen at 325,000 until 5 April 2015.

The rate of IHT remains at 20% for lifetime transfers and 40% for death estates (including transfers within seven years before death brought back

Chancellor of the Exchequer George Osborne with the famous red box as he leaves 11, Downing Street to present the Budget Statement.


Figure 1:

Figure 2:

Figure 3:

2012/13 Employer Employee

Class 1 - not contracted out 3,847.9 4,955.1

Payable on weekly earnings of 819.8 1,386.9

Below 107 (lower earnings limit) 5,865.0 10,204.1

107 to 144 (employers earnings threshold) 1,521.2 3,560.2

144.01 - 146 (employees earnings threshold) 9,146.9 16,270.0

146.01 - 770 (upper accrual point) 2,375.8 4,274.6

770.01 - 817 (upper earnings limit) 1,338.3 2,859.7

over 817 998.4 2,435.0

Where the employee is over state retirement age, the employee contribution is generally nil

Class 1A

Onrelevantbenefits 13.8% Nil

Self employed 2.65 per week

Limit of net earnings for exception 5,595 per annum

Class 3 Voluntary 13.25 per week

Selfemployedonprofits

7,605 - 42,475 9%

Excess over 42,475 2%

*Exemption applies if state retirement age was reached by 6 April 2012.

2012/13 2011/12

Basic rate band income up to 34,370 35,000

Starting rate for savings *10% *10%

Basic rate 20% 20%

Dividend ordinary rate 10% 10%

Higher rate income over 34,370 35,000

Higher rate 40% 40%

Dividend upper rate 32.5% 32.5%

Additional rate income over 150,000 150,000

Additional rate 50% 50%

Dividend additional rate 42.5% 42.5%

* The starting rate is for savings income up to the starting rate limit of 2,710 (2,560) within the basic rate band. The rate applies to any balance of the limit remaining after allocating taxable non-savings income.

Personal allowances (PA)

under 65 8,105 7,475

65 to 74 10,500 9,940

75 and over 10,660 10,090

2012/13 2011/12

Married couples allowance (MCA)

Either partner born before 6 April 1935(relief restricted to 10%)

7,705 7,295

into the estate for the purpose of cal-culating the tax due at death).

A reduced rate of 36% will apply from April 2012 to death estates, where 10% or more of the net estate is left to charity.

Avoidance using offshore trusts: With effect from 21 March 2012, if a person enters into arrangements through which they acquire an inter-est in excluded property such that the value of their estate is reduced, the reduction will be charged to IHT as if that person had transferred assets of that value directly to a relevant prop-erty trust. The assets settled in the offshore trust will cease to be treated as excluded property and will instead become subject to the relevant prop-erty regime.

These provisions will also apply to existing schemes or arrangements en-tered into before 21 March 2012 but only in relation to periodic charges and exit charges that arise on or after that date.

National Insurance Contributions: National Insurance contributions for the year 2012-13 will be as in figure 1.

Income tax rates: The income tax rates for 2012-13 will be as in figure 2.

The personal allowance for those aged under 65 will increase from 6 April 2012 to 8,105. The advantage to higher rate payers is countered by a lowering of the higher rate threshold, to 34,370 from 6 April 2012.

Married couples allowance: This will be as in figure 3.

Age-related allowances are reduced by 1 for every 2 that adjusted net income exceeds 25,400 (24,000), to a minimum PA of 8,105 (7,475).

The MCA is reduced by 1 for every 2 by which the income of the spouse or civil partner with the most income exceeds 24,000 (22,900), subject to a minimum of 2,960 (2,800).

Where adjusted net income exceeds 100,000 the PA, including the minimum age-related allowances, is


reduced by 1 for every 2 that net adjusted income exceeds 100,000 until it is nil.

Individual Savings Accounts: The ISA rules will be changed as follows:

The annual ISA subscription limit for 2012/13 will rise from 10,680 to 11,280, up to 5,640 of which can be invested in a cash-only ISA.

The subscription limit for Junior ISAs, which are available to those aged un-der 18 who do not have a Child Trust Fund account, will remain unchanged at 3,600.

Furnished holiday lettings: The rules on FHLs have been subject to a num-ber of changes in recent years, and fur-ther changes apply from the 2012/13 tax year. From April 2012, the follow-ing tests must be satisfied in order for a letting to qualify as an FHL:

the property must be available for commercial letting as holiday accommodation for a minimum of 210 days during the relevant period

the property must actually be let to the public for a minimum of 105 days during the relevant period

the accommodation must not be let for periods of longer term occupation (over 31 days) for more than 155 days in the tax year.

Child Benefit: The Child Benefit rules are changed as follows:

A new income tax charge will apply to taxpayers who receive Child Benefit themselves or whose partner receives Child Benefit. The charge will apply to those whose income exceeds 50,000 for the tax year. If both partners have income of more than 50,000 for the tax year, the charge will apply only to the partner with the higher income.

For this purpose, a partnership means: a married couple living to-gether; civil partners living together; a man and a woman who are not mar-ried to each other but who are living together; or a man living with a man or a woman living with a woman who are living together as if they were civil partners.

For people with income between 50,000 and 60,000, the amount of the charge will be a proportion of the Child Benefit received. For those with income above 60,000, the amount of the charge will equal the amount of Child Benefit received. For example, Child Benefit for two chil-dren is 1,752. For someone whose income is 54,000, the charge will be 700.80 i.e. 17.52 for every 100 earned above 50,000. For one whose income is 62,000, the charge will be 1,752.

The amount of Child Benefit pay-able will be unaffected by the new tax charge. However, Child Benefit claim-ants will be able to elect not to receive the benefit if they or their partner do not wish to pay the new charge. That election may subsequently be with-drawn if the circumstances change.

This measure is to come into effect from 7 January 2013. HMRC will contact people earning over 50,000 about the new charge from Autumn 2012.

Income tax for 2013/14: The basic and higher rates of income tax will remain at 20% and 40%, respectively, while the additional rate will be reduced to 45%. The dividend additional rate will be set at 37.5%, the trust rate will be set at 45% and the dividend trust rate will be set at 37.5%.

For 2013/14 the personal allowance for those born after 5 April 1948 will

be set at 9,205 and the basic rate limit at 32,245.

From 2013/14, the age-related per-sonal allowances will not be increased and their availability will be restricted to people born on or before 5 April 1948:

Born 6 April 1938 5 April 1948 10,500 Born before 6 April 1938 10,660

Cap on income tax reliefs: There will be a cap on income tax reliefs claimed by individuals from 6 April 2013 where they are currently unlim-ited. Where a person seeks more than 50,000 in reliefs, a cap will be set at 25% of income, or 50,000, which-ever is greater.

Income tax domicile and residence: From 6 April 2012, the 30,000 an-nual Remittance Basis Charge will be increased to 50,000 for resident, non-domiciled individuals (non-doms) who have been UK resident for at least 12 out of the last 14 years. The 30,000 RBC will continue to apply for those who have been resident for at least 7 out of the last 9 years. How-ever, the remittance basis tax charge will not apply where non-doms remit foreign income or gains to the UK for the purpose of commercial invest-ment in UK businesses, nor (subject to conditions) when certain property is brought to, and sold in, the UK and the proceeds are then taken offshore.

Complex (and generally not ben-eficial) identification rules apply if a non-dom remits nominated income or gains before remitting all other off-shore income and gains of the year. A slight relaxation applies from 6 April 2012, allowing up to 10 of a years nominated income and gains to be re-mitted without triggering the identifi-cation rules.

The introduction of the statutory resi-dence test has been delayed until April 2013. Any reforms to ordinary resi-dence will be introduced at the same time.

Also proposed for 2013 is legislation to increase the inheritance tax-

George Osborne


Bangkok International Associates is a general corporate and commercial law firm. For further information, please contact Stephen Frost by email at: [email protected] or telephone (66) 2 231 6201/6455.

exempt amount that a UK domiciled individual can transfer to their non-UK domiciled spouse or civil partner. The Government similarly proposes to allow individuals who are domiciled outside the UK and who have a UK domiciled spouse or civil partner to elect to be treated as domiciled in the UK for the purposes of inheritance tax.

Corporation tax: Corporation tax rates and bands will be as follows:

Other measures:

Income tax avoidance: Life insurance policies: The chargeable event gain regime provides special rules for ap-plying income tax to investment gains from life insurance policies. These rules apply to each individual policy or contract and provide that the amount of a gain that may be liable to income tax is the difference between the value of benefits paid from a policy and the total of premiums paid into the policy

will introduce a new Personal Tax Statement for around 20 million tax-payers, including Self Assessment tax-payers and those in PAYE who receive a coding notice.

The statement will detail the income tax and National Insurance Contribu-tions (NICs) they have paid and their average tax rates. It will also outline how this contributes to public spend-ing, outlining the proportions used for education, health and welfare.

Real Time Information (RTI) and PAYE penalties: Currently, employers and pension providers send informa-tion about tax, NICs and other pay-roll deductions to HMRC after the end of each tax year. The result is that HMRC cannot correct mistakes until the employer sends this information. However, under RTI, employers and pension providers will tell HMRC about tax, NICs and other deduc-tions when or before the payments are made. The Government will consult before the Summer on a new model for PAYE late payment and late filing penalties.

Note: This article is composed from press and other public sources. For comprehensive advice, it is preferable to consult an accountant or lawyer familiar with UK tax law.

I am indebted to Tony Coates FCA, Managing Partner of Coates & Co Chartered Accountants www.coatesca.co.uk for proofreading this article before publication.

Financial year to 31 March 2013 31 March 2012

Taxable profits

First 300,000 20% 20%

Next 1,200,000 25% 27.5%

Over 1,500,000 24% 26%

The main rate of corporation tax will be reduced to 23% for the financial year commencing 1 April 2013 and to 22% for the financial year commenc-ing 1 April 2014.

Controlled foreign companies: A new CFC regime will have effect for CFC accounting periods beginning on or after 1 January 2013. The business profits of a foreign subsidiary will be outside the scope of the new CFC re-gime if they meet the specified condi-tions set out in a gateway. There will be safe harbours for

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The Brief, Issue 2/2012

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