The Brief, Issue 2/2012 by The British Chamber of Commerce Thailand

Magazine of the British Chamber of Commerce Thailand Issue 2/2012

www.bccthai.com

Backing Britain The Brief

Issue 2/2012

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CONTENTS Issue 2/2012

BCCT

Board of Directors 2012 Chairman Simon Landy Colliers International Thailand T: 02 656 7000 simon.landy@colliers.com Vice Chairman & Treasurer John Sim KPMG Phoomchai Holdings T: 02 677 2288 jsim@kpmg.co.th Vice Chairmen Matthew Lobner HSBC T: 02 614 4040 matthew.k.lobner@hsbc.com Simon Matthews Manpower Thailand T: 02 634 7273 matthews@manpower.th.com

Dean Thompson Boots Retail (Thailand) Ltd T: 02 694 5900 dean.thompson@bootsrt.com Directors Jane Bailey Equitech (Thailand) Ltd T: 02 259 6255 jane.bailey@pattfoundation.org Gary Biesty South Asia Law Co., Ltd T: 02 636 0585 garyb@southasia-law.com David Cumming Amari Orchid Pattaya T: 038 418 418 david.cumming@orchid.amari.com

Richard Greaves Grand Hyatt Erawan Bangkok T: 02 254 6239 richard.greaves@hyatt.com Colin Hastings The Big Chilli Co., Ltd T: 02 235 0170 colin1066@hotmail.com Andrew McBean Grant Thornton T: 02 205 8222 Email: andrew.mcbean@th.gt.com Sriram Narayan British Airways PLC T: 02 627 1723 sriram.narayan@ba.com Chris Thatcher Individual T: 085 064 8884 christhatcher1@gmail.com Toni Weber TNT Express Worldwide (Thailand) T : 02 257 6555 toni_weber@msn.com

This Edition

Royal visit raises trade hopes

UK Trade Minister in upbeat mood

16 Front cover: HRH The Duke of York meets Prime Minister Yingluck Shinawatra during his trade visit to Thailand.

ASEAN Secretary General gives BCCT annual lecture

Myanmar star on the rise

Action time for UK pensioners

Analysis of Chancellor of the Exchequer George Osborneâ&#x20AC;&#x2122;s latest Budget statement

Future unclear for Olympics Stadium

The Brief

Issue 2/2012

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CONTENTS Issue 2/2012

British Chamber of Commerce Thailand 7th Floor, 208 Wireless Road Bangkok 10330, Thailand Tel: 02-651 5350/3 Fax: 02-651 5354 Website: www.bccthai.com Email: greg@bccthai.com Greg Watkins, Executive Director

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

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.

Every Edition

Message from Chairman Simon Landy

Updates from Executive Director Greg Watkins

Latest news from the British Council

Member news: Record profits for Standard Chartered

By the Numbers

Chamber events in Thailand

The Last Word The Brief

Issue 2/2012

Chairman’s Message

hat’s black and white and read all over? Well, not last month’s Chairman’s Message, judging by the deafening silence that greeted my call for input from members.

Simon Landy

Sterling Partners

Corporate Partners

Other Major Partner

Supporting Partners

Maybe I’m 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 haven’t 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 Council’s CSR event on March 27th. Internally, we’ve 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 you’d 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.

Annual Airline Partners

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, I’d 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. The Brief

Issue 2/2012

Executive Director’s Message

he 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.

GREG WATKINS

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 BCCT’s 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 greg@bccthai.com 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 greg@bccthai.com 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 rungjit@bccthai.com. 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.

The Brief

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Cover Story

All smiles from HRH The Duke of York and Prime Minister Yingluck Shinawatra.

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

he last few months have been an outstanding period for high-level engagement between 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 Investment Minister Lord Green and HRH The Duke of York in the last two months alone. The Duke of Yorkâ&#x20AC;&#x2122;s 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 10

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Thai government having to adopt economic 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 early stages of decision making - a case in point being EU-Thailand FTA negotiations. The Commerce Minister told us that scoping work would begin in April after which time a Parliamentary mandate to pursue formal negotiations 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 permit 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 between rich and poor, the difficulties of financing major, long term infrastructure projects (an issue which the Lord Mayor will pick up on in his visit

Cover Story

to Bangkok in May), the reconciliation process, and difficulties faced by Thais applying for visas to the UK. She cited the recent cut in Corporation Tax, from 30 percent to 23 percent as evidence that the Government was back on track in delivering its election promises. Trade and investment featured heavily in the programme. The Duke visited a British Council sponsored ecodesign project and met leading Thai corporates as well as the British business 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 facility in the spring. It is also looking to source as much of its raw materials as possible from within the UK, including 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 Seaboard to open Tesco’s flagship zero carbon store, (its first in Asia) and to visit Reckitt Benckiser’s Nurofen and Strepsils plant. Reckitt have impressive plans to expand its footprint in Thailand 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 2324 May will focus upon legal services and dispute resolution, banking and insurance. There will be an opportunity for Chamber members to meet him at a special lunch being hosted by the BCCT during his visit.

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

Bradley Jones is Director – UK Trade & Investment in Thailand, based at the British Embassy, 14 Wireless Road, Bangkok 10330 Tel: 02 305 8256 Fax: 02 255 8619 Email: bradley.jones@ fco.gov.uk www.ukinthailand.fco.gov.uk

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Advertorial

Top business tips for PWG members By Toni Weber

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

very year, on 8th March, numerous events and activities are organised to celebrate International Women’s Day, honouring the economic, political and social achievements of women around the world.

This celebration has now been running for over one hundred years and is an official holiday in many countries. BCCT’s Professional Women’s 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 businesses. BCCT Director Gary Biesty also gave an overview of the practicalities of setting up a business in Thailand. More and more countries are introducing 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 entrepreneurship was therefore very topical for our March event. The entrepreneurs on show included Vibeke Lyssand Leirvag, who founded Felicia (Jewellery) 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 offering handmade designer shoes; and

The Professional Women’s 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. Toni Weber

Pakinee Jiwattana Paiboon, who used her university training to transform her mother’s fledgling company into Xongdur Organic Foods. These entrepreneurs were asked to provide their top tips in setting up and managing a business here. Laksasubha Kridakon, owner of Baan Laksasubha 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 restaurant, said, “Before opening your business, 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

This was our second PWG event in 2012, the first being a highly enjoyable speed networking event in January. Previous events have included ‘Women’s 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 Tiffany’s 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 ‘perfume 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. Toni Weber is Director, Corporate Initiatives - Asia Pacific with TNT Express Worldwide (Thailand) Ltd. She is Chairwoman of the Professional Women’s Group and a BCCT Board Director. Tel: +66 2 257 6555 Fax: +66 2 257 6588 Email: toni_weber@msn.com

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UK Trade Minister in upbeat mood B

ritain’s relationship with Thailand 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 Chairman of HSBC Holdings, was in Thailand recently to promote British interests in a series of meetings with Thai government ministers and representatives of the private sector. In an article preceding his visit, published in The Nation newspaper, Lord Green wrote that ‘British visitors have long admired the resilience and energy of Thailand’s businesses, and their reaction to the floods last year is something that we can all learn from – a combination of moving generosity, working alongside government to help the most affected, and impressive 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 together, 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, bilateral trade was worth three billion pounds and between 2006 and 2010 UK goods exports to Thailand doubled. We are also Thailand’s leading EU investor, with major companies enjoying a strong presence here in-

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

cluding HSBC, Standard Chartered, GlaxoSmithKline, BG Group, Boots and Tesco, the latter of which has over 1,000 stores - the largest number outside the UK’. Lord Green also stated that ‘Thai investment in the UK is equally important and we want to continue to attract more innovative Thai companies to choose Britain as a place to do business. An important example of Thai investment is Tata Steel’s Teeside Cast Products in Redcar by Thai-based Sahaviriya Steel Industries. Up to 1,000 jobs will be created and 700 saved’. Lord Green’s schedule in Thailand included discussions with UK engineering consultancy Halcrow to look at the opportunities for partnership work. ‘The UK has extensive global expertise in construction and infrastructure, 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 developing 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 education was another area where the two countries could work together. He added that ‘Thailand’s neighbours, Malaysia and Singapore, boast a large English-speaking population that is

expanding rapidly. Emerging markets like Vietnam and Indonesia are following suit. As with any country looking to maintain international competitiveness, proficiency in English is at the heart of global business. As Thailand 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 vocational training and can meet any occupation-based learning requirement as well as providing world-class training to the business world. I am delighted that the University of Central Lancashire is planning to establish the UK’s first private university campus 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 Thailand’s efforts to provide affordable and effective healthcare for all of its citizens. Lord Green’s article concluded: ‘I am a strong believer in free trade, which in my view benefits all countries and

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.

stimulates competition. That’s why I would like to see Thailand follow in the footsteps of its neighbours and seek an early parliamentary mandate to commence negotiations for an EU-Thailand Free Trade Agreement (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

way business is undertaken between the two countries.

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

• Lord Green’s focus at the FCO is to help achieve a more commerciallyminded office that effectively supports the government’s growth agenda. He oversees the new Commercial and Economic Diplomacy Group tasked with delivering a more commercial FCO in practice • As head of UK Trade & Investment, Lord Green helps UK firms to export abroad and 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 Department and acts as spokesman for the Government on trade and investment issues in the House of Lords • Lord Green chairs the Council of Business Ambassadors and is a member of the Prime Minister’s Business Advisory Network. He has also chaired the British Bankers’ Association and the Prime Minister’s Business Council for Britain. Lord Green has also served as a trustee of the British Museum

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 Stephen Green is Minister of State for Trade and Investment in the UK’s Department 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 Government’s Ministry of Overseas Development. In 1977 he joined the man-

• Lord Green is responsible for ensuring the delivery of a cross-Government strategy for trade and for attracting international investment. He is accountable to both the Secretary of State for Business and the Foreign Secretary • The UK is currently the world’s sixth largest exporter and second largest investor in foreign markets. Many world-beating business sectors have built up a strong presence in the world’s biggest developed 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

‘We now need to build on our strong relationship and provide the best environment for business to flourish. We face similar challenges, adapting our economies to an uncertain global environment. But we also share a vision for the future that will unlock opportunities, foster talent and stimulate knowledge’.

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ASEAN chief calls for better English language skills

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

hailand faces some major challenges in the lead-up to the ASEAN Economic Community in 2015. That’s the view of ASEAN Secretary General Surin Pitsuwan, 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 implementation’. He expressed concern that national parliaments will adopt protectionist measures that contradict the principles of the ASEAN Economic Community, hindering progress and nullifying many of the broad principles enveloped in the wide-ranging framework. He began his address by recalling the words of Thailand’s former Prime Minister Anand Panyarachun (1991/2) who had stated during his tenure that ‘the region needs to develop a free trade area to prevent the Chinese taking everything’. He also recalled the original aspirations of the ASEAN ‘founding fathers’, the Foreign Ministers of Indonesia,

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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 encouraged by the fact that there would be a 99 percent tariff free zone by 2015 and that they were ‘on course’ to secure major agreements on goods, services and investment. But his message to Thailand’s politicians and business leaders was clear: ‘change your mindset and explore the possibilities’. Malaysia, the Philippines, Singapore and Thailand when they signed the ASEAN Declaration in 1967. These aims and purposes were about cooperation in the economic, social, cultural, technical, educational and other fields, and 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. “Forty five years later and we are now talking about an ASEAN economic

He stated that multinationals were doing much better than Thai companies in taking advantage of the new deregulation across the ASEAN region. “Thailand’s 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 eastwest corridors.”

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 issue of labour mobility across ASEAN borders. “We cannot have total free movement,” he said. “It is restricted to skilled labour covering such professionals as dentists, architects, accountants, 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 it’s a matter of member nations talking to each, people to people.” The Secretary General, mindful of the major problems affecting the eurozone, all but ruled out a single currency within the ASEAN Economic Community. “It’s difficult to have monetary union without countries monitoring each other’s macro-economic policies,” 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 comfortable with our direction’. Asked about the threats to and opportunities for Thailand, the Secretary General highlighted the need to improve English language skills (English being the official language of ASEAN) and the importance of reform in the state’s education system.

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.

“Thailand is not comfortable with change but it faces a tremendous challenge. 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.”

The original ASEAN Declaration was a short, simply-worded document containing just five articles. It declared the establishment of 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.

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

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

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

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 proclaimed ASEAN as representing the collective will of the nations of Southeast Asia to bind themselves together in friendship and cooperation and, through joint efforts and sacrifices, secure for their peoples and, for posterity, the blessings of peace, freedom and prosperity.

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Outdated laws prove stumbling block to ASEAN integration Tilleke & Gibbins Partner and close ASEAN watcher Cynthia Pornavalai gives her latest assessment of the ASEAN Economic Community.

he ASEAN Free Trade Area has made great strides in removing tariffs between member 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 agreements 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 nontariff barriers by enhancing transparency of non-tariff measures and formulating regional rules and regulations consistent with international best practices”, explains Cynthia Pornavalai, 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, harmonise and standardise trade and customs processes, procedures and related information flows by establishing the essential trade facilitation cooperation mechanism and customs integration. The ultimate goal is the ASEAN Single Window (ASW).” But it’s not that easy. To create the ASW each individual member must first make operational its National Single Window. The AEC envisages the complete removal of restrictions to the provision 18

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of services and the establishment of companies across national borders with the ASEAN region by 2015 (subject 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 arrangements for professional services provided by architects, accountants, dentists, surveyors and doctors. The AEC is also striving to establish a free and open investment regime that enhances ASEAN’s 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

capital market development and integration 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 competencies and qualifications for occupational trainers’ skills and strength-

en the research capabilities of each ASEAN member country through the promoting of skills and job placements in the region.”

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

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 National Single Window, along with Brunei, Indonesia, Malaysia, Philippines and Singapore. Thailand has also ratified the ASEAN Trade in Goods Agreements (ATIGA), described by ASEAN Secretary General Dr Surin Pitsuwan as ‘a major achievement towards the establishment of a single market under the ASEAN Economic Community 2015’. Thailand, along with Indonesia, has not yet ratified the ASEAN Comprehensive Investment Agreement. All

Cynthia Pornavalai

other member countries have ratified this important agreement. Most ASEAN countries, including Thailand, no longer place restrictions on inward and outward foreign investments. However, work continues on the key issue of financial integration in capital market development, liberalisation of financial services, capital account liberalisation and ASEAN currency cooperation.

“Thailand has always oscillated between protectionism and liberalisation. 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 foreign participation in industries where Thai nationals are deemed to be uncompetitive,” says Cynthia Pornavalai. “For Thailand to fulfil its commitments to various AEC agreements and protocols it must revamp the two major legal stumbling blocks, namely the Foreign Business Act and the Alien Employment Act.”

The Brief

AD SAMITIVEJ (HP)

Issue 2/2012

SMEs in deep water after Thailand floods By Andrew McBean

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. Policyholders refer to Best’s ratings and analysis as a means of assessing the financial strength and creditworthiness of risk-bearing entities and investment vehicles. The overview stated that ‘overall, industry wide insurers’ loss estimates from the floods have increased by 50 percent to US$15 billion since Best’s 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 world’s fourth costliest insured loss ever. This was supported by Lloyds of London in a statement on 14th February estimating that claims may reach US$20 billion, with the Thai floods constituting Lloyd’s third biggest loss in its 324 year history. It was, notably, the world’s largest ever fresh-water flood disaster. Even more painful for insurers were that they had only collected an estimated US$4.5bn in premiums with 70 percent of the losses being shouldered by international Insurers, 20 percent regional and only 10 percent local. It could have been much worse for insurance 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 20

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than what resulted from Japan’s earthquake 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 generally wholly unprepared and inexperienced regarding claims of this size and type and how to deal with insurance 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 perspective of being reluctant to pay for expertise – deemed to be not tangible. Recently I heard claims expert Patrick Bickford, CEO of Adjusters International Colorado, tell a seminar audience 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 issues can be interpreted through different vantage points. A key to success with any claim is being 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 interruption (BI) claims and contingent business interruption (CBI) claims, which are based on supply chain interruption rather than actual property losses, remains 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 Ramangura, head of the Strategic Formulation 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 considered the long term impact on Thailand. It underscored that the unprecedented flooding ‘has forever changed the perception of risk in Thailand and brought about significant changes to the Thai insurance industry. The Thai commercial insurance industry will likely begin facing sharply contracted capacity, higher pricing and tighter terms for coverage with the Asian and Japanese reinsurance renewals in April. In 2012, flood coverage will be separated from IAR policies’. This will have serious financial implications for hundreds of thousands of business and home owners who now have to pay more attention to insurance, many for the first time. This is especially the case for flood-related damages given the backdrop of dire

warnings from the Science and Technology 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 Jitkomut, 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. However, this will be further exacerbated by two more factors: • Khun Vallop Vitanakorn, a vicechairman of the Thai National Shippers’ Council, added that of the 2.3 million SMEs in Thailand, 2030 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 Lessons from the Thai Floods’ that international reinsurers were demanding high premium rates, varying between five and 10 percent, for catastrophe insurance 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 received before the floods struck in 2011. Finally, why do we need insurance payments? Ideally, these are to help the return to production as quickly as possible. In the USA, the Small Business Association 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 companies to be prepared to invest more in intangible services such as ‘expertise’, (for example in how to make an insurance 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: andrew.mcbean@th.gt.com Tel: +66 2 205 8222.

The Brief

Issue 2/2012

Ice cool LCS aids post flood clean up By Simon Birkett

ast year’s flooding was, as we all know, devastating and predominantly negative. However, as with all such events, there were some positives. Efficient technologies surfaced 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 Thailand’s food and automotive industry. It’s 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 exhaustive restoration. Tasks included the removal of rust from metal parts; removing water-borne debris stains and contaminants from walls and surfaces; cleaning chemical spills, corrosion and stains; removing corrosion and sediment from terminals and electrical wiring on main and sub distribution boards. Replacement parts and maintenance teams were in short supply and both mould and rust were ongoing 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, nonconductive and non-abrasive so that it may be used to clean delicate components such as printed circuit boards, precision moulds and electric components. Dry ice is also used in food and pharmaceutical installations because it is non-toxic, requires no secondary cleaning and often achieves results ex22

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requirements allowed LCS to showcase the flexibility of dry ice by cleaning both sensitive electrics and wires in the distribution cabinets as well as the bottle moulds, conveyors, filling, capping and labelling stations on Nestlé’s 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 assistance of the BCCT. Two of Thailand’s 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 PTT’s flood restoration team, we had a reliable source of pellets.

ceeding the sanitisation standards of these regulated industries. Dry ice blasting may also be used to clean high-pressure moulds for engines and tyres to ensure product quality; 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

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 industry in Thailand has been positive. More companies are aware of its speed, quality and flexibility. We have seen an increase 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.

Simon Birkett is Chief Executive Officer of LCS. He can be reached at: simonb@laiert-cs.com.

The Brief

Issue 2/2012

Hope looms large for investment in Myanmar By Gary Biesty

he 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 different – 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 persons for whom sanctions were initially imposed, namely the poorer, disenfranchised sections of society. One commentary which carried more weight than most was the position paper produced in 2011 by the International 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 Ambassador to the UN. During early 2012 the internal changes in Myanmar began to crystalise. 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 liberalise 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 period. Pictures on the international news channels showed the violence and widespread chaos unleashed on the countries of Libya, Egypt, Tunisia, Yemen and, latterly, Syria. These countries are paying a very high price to seek to bring about change, similar to that which Myanmar has witnessed in 2012.

Myanmar and enjoy photo opportunities with ‘the lady’. On each occasion there was dialogue with the government and strong expressions of support for the changes being introduced. Investors from the West have been jealously watching the growth of Chinese, Thai and other investor influence in Myanmar. There is a reservoir of investment money available for Myanmar which is coupled with huge good will toward the people and a desire to help the country move forward.

Aung San Suu Kyi has taken a characteristically brave stance and decided to engage in this gradual change and the world was watching with interest in the build up to the election of 1st April.

Encouraged by the actions and words of their western political leaders European, US and Japanese companies and entrepreneurs have been filling the aircraft seats and hotels of Yangon for the last nine months. Positive sentiment within and outside Myanmar 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.

International political leaders have queued for the opportunity to visit

The legal structure to allow such investment is generally in good order The Brief

Issue 2/2012

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

and so the immediate issue is where to locate the investment and which, if any, legal or commercial constraints might inhibit such investment. Whatever one’s views may be regarding English colonialism there is rarely criticism of the legal draftsmanship 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 concerned, 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 identified 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 investment. It is not uncommon for investors to seek to use Myanmar nationals as nominees to front potential investments. The prohibition on foreigners owning land or owning shares in Myanmar companies means that 26

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such a method of investment is based entirely upon trust. One might characterise 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 primarily 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 numbers. 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 depending upon the proposed activity. If the investment is rather more modest, then the easier approach would be to simply incorporate a company (or partnership/branch/representative 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 extensions of up to 30 years) and indeed longer for special cases of investment in less popular locations. Any prudent 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 disproportionately high. The Arbitration Act of 1944 offers a comprehensive framework within which one may seek

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 Chamber 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 recalcitrantâ&#x20AC;&#x2122;s Permit to Trade. Myanmarâ&#x20AC;&#x2122;s increasing role in ASEAN must inevitably result in a tightening of the processes for ADR. Sadly there are inevitable hurdles which will slow progress. This article deliberately makes no comment of substance concerning politics in Myanmar. There is very considerable world support for the efforts to liberalise and that these will involve all the ethnicities in Myanmar. The commercial 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 property, domestic energy needs are a huge issue as is the availability of commercial and residential accommodation. 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 changing for the better and we have oppositions groups that are cautiously optimistic. We also see foreign governments 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: garyb@ southasia-law.com Tel: +66 2 636 0587

Boxing clever with new investment campaign T

hailand’s Board of Investment has announced its ‘Unbeatable Thailand, Unparalleled Opportunities’ campaign to enhance Thailand’s image as Asia’s key investment and tourist destination. The campaign kicked off in Japan during Prime Minister Yingluck Shinawatra’s recent trade visit. M.R. Pongsvas Svasti, Thailand’s Minister for Industry, said that the Ministry’s mission was to enhance Thai industrial sector’s potential to compete in the global arena and to ensure a conducive environment for business operation and investment. This included the Ministry’s full support to help investors coping with various challenges in the past few years. He added that the Ministry has introduced various policies and measures that help mitigate the impact from challenges such as natural disasters on businesses while enabling investors and business operators to recover and bring their businesses back to normal as fast as possible. The Ministry realised the urgency in restoring Thailand’s image as the preferred trade and investment destination, as well as strengthening investors’ confidence in Thailand.

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

A press release issued by the BOI stated that the campaign, for the first time in its history, highlights Thailand’s 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 fighting 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,

“Unbeatable Thailand, Unparalleled Opportunities”, which emphasises not only the strong spirit of Thais and Thailand itself but also Thailand’s incomparable key strengths such as the strategic location, world-class infrastructure, cost-effective workforce, strong economic fundamentals and diverse resources. These key strengths are still evident and make Thailand an unbeatable investment destination that offers unparalleled opportunities in trade and investment,” said M.R. Pongsvas Svasti.

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 Regent’s 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.

The Brief

Issue 2/2012

Action time for UK pensioners By Eric Jordan

magine you are British and decided to live in Thailand when you retired in the late 70’s. 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 apply 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 government there would provide some additional support rather than allow you to descend into abject poverty. Understandably this is a sore point in Australia 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 Security 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 30

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governments have steadfastly resisted 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 individual and then told him they were reducing his benefits if he chose to live in any one of 150-plus listed countries. 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 arranged an online petition that may be signed by simply visiting the website: http.bit.ly/BritPensions. You may also visit www.pensionparity-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 person’s last constituency will also help to convey 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 numbers 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 relatively small group, the matter of a comfortable retirement or even just surviving in retirement affects all westerners. The position is a little different for most Asians where strong family support ensures the survival and care of the elderly although, even

here, things are changing and employers need to adjust.

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

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 occupational schemes. Even these cannot be relied upon; many companies are no longer able to sustain the crippling costs of such schemes. American Airlines, which has recently entered bankruptcy, is proposing to abandon its pension scheme. Others are likely to follow.

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 provision for a surviving spouse.

What are the solutions? The first priority is to make a realistic assessment of what income would be required to provide an acceptable standard of living in retirement. Let’s say you determine you can live comfortably on a pension of US$3,000 a month in today’s money. Assuming an annual return on assets of five percent (close to current annuity 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 upwards 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 preserve your monthly purchasing power. If you have unexpected large expenses such as medical care you could see your capital diminishing at an alarming rate. The ideal objective is to accumulate sufficient assets to ensure that the return 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

To build up wealth that has the potential 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 maintenance costs) • Forestry funds/products

• 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 developers, law firms, new energy companies, 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 one’s 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 future that could be bleak without proper planning and early action. In Bangkok 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 counting on others to take care of us are disappearing. We have to take ownership of our own destinies.

Pensioners’ Parliament to meet in Blackpool The annual NPC Pensioners’ Parliament is widely regarded as one of the most important activities in the pensioner movement’s 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

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 year’s NPC Pensioners’ Parliament will take place from 19-21 June 2012, Winter Gardens, Blackpool. Tickets are now available, priced £5 for the three-day event (including entertainment on the evening of 20th June). National Pensioners Convention Walkden House 10 Melton Street London NW1 2EJ

The Brief

Issue 2/2012

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

UK Budget for 2012: an expatriate perspective By Stephen Frost

his 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 (freehold, 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

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will apply to residential properties over £2 million purchased by certain ‘non-natural persons’, and will take effect from 21 March 2012.

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

In addition, the Government will consult on the introduction of an annual charge on residential properties valued over £2 million owned by certain non-natural persons, with the intention of introducing legislation next year and the measure coming into effect in April 2013.

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

Capital gains tax: The annual exempt amount for individuals for 2012/13 will be £10,600. Gains that fall within an individual’s otherwise unused basic rate income tax band are taxed at 18%; any re-

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

into the estate for the purpose of calculating the tax due at death).

Figure 1: 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

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 interest 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 property trust. The assets settled in the offshore trust will cease to be treated as excluded property and will instead become subject to the relevant property regime.

Where the employee is over state retirement age, the employee contribution is generally nil On relevant benefits Class 1A

Class 3

13.8%

Nil

Self employed

£2.65 per week

Limit of net earnings for exception

£5,595 per annum

Voluntary

£13.25 per week

Self employed on profits

These provisions will also apply to existing schemes or arrangements entered 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.

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

Excess over £42,475

Figure 2:

Married couple’s allowance: This will be as in figure 3.

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).

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

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.

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).

£7,605 - £42,475

2012/13

2011/12

Basic rate band – income up to

£34,370

£35,000

Starting rate for savings

*10%

Basic rate

20%

Dividend ordinary rate

10%

Higher rate – income over

£34,370

£35,000

Higher rate

40%

Dividend upper rate

32.5%

Additional rate – income over

£150,000

Additional rate

50%

Dividend additional rate

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

£7,705

£7,295

Figure 3: Married couple’s allowance (MCA) Either partner born before 6 April 1935 (relief restricted to 10%)

The Brief

Issue 2/2012

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

be set at £9,205 and the basic rate limit at £32,245. From 2013/14, the age-related personal allowances will not be increased and their availability will be restricted to people born on or before 5 April 1948:

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.

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

The subscription limit for Junior ISAs, which are available to those aged under 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 number of changes in recent years, and further changes apply from the 2012/13 tax year. From April 2012, the following 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 together; civil partners living together; a man and a woman who are not married 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. 34

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George Osborne

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 children 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 payable will be unaffected by the new tax charge. However, Child Benefit claimants 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 withdrawn 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

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 unlimited. Where a person seeks more than £50,000 in reliefs, a cap will be set at 25% of income, or £50,000, whichever is greater. Income tax domicile and residence: From 6 April 2012, the £30,000 annual Remittance Basis Charge will be increased to £50,000 for resident, non-domiciled individuals (nondoms) 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. However, the remittance basis tax charge will not apply where non-doms remit foreign income or gains to the UK for the purpose of commercial investment 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 beneficial) identification rules apply if a non-dom remits nominated income or gains before remitting all other offshore income and gains of the year. A slight relaxation applies from 6 April 2012, allowing up to £10 of a year’s nominated income and gains to be remitted without triggering the identification rules. The introduction of the statutory residence test has been delayed until April 2013. Any reforms to ordinary residence will be introduced at the same time. Also proposed for 2013 is legislation to increase the inheritance tax-

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:

Financial year to

Other measures: Income tax avoidance: Life insurance policies: The chargeable event gain regime provides special rules for applying 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

31 March 2013

31 March 2012

First £300,000

20%

Next £1,200,000

25%

27.5%

Over £1,500,000

24%

26%

Taxable profits

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 commencing 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 regime if they meet the specified conditions set out in a ‘gateway’. There will be ‘safe harbours’ for the gateway conditions covering general commercial business, incidental finance income and some sector specific rules. As an alternative to the gateway there will be exemptions including excluded territory exemption and a low profits exemption. There will also be rules for intra group finance income. Anti-avoidance: Legislation will be introduced in the Finance Bill to prevent tax avoidance arising from: corporate investors in Authorised Investment Funds; corporate settlor-interested trusts; debt buybacks; plant and machinery leasing; plant and machinery transactions where there is a tax avoidance purpose; post-cessation trade and property reliefs; property losses; sales of lessor companies; and site restoration payments.

plus certain gains arising earlier in the life of a policy. There is currently no requirement under these rules that the earlier gains must have been included in the total income of a person liable to any tax under the chargeable event gain regime. For relevant policies and contracts made on or after 21 March 2012 (and existing policies and contracts which are assigned in part or whole, or are used as security for a debt, or into which policyholders choose to pay further premiums, on or after 21 March 2012), changes announced will ensure that when calculating the amount of a chargeable event gain under a policy or contract, a deduction for earlier gains will only be allowed to the extent that those earlier gains are attributable to a person chargeable to tax on gains under the chargeable event gain regime. Further provisions will be included to ensure that interdependent policies (under which the value of benefits paid from one policy is dependent on premiums paid into another policy) will be treated as a single policy with the current rules applying to that single policy as usual. Personal Income Tax Statement: From the 2014/15 tax year the Government

will introduce a new Personal Tax Statement for around 20 million taxpayers, including Self Assessment taxpayers and those in PAYE who receive a coding notice. The statement will detail the income tax and National Insurance Contributions (NICs) they have paid and their average tax rates. It will also outline how this contributes to public spending, outlining the proportions used for education, health and welfare. Real Time Information (RTI) and PAYE penalties: Currently, employers and pension providers send information about tax, NICs and other payroll 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 deductions 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.

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

The Brief

Issue 2/2012

Advertorial

GSKreceives receives Thai Thai Chamber ofofCommerce Business GSK Chamber Commerce Business Ethics Standard Test Award 2011 Ethics Standard Test Award 2011 for its its Business Business and for andCSR CSRapproach approach

GlaxoSmithKline Thailand , a leading research-based pharmaceutical and healthcare company, today announced it has received the "Thai Chamber of Commerce Business Ethics Standard Test Award 2011: TCC BEST Award." The award reflects GSK's commitment to operating its business in an honest and transparent manner using best practices and high standards that benefit all related parties, while running socially-responsible activities under its Access to Medicines initiative to help improve the well-being of Thai people. According to Mr. Viriya Chongphaisal, General Manager, GSK Thailand, “We are very pleased and honored to receive the TCC BEST Award. It reflects GSK's success operating in Thailand in a very socially-responsible manner with integrity and transparency, and is a source of great pride for all of us at GSK.” GSK Thailand operates our business in a responsible and ethical manner. The corporate values that define our business conduct are Transparency, Respect for People, Integrity and Patient Focus. The company is committed to socially-responsible and ethical practices, and strict adherence to all related laws and regulations. Its employees are aware of their shared ownership of the company and poised to create innovations that benefit people’s well-being.

Dr Thavirap Tantiwongse, Public Affairs Director receives the "Thai Chamber of Commerce Business Ethics Standard Test Award 2011: TCC BEST Award" from H.E. Prof Dr Kasem Watanachai, Privy Councillor.

GSK Thailand continues to enhance healthier lifestyles for Thai people under the Access to Medicines initiative by focusing on health promotion and increasing access to innovative medicines and vaccines for Thai people. Under this global initiative, GSK Thailand has introduced the GSK Medicine Bank and the Nursing Excellence Programme to create shared social values by making good health more widely available to patients and underprivileged people in Thailand.

Criteria of Thai Chamber of Commerce Business Ethics Standard Test Award 2011 1. Fair Trade Management 2. Disclosure and Transparency 3. Responsibility for Consumers and Suppliers 4. Honesty 5. Good Corporate Governance 6. Good Corporate Social Responsibility 7. Environmental Preservation 8. Respect for Individual Rights and Liberty 9. Risk Management 10. Promoting Organisational Best Practices

The GSK Medicine Bank, which is run in conjunction with the Thai Red Cross Society, is designed to provide underprivileged people throughout Thailand with access to essential medicaGSK Medicine Bank, which is run in conjunction with tions as well as quality healththe Thai Red Cross Society, gives healthcare advice and services to the underprivileged and the general public. care advice and services. The Nursing Excellence Programme is increasing access to health care for Thai people by supporting the development of more health practitioners and encouraging them to serve communities in remote areas of Thailand. The program, which is conducted in collaboration with the Praboromarajchanok Institute of Health Workforce Development, Ministry of Public Health, offers young, underprivileged students the opportunity to receive an education and pursue a nursing career at hospitals and public health centers in rural communities.

GSK shared values: “GSK employees provide the knowledge of healthcare and sanitation for the public.”

GSK support: “GSK Nursing Excellence Programme” Nursing students received scholarships from GSK. The programme offers young, underprivileged students the opportunity to receive an education and pursue a nursing career at hospitals and public health centers in rural communities.

GSK Thailand also encourage our employees to participate in a wide range of corporate social responsibility activities to beneﬁt the development and well-being of all members of the public. GSK is part of the community where we operate, so the company conducts several initiatives and activities together with many partners to ensure increased value for society, consumers and all parties related to our business. This gives GSK a solid foundation for sustainable business success.

GSK volunteering programmes: Build “Access to a Happy and Healthy Room” a medical care unit at the blind school and ﬂood affected schools.

Queen heads for Epsom as nation celebrates Jubilee T

he Queen will be celebrating the Diamond Jubilee weekend in June by attending The Derby at Epsom racecourse. Her Majesty is a keen follower of flat racing and her horse Carlton House started last year’s race as the 5/2 favourite. But the horse threw a plate during the race and finished in third place. With Monday 4th June a Bank Holiday (moved from 28th May) and the government designating Tuesday 5th June as an additional public holiday the country is set for four days of intense Diamond Jubilee celebrations. A flotilla of up to 1,000 boats will sail along the Thames with the Queen on the Royal Barge on 3rd June. A BBC concert is being staged at Buckingham Palace on 4th June with three knights of the realm set to perform. Latest details to emerge about the line-up include the names of Sir Elton John, Sir Paul McCartney and Sir Cliff Richard. But there’s no indication that Sir Mick Jagger will join the rest of the Rolling Stones for this royal rock affair. A chain of over 2,000 beacons will be lit across the UK on the night of 4th June with The Queen set to light the national beacon. The long weekend will conclude on 5th June with a carriage procession and a service of thanksgiving at St Paul’s Cathedral in London. On Saturday 19 May nearly 2,500 troops from the Royal Navy, the Army and the Royal Air Force will parade through Windsor Castle and town before The Queen and The Duke of Edinburgh. The Royal Collection is staging exhibitions at Buckingham Palace,

The Brief

Issue 2/2012

Her Majesty The Queen at Epsom Racecourse on Derby Day 2011.

Windsor Castle and the Palace of Holyroodhouse to mark the Diamond Jubilee. The National Maritime Museum’s ‘Royal River: Power, Pageantry and the Thames’ has now opened, exploring the relationship between The Queen, the City of London and the River Thames.

The National Portrait Gallery will stage ‘The Queen: Art and Image’, a touring exhibition of images of Her Majesty. The Victoria and Albert Museum is holding an exhibition of portraits of The Queen by photographer Cecil Beaton. The exhibition will visit towns and cities throughout the United Kingdom.

Three towns gain city status

helmsford, Perth and St Asaph have been given city status by Her Majesty The Queen. These three towns beat off competition from 22 other applications from as far field as Bolton to Bournemouth and Stockport to St Austell.

Preston, Newry, Lisburn and Newport became cities in 2002 to mark the Queen’s Golden Jubilee. Brighton

and Hove, Inverness and Wolverhampton were awarded the title to mark the new millennium. St Asaph in North Wales, which has a population of just 3,500, will become one of the smallest cities in the UK. St. David’s in Wales is the UK’s smallest - only about 1,200 people live there according to the most recent census.

Katherine’s a winner with Diamond design

en year old Katherine Dewar from Chester has won a competition to design the Queen’s official 2012 Diamond Jubilee emblem. The competition, run by the BBC children’s TV programme Blue Peter, attracted some 35,000 entries.

Katherine Dewar (left) shows The Queen the winning Diamond Jubilee design.

One judge, branding expert Martin Lambie-Nairn, said that giving a child the responsibility of designing the emblem was ‘a brave ambition’. Previous emblems - which marked the Queen’s Silver Jubilee in 1977 and the Golden Jubilee in 2002 - were created by pro-

fessionals. “The result is beautiful, fresh and practical,” said Mr LambieNairn. Blue Peter presenter Barney Harwood and children’s book illustrators Tony Ross, Nick Sharratt and Emma Chichester-Clark were also on the judging panel.

Olympic flame lights up UK

he Olympic flame arrives in the UK on 18th May to begin a 70-day relay tour. The route has been planned to ensure that it will come within 10 miles of 95 percent of the nation’s population. The relay kicks off in Cornwall on 19th May in the cobbled streets of Newlyn before passing through Penzance and Marazion. The tour of Wales includes a journey on the historic Snowdon Railway.

Crosby Beach to see the torch, 100 human figures will remain static, staring out to sea. This is the site of the acclaimed Another Place installation by Turner Prize winner Antony Gormley: 100 cast-iron human sculptures modelled on the artist himself are dotted across the seascape, appearing and disappearing with the turn of the tides. In Northern Ireland the torch relay will pass the Unesco heritage site of Giant’s Causeway on 4th June.

At noon on 1st June, when the population of Grimsby flocks to

One of the greatest monuments to Roman Britain, Hadrian’s Wall,

stretches 86 miles across the north of England. It was built as a defence against the Pictish hordes of Scotland in the second century AD but crowds from both sides of the border will descend on 16 June as the torch relay passes by. Other notable places for viewing the torch relay include Bletchley Park in Buckinghamshire (Britain’s centre for codebreaking during the second world war), and Margate in Kent. More details on the torch relay route at:http://www.london2012.com/ olympic-torch-relay-map

The Brief

Issue 2/2012

Future unclear for Olympics Stadium T

he Olympic Park Legacy Company (OPLC) and Mayor of London Boris Johnson have taken the decision to keep the new stadium in east London in public ownership. But there is still no clear indication if it will become the home for a professional football club. The deadline for bids to be tabled with the OPLC passed with four parties, including West Ham United Football Club, confirming interest. West Ham, currently bidding to gain promotion to the English Premier League, is regarded in some quarters as the most likely long-term tenants of the new stadium. But it is understood that the club’s owners wish to see the stadium running track removed after the Olympics Games and that could be a major stumbling block in the club’s plans to move from its current home at the Boleyn Ground, Upton Park in east London. In another twist, Leyton Orient F.C. chairman Barry Hearne said he had withdrawn his bid because he did not consider the stadium to be fit for football. He also indicated that he will challenge any request by West Ham to the Football League for permission to move from Upton Park. West Ham United confirmed its interest on deadline day but warned that the move from the club’s current home at the Boleyn Ground, Upton Park in east London would be conditional on the stadium ‘being fit for world-class football’, a reference to the thorny issue of the running track. The Olympic Park Legacy Company (OPLC) and Mayor of London Boris Johnson have taken the decision to keep the Stadium under public ownership. The OPLC describes the new stadium as ‘the most sustainable ever built’.

The Brief

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London’s new Olympic Stadium can seat up to 80,000 sports fans.

The Olympic Stadium is located in the south of the Olympic Park on an ‘island’ site, surrounded by waterways on three sides. Spectators will reach the venue via five bridges that link the site to the surrounding area.

With steel a resource in short supply, the build was made 75 percent lighter in terms of steel use than other stadiums. It also features a low-carbon concrete, made from industrial waste and containing 40 percent less embodied carbon than usual. The top ring of the stadium was built using surplus gas pipes - a visual testament to London 2012’s ‘reduce, reuse, recycle’ approach to sustainability. Steel and concrete use was further reduced by designing the lower section of the stadium to sit within a bowl in the ground. Construction began in May 2008 and was completed in less than three years, with the final piece of turf laid in April 2011.

The stadium will have a capacity of 80,000 during the Games with 25,000 permanent seats in its permanent lower tier and a temporary lightweight steel and concrete upper tier holding a further 55,000 spectators that can be removed after the Games. Facilities for athletes within the stadium include changing rooms, medical support facilities and an 80m warm-up track. Spectator services, refreshments and merchandise outlets will be located outside the venue on a podium that will surround the stadium, rather than being located within the stadium itself. The stadium is designed to be flexible enough to accommodate a number of different requirements and capacities and will continue to be a venue for sport and athletics as well as cultural and community events.

Key role for business in making Britain great By Jane Bailey

he British Chamber of Commerce (BCC) has launched its ‘Business is Good for Britain’ campaign to the UK business leaders. The launch provided the major theme at the BCC’s annual conference, held in March at Westminster Hall in London. The BCC is the national body for the powerful and influential Network of Accredited Chambers of Commerce across the UK. This is a network that serves not only its member businesses but also the wider business community. The annual conference is a platform used to communicate reviews, updates and future plans for development to the business sector. A balance of political and private sector speakers gave insights, thoughts and opinions into how Britain needs to evolve, encouraging a stable yet more competitive and thriving nation.

The Rt. Hon, Chris Grayling MP, Minister for Employment discussed with delegates the issues and concerns of the current education system not competently providing skill sets that employers seek, emphasising the importance and value that local businesses have on communities and how they can engage in student career days and offer speakers and workshops to schools.

Nick Clegg

Stephen Hester

Deputy Prime Minister Nick Clegg told delegates that the government alone cannot increase the UK’s competitive edge in the global market place and that we, UK businesses, need to support these efforts in making Britain great again.

lish Premier League, stating Britain is currently the equivalent of Fulham Football Club. With that in mind, he reiterated the fact the UK we should not be trying to avoid relegation but rather trying to win the league!

Willy Walsh, Chief Executive for International Airlines Group (parent company of British Airways), posed the question ‘Is Britain good for business’. He covered the pressing issue of airport expansion and the necessity of Heathrow Airport to remain the world’s number one airport. Mr Walsh compared Britain’s position in the global market to that of the Eng-

Emphasis was placed on the importance of creating modular framework apprenticeship positions, working in partnership with local businesses to deliver transferable and specialist skills. The BCC encouraged all member companies to support this initiative and develop effective programmes to train and to develop new and existing staff.

Stephen Hester, Chief Executive of RBS, highlighted changes to the financial support programmes currently available for SMEs in an effort to stimulate, expand and promote new business to the UK. The Rt. Hon. Justine Greening MP, Secretary of State for Transport, updated delegates on the HS2 (high speed rail link) development plans for implementation in this year’s proposed budget. Road, track and runway proposals which have sat dormant with parliament for up to 40 years are also being reviewed by the coalition government which intends to action and implement those plans still relevant to improving Britain today. John Timpson, Chairman of Timpson Ltd, said that keeping things easy and simple, working on a reward basis and choosing the right people was their key to success. He added that altruistic, friendly and approachable staff can be trained to cobble shoes but cobblers cannot be trained to have a personality. That was Timpson’s motto. Jane Bailey, a BCCT director, attended the conference during a UK business trip.

Footnote: Fulham FC, formed in 1879, is one of 20 teams currently competing in the English Premier League. The club has never won a major honour but has been a finalist twice in the F.A. Cup and in 2010 reached the final of the Europa League tournament. The club is owned by Egyptian businessman Mohamed Al-Fayed ( former owner of Harrods). Despite the analogy posed by Irishman Willie Walsh it is unlikely that Fulham will be relegated from the EPL this season.

The Brief

Issue 2/2012

British Council designs on sustainable future By Simon Farley

he British Council in Thailand has completed an incredibly busy and productive March with a series of events and project developments. Some highlights of our activities follow, together with an image from our ‘Everything Forever Now’ weekend workshop participants and our CSR forum speakers. British Council Thailand’s latest exhibition, ‘Everything Forever Now’ Designs for a Sustainable Future, sponsored by Tesco Lotus, has completed a six week run at the Thailand Creative and Design Centre (TCDC) and is now touring Vietnam. The exhibition in Bangkok achieved a very respectable total of 15,000 visitors (some 500 each day), helped by some great press coverage. As well as the exhibition itself, a series of live eco design events were also staged at the Park Ventures Ecoplex building. Thirty young designers from Thailand and throughout the east Asia region arrived in Bangkok in early March for a long, intensive weekend workshop led by Claire Brass from the RCA in London. The challenge to the participating designers was to design a sustainable, social enterprise solution for the prolific street food vending communities of Bangkok and some really inspiring projects were created as a result. A symposium event was also staged at the Park Ventures Ecoplex building, attracting international speakers and a diverse audience, and a reception at the British Embassy proved to be a fitting conclusion to an intensive period of event activity around the exhibition. Chiang Mai Digital Crafts is a new British Council Thailand Creative

The Brief

Issue 2/2012

Economy project launched in partnership with Chiang Mai Creative City. Additional partners include Chiang Mai University (College of Art, Media and Technology) and Nohmex – the Northern Thailand Craft Industry Exporters Association. The overall aim of the project is to promote the well-established Lanna derived crafts industries of northern Thailand through the use of new, innovative digital applications and, in so doing, to support and promote both the established crafts sector of the creative economy and the newly emerging digital software creative industry of the region. The first phase will focus on digital storytelling in the ceramics, textiles and wooden crafts industries of Chiang Mai. The aim here is to promote the rich history associated with quality locally produced craft products by detailed mapping of the origins of the products, downloadable on visitors’ smart phones, laptops and tablets. In addition, the pilot will review the market positioning of the craft sector and how products are promoted and sold. Further phases will explore the potential of digital applications for new craft product design, and the potential to impact on the manufacturing process also. As well as providing grant funding for the project British Council Thailand is also providing expert knowledge from the UK to work directly with the delivery partners. Peter Tullin of CultureLabel and Ellen O’Hara of Cockpit Arts – both leaders of digital craft initiatives in the UK – have already spent an initial week in Chiang Mai assessing the issues for the project to focus on and information sharing of best practice of digital craft projects from the UK.

British Council’s South Thailand English Project is a multi-strand English teacher and learner programme which aims to bring improved English language ability and teaching skills to teachers in Islamic, state and private schools and community leaders in Narathiwat, Yala, Pattani, Songkhla and Satun provinces in Southern Thailand. This project will enable better teaching and learning outcomes as well as giving participants an international perspective and a greater sense of connectivity with the outside world and with other communities within and outside participants’ home provinces. Our Teacher Development Programme is a blended learning programme using British Council teacher development courses which have a dual purpose: teacher language upgrade and methodology training. Face-to-face training takes place at a hub in Songkhla province and includes teachers from both Islamic and state sectors. Ethnic Thai and Malay teachers work together and share knowledge and experience in both the face-to-face and moderated online groups. State sector teachers from Pattani, Yala and Narathiwat are predominantly female and predominantly ethnic Malay. Our Learner Programme is a blended learning programme aimed at improving the English skills of lawyers and paralegal workers from Pattani, Yala and Narathiwat. This will give them the ability to engage with national and international counterparts and organisations, to better support their communities by providing legal services, and to provide a neutral language for engagement with Thai authorities and institutions.

This project engages with 120 teachers from the state sector, 20 from the Islamic sector and 20 lawyers and paralegal activists. Partner organisations include Ministry of Education, British Embassy, Cross Cultural Foundation, Princess Sirindhorn Projects’ Committee, Islamic Schools Council, Narathiwat, Yala, Pattani, Songkhla and Satun. The initial pilot project is running until May 2012. British Council has launched a national reform programme for the development of English language skills and framework for the delivery of English language programmes at vocational colleges throughout Thailand with the Office of Vocational Education Commission, Ministry of Education. Subjects for English language development focus include hospitality and tourism. UK English language experts and consultants on the development of language programmes at vocational level are currently working with the Thai vocational sector. We are providing language training for 60 vocational college teachers from across the country and 20 senior vocational

college managers are being trained to develop the English language programmes. The Ministry has committed to fully fund the implementation of the new English Programmes framework for the vocational sector.

aimed at not only bringing science to life in the classroom and developing thinking skills for the future but also to engage students in current affairs, contextual issues and matters which affect their everyday lives.

British Council in Thailand has played an active role in preparing Thai state schools for regional integration within ASEAN. Fifty schools under the British Council’s Connecting Classrooms project were selected as Spirit of ASEAN schools, where curriculum-based exchange projects with schools in other east Asian countries and the UK deepened a sense of Thai identity within young Thai students while enabling them to openly share their identity and culture with others, learning from other cultures.

Finally we hosted, in collaboration with the British Chamber of Commerce Thailand and with the organisational support of CSR Asia, a Corporate Social Responsibility Forum titled ‘Strategic Partnerships – New Opportunities in CSR’ at the Park Ventures Ecoplex. The event showcased recent examples of British Council CSR initiatives, including the E-Idea project with LRQA and sustainable design exhibition partnership with Tesco Lotus as well as other examples of best practice such as UNESCO’s education partnership with Intel.

We are currently involved in a major science project at lower secondary schools in Thailand, Inspiring Science, with Sheffield Hallam University from the UK working with the Ministry of Education and Thai teachers to develop creative and innovative materials for the science curriculum. It is a three- year project

BCCT led a session on how the Chamber can best structure its own CSR strategy in order to best serve the needs of its members. The event produced a great deal of lively debate with many outcomes to be followed up in the months ahead.

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New research gives key pointers to industry leaders By Amanda Boyd, MBA and Dennis Garritan, PhD, CFA, SPHR

n appraisal of a research dissertation that studied the relationship between leadership and the creation of shared value in organisations. The study examined the background of leadership and its development; it examined preferred leadership practices in Thailand and it describes the advancement of sustainability measures within organisations and its progression into the creation of shared value. The aim of the study was to establish whether specific leadership behaviours could aid in driving the implementation of shared value into organisations. In the aftermath of a global financial crisis which led to a deep global recession, it is not surprising that global knowledge workers began to lose faith in the capitalist system. Business has increasingly been viewed as a major contributor to social, environmental and economic problems.

cial performance in a bubble while missing the most important customer needs. They fail to realise that the long-term success of their customers and their long-term success as companies are inalterably intertwined. How else could companies overlook the well-being of their customers, the depletion of natural resources vital to their businesses, the viability of key suppliers or the economic distress of the communities in which they build, produce and sell? Government agencies and regulators often exacerbate the problem by introducing regulations which address social weaknesses at the expense of business. Decades of such policy choices have institutionalised this perceived trade-off between business profitability and social progress.

Companies have been widely viewed as doing well at the expense of the broader community. The more companies have been embracing corporate social responsibility, the more they have been blamed for societyâ&#x20AC;&#x2122;s failures. This diminished trust in businesses has caused governments to enact strict regulations which in some cases have undermined their competitiveness and diminished global economic growth.

It is incumbent upon global businesses to take the lead in bringing business and society back together again. Sophisticated business leaders in global companies such as Unilever, GE, Google, IBM, Intel, Johnson & Johnson, Nestle, Pepsi and Wal-Mart are recognising this fact - and promising elements of a new business model are emerging. However, most companies are stuck in a corporate social responsibility (CSR) mind-set in which societal issues are out on the periphery and not at the core.

Businesses rely upon outdated strategies which optimise short-term finan-

We believe the solution lies in the strategy of creating shared value (CSV)

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which involves creating economic value in a way that also creates value for society by concomitantly addressing social needs and challenges. Global and local business leaders must reconnect company success with social progress. However, creating shared value is not corporate social responsibility (CSR), philanthropy or even sustainability but rather a new way to achieve long-term growth and economic success. It is not out on the margin of what companies really do but at the centre of their vision and mission. We believe that creating shared value and not mere corporate social responsibility is on the leading-edge of the next major transformation of global and local business thinking. The approach to CSV differs from the traditional corporate social responsibility framework which is, more often than not, built around compliance. It also differs from environmental and social regulations and unfocused charitable giving which is usually unrelated to the organisation itself. Corporate social responsibility initiatives have often been a reactive approach in response to external pressures and have been put in place to improve an organisationâ&#x20AC;&#x2122;s reputation. In disparity, CVS makes the recognition that societal needs have the potential to define markets. Thus, shared value is not about personal values, nor is it about sharing value already created by organisations.

Instead, it is about expanding the total pool of economic and social value. As such it has the potential to do more to drive the global social agenda than any government, global agency or coalition. CSV consists of three main areas, namely products and services, value chains and clusters. Innovative products and services should be developed which advance the social agenda as they create consumer demand. Companies must increase productivity by creating economies of scale which also value the responsible use of natural resources, good working conditions, and health/safety controls. Finally, the development of industry clusters involves creating local capacities in non-competitive eco-systems surrounding the main product or service. These clusters could consist of support services such as transportation, education or clean water. These ecosystem clusters could also involve complementary and non-competitive

products or services such as smartphone applications, which reduce battery power expenditures during times of non-peak usage. Research findings indicated that leadership would have a significant impact on driving shared value creation in Thai organisations. Furthermore, stepwise regression analysis uncovered the top three leadership behaviours which had the biggest positive impact on driving shared value creation in Thai organisations, namely vision, inspiration and inclusive leadership. Conversely, stepwise regression analysis also uncovered the three leadership behaviours which had the biggest negative impact on driving shared value creation in organisations: autocracy, formality and low confidence. The decision to drive shared value creation in organisations is truly the authentic leadership work of the visionary, transformational leaders of south

east Asia. It is their decision to fulfill their destiny, legacy and gift to the next generation of global leaders. It is their decision to provide the necessary guidance so the next generation of leaders will develop the critical skills necessary to lead in any part of the world where their careers take them and their global society needs them to be. As always, leadership begins with a decision.

Amanda Boyd, MBA, is Global HR Advisor for Unilever, UK. Dennis J. Garritan, PhD, CFA, SPHR is Associate Dean at The Mountbatten Institute and Adjunct Professor of Management, Harvard Business School.

Management Development Group Mission: The Group’s mission is to present a series of training classes, events and workshops to support the Management Development needs of BCCT member companies.

Chamber member companies such as HSBC, Tesco, Standard Chartered and PCS as well as some local training companies. Prices have been from THB 2,500 nett for a half-day workshop to THB 3,900 nett for a full-day workshop.

Key objectives: • To provide management development for member company employees, particularly the SME’s • To focus the training programmes on soft skills development, based upon an established list of core competencies, such as Time Management, Change Management and Planning & Goal Setting • To offer a range of panel or keynote speaker presentations on various topics related to management development Training Programmes: Training programmes are separated into two-tiers, for senior management and middle management, with a series of half-day and full-day workshops.

Richard Greaves

English language classes: senior management focused training is conducted in English and is carried out by training companies that are Chamber members. Class sizes are up to 24 participants and held in a hotel location. Prices have been around THB 3,750 nett for a half-day session. Thai language classes: middle management classes are conducted in Thai and are generously supported by the training departments of large multi-national

The BCCT Management Development Group has linked with the BCCT Human Resources Group to form one new group. The group proposes to take on Khun Picharn Sukparangsee, Siam City Law Offices and Simon Matthews from the previous HR group. Our HR focus should be on legal updates and HR development/support for SMEs. Group members are Richard Greaves (Chairman) - Hyatt Erawan Hotel; Ian Thornhill (Vice Chairman) - KPMG; Bubphawadee Owararinth - Standard Chartered Bank; Sukhavichai Dhanasundara - Honorary Advisor, BCCT; Joe Barker-Bennett - JMBB Consulting; and Christina Dodd - ATA LifeCoach.

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BISEA meets in Phnom Penh

ritish Ambassador to Cambodia Mark Gooding welcomed delegates to the recent meeting of BISEA, held at the Raffles Hotel le Royal in Phnom Penh. Mr Gooding presented an overview of the Cambodian economy and stressed that Her Majesty’s government recognised the importance of the ASEAN region. The meeting also heard that the UK ASEAN Business Council is seeking local experts to join its advisory panel. Tim Standbrook, Executive Director of the UKABC, explained that a principal objective of the Council is to ‘map the flow of government and business visitors between the UK and the ASEAN region’, promoting British interests with a strong focus on boosting exports. He also told the meeting that there may be UKABC represented based full-time in this region and this would further strengthen ties between all those

It was agreed that every organisation represented at the BISEA should warn its members about the issues arising from the change in government policy and create awareness of the instructions posted on British Embassy websites.

Greg Watkins (fourth from right) pictured with BISEA colleagues in Phnom Penh.

organisations representing British business interests. The issue of passport renewals was discussed in detail. BCCT Executive Director Greg Watkins said that that the issue had become more widespread as it was now some 18 months since the passport renewal service was taken away from Embassies and High Commissions. “Visibility of the issues has been achieved but the government responses are palliative”, he said.

BISEA remains focused upon the recently-introduced UK Bribery Act. The meeting shared views on how the new Act is affecting members in the region. It was acknowledged that countries have varying levels of complexity and it was agreed that BISEA can play an important role in assisting British firms with training and compliance in line with the rigours of this legislation. The UK Bribery Act was passed in April 2010 by the previous Labour government and become law on 1st July 2011. Finally, Brunei is the latest country to join BISEA and will be formally represented at the next meeting in mid-July.

Britain in South East Asia (BiSEA) Cambodia British Business Association of Cambodia c/o Top Recruitment Cambodia 592, Building F, Phnom Penh Centre Corner Sothearos & Sihanouk Boulevards, Phnom Penh, Cambodia Tel: 855-23-997-492 Fax: 855-23-997-493 Email: secretary@bbacambodia.com Website: www.bbacambodia.com Chairman: Tom Sterling Committee Secretary: Kevin Britten Indonesia British Chamber of Commerce in Indonesia Wisma Metropolitan 1, 15th Floor, Jl. Jend, Sudirman Kav 29-31 Jakarta, Indonesia 12920 Tel: 62-21-522-9453 Fax: 62-21-527-9135 Email: bisnis@britcham.or.id Website: www.britcham.or.id Chairman: Haslam Preeston Executive Director: Chris Wren Malaysia British Malaysian Chamber of Commerce E04C1, 4th Floor East Block Wisma Selangor Dredging, 142-B Jalan Ampang 50450 Kuala Lumpur, Malaysia

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Tel: 603-2163-1784 /1786 Fax: 603-2163-1781 Email: britcham@bmcc.org.my Website: www.bmcc.org.my Chairman: Dato Larry Gan Director, Business Development: Molly Jagpal Philippines British Chamber of Commerce of the Philippines c/o The British Embassy Manila 120 Upper McKinley Road McKinley Hill, Taguig City 1634 Metro Manila, Philippines Tel: 632-858-2255/858-2372/858-2373 Fax: 632-858-2390 Email: secretariat@bccphil.com Website: www.bccphil.com Chairman: Keith Perrin Executive Director: Alison Doig Henderson Singapore British Chamber of Commerce in Singapore 138 Cecil Street, #11-01 Cecil Court Singapore 069538 Tel: 65-6222-3552 Fax: 65-6222-3556 Email: info@britcham.org.sg Website: www.britcham.org.sg President: Mr. Steve Puckett Executive Director: Brigitte Holtschneider

Thailand British Chamber of Commerce Thailand (BCCT) 7th Floor, 208 Wireless Road, Lumpini Pathumwan, Bangkok 10330 Tel: 66-2651-5350-3 Fax: 66-2651-5354 Email: greg@bccthai.com Website: www.bccthai.com Chairman: Simon Landy Executive Director: Greg Watkins Vietnam British Business Group Vietnam Ho Chi Minh City G/F 25 Le Duan Blvd, District 1 Ho Chi Minh City, Vietnam Tel: 84-8-3829-8430 Fax: 84-8-3822-5172 Email: execdirector@bbgv.org Website: www.bbgv.org Hanoi 67 Le Van Huu, Hai Ba Trung, Hanoi, Vietnam Tel: 84 4 6674 0945 Chairman: Patrick Regis Executive Director: Jakki Lydall

Member News

Record profits for Standard Chartered S

tandard Chartered Bank in Thailand has announced record profits for the year ending 31st December 2011. President and Chief Executive Officer Lyn Kok said that the bank, together with its subsidiaries, achieved a consolidated profit of THB 4,004 million, representing growth of 27 percent on 2010. Both consumer and wholesale banking returned improved figures with profits at 23 percent and 10 percent respectively.

“Thailand’s performance was in line with Standard Chartered Group’s ninth consecutive year of record profits and income. Amid the economic volatility, the Europe sovereign debt crisis, slowing growth in the USA and a sign of a less robust Chinese economy, Standard Chartered Group is the only major international bank to have been upgraded by the three most prestigious ratings agencies since the beginning of the global financial crisis,” she said. Speaking about the consumer banking sector Lyn Kok said, “Our strategy to secure a balance between secured and unsecured businesses continued with good traction. The unsecured lending growth and momentum on priority banking and SME banking also continued with double digit growth. Unsecured lending portfolio experienced strong growth, especially in installment loans. Credit card spending reached a record high and our portfolio programmes yielded a very positive outcome. Secured lending portfolio demonstrated steady growth with improved Mortgage Reducing Term Assurance (MRTA) penetration. “Our aspiring goal for 2012 is to continue delivering double-digit income

Lyn Kok (left), President and CEO of Standard Chartered Bank in Thailand, in cheerful mood as she announces record profits.

growth through creative solutions and maintaining our strong disciplines in risks and costs as well as strong balance sheet excellent shape with high liquidity and strong capital. This year, Service Guarantee is the common theme used across consumer banking. New products and services will be launched within the second quarter.” The bank is also planning to introduce a ‘Wealth Management Clinic’ in

line with its customer-focused strategy. Standard Chartered Bank (Thai) is also leveraging the sponsorship deal with Liverpool Football Club. English Premier League. “After the success of ‘Savings for Fans’ savings account with Liverpool ATM/debit card that gained us 54 percent of new customers we will continue to leverage the Liverpool FC sponsorship through sports marketing activities,” added Lyn Kok.

Sun shines on Sunday Newspaper readers in Thailand may now order Rupert Murcoch’s latest title The Sun on Sunday. The new title, bidding to replace the now defunct News of the World, launched on 26th February in the UK. Copies are available in Thailand via NewspaperDirect International.

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Member News

UK firms face rent rise in Bangkok U

pletion by the end of 2014. Demand is starting to increase, vacancy rates will fall and rents will rise.”

K firms could face early rent increases on their office accommodation in Bangkok. That’s the view of James Pitchon, Executive Director of CBRE Thailand.

The CBRE Thailand report also states that ‘Bangkok office rents have been among the lowest in the Asia Pacific Region along with Wellington, Manila and Jakarta. GradeA rents in Hong Kong are 7.5 times more expensive than Bangkok, while Singapore and Mumbai are four times more expensive. Regionally some of these office markets appear to have peaked and are now falling such as Hong Kong, Singapore and Kuala Lumpur’.

A CBRE Thailand report states that office rents are now starting to rise and have topped the last peak that occurred some 20 years ago. The reports refers to Park Ventures, the recently completed Grade-A eco office building in Bangkok that is now achieving rents of over THB 850 per square metre/month. The last building to achieve this level of rent was GPF Tower, (then Diethelm Tower), on Wireless Road, Bangkok when it was completed in 1992. James Pitchon believes rentals will continue to increase for the best quality best located buildings. “The total Bangkok office stock is 8.12 million square metres. Of this, 1.15 million square metres (14.13 percent) is vacant but a significant amount of the vacant space is in buildings that are

in less popular locations and older buildings that are in some cases technically obsolete,” he says. “There is only 390,000 square metres under construction due for com-

New Ice Age in Thailand T

wo British Chamber members in Thailand have joined forces to launch a dry ice cleaning service. Property Care Services and La-iert Cryogenic Sanitisation are now promoting dry ice cleaning as a ‘groundbreaking cleaning technology designed to clean many types of highly difficult surfaces such as large industrial machines’. “By projecting food grade ice onto the surface we can lift unwanted material off more efficiently while leaving no harmful residue as well as and reducing waste disposal. The dry ice cleaning process can deliver increased production time, reduced wear and tear and higher safety and environmental standards as well as achieves results in excess of sanitisation requirements,” explains Mr Thana Thiramanus, Managing Director of Property Care Services (Thailand) Ltd.

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The report continues: ‘Rents in Vietnam both in Ho Chi Minh City and Hanoi continue to fall because of the troubled economy and new supply. However, Vietnamese office rents still remain between 60 and 80 percent more expensive than Bangkok. Regionally, office rents are rising in Bangkok, Manila, Jakarta and most Australian cities’. “Current rental levels in Bangkok make it difficult to build new office projects unless the land has been acquired at below today’s prices. We will only see developers start to build offices when the rent rises above THB 1,000 per square metre/month which is why there is only a limited amount of space under construction,” adds James Pitchon. “Few listed developers have office expertise, having focused exclusively on residential condos.” CBRE Thailand expects that the rental gap between the best located best quality buildings and other less attractive developments will increase and believes that tenants are increas-

ingly willing to pay a higher rent for the best located buildings that function well. ‘Office tenants in Bangkok base their choice of office premises on three main criteria: location, especially proximity to mass transit routes; usability and quality of the building, and cost. More companies are treating proximity to a mass transit station preferably with direct covered access as a priority. Office buildings next to mass transit stations are generating higher rents than other buildings and will continue to do so’, CBRE states. ‘Tenants want efficient lifts to minimise waiting times’. “One of the biggest complaints about old buildings is that the lifts are slow and it can take minutes not seconds to enter a lift at peak times. An efficient air-conditioning system that can maintain a constant temperature in all areas of the office is also important; the air-conditioning systems in many older buildings cannot do this. Other features are the provision of good security features such as fire safety, turnstiles and destination control lifts.

“The new generation of office buildings in Bangkok such as Park Ventures and Sathorn Square are as good in terms of technical specifications as many of the Grade-A developments in Hong Kong, Singapore and Tokyo but the rentals are a fraction of the costs in these cities,” says Mr Pitchon. Experts at Jones Lang LaSalle also note that strong occupier demand is driving rental growth in emerging South East Asian economies whilst more established markets dominated by financial services, such as Hong Kong and Singapore, are experiencing a decline in grade A rental values as the banking and finance sector remains focused on managing costs. Jeremy Sheldon, Managing Director, Markets Asia Pacific at Jones Lang LaSalle, said, “We are witnessing a polarisation in the region. Whilst we are seeing a slowing of leasing activity levels in the established markets, there is increasing activity in south east Asia where we are experiencing higher enquiry levels than before. Companies are taking advantage of the major labour cost arbitrage

within these markets and we expect this to continue this year. Overall our forecast for grade A rents is for limited growth this year in certain markets. The market generally looks to be much slower than 2011 although last year was a record in terms of take up, surpassing even 2007 which was the last peak of the market.” Sheldon added, “Our outlook is positive in that the Asia Pacific region continues to experience economic growth at a faster pace than the rest of the world and this is forecast to continue this year. Current conditions may be a good opportunity for companies to find space that represents good value for money and to secure opportunities to expand and consolidate in a region that will continue to grow in economic importance globally. “Much will of course be dependent on events in the eurozone and the United States. We have already seen positive news from the latter in recent weeks and like everyone else we are keeping a close eye on events in the Eurozone.”

Phuket prepares for Russian invasion

of tourist – the lower middle class and ultra-wealthy tourist. Phuket is abuzz with talk of these new buyers,” he said.

“One reason for the dramatic increase in numbers is the severe weather in the eurozone, notably Eastern Europe, which has shaken up many people about the need to relocate to safer, better homes. Russians were visiting places like Turkey and Egypt but due to the political unrest in those areas and the cost being the same they have turned to Phuket. However, there are two main classes

Khun Nattha added that the Phuket market is adapting to cover all market segments. “Previously you would only get high class people but now the market is opened for all classes of people. Major buyers were expatriates working in Hong Kong and Singapore as well as the international visitors from Europe. Currently, foreign property buyers in Phuket come from all different walks of life and all types of societies,” he added.

huket’s property market is being increasingly dominated by Russians seeking respite from the cold winters in eastern Europe, according to Knight Frank Phuket Director Nattha Kahapana.

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Member News SC Asset Corporation Public Company Limited has sealed the contract to appoint Jones Lang LaSalle as the sole leasing agent for Shinawatra Tower 3. Located on Vibhavadi-Rangsit Road, Shinawatra Tower 3 is a 36-storey commercial building with approximately 53,000 sqm of lettable Grade A office space. Pictured left are Mrs. Busaba Damapong, Chairman of Executive Committee of SC Asset Corporation Public Company Limited and Mr. Longlom Bunnag, Chairman of Jones Lang LaSalle (Thailand) Limited, exchanging the contracts of appointment at the recent signing ceremony accompanied by senior executives of both parties.

Flashmob makes big splash at Terminal 21 T

he New International School of Thailand (NIST) has hosted the first ever Bangkok ServICE conference. Over 170 student service leaders from 12 international schools took part in the event which aimed to ‘inspire, connect, and empower’ each other through community service activities. The three-day conference combined student-led interactive presentations and activities with inspirational speakers and an NGO fair. The conference culminated in a freeze-anddance ‘flashmob’, comprising some 200 students and teachers, at Bangkok’s Terminal 21 shopping mall. They were aiming to raise awareness about the use of dolphins in captivity for entertainment purposes in Thailand.

will now be more powerful and effective in taking an initiative to deal with current issues.

Ping-Ko, NIST student leader and an organiser of the conference, said, “The Bangkok ServICE conference has allowed us to get together because of the common goals and visions we share. The conference is just the first step taken to inspire, connect and empower the members of this newly established community. We

“The dolphin captivity awareness ‘flashmob’ at Terminal 21 is an example of how a greater impact on the local community has been achieved through simple connections between passionate individuals. I believe the Bangkok ServICE community can only grow larger and more powerful in the upcoming years.”

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Flashmob rules at Terminal 21 in Bangkok.

The 12 participating international schools were: NIST, International School Bangkok (ISB), Thai-Chinese International School (TCIS), Regent’s School Bangkok, Regent’s School Pattaya, Harrow International School, KIS, Bangkok Patana School, Well’s International School, Ruamrudee International School, International Community School Bangkok and Shrewsbury International School.

Commercial focus for HSBC in Thailand H

a lot more to do and we remain focused on delivering our targets.”

SBC has pledged further investment in Thailand despite the sale of its retail business to the Bank of Ayudhya.

Peter Wong, Chief Executive of HSBC in Asia, said, “As our strong financial performance shows, HSBC’s strategy is delivering results in the Asia Pacific region across all geographies and the Global Businesses. By focusing on quality assets, fee income-generating activities and opportunities linked to the rise of the renminbi as a world currency, HSBC Asia Pacific is well positioned for sustainable growth.

HSBC Thailand CEO Matthew Lobner told a press briefing in Bangkok that the bank would continue to invest in Thailand but with the focus upon in commercial and corporate customers. He explained that the sale of the retail business was an integral part of the HSBC Group’s strategy to concentrate upon corporate portfolios, positioning itself as a leading international bank and cashing in on the emerging-market trend. Mr Lobner added that part of the bank’s strategy was to continue to expand its wholesale banking capabilities. HSBC Asia Pacific has announced profits before tax of US$13.3 billion in 2011 on a reported basis, an increase of 15 percent year-on-year. The Asia Pacific business remains a key contributor to the HSBC Group’s global performance, accounting for 61 percent of total Group profits before tax in 2011. HSBC Holdings made a profit before tax in 2011 of US$21.9bn, up US$2.8bn on the previous year.

Matthew Lobner

Stuart Gulliver, Group Chief Executive, said that 2011 was a year of major progress for HSBC. “We gained traction in our strategy designed to simplify the structure and improve the management and control of the Group, thereby improving returns and positioning HSBC for growth. We recorded a strong performance in faster growing markets and had a record year in commercial banking. I am pleased with our progress but there is

As economic expansion in our region continues to outpace that of the developed world, I believe our international connectivity is a core strength serving our customers locally, regionally and globally.” As we reported in the last issue of The Brief, the HSBC Group is to concentrate upon corporate banking in Thailand and has agreed to sell its Retail Banking and Wealth Management business to the Krungsri Group (Bank of Ayudhya Public Company Limited and its affiliates). The bank’s main consumer branch on Rama IV Road in Bangkok will close on 30th June 2012.

Bangkok-based architecture and interior design firm dwp design worldwide partnership celebrated its annual event in the company of James Wise, Australian Ambassador to Thailand. Mr Wise gave a keynote address to dwp employees, clients and suppliers. Pictured (left to right): Brenton Mauriello (dwp Group CEO), Sarinrath Kamolratanapiboon (Business Development Director, dwp Thailand), James Wise, Scott Whittaker (dwp Executive Director/Founding Partner), Dr Saeed Zaki Ph.D (dwp Executive Director) and Suphot Chaisilprungrueng (dwp Thailand General Manager).

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British Chamber of Commerce Thailand

Honorary Advisors Khun Arnop Phorndhiti, Chairman of the Executive Committee, MSIG Insurance (Thailand) Co., Ltd. Arnop Phorndhiti has over 40 yearsâ&#x20AC;&#x2122; professional experience in the general insurance industry. He was appointed head of Thai operations of a leading British non-life insurer in 1988 following his return from secondment in the UK. Arnop is well known and respected in the insurance community in Thailand and is currently the Chairman of the Executive Committee of MSIG Insurance (Thailand) Co., Ltd. Khun Chainarong Indharameesup, Chairman, Boyden Associates (Thailand) Ltd. Chainarong Indharameesup received his Master of Public Administration degree from National Institute of Development Administrator (NIDA), Thailan and then continued his studies in Executive Programs at John F. Kennedy School of Government, Harvard University. Previously he was the Audit Committee Chairman of the National Scientific Research Institute of Thailand. He also held positions on the Audit Committee at King Prajadhipokâ&#x20AC;&#x2122;s Institute, and Executive Committee of The International Institute for Trade and Development. He was also an advisor to the Prime Minister of Thailand. He is now Chairman of Boyden Associates (Thailand) Co., Ltd. and CSN Associates Co. Ltd. Dr. Suchati Chuthasmit, Advisor, Thai Chamber of Commerce and the Board of Trade of Thailand Dr. Suchati Chuthasmit was born on 14th April 1933 at Pitsanulok Province in the Northern part of Thailand. His father took him and the family to Bangkok in order to 52

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receive good education. In his younger years, he studied at Debsirin school. His first degree was in Law from Thammasat University. his second degree was in Master of Economics at the same University, under the distinguished Dr. Puey Ungphakorn. Dr. Chuthasmit joined the Ministry of Foreign Affairs in 1952 as a junior officer, and received a Thai Government Scholarship to study International Relations in the United States. He went to the Maxwell Graduate school at Syracuse University for his M.A. Degree and later to the Fletcher School of Law and Diplomacy at Tufts University in cooperation with Harvard University for his doctorate degree in 1962. In his career, he had his first foreign posting at the Royal Thai Embassy in New Delhi, India in 1965. Ten years after that, he was assigned as Thai Ambassador of India, covering Nepal, Sri Lanka and Afghanistan. During 40 years of foreign services, he served as Ambassador of Thailand to Austria, Hungary, South Korea and to Indonesia as the last posting in 1990. He was also Director-General of International Economics Department and Department of International Organizations. After retirement from foreign service in 1990, Dr. Suchati Chuthasmit has been working as the Adviser to The Thai Chamber of Commerce and the Board of Trade of Thailand, in charge of welcoming foreign trade delegations and sending Thai trade missions abroad to expand Thai international trade. He also lectures at some Thai universities in the areas of his expertise. Khun Sukhavichai Dhanasundara, Board Advisor and sub-committee Director, The Investor Club Khun Sukhavichai Dhanasundara, has been involved with the industrial sector for over 40 years in the fields of industrial promotions as resource person for the BOI, industrial estates and factory development as Managing Director of TFD plc and partnering with the IEAT, project development and financing under IFCT, and factory operations with Ideal Standard and American Standard plc.

Currently Khun Sukhavichai lectures in MBA and BBA programs at the Lucerne University of Applied Sciences and Arts (Switzerland) and Bangkok University International College. He is a founding member of the BCCT Management Development Group, and is also Advisor and Facilitator, Asian-Pacific Development Communication Centre, and Director, Thai Business Coalition on Aids. Khun Sunthorn Arunanondchai, CBE, Chairman, Ek-Chai Distribution System Co., Ltd. Sunthorn Arunanondchai is the Vice Chairman of CP Group of Companies, the largest Thai conglomerate with businesses in agricultural feeds, telecommunication and real estate amongst others. In 1998, he created a highly successful joint venture between the CP Group and Tesco PLC (UK). The company has since become the largest hypermarket operation in Thailand. Over the past 36 years, Sunthorn has been continuously active in the field of education, lecturing regularly at local universities and sitting on boards of management. He has donated a building to the College for Graduate Studies in Management at Khon Kaen University. Furthermore, he currently serves as Chairman of the Board of Directors at the university. Being an active and charismatic leader with diverse interests, Sunthorn is currently an Associate Judge for the Central Intellectual Property and International Trade Court. In 2005, Sunthorn received the Alumni International Achievement Award at the Sam M. Walton College of Business at the University of Arkansas. Additionally, he was bestowed an Honorary Commander of the Civil Division of the Most Excellent Order of the British Empire (CBE) in 2007. Khun Tiraphot Vajrabhaya, Ex-Chairman, The Shell Company Of Thailand Ltd. Tiraphot Vajbhaya was born on the 1st of February 1953 in Bangkok. He holds a BA in Economics and Commerce from the University of Melbourne, Australia in which he graduated in 1976. He then received an MBA from Boston University, USA in 1981. He is married to Varita and they have a son and a daughter. Tiraphot joined the Shell Co. of Thailand Limited in 1978 as a Senior Assistant in the Systems Evaluation Department. and worked in a variety of roles in the fields of Finance, Supply & Shipping, Personnel and Marketing in addition

to an assignment at Shell International Petroleum Co., Ltd., U.K. in 1995. He then became Retail Director in 1998 and General Manager Retail for Thailand in 1999. He retired as Chairman of Shell Companies in Thailand in 2008. Khun Vikrom Koompirochana, Chairman of the Board, Dragon One Public Co., Ltd. and former Thai Ambassador to the United Kingdom Vikrom Koompirochana graduated in History from Chulalongkorn University in 1967 and received his MA and PhD degrees in History from Michigan State University in 1972. He first joined the civil service as a lecturer in History at the Faculty of Arts, Chulalongkorn University before transferring to the Ministry of Foreign Affairs in 1973. He has served as Ambassador of Thailand to Singapore (1991-1995), Malaysia (1996), New Zealand (1997-1999), Italy (2002) and the United Kingdom (20032006). During 2000-2001, he served in the Headquarters as Deputy Permanent Secretary of Foreign Affairs. Vikrom served in the Thai foreign service for 34 years until he reached the statutory retirement age of 60 in 2006. He is now Chairman of the Board of Dragon One PCL; Chairman of the Audit Committee, Oishi Groups of Companies; Advisor to TCC Holding Co., Ltd. and TCC Land Co., Ltd. Dr. Virachai Techavijit, Chairman and Founder, The Regentâ&#x20AC;&#x2122;s Schools Thailand Dr. Virachai Techavijit graduated in Accountancy from Thomas More College-Ft. Mitchell, KY, USA in 1973 and received his MA and PhD degrees in the same field from the University of Missouri-Columbia, USA in 1979. In the same year he also received his Certified Public Accountant (CPA) certification from the State of Nebraska USA. After he received an Advanced Teaching Certificate in 1966 from the Ministry of Education Thailand, he undertook the position of Headmaster at Joseph Upatham School, Thailand from 1967-1969. He then worked at universities in the U.S.A. from 1975-1981. The last university he worked for was the University of California, Los Angeles (UCLA) as an Appointed Full Time Lecturer. In 1994-1995 he was Chairman of the Board of the Mass Rapid Transit Authority (MRTA). From 1996-1997 he was an Official Adviser to The Prime Minister. Currently, he is Chairman of Ventures Group of Companies and, since 1994, Founder /Chairman of The Regentâ&#x20AC;&#x2122;s Schools. The Brief

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Membership Group in new consultation process By Chris Thatcher

Part of the membership group preparing ahead of the BCCT membership meeting.

hen you are part of a membership organisation there will always be things that you think are being done well, things you think could be done better and things that you feel quite strongly need changing. The BCCT is no different and the purpose of this article is to give you an opportunity to forward your thoughts to the BCCT Membership Group. This group was set up after the AGM on the initiative of newly-elected BCCT Chairman Simon Landy. Its purpose is to obtain the views of members in as many different ways as possible and to collate them, consider them and, if they are viable, construct a strategy to implement them and present that to the Board of Directors for discussion. If there is agreement, then the next stage would be to decide how to put the strategy into practice. No organisation is perfect (if you think there is one, please let us know) and the BCCT is seeking your views and inviting you to respond by email, 54

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phone, Facebook or even ‘snail mail’ and let us know your thoughts. We held a meeting for members on the 3rd April but you may well not have been able to attend that. The process of getting feedback from members should be on-going process so there is no fixed timeframe. Some of the recommendations we will be making to the Board will be fairly simple to put in place. Others may require constitutional changes and will not able to be implemented quickly. Some changes may be unachievable if they affect the financial stability of the Chamber. Naturally some members may feel strongly about one issue but not about others but the overall aim is to clearly ensure that the Chamber is seen to be a membership organisation run by and for the BCCT members and reflecting their views and requirements wherever practical and possible. Positive comments are welcomed as well as those suggesting changes – it’s always good to know what people are thinking. One thing is for sure

that is it is your BCCT and you have opportunity to influence the way it goes forward. If you say nothing, there could be an assumption that nothing needs to change. Please let us know your thoughts. Membership Group members working with me, in my capacity as Chairman of the Group, are: • Jane Bailey, Equitech (Thailand) • Viriya Chongphaisal, GlaxoSmithKline (Thailand) • Andrew McBean, Grant Thornton • Ewen McDonald, Rolls-Royce (Thailand) • Sriram Narayan, British Airways • Toni Weber, TNT Express Worldwide (Thailand) If you feel you have something you are bursting to say or to tell us about, please respond to me via email at christhatcher1@gmail.com in the first instance. I will undertake to ensure that your views are circulated to all group members and included in our discussions. One thing is for certain – if nobody says anything, little will change.

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OBITUARY

Liam Ayudhkij L

iam Ayudhkij, the founder and Chairman of PCS (Thailand) Ltd., has passed away at the age of 66. Liam, a Thai citizen, was born in Dublin in 1945 and had lived in Thailand for almost 50 years. Renowned as a business leader, Liam was known for his dedication to charity, his love of Thai art, his boundless enthusiasm and joy of life.

of Companies. He is regarded as having been a wonderful leader, a dynamic business person and the man who steered PCS to achieve so many of its corporate goals and successes.

After graduating from Dublin’s O’Connell’s School he moved to Thailand at the age of 18. Liam was the General Manager of the original PCS in 1969 when it consisted of five people as part of the lnchcape Group

He was a professional and personal inspiration to everyone who knew him and was a close friend of the BCCT. He will be missed by all those whose lives he touched.

He dedicated considerable time and effort to a wide range of charities and other worthwhile causes. He was a dedicated supporter of Thai art and artists, both known and unknown. Liam’s collection was renowned, as was his support and assistance for young artists.

Staporn Kavitanon K

hun Staporn Kavitanon, formerly Chief Economic Advisor to Prime Minister Abhisit Vejjajiva in the previous national administration, has passed away at the age of 72. Khun Staporn also served as Secretary-General of the Board of Investment, holding the position for 10 years until 2001. He is regarded as having played a major role) and playing an influential role in reviving the fortunes of the BOI. He led

the move to transform the BOI into a ‘one-stop service centre’. He served several governments in various capacities and was also a significant figure in the private sector, perhaps most notably as vice-chairman of Bangkok Bank. Khun Staporn is fondly remembered and much missed by BCCT members and it was only in May 2011 that he addressed the chamber on the future of Thailand’s economy.

Norman Denning

David Levy

t is with great sadness that we report the death of Norman Denning at the age of 70. Norman, with his wife Eileen, had lived in Thailand for some 13 years running their company Yorkies – producing meats, pies and sausages. They also built a school in Yasothon.

The Brief

Issue 2/2012

e regret to report the passing of David Levy who worked at the Dharmniti Law Office Company Limited in Wireless Road, Bangkok. He passed away after a prolonged battle to recover from a head injury suffered as a result of a fall that took place in December last year.

Dataconsult

Chamber Events

By the Numbers Chris Bruton Director, Dataconsult Ltd.

yanmar has aroused a frenzy of interest, exceeding even the Vietnam mania of the 1990’s, which also preceded the lifting of a US embargo. It is surely to be hoped that ardour will cool and hard facts will moderate wild dreams. Certainly gold rushes always benefit sellers of blue jeans and pickaxes (as well as those providing legal, tax and market advice). Myanmar is regularly described by media as ‘resource rich’ which, to some extent, could be an accurate description. Reaping those resources will, however, require infrastructure investment, trained personnel and a solid basis of rule of law – none of which are presently evident in Yangon or Naypyidaw. Myanmar has not been strong on statistics at any time in history so the numbers available tend to be sparse, often conflicting and frequently dubious. Myanmar is certainly the second biggest country in ASEAN with the fourth or fifth biggest population, depending on whether there are more people in-country than in Thailand. With no proper census on record, population can only be guessed and the guesses may well err on the side of conservatism. The ethnic composition is also in doubt, although the ruling Bamar people claim to represent over 65 percent of total population. This may be an exaggeration, as the various minority groups are likely to be more numerous than is suggested, but it will be a while before the truth is known.

Certainly people are poor, the poorest in ASEAN, although some are rich with hoarded wealth in gold, foreign currency and overseas bank accounts. At least a third of the population lives

The big picture: 2012 estimates Country

Area (Sq. Km)

Population (million)

Population density (people per sq. km)

GDP (US$ bn)

GDP PPP basis (US$ bn)

GDP per capita (US$)

GDP per capita PPP (US$)

Indonesia

1,964,569.0

243.4

128.0

936.5

1,206.0

3,847.9

4,955.1

Myanmar

676,578.0

63.7

94.0

52.2

88.3

819.8

1,386.9

Thailand

513,120.0

64.6

126.0

379.2

659.7

5,865.0

10,204.1

Vietnam

331,210.0

90.4

273.0

137.5

321.8

1,521.2

3,560.2

Malaysia

329,847.0

29.2

89.0

267.3

475.4

9,146.9

16,270.0

Philippines

300,000.0

97.7

325.0

232.1

417.6

2,375.8

4,274.6

Laos

236,800.0

6.7

28.0

8.9

19.1

1,338.3

2,859.7

Cambodia

181,035.0

14.6

80.0

14.6

35.5

998.4

2,435.0

Brunei

5,765.0

0.4

74.0

15.6

21.8

35,743.2

49,925.2

Singapore

697.0

5.3

7,670.0

283.7

332.0

53,071.7

62,094.7

Source: International Monetary Fund, September 2011

FDI FDI flows 2005-2010 (Millions of dollars)

FDI stock 1990, 2000 , 2010 (Millions of dollars)

Countries

2005

2006

2007

2008

2009

2010

1990

2000

2010

ASEAN

40,737

56,701

75,740

46,947

37,981

79,408

64,303

266,291

938,401

Brunei

289

434

260

239

370

496

3,867

11,225

Cambodia

381

483

867

815

539

783

1,580

5,958

Indonesia

8,336

4,914

6,928

9,318

4,877

13,304

8,732

25,060

121,527

Laos

187

324

228

319

350

588

2,088

Malaysia

4,065

6,060

8,595

7,172

1,430

9,103

10,318

52,747

101,339

Myanmar

236

428

715

976

579

756

281

3,211

8,273

Philippines

1,854

2,921

2,916

1,544

1,963

1,713

4,528

18,156

24,893

Singapore

15,460

29,348

37,033

8,588

15,279

38,638

30,468

110,570

469,871

Thailand

8,067

9,517

11,355

8,448

4,976

5,813

8,242

29,915

127,257

Vietnam

2,021

2,400

6,739

9,579

7,600

8,173

1,650

20,596

65,628

Source: UNCTAD, World Investment Report 2011, Annex tables 1-6 and 1-2

below the absolute poverty level, while others can afford palatial houses and sumptuous family weddings. Foreign investment is modest, although well ahead of Cambodia or Laos, with more than three-quarters of that investment in oil, gas and mining. This situation is likely to

continue, threatening a ‘resource curse’ which may crowd out the lowcost labour-intensive manufacturing that the country most needs. Most disturbing are the horrendous levels of governance, transparency and human development which place Myanmar among the least favoured countries in the world. The Brief

Issue 2/2012

However, these discouraging statistics reflect 50 years of authoritarian and largely incompetent military rule, along with self-imposed isolation from the rest of the world. The extent of recent changes towards reform appears dramatic but the underlying motivations remain obscure. Do leopards change their spots, do generals so easily change their uniforms and do wolves take on sheep’s clothing? Nationalism, together with ethnic diversity and conflicts, will remain as challenges. Too many attempts at reform in too short a time are bound to cause a degree of ‘economic indigestion’ with resulting road blocks and setbacks. Corruption and poor implementation of rule of law cannot be changed overnight.

Myanmar inward direct investment by type (US$ million) Country

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Total

Agriculture, Fishery and Forestry

Mining and Quarryling

107

111

163

270

233

420

482

790

486

3,133

Manufacturing

122

Construction

Trade / Commence

Financial Intermediation and Services (include insurance)

Real Estate

Services

127

Other (not elsewhere classified)

163

220

170

564

208

193

191

290

251

235

428

715

976

579

4,066

Total

Source: ASEAN Investment Report 2011

The Brief

Issue 2/2012

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Brunei

984

840

891

944

119

127

158

179

226

158

214

Cambodia

466

605

787

701

1,055

1,422

1,700

2,015

2,126

2,162

2,508

Indonesia

]5,064

Lao PDR

737

Malaysia Myanmar

5,154 4,914 4,371 5,321 5,002 4,871 5,506 6,429 6,324 674

736

636

895

1,095 1,215 1,624 2,005 2,008

7,003 2,513

10,272 12,775 13,292 10,577 15,703 16,431 18,472 20,236 22,053 23,646 24,577 271

205

217

597

657

660

653

732

661

763

792

Philippines

1,992 1,797 1,933 1,907 2,291 2,623 2,688 3,092 3,139 3,017

3,521

Singapore

7,691 7,519 7,567 6,127 8,375 8,942 9,752 10,288 10,117 9,681

11,639

Thailand

9,509 10,062 10,799 10,082 11,737 11,517 13,822 14,464 14,598 14,150 15,936

Vietnam

2,150 2,330 2,628 2,429 2,928 3,468 3,583 4,150 4,254 3,772

ASEAN

5,050

39,136 41,960 43,763 38,371 49,082 51,288 56,914 62,285 65,606 65,680 73,753

Source: Association of Southeast Asian Nations: ASEAN Tourism Statistics,2011

Governance, Human Development and Transparency Ranking Human Development Transparency

Country

Government Effectiveness

Voice and Accountability

Total (max 600)

Human Development Index Ranking (187 countries)

Mean years of schooling (years)

Life expectancy and Governance Ranking at birth (years)

Transparency International Ranking (183 countries)

Governance Ranking

Regulatory Quality

Watch out Thailand, watch out Singapore. Myanmar is on the move!

2000

Rule of Law

Nobel prizewinner and newly-elected MP Aung San Suu Kyi claims that Myanmar can again become the most advanced country in south east Asia, which at one time indeed it was.

Country

Corruption Control

The move of the Myanmar capital to Naypyidaw under Senior General Than Shwe was equally dramatic with a city, populated by a million people, rising from the jungle, planned and constructed largely unnoticed by the outside world. It’s a Disneyland rivalling California, with its population required to uproot from Yangon virtually over the course of a weekend. A country that can create Naypyidaw (or even countenance anything so monumental) might even be capable of becoming the leader of ASEAN (which Myanmar will actually achieve in 2014).

Tourist arrivals 2000-2010 total in thousands

Political Stability

Nevertheless, Myanmar is capable of remarkable and dramatic change, which really can take place overnight. General Ne Win’s astrologer advised him to ‘move to the right’ (referring to the Burmese Road to Socialism), but that astute general simply changed the driving rules, requiring all vehicles to swap sides of the road. That did happen overnight, even though steering wheels have remained on the right-hand side of the vehicles ever since. That reform did not improve the economy but did evidence how remarkably quickly change can be effected.

Singapore

100

516

8.8

81.1

Brunei

431

8.6

78.0

Malaysia

342

9.5

74.2

Thailand

274

103

6.6

74.1

Indonesia

224

124

5.8

69.4

100

Philippines

221

112

8.9

68.7

129

Vietnam

215

128

5.5

75.2

112

Cambodia

138

139

5.8

63.1

164

Laos

106

138

4.6

67.5

154

Myanmar

150

4.0

65.2

180

Governance: World Bank; Human Development: UNDP; Transparency: Transparency International (all 2011)

Myanmar in ASEAN Myanmar in ASEAN: GDP (current prices 2006-2016) Countries Indonesia Thailand Malaysia Singapore Philippines Vietnam Myanmar Brunei Cambodia Laos

2006 364.4 207.1 157.1 145.3 122.2 60.9 14.5 11.5 7.3 3.6

2007 432.2 247.0 187.0 177.3 149.4 71.1 20.2 12.2 8.7 4.2

2008 511.2 272.6 222.7 189.4 173.6 90.3 31.4 14.4 11.3 5.3

2009 538.5 263.7 193.0 183.3 168.5 93.2 35.2 10.7 10.9 5.6

2010 706.8 318.9 238.0 222.7 199.6 103.6 45.4 12.4 11.6 6.5

Laos Vietnam Cambodia Myanmar Indonesia Singapore Malaysia Philippines Thailand Brunei

8.6 8.2 10.8 13.1 5.5 8.7 5.8 5.2 5.1 4.4

7.8 8.5 10.2 12.0 6.3 8.8 6.5 6.6 5.0 0.2

Singapore Brunei Malaysia Thailand Indonesia Philippines Vietnam Laos Cambdoia Myanmar

31,672.4 29,949.2 5,853.2 3,296.1 1,635.7 1,405.2 724.0 595.7 526.4 256.7

36,642.9 31,404.3 6,878.7 3,917.9 1,915.6 1,683.8 835.1 693.6 626.7 350.1

Singapore Brunei Malaysia Thailand Indonesia Philippines Vietnam Laos Cambodia Myanmar

47,334.4 49,430.8 12,270.5 7,691.2 3,447.8 3,260.1 2,364.1 1,815.8 1,669.1 983.2

50,236.0 50,028.9 13,269.4 8,285.9 3,724.6 3,506.8 2,607.5 1,979.0 1,883.6 1,110.7

50,565.3 49,139.4 14,032.8 8,638.0 3,985.2 3,661.1 2,799.9 2,140.7 2,033.8 1,153.0

Vietnam Myanmar Indonesia Cambodia Laos Philippines Malaysia Thailand Singapore Brunei

7.5 26.3 13.1 6.1 6.8 6.2 3.6 4.6 1.0 0.2

8.3 32.9 6.0 7.7 4.5 2.8 2.0 2.2 2.1 1.0

23.1 22.5 9.8 25.0 7.6 9.3 5.4 5.5 6.6 2.1

Indonesia

222.7

225.6

228.5

231.4

237.6

Philippines

87.0

88.7

90.5

92.2

94.0

Vietnam Thailand Myanmar Malaysia Cambodia Laos Singapore Brunei

84.2 62.8 56.5 26.8 13.8 6.0 4.6 0.383

85.2 63.0 57.6 27.2 13.9 6.1 4.8 0.390

86.2 63.4 58.8 27.5 14.0 6.2 5.0 0.398

87.2 63.5 60.0 27.9 14.1 6.3 5.1 0.406

88.3 63.9 61.2 28.3 14.3 6.4 5.2 0.417

2011 834.3 339.4 247.6 266.5 216.1 121.6 50.2 15.6 13.2 7.9

2012 936.5 379.2 267.3 283.7 232.1 137.5 52.2 15.6 14.6 8.9

2013 1031.9 419.1 288.5 295.9 248.8 154.2 54.8 15.7 16.2 9.7

2014 1137.4 457.3 311.3 309.6 266.7 171.7 57.6 16.1 18.1 10.6

2015 1253.2 497.6 335.6 323.9 286.1 190.0 60.4 16.3 20.1 11.7

2016 1381.7 538.0 361.7 338.6 307.3 210.2 63.5 16.7 22.3 12.8

7.1 6.8 7.0 5.6 6.7 4.2 5.1 5.0 4.8 1.9

7.4 7.2 7.3 5.6 7.0 4.2 5.1 5.0 4.9 3.8

7.9 7.5 7.8 5.6 7.0 4.1 5.0 5.0 5.0 2.6

7.4 7.5 7.7 5.7 7.0 4.0 5.0 5.0 5.0 3.3

54,400.9 35,206.1 9,707.0 6,444.6 4,189.7 2,496.4 1,685.8 1,429.3 1,097.4 843.8

55,941.4 35,203.5 10,301.3 6,990.4 4,567.7 2,623.8 1,854.6 1,534.0 1,214.7 868.6

57,524.2 34,870.4 10,918.6 7,560.3 4,977.8 2,759.9 2,028.3 1,657.2 1,336.4 894.2

59,110.3 34,813.2 11,572.9 8,124.6 5,428.6 2,906.5 2,217.2 1,775.8 1,469.6 920.6

62,094.7 49,925.2 16,270.0 10,204.1 4,955.1 4,274.6 3,560.2 2,859.7 2,435.0 1,386.9

64,004.6 50,086.3 16,921.9 10,698.4 5,258.0 4,428.6 3,782.6 3,026.2 2,596.1 1,445.5

66,111.7 51,225.9 17,636.9 11,250.8 5,612.3 4,597.7 4,039.9 3,218.5 2,781.4 1,509.7

68,454.8 51,979.2 18,427.1 11,883.5 6,010.9 4,789.6 4,341.7 3,450.3 3,003.1 1,582.1

70,992.8 53,215.7 19,301.6 12,583.5 6,454.2 5,002.1 4,677.8 3,690.8 3,248.2 1,662.4

12.1 3.7 6.5 5.6 6.7 4.1 2.5 4.1 2.9 1.2

6.0 4.1 5.4 3.6 5.3 4.0 2.4 4.2 2.4 1.2

5.5 4.0 5.3 3.1 4.6 4.0 2.4 3.5 2.1 1.2

5.3 4.0 4.7 3.0 4.5 4.0 2.3 3.3 2.0 1.2

5.0 4.0 4.5 3.0 3.9 4.0 2.3 2.7 2.0 1.2

240.5

243.4

246.3

249.0

250.0

254.5

95.8

97.7

99.6

101.6

103.7

105.7

89.3 64.3 62.4 28.7 14.4 6.6 5.3 0.427

90.4 64.6 63.7 29.2 14.6 6.7 5.3 0.437

91.5 65.0 65.0 29.7 14.7 6.8 5.4 0.447

92.6 65.4 66.3 30.2 14.9 6.9 5.5 0.457

93.7 65.8 67.6 30.7 15.0 7.1 5.6 0.460

84.8 66.2 68.9 31.3 15.2 7.2 5.7 0.500

Myanmar in ASEAN: GDP Growth (constant prices 2006-2016) 7.8 6.3 6.7 3.6 6.0 1.5 4.8 4.2 2.6 -1.9

7.6 5.3 -2.0 5.1 4.6 -0.8 -1.6 1.1 -2.4 -1.8

7.9 6.8 6.0 5.5 6.1 14.5 7.2 7.6 7.8 2.6

8.3 5.8 6.7 5.5 6.4 5.3 5.2 4.7 3.5 2.8

8.4 6.3 6.5 5.5 6.3 4.3 5.1 4.9 4.8 2.2

Myanmar in ASEAN: GDP per capita (current prices 2006-2016) 37,971.0 36,223.2 8,087.8 4,300.0 2,237.0 1,919.2 1,047.9 856.2 805.1 533.5

36,112.5 26,423.1 6,919.7 4,151.3 2,327.3 1,826.9 1,068.3 885.7 768.4 587.3

43,116.7 29,674.8 8,423.2 4,992.4 2,974.0 2,123.0 1,173.5 1,003.7 813.8 742.4

50,714.2 36,520.7 8,616.7 5,281.5 3,469.3 2,254.9 1,361.6 1,203.6 911.7 804.3

53,071.7 35,743.2 9,146.9 5,865.0 3,847.9 2,375.8 1,521.2 1,338.3 998.4 819.8

Myanmar in ASEAN: GDP per capita (PPP 2006-2016) 49,815.5 47,796.5 13,771.4 8,504.6 4,159.8 3,670.5 2,944.7 2,285.1 1,995.1 1,201.0

56,694.4 48,333.1 14,744.4 9,220.7 4,346.7 3,920.1 3,143.0 2,449.3 2,118.4 1,255.8

59,937.0 49,517.8 15,579.0 9,693.4 4,668.1 4,111.1 3,354.8 2,659.2 2,286.1 1,327.0

Myanmar in ASEAN: Inflation (2006-2016) 6.7 8.2 4.8 -0.7 0.0 3.2 0.6 -0.8 0.6 1.0

9.2 8.2 5.1 4.0 6.0 3.8 1.7 3.3 2.8 0.4

18.8 6.7 5.7 6.4 8.7 4.5 3.2 4.0 3.7 1.8

Myanmar in ASEAN: Population

Source: International Monetary Fund September 2011

The Brief

Issue 2/2012

Chamber Events

Chamber Events Life & Style Garden Party 23 February 2012 On 23rd February the British Embassy opened its gates for members and guests to attend the annual Life & Style Garden Party.

Thank you to our sponsors and partners. 60

The Brief

Issue 2/2012

Chamber Events

Networking in Chiang Mai 9 February 2012 Networking in Chiang Mai AA Insurance Brokers, ACS Insurance, Thai Health Insurance and Four Seasons sponsored the BCCT Networking on 9th February at Four Seasons Chiang Mai.

01 01 - All smiles at the Networking Evening in Chiang Mai.

02 02 (from left to right) - Mike Barrett, ACS Insurance - Peter Smith, AA Insurance Brokers

AustCham/AMCHAM/BCCT Eastern Seaboard Networking Evening 17 February 2012 M&C Energy, AFG and Amari Orchid Pattaya kindly sponsored the Joint Eastern Seaboard Networking on 17th February 2012 at Ice Bar.

01 01 - Ice cool in Pattaya.

02 02 (from left to right) - John Sim, KPMG in Thailand/BCCT Vice Chairman - Mark Hamill-Stewart, MRI Worldwild Recruitment - Karen Hochhauser, Santa Fe (Thailand) Ltd

Thank you to our sponsors and partners. The Brief

Issue 2/2012

Chamber Events

Special BCCT dinner 17 February 2012 Lord Green of Hurstpierpoint On 17th February Lord Green of Hurstpierpoint, UK Minister of State for Trade and Investment, was guest speaker at the Special BCCT Dinner sponsored by HSBC and Boots Retail (Thailand).

01 01 - Lord Green (centre) with BCCT Board Directors and UK Ambassador Asif Ahmad.

02 02 - Lord Green of Hurstpierpoint

British polo day 18 February 2012 Ambassador Asif Ahmad attended the British Polo Day on Saturday 18th February at The Thai Polo and Equestrian Club, Pattaya.

01 01 - British Ambassador Asif Ahmad (centre) with Harald Link (second left) and friends.

02 02 - The victorious British Army team

Thank you to our sponsors and partners.

The Brief

Issue 2/2012

Chamber Events

Half-day workshop 28 February 2012 ‘Implementing Change’ On Tuesday 28th February the BCCT Management Development Group organised the Thai language Half-Day Workshop on ‘Implementing Change’.

01 - Khun Orravan Kowathana, HR Manager at Tesco Lotus

02 - This half-day workshop was well attended by BCCT members.

PWG - Women’s Entrepreneurs Night 8 March 2012 On 8th March Samitivej Hospital kindly sponsored the Joint PWG - Women’s Entrepreneurs Night.

01 (From left to right) - Sally Holloway, KIS International School - Porntip Utsahaphan, Samitivej Hospital - Toni Weber, TNT Express Worldwide (Thailand)/BCCT Board Director - Kitima Sirichai, Samitivej Hospital

02 - Gary Biesty, South Asia Law/BCCT Board Director

Thank you to our sponsors and partners.

The Brief

Issue 2/2012

Chamber Events

BCCT/AustCham/RICS breakfast briefing 13 March 2012

James Pitchon of CB Richard Ellis was guest speaker at a joint BCCT/AustCham/RICS breakfast briefing on 13th March.

01 (From left to right) - Chris Thatcher, BCCT Board Director - James Pitchon, CB Richard Ellis Co., Ltd. - John Anderson, Meinhardt/AustCham President

02 - Guests listen intently to the presentation from James Pitchon.

AMCHAM/AustCham/BCCT Eastern Seaboard Networking Evening 16 March 2012 On 16th March the BCCT joined hands with AMCHAM and AustCham for an Eastern Seaboard Networking Evening at Hilton Pattaya. Thanks to our sponsor Hemaraj Land and Development.

01 (From left to right) - Judy Benn, AMCHAM Executive Director - Simon Matthews, Manpower (Thailand)/BCCT Vice Chairman - David Nardone, Hemaraj Land and Development - Anthony Nafte, CLSA - David Cumming, Amari Orchid Pattaya/BCCT Board Director

02 - Hemaraj Land and Development team members

Thank you to our sponsors and partners.

The Brief

Issue 2/2012

Chamber Events

BCCT Half-Day Workshop 20 March 2012 Performance Management On 20th March BCCT Management Development Group, in collaboration with HSBC, offered an interactive workshop on the topic of ‘Performance Management’.

01 - Performance management is a topical subject in local and international companies.

02 - Facilitator Khun Janejit Lerdmaleewong, HSBC

BCCT Eastern Seaboard Panel Evening 21 March 2012 How to retain good people On 21st March BCCT organised the first Eastern Seaboard Panel Evening on the topic ‘How to retain good people’. The event was held at the Pullman Pattaya.

01 01 (From left to right) - Kulshaan Singh, Aon Hewitt Southeast Asia - Joe Barker-Bennett, Crestcom - Matt Horris, Acushnet Titleist (Thailand) - Clinton Lovell, Pullman Pattaya Aisawan - Trevor Negus, Ford Motor Company - David Cumming, Amari Orchid Pattaya

02 02 (From left to right) - Peter Hamilton, Nestle (Thai) - Duncan Varnes, GKN Driveline (Thailand)

Thank you to our sponsors and partners.

The Brief

Issue 2/2012

Forthcoming events APRIL

17/5 – THIRD THURSDAY Venue: Sofitel Bangkok Sukhumvit

25/4 – Special BCCT Luncheon Guest speaker: MR. Pongsvas Svasti, Minister of Industry Venue: Shangri-La Hotel 26/4 – BCCT Half-Day Seminar (Labour & Employment Law) Venue: British Club 27/4 – One-to-one meetings with Chris Wren, Executive Director of British Chamber of Commerce Indonesia Venue: BCCT office

May 14/5 – BCCT Site Visit to Amata Nakorn & Triumph Motorcycles 16/5 – BCCT ICT Evening Presentation Venue: TBA

Bangkok Masters Football Tournament 2012 Saturday 26th and Sunday 27th May 2012 From 10.00 am to 5.00 pm At Bangkok Patana School, 643 LaSalle Road (Sukhumvit 105)

18/5 – BCCT Eastern Seaboard Half-Day Workshop (The Strategic Role of Human Resources Management) Venue: Pullman Pattaya Hotel G 18/5 – Joint AMCHAM/AustCham/ BCCT Eastern Seaboard Networking Evening Venue: TBA 23/5 – Special BCCT Luncheon Guest speaker: Alderman David Wootton, Lord Mayor of London and Dr. Prasan Trairatvorakul, Governor, The Bank of Thailand Venue: TBA 25/5 – BCCT Networking Evening Venue: My Bar, Dusit Thani Bangkok 26-27/5 – BCCT-Tesco Lotus Bangkok Masters Football Tournament Venue: Bangkok Patana School 26/5 – Football Dinner Venue: Dusit Thani Hotel, Bangkok 31/5 – Joint Professional Women’s Group Venue: TBA

JUNE

Football Dinner Saturday 26th May 2012 at Dusit Thani Hotel, Bangkok For dinner sponsorship opportunities Contact : greg@bccthai.com

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