Thai-Norwegian Business Review by Thai-Norwegian Chamber of Commerce

Thai-Norwegian Business Review 2012 â&#x20AC;&#x201C; 1

Thai-Norwegian Chamber of Commerce

John Eddy Abdullah Smiles across the Spectrum

ASEAN Economic Community

For a more colourful world, weâ&#x20AC;&#x2122;re taking steps to be a little greener

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Jotun Thailand Ltd. (02) 750-3355 Jotun Powder Coatings (Thailand) Ltd. (038) 468-744 to 5

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Contents Nordic Networking with dtac

The exhibition “Polar Norway – The White Adventure”

Theme: ASEAN Economic Community

AEC: Challenges and Opportunities

A Clarion Call for ASEAN to Drive AEC Forward

Implications of the AEC in the IP Field

Will AEC Change the Service Sectors in Thailand?

Interview with Jon Eddy Abdullah, CEO of dtac

Annual General Meeting 2012

Thai Technology is good News for Norway

A Letter from Chiang Mai

Seafood Under the Stars

Space in the Thai Market for Sweden’s Home

Thai Economy at a Glance

Members Directory

38 Editor: Kristine Hasle Journalists: Eric Baker, Colin Jarvis, Nadia Willan, Anton Benzon Design/artwork: Karine Slørdahl Advertising: Elisabeth Bashari

Front page picture: Buddhist Munks Photography from Istock

AEC – Opportunities

2015 is on everybody’s mind since this is the year when the ASEAN Economic Community (AEC) becomes reality. While many of the ideas behind AEC have been agreed to by the ASEAN governments, we are still far from seeing a free flow of goods, investments, capital, labour and services between the ASEAN nations. The press has done their part to paint shock scenarios featuring a free flow of cheap products which will make Thai products uncompetitive in addition to a free flow of unskilled labour. The fact is that we are talking about skilled labour in a limited number of fields. Such professionals will still have to qualify according to rules imposed on Thai nationals are in principle meaning language barriers for foreigners. What the press has neglected to report is the positive opportunities which lie in the AEC introduction. The fact that the AEC framework enable Thai companies to reach 600 million consumers should not be underestimated. At the same time Thai businessmen will in principle be able to hold 100% ownership in businesses across the region and free repatriation of funds and taxation open up new opportunities for Thai companies in other AEC countries. Thailand is facing severe labour shortage and a workforce unwilling to take on factory production at minimum wages even after the minimum wage has been raised by almost 40% in some areas. Three million foreign workers, mostly Myanmar and Cambodian nationals are helping to keep the wheels turning. A freer flow of skilled workers should benefit Thai companies and not be seen as a threat. A delegation of Norwegian businesspeople and officials from Norwegian state agencies has just returned from Myanmar. Opportunities in Myanmar are abundant since the country has practically been closed for 50 years with the result that basic services are lacking in almost every field. Thailand is Myanmar’s second largest foreign investor. AEC opens up for a freer flow of goods and services and should greatly benefit Thai investors in neighbouring countries. Like Dr. Surin Pitsuwan, the ASEAN Secretary General, I urge you all to embrace AEC and see the opportunities which lie ahead rather than the threats. This magazine feature articles on many of the opportunities AEC offers. Happy reading!

Sincerely, Axel Blom President Thai-Norwegian Chamber of Commerce

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Excellent Nordic Networking with dtac text by Kristine Hasle photos from dtac

From 38th floor and the Bangkok skyline view, finger food, wine and live music, people enjoyed the perfect setting for an excellent networking event.

On 24 January 2012, dtac opened their doors and welcomed more than 100 members of the Nordic Chambers of Commerce in Thailand to an unforgettable networking evening. Mr. Axel Blom, President of Thai-Norwegian Chamber of Commerce, welcomed the guests and thanked dtac for inviting the Nordic Chambers.

John Eddy Abdullah talked about dtacs achievements and went quickly through 20 years of operation in Thailand. With dtac’s 23 million customers, 6,000 employees and 75 billion revenue, dtac has a lot to be proud of. Total Access Communication PCL was established in 1989 and Telenor became a shareholder in 2001 and introduced the brand name dtac.

Mr. Jon Eddy Abdullah, CEO of dtac, described the business situation, the current mobile market, and future accomplishment. After his presentation, participants were invited to step up to the open-air bar.

John Eddy used the chance to talk about the network problems dtac had in the beginning of this year. Dtac is replacing all its existing or legacy network components installed in the past, with the latest and most advanced equipment on the market. This upgrading of the systems is for the customer’s best in the long run, and it will increase the quality speed and reliability of dtac’s services. He mentioned present trends on the mobile market, with examples on how Smartphones and social media like Facebook and Twitter have revolutionised the world over the past few years. How apps can be downloaded and how you suddenly can call for free through Viber, Skype etc. One of the challenges for the telecom industry is how they can take part of the rapid development that takes place everywhere in the world. Mobile payments will impact future of banks, back end payment processing, credit card transactions and retail customer spending. Smartphones using encryption and biometrics will enable telecom companies to compete with banks and credit card companies for retail payment transactions. Despite this, some customers will continue to prefer cash because it allows anonymous purchases and is convenient for smaller purchases. Retail impact of online price comparison using mobile devices, smartphones, and aggregator sites will change customer behaviour and shopping patterns. Customers can compare prices in stores or shopping malls and then buy online or from a competitor store nearby.

Thai-Norwegian Business Review found Mr. John Eddy’s presentation very interesting and wanted to hear more about dtac’s future plans. You can read an interview with him on page 24

Mobile financial services will have a significant impact on the economic and societal growth of development countries. By bringing banking services and financial products to people who are entirely unbanked at present, they now have the chance to strengthen their development and prosper. The mobile phone is the key to simpler money transfers, readily accessible savings accounts, new methods of bill payment and even insurance products to protect against unforeseen events.

The exhibition “Polar Norway – The White Adventure” opened in The Royal Norwegian Embassy and the National Science Museum Thailand invited to the opening of the exhibition “Polar Norway – The White Adventure” at NSM Science Square, Chamchuree Square.. Bangkok was the final destination of the exhibition which has been travelling around the world for the past years, spreading knowledge about climate change in the Polar Regions and its global consequences. After a welcoming speech by Dr. Pichai Sonchaeng, President of the National Science Museum, H.E. the Ambassador of Norway to Thailand, Ms. Katja Nordgaard, and H.E. Thailand’s Minister of Science and Technology, Dr. Plodprasop Suraswadi, made their keynote speeches concerning the imminence threats of climate change, the global importance of the Polar Regions and the friendly relationship between Thailand and Norway. The invitees came from near and far, representing the diplomatic corps, the Thai Academic circles, Norwegian companies and representatives of the media. One of the main messages brought by the exhibition is that local, national and regional environmental degradation all have global consequences in the long run. For example, greenhouse gas emissions and pollution originating in distant parts of the world are

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having impacts in the Polar Regions, which again can lead to dramatic consequences in every corner of the globe. If the ice melts by 20 per cent in Greenland and 5 per cent in Antarctica at the same time, the sea level will rise by 4 to 5 metres. Needless to say, small islands in the Pacific, Caribbean, and in the Indian Ocean are all at high risk of becoming washed away. Also countries like the Netherlands and Bangladesh, and cities and coastal infrastructure in many other countries, such as Thailand, could be affected negatively. Knowledge about the Arctic climate is important for global climate policy and for taking the decisions needed to reduce global warming. Knowledge gained in the Arctic is already of crucial importance for understanding the functioning of the climate system at global as well as regional level. The exhibition, “Polar Norway – The White Adventure” also showcased environmental and climate change related technology solutions from leading Norwegian companies, such as Yara, Carbon Reduction Technology, Jotun, AquaFence and Telenor. The private sector has a key role to play when it comes to combating climate change – both by changing the way they conduct their business, but most importantly by inventing new and innovative solutions and technology to meet future challenges.

n Bangkok

AquaFence (Flood Protection) AquaFence AS, headquartered in Norway and with subsidiaries and member companies in USA, Canada, UK, Germany, Poland, Sweden, Austria, Slovenia, Romania, Asia and Australia. AquaFence is specialised in mobile flood protection. The company’s vision is to deliver the world’s best solutions for urban mobile protection. AquaFence is typically used by cities, communities and industries to protect their multibillion investments which otherwise risks being inundated by water. Our solutions protect up to 2.1 meter of water and can be built up to 1000 times faster than sand bag walls. The systems have been used in floods in North America, Europe and Asia with flying marks. Behind the system is unique technical solutions with high safety factors, certification from one of the leading universities in the world on flood issues (Technical University of Hamburg Harburg, Germany – TUHH), matching existing industrial standards in the USA, UK and Europe. Today we deliver maybe the only mobile system that can in heights up to 2,1 meter, deliver very fast deployment both before the flood and during the flood (early recovery of flooded areas), can sustain waves, current & debris, have also fast de-mobilisation, clean and have a certified life expectancy of 100 times use. We are constantly developing our solutions and will continue to an innovative company in the mobile flood business in the future.

(Waste from Electric and Electronic Equipment). Norway is a market leader in this industry having been the first country in Europe which introduced regulations and a recycling system handling everything from metals, plastics, refrigeration gases and other dangerous materials. Thailand is set to introduce WEEE regulations in 2015 and Carbon Reduction Technologies is positioned as one of the stakeholders in Thailand’s waste management system. Carbon Reduction Technologies commitment to improve Thailand’s environment is displayed at the exhibition: • Reducing impact from Waste from Electric and Electronic Equipment. State-of-the-art technology used at a plant in Stjørdal, Norway is displayed through a scale model of the factory as well as a photo gallery of the process and examples of the processed materials. • Fluorescent tubes are to a large extent not recycled in Thailand. They are simply put on landfills and mercury is consequently added to the environment. CRT is championing use of the dry method to recycle fluorescent tubes. Powerful air pressure is used to blow out the inside coating of the fluorescent tube. The whole process takes place inside a vacuum chamber and thereby securing that the toxic materials are not impacting the environment. Powder coating can be analysed and sorted according to manufacturer’s formula and thus also recycled by respective manufacturers. Unclaimed powder coating can be distilled into liquid mercury and non-toxic residues that can be sent on landfill.

At the end of October 2011, several companies at industrial sites in Thailand contacted AquaFence in Norway to deliver flood protection systems for their factories. These are now installed at sites in Bang Poo, Nava Nakorn and Samut Sakhon. Carbon Reduction Technologies (Recycling of Hazardous Waste) Carbon Reduction Technologies AS is a consortium of Norwegian companies with long experience in the waste industry focusing primarily on WEEE

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Continued from page 9

• Electric Arc Furnace Dust (EAFD) is a byproduct from steel smelting process. The dust is highly toxic as it contains both zink and lead. Norway has developed technology for recycling toxic components in red dust and breaking down the residues to nontoxic materials through the patented ArcFume plasma process which offers a clean and energy efficient process Jotun (Paints and Coatings) Jotun Thailand is a fully owned subsidiary of Jotun AS in Norway that has one of the most sophisticated manufacturing facilities of all companies in the Jotun group. Jotun claims to be market leader no.1 in Protective Coatings and no.2 in Thailand for Marine Coatings and a fast growing player in the Decorative segment. The company has been awarded the ISO 9000 version 2000 (Quality), ISO 14000 (Environmental) Certificates and OHSAS 18000. The exhibition features examples of Jotun’s commitment to both environment and to quality: • Jotashield Extreme is the most durable paint for the extremely harsh tropical climate. It’s a fact that all exterior walls of buildings absorb heat from the sun leading to a warmer interior, higher cooling costs and faster paint deterioration. Jotashield Extreme comes with the revolutionary 2X Heat Reflective feature which helps reflect heat and thereby reduce cooling costs. In addition it features, low dirt pickup, antialgae build-up and the products are green labelled and 100% lead and mercury free. • In 2552, the company discontinued the sale of the Coal Tar Epoxy 82 product, an industrial paint from ships. The product was very popular at that time. Due to a mixture of tar which negatively impacts the environment and is harmful to users, Jotun decided to discontinue the product line while other paint producers continue with related products. • In 2553 Jotun was the first paint manufacturer in Thailand to develop products that are free of APEO (Alkylphenol Ethoxylate) which is highly toxic and which severely impacts the environment

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Telenor Group (Telecommunications) Telenor is an international provider of quality telecommunications services with a history of more than 150 years in communications technology. Today Telenor is among the leading mobile operators in the world, with 133 million mobile subscriptions. The company has mobile operations in 11 markets, as well as a stake of 32 percent in VimpelCom Ltd., operating in 19 additional markets. Telenor is present in some of the world’s most advanced mobile markets and in some of the world’s fastest growing markets. The Telenor Group has a highly skilled local workforce dedicated to serving local markets and driving the advancement in their respective countries. Telenor is a shareholder in dtac, Thailand’s second largest mobile network operator with a market share of 32 percent. The proportion of the population of mobile phone increased from 35 percent in 2003 to 110 percent in 2011 meaning many subscribers carry more than one mobile telephone. Dtac’s number of subscribers grew from 6.6 to 22.7 million. dtac offers mobile telephony, roaming and additional services to subscribers and prepay customers. dtac also offer mobile internet services.

The Telenor Group’s commitment to society and to Thailand is exemplified through some of dtac’s Corporate Responsibility projects: • “*1677 Farmer Information Superhighway”: The service based on telecommunications technologies to help Thai farmers enhance their skills, share and exchange their knowledge, and get access to the best resources of sustainable agricultural practices through the use mobile phones and the internet. • “Mobile Battery for Life” is a campaign to raise awareness among dtac customers, dtac employees and general consumers that dtac has been collecting expired mobile batteries, old handsets and devices for environmentally-friendly recycling and disposal processes. The aims of the projects are to prevent hazardous electronic wastes and to reduce the impact of telecom industry on natural environment as much as possible. • Save energy by bicycling: This is a campaign to raise awareness on environmental conservation. dtac encourages community citizens to use bicycles instead of cars citing that it is good for their health and also good for the environment. For every one kilometre, dtac will donate 10 baht as fund to buy new bicycles for kids in remote areas. The activities have been held in 10 provinces in every region and dtac could collect more than 260,000 kms. allowing dtac to allocate funds to buy 1,000 bicycles to give to needy children as targeted. In other words, not only is dtac saving the environment but also help kids to a brighter future. Yara (Ferilisers) Yara International ASA is the world’s leading chemical company that converts energy, natural minerals and nitrogen from the air into essential products for farmers and industrial customers. As the number one global supplier of mineral fertilisers, the company helps provide food and biomass which can be used for renewable energy for a growing world population. Correct crop nutrition involves supplying a properly balanced diet of nutrients and micronutrients to optimise plant health and growth while minimising waste and pollution. Yara is the world’s leading producer of nitrogen fertilisers and with its Crop Nutrition Concept can assist growers in increasing food production. Yara’s overall theme at the exhibition is Global Mega Trends which impacts three areas: • Resources: Land and Water use are critical resources affecting the sustainability for human development. 70% of our fresh water use is consumed by agriculture. Yara is helping farmers to produce more yields per rai and per drop of water through better nourishment of their crops. Scientific, balance nutrition, supplying the right nutrients at the right rate and the right time leads to yield improvements.

Combined efforts are required to gain substantial improvements in land and water use. • Food: The World Population will grow from the current 7 billion to 8.3 billion people in 2573. What will it take to feed the world? Major improvements in agricultural production are required to feed the world. Plant breeding, crop protection, crop nutrition and agronomy will combine forces to meet this challenge. The natural variation in soil texture and fertility that occurs across a field can be mapped by the Yara N. Sensor as it reads the nitrogen needs of plants. Connected directly to a variable rate fertilise spreader, the Yara N. Sensor helps produce the maximum yield with the optimum rate of nitrogen fertiliser. Yara crop Nutrition combines crop knowledge, product rage and application competence in response to this challenge. • Environment: The concentrations of the greenhouse gases CH4 and N2O, which are highly linked to agricultural production, have increased by 150% and 16%, respectively, since the pre-industrial era in the nineteenth century. In agriculture N2O is produced in the field and in the production of nitrogen fertilisers. N2O is 310 times more powerful greenhouse gas than CO2. Yara is reducing N2O in nitrogen fertiliser production through Improvements in nitric acid production. Installation of the Yara N2O abatement catalyst means 90% reduction of emissions. The use of nitrates in fertilisation combined with reduced emission in production process, allows for significant reductions in carbon footprint.By using Yara’s fertilisers and crop nutrition programs, farmers will be able to achieve maximum yields with minimum climate impact.

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ASEAN Economic Community By 2015, ASEAN member countries should have relatively open movement of goods, services, investment and labour through the ASEAN Economic Community (AEC) agreement. The Association of Southeast Asian Nations (ASEAN) is a regional association composed of the ten countries in Southeast Asia – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. These countries are home to a population of about 600 million people, which is nearly 9 % of the world’s population. The declaration on the ASEAN Economic Community Blueprint from November 2007 says that AEC aims to transform ASEAN into a single market and production base by 2015, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy. At the 12th ASEAN Summit in January 2007, the leaders affirmed their strong commitment to accelerate the establishment of an ASEAN Community by 2015. In particular, the leaders agreed to hasten the establishment of the ASEAN Economic Community by 2015 and to transform ASEAN into a region with free movement of goods, services, investment, skilled labour, and freer flow of capital. Tilleke & Gibbins summarises the five core elements of the ASEAN Economic Community in a clear way in their “Informed Counsel” client newsletter from February 2012 Free trade of goods: The ASEAN Free Trade Area (AFTA) has already achieved great strides in removing tariffs among ASEAN countries. Under the AEC, tariffs on all intra-ASEAN goods are expected to be completely eliminated in accordance with the schedules and commitments set out in relevant agreements and protocols. In addition to zero tariffs, however, the AEC aims for the removal of non-tariff barriers and increased trade facilitation. The main focus toward 2015 will thus be on the full elimination of non-tariff barriers by enhancing transparency of non-tariff measures and formulating regional rules and regulations consistent with international best practices.

Free flow of services: The AEC envisages the complete removal of restrictions to the provision of services and the establishment of companies across national borders within the ASEAN region by 2015, subject to national regulations. Separate negotiations with respect to specific sectors, such as air transport and financial services, are being undertaking by respective ministerial bodies. ASEAN also aims to establish mutual recognition arrangements for professional services, starting with architectural services, accountancy services, surveying qualifications, medical, and dental practitioners. Free flow on investment: The AEC is striving to establish a free and open investment regime to enhance ASEAN’s competitiveness in attracting foreign direct investment and to promote intra-ASEAN investment. The goals include enhanced investment protection, facilitation, and cooperation, as well as progressive liberalisation of members’ countries’ investment regimes. Freer flow of capital: The AEC aims to strengthen ASEAN capital market development and integration through harmonisation of capital market standards in areas such as offering rules for debt securities, disclosure requirements and distribution rules, and cross-border capital raising activities. It also aims to allow greater capital market mobility by ensuring capital account liberalisation, albeit within the scope of each member country’s national agenda and economic readiness. Free flow on labour: The AEC in moving toward managed mobility or facilitated movement of natural persons in trade in goods, services, and investments through visa facilitation and issuance of employment passes for ASEAN professional and skilled labour. It is envisaged that by 2015 there will be a complete free flow of services. To this end, the ASEAN member countries are working toward harmonisation and standardisation by enhancing increased mobility of students and staff within the region, developing core competencies and qualifications for occupational trainers’ skills, and strengthening the research capabilities of each ASEAN member country in terms of promoting skills and jobs placements and developing labour market information among the member countries. Business Review has talked with Andrew Durieux, the managing director of Coverage and chairman of the AEC committee of the Joint Foreign Chambers of Commerce who’s helping Thailand to transition to the terms of this agreement. Our journalist Eric Baker was present at the annual symposium of the Department of Trade Negotiations of the Ministry of Commerce, where Dr Surin Pitsuwan, Secretary-General of ASEAN, painted a clear picture of what Thais have to look forward to as the AEC comes to pass. Economist Saowaruj Rattanakhamfu from Thailand Development Research Institute (TDRI) tells us why she thinks the AEC in 2015 will lead to few changes in the service sectors in Thailand. Tilleke & Gibbins let us have a closer look at ASEAN and the Intellectual Property Rights Action Plan (IPR Action Plan).

AEC: Challenges and Opportuniti text by Eric Baker photos from Coverage

By 2015, ASEAN member countries are supposed to have relatively open movement of goods, services, investment and labour through the ASEAN Economic Community (AEC) agreement. The 10 countries will become more of an economic powerhouse, better able to provide for each country’s demands and create wealth for their citizens. At least that’s the narrative governments are spreading. But the details are proving to be more complicated, and that’s where people like Andrew Durieux come in, helping Thailand to transition to the terms of this agreement. Durieux is the managing director of Coverage, which handles software distribution and business continuity planning in the kingdom for disasters, such as the flooding in 2011. He was previously president of the Australian Chamber of Commerce, and is now chairman of the AEC committee of the Joint Foreign Chambers of Commerce that consults with the Thai government about how the country should approach the treaty to best take advantage of it.

A beneficial treaty is one where every side gains, but in order to reach that point, each side also has to give something up. The JFCCT AEC Committee is trying to convince the Thai administration it has much more to gain if it takes some countries off the protected list of the Foreign Business Act and opens them open to competition. “Many people believe the aim is to have something like the EU,” said Durieux. “You start talking about free movement of individuals. But that is clearly not the intention of this treaty. These countries want movement to be more open, but still controlled.” The first challenge for Durieux’s committee is just knowing which agencies to consult with. The Department of Trade Negotiations is responsible for making all the changes Thailand needs to comply with its treaty obligations, but various Ministries, such as Commerce, Labour, Immigration, Revenue, Customs and Land control the actual activities the treaty addresses. Durieux’s group just hopes its message filters down. “A lot of the news stories talk about how Thai companies need to increase their competitiveness or they’re not going to be able to survive once the AEC goes into effect, and it’s certainly true that some companies may face increased competition,” said Durieux. “But what people aren’t mentioning is that a Thai company could go from a market of 60 million to one of 600 million throughout ASEAN, and that increased competition will result in lower prices and better services and quality for the average Thai. That needs to be the focus.” Citizens of EU countries don’t need a visa or work permit to cross EU borders, but in ASEAN countries ASEAN citizens will most likely still need both documents. But, the AEC agreements show that a company from an ASEAN country may be able town 100% of a company in another ASEAN country, something not possible now in most of the ASEAN countries. For example, a Vietnamese company could become the 100% owner of a Thai company.

Managing Director of Coverage, Mr. Andrew Durieux

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Where the issue gets tricky is where there are inconsistencies today. In certain countries, such as Cambodia and Singapore, 100% foreign ownership of some companies is permitted, and this includes nonASEAN countries such as Norway. Thailand requires

ties 51% Thai ownership of foreign companies in most cases. But by 2015, that Cambodian company that is 100% owned by a Norwegian may be able to come into Thailand and completely own a Thai company, because at least on paper, the company is Cambodian. This is one area where the JFCCT committee wants Thailand to reconsider its foreign ownership rules, because the country risks losing out if foreign companies decide to set up in Cambodia or Laos just for this benefit, or because of lower wage levels or better tax levels or if the sectors have not been liberalised. The loss of potential foreign direct investment also means the country loses out on opportunities for exports, tech transfer, skills know-how and significant tax revenues. In fact, there are likely to be some significant taxation issues that arise unless some sort of consistency is achieved before 2015.

“Many Thai industries are already competitive, but they remain protected under the Foreign Business Act,” said Durieux. “Thai tourism operators are clearly some of the best in the world. Thai hairdressers offer a service at a price no one else can compete with. And Thai advertisers win global awards for their work, yet the Thai government has not opened up these sectors.” Durieux has some advice for Thais looking to prepare for the AEC. “You need to understand and practice good governance, international standards of accounting and reporting, and acquire good English skills.

Much progress has been made on movement of goods, with import and export duties reduced or eliminated in many cases for intra-ASEAN trade. A fast-track customs window is also being pushed by the US government.

The problem is Thailand still has a protectionist attitude in several sectors, he added. A good example is in telecommunications. Many developed countries are moving to 4G services, and even the top of Mount Everest has 3G service. Most of Thailand is only now moving to 3G, but there are still many questions and challenges about the legalities of this. The average Thai consumer gets a much worse service, and companies need the access to the improved infrastructure to allow them to compete internationally.

The foreign business community feels the government has been lagging on the investment and services front, especially in the banking sector. But the real challenge lies in movement of labour, as some countries already have good systems in place, but all countries want to keep control of labour movement, said Durieux. Singapore, without the water and food infrastructure to support large inflows of people, is rightly concerned if it allows free movement of labour it will be flooded with jobseekers. Right now any business that wants to set up in multiple ASEAN countries has to fill out licence and registration papers for each country where it wants to operate. A dream of the AEC would be to require a single filing and registration. There has been no talk so far of an ASEAN-wide tourist visa nor a single currency, as those would require much more discussion before any agreement could be reached. Durieux points to Banpu, the Thai coal miner, as an example of how Thai firms should strive for competitiveness. Realising there were limited coal reserves in Thailand, it has branched out to Indonesia, Australia and China to become the region’s major player in the sector.

“Generally speaking, Thais are not good at these things because of the education system, and the business environment doesn’t encourage it. We are trying to get the government to make changes now, because if we wait until 2015 it will be too late.”

“Certain countries are always going to have advantages based on geography and historical expertise. Thailand has always been good at agriculture, and is much improved at manufacturing. There was much apprehension at the beginning of the Thai-Australian free trade agreement, too, as in the beginning the balance of payments tilted in Australia’s favour. But over time, this balance shifted to give Thailand a significant trade advantage.” As for the AEC, the blueprint calls for certain steps to be taken before 2015 so it is not such a massive change. An ASEAN-owned business is already supposed to be able to have 51% ownership in Thailand and other Asean countries of a services company, but this is not the case in Thailand yet. At the end of 2012, this ratio should increase to 70%. “Various Thai departments need to take the necessary steps to make this happen,” said Durieux. “In the last few months the Department of Trade Negotiations have started to address the changes that need to be made, but movement has been very slow on actual legislation and regulation changes.”

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A Clarion Call for ASEAN to Drive text and photos by Eric Baker

ASEAN needs to embrace the rules and norms it set up for market liberalisation via the ASEAN Economic Community (AEC), resisting the urge to retrench to protectionist practices, says secretary-general of ASEAN. “We have to make sure our efforts don’t just stop at ratification if we want to keep our regional economies moving,” said Dr. Surin Pitsuwan, ASEAN Secretary General. “Foreign investment is dependent on the trust that this region will be robust and dynamic in opening up our industries, particularly the services.”

multinational corporations will have an advantage because of their readiness and budget,” he said. “The journey to an equitable AEC will not be smooth. Thai workers will need skills to compete. But we don’t want to be trapped in the middle-income bracket forever.” Mathew Verghis, the World Bank’s lead economist for Thailand, Cambodia, Laos and Myanmar, agreed there was a middle-income trap but wasn’t so sure Thailand could escape it. “Taiwan and Korea have reached European living standards for GNP, but Thailand and Malaysia need to change their mind-set if they want to make that jump,” he said. “They have reached the limits of what they can achieve with low-wage manufacturing. These countries need to consider new markets and products in a global environment that’s unfavourable and is more environmentally attuned. What is needed is a new development strategy.

Speaking at the annual symposium of the Department of Trade Negotiations of the Ministry of Commerce, Dr. Surin Pitsuwan painted a clear picture of what Thais have to look forward to as the AEC comes to pass. “All of a sudden Asia and especially Southeast Asia has been declared the new global growth engine,” he said. “We started from humble beginnings, mostly small businesses, but ASEAN GDP was US$2 trillion in 2010 and trade among the region accounted for 50% of that in NAFTA and 60% of that in the EU.” In 2010, $78 billion in foreign direct investment flowed into Asean, with 70% of that in the burgeoning services sector the association is trying to bolster.

Pamela Mar from the Fung Global Institute in Hong Kong.

“More investment is coming in for telecom and logistics and less for manufacturing, so that is a move in the right direction. “Take a look at what happened with Korea. The GDP portion contributed from outside the country is increasing. Japan shows the same pattern and it has for a long time. “This can happen in Thailand too. Thais should not feel restrained to the 65-million Thai market. You can sell almost 10 times that much if you open up to ASEAN.” But Dr. Surin Pitsuwan admitted the first few steps could be painful. “Of course, in the initial phase,

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Dr. Surin Pitsuwan, secretary-general of Asean.

AEC Forward “For example, Thailand is the world’s leading harddisk-drive manufacturer. But it exports many of these to countries who use them to build more complicated, expensive machines. Thailand needs to shift to exporting more finalised and value-added goods.” The kingdom can accomplish this by following a few steps, said Dr Verghis. First, both Thailand and ASESAN need to increase their skill development, which is a lifelong process, he added. “Thai basic education testing is quite poor,” he said. “And the gap is not shrinking. But the good news is in Bangkok, the scores are the same as the US, which means it can be done. The gap just needs to be closed out of Bangkok in the provinces.” Second, Taiwan and Korea have grasped that the service sector is the new engine of growth, but Thailand has recently had that sector make up a falling share of its GDP, partly because manufacturing has been so successful here. ASEAN still has a high level of restrictions on most services, so this needs to be addressed before the AEC, said Dr Verghis. Finally, the growth has to be sustainable, he said. “If you can educate the poor, this is the biggest change you can make. Services release less carbon emissions than manufacturing, but its important Thai companies realise they can’t simply move polluting factories to Myanmar because they don’t have stringent environmental laws.”

adjust to liberalisation, Mr Kittiratt told the crowd at a seminar that would compare Asian countries with one another not to compare Thailand to anyone else. Thailand only needs to compare itself to itself, he said. But maybe Dr. Surin Pitsuwan provided the most cogent warning to companies who would prefer to stick their head in the sand than face the onset of globalisation. “You can’t expect protection forever,” said Dr. Surin Pitsuwan. “Even if Asean doesn’t open up your industry, the World Trade Organization will. If it doesn’t, globalisation will. Globalisation means commerce flows, you can’t stop it. And if you erect walls against all this pressure from outside, you will be weakened, and when the wall is brought down you are going to be overwhelmed because of lack of preparation.”

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Dr. Surin Pitsuwan points to more emphasis on research and development to break out of the middle-income trap. “We are behind where Korea and Japan were at a similar stage of development in terms of investment in R&D. We need to advance from the mind-set of 40 years ago when all of Thailand’s investment, technology and management came from Japan and Taiwan.” He called on small and medium-sized enterprises to take the plunge and invest across the border in ASEAN, as the Chiang Mai Initiative provides $120 billion in security that the economy in East Asia will be stable by deterring speculators. This was a different tone altogether than the mood Kittiratt Na-Ranong, the deputy prime minister and finance minister, struck in his opening remarks. While repeating his plea for Thai companies to accept and

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Implications of the AEC in the IP By Thomas J. Treutler, Siraprapha Rungpry, and Anh Mai Duong Attorney-at-Law, Tilleke & Gibbins

While it is expected that the AEC harmonisation will significantly boost the region’s economy and attract greater foreign investment, the harmonisation will also undoubtedly present a host of challenges for the ASEAN nations to address. Among the key challenges posed by integration, ASEAN Member States will need to implement an effective system for the protection and enforcement of intellectual property within the AEC. Although the development of intellectual property laws and enforcement mechanisms differ from one member state to another, ASEAN recognises the importance of effective IP policy, which must be consistently implemented in all member states. Therefore, ASEAN adopted the Intellectual Property Rights Action Plan (IPR Action Plan), which provides a framework for establishing effective IP policy in the region. The first phase of the IPR Action Plan (from 2004 to 2010) was aimed at: (1) helping to accelerate the pace and scope of IP creation and commercialisation, both inside and outside ASEAN; (2) developing and harmonising IPR registration and protection and setting up an enforcement framework of policies and institutions in the region; and (3) promoting greater public awareness and building up human resources and institutions relating to IP and IPRs within ASEAN. The second phase of the IPR Action Plan (from 2011 to 2015) builds on the completion of the first IPR Action Plan (2004–2010), and further takes into account the differing capacities of the member states. It is aimed at transforming ASEAN into an innovative and competitive region through the use of IP. Five strategic goals were identified in the second IPR Action Plan (2011–2015):

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1. A balanced IP system that takes into account the varying levels of development of member states, and the differences in the institutional capacity of national IP Offices, to enable them to deliver timely, quality, and accessible IP services and to promote the region as being conducive to the needs of users and generators of IP. 2. Development of national or regional legal and policy infrastructures that address the evolving demands of the IP landscape and facilitate the participation of ASEAN member states in global IP systems at the appropriate time. 3. Advancement of the interests of the region through the systematic promotion of IP creation, awareness, and utilisation, to ensure that IP becomes a tool for innovation and development; support for the transfer of technology to promote access to knowledge; and consideration for the preservation and protection of indigenous products and services, and the works of their creative people in the region. 4. Active regional participation in the international IP community, with closer relationships with dialogue partners and institutions to develop the capacity of member states and to address the needs of stakeholders in the region. 5. Intensified cooperation among ASEAN member states, and increased levels of collaboration among them, to enhance the human and institutional capacity of IP Offices in the region. In light of this, significant improvements can be expected in the IP field within the next few years. For each type of IP, the AEC harmonisation may have several implications in regard to protection, utilisation, and enforcement of an IP asset. In particular, the implications in regard to trademarks, patents, and copyrights would likely have the largest impact on businesses in the region. Each of these is discussed in detail below.

Field Trademark At present, there is great regional disparity among ASEAN members with regard to trademark protection and enforcement. While every ASEAN nation provides some form of trademark protection, Myanmar, for example, does not have a formal trademark act. On the contrary, Thailand has a well-developed trademark law, and a national trademark office that regulates and oversees trademark registration. Furthermore, disparity also exists in terms of trademark enforcement mechanisms and court procedures, which vary from one country to another. In view of the AEC harmonisation, this disparity will have to be dealt with effectively, in order to ensure uniformity within the region, which needs to operate as a single market and production base. The AEC harmonisation plan for trademarks will be based primarily on the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, or the â&#x20AC;&#x153;Madrid Protocol,â&#x20AC;? which is an existing system for the international registration of trademarks. Unlike the EU model, ASEANâ&#x20AC;&#x2122;s integration plan for trademarks does not include a Community Trademark (CTM) scheme, which is currently employed by the EU. The AEC will take advantage of the Madrid Protocol, which provides a cost-effective and efficient means for trademark owners to obtain protection for their marks in multiple countries, through the filing of one application with a single trademark office, in one language, and with one set of fees. The Madrid Protocol also simplifies the subsequent maintenance of trademark registrations in the designated countries. According to the IPR Action Plan, ASEAN members are required to accede to the Madrid Protocol by 2015. At present, only Singapore and Vietnam are members of the Madrid Protocol. Thailand has been working toward accession for several years, and is expected to join by 2015. Thus, when the AEC is fully established, companies will be able to enjoy the benefits of the Madrid Protocol, thus enabling them to manage their marks more effectively throughout the region. In addition to accession to the Madrid Protocol, the AEC also aims to expedite the trademark registration process in its member states, build up capacity and

raise awareness in regard to trademarks, suppress the movement of counterfeit goods, and enhance cooperation against counterfeits. Enforcement procedures and mechanisms will likely be improved across the region, thereby enabling trademark owners to protect their marks more effectively. Patent Importantly, the AEC envisions that all countries will become members of the Patent Cooperation Treaty (PCT) by 2015. Currently, Brunei Darussalam, Cambodia, Laos, and Myanmar are not yet members. Member states are charged with the responsibility to issue appropriate guidelines for PCT implementation in their country, and to amend any relevant legislation. The use of the PCT by stakeholders is to be encouraged by the member states. One key facet of the AEC harmonisation is widespread implementation of the ASEAN Patent Search and Examination Cooperation (ASPEC) system. It is hoped that the system will be fully operational by 2012, and will be used for 5% of all patent applications by 2012. Other plans include the establishment of a regional network of at least 20 regional patent libraries to increase access to global scientific and technology information. In regard to design patents, the AEC sets forth an ambitious goal whereby seven member states are to accede to the Hague Agreement Concerning the International Registration of Industrial Designs by 2015. So far, among member states, only Singapore is a member. Each country is to develop a road map for accession, and amend or issue new legislation as needed to implement this convention. Other goals of the AEC relate to capacity building for the patent offices of member states. In this regard, under the umbrella of the AEC program, various training programs in law and procedures for patent examiners will be implemented, with emphasis being placed on following the procedures of the highly efficient patent offices in the region. One highlight of this initiative is an exchange programme for patent examiners among patent offices. Specific trainings on design patent issues are also prescribed under the AEC. In regard to plant variety protection, Singapore and Vietnam, which have adopted the International Union

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Continued from page 19

for the Protection of New Varieties of Plants (UPOV), are expected to share their experience to help other member states bring their plant variety protection regimes up to international standards. Copyright The AEC prescribes that member states will undertake studies on the contributions to the economy of copyright industries and toward economic development. The results are to be shared, with the goal of more effective use of copyright by the members. In this regard, best practices regarding copyright and recordation will be shared among members. Thailand is taking the lead under the AEC in sharing information on how to build and operate collecting societies for effective use of copyright. Initiatives on building linkages between collecting societies in various countries will be launched under the AEC, with the goal of achieving regional cooperation on copyright. In a humanitarian step, the AEC dictates that each member stateâ&#x20AC;&#x2122;s copyright laws should contain special

exceptions for impaired or disabled persons, and urges members to take a collective stand on this point. Conclusion The AEC sets forth a broad, well-conceived framework for regional cooperation in many areas of intellectual property. The framework goals, if met, will not only improve regional cooperation, but will reach harmonisation on some legal facets of intellectual property and will help to bring many IP regimes up to best practice international standards. This will allow stakeholders in the member states to better capitalise on their untapped intellectual property assets. This article was prepared by Thomas J. Treutler, Siraprapha Rungpry, and Anh Mai Duong of the Tilleke & Gibbins Intellectual Property group. Please send any comments or questions to Andrew Stoutley at andrew.s@tilleke.com.

With the compliments of

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Kamthorn, Surachet & Somsak 31st Floor, Sinn Sathorn Tower 77/131-132 Krungthonburi Road Klongtonsai, Klongsarn Bangkok 10600 Telephone: +66 (0) 2440 0288-97 Fax: +66 (0) 2440 0298-00 E-mail: kss@kss.co.th www.kss.co.th

AEC in 2015: Will it Change the Service Sectors in Thailand? text and photos by Eric Baker/Istock photo

Economist SaowarujRattanakhamfu isn’t employed by the government or a corporate interest, so as an independent she’s one of relatively few people able to make a dispassionate argument about what the Asean Economic Community (AEC) initiative slated for 2015 will mean for the kingdom. She works as a research fellow for Thailand Development Research Institute (TDRI), one of only a handful of thinktanks in the country, and unlike much of what is published in the media, Dr Saowaruj believes not much will change by 2015.

Rather than dire warnings of how companies have to prepare for increased competition and liberalisation, her research and knowledge of the AEC commitments has led her to believe that much of this warning is overblown hype. “I want Thailand to open up several of its sectors. I want it to improve on worker productivity and education and technology. But right now, in preparation for the AEC, not much is being done and that won’t change anytime soon,” said Dr Saowaruj. To understand why, first you have to understand the commitments. “The biggest myth about the AEC is that there will be free flow of labour,” she said. “But to this point it is only highly skilled labour that can move, and it isn’t that freely. Warnings of a flood of skilled labour to Singapore are unfounded.” Article 140 of the Thai Constitution requires that any international agreement is passed by Parliament. So far only the slightest of concessions has been made, Mutual Recognition Agreements (MRAs) for seven professions: engineering, nursing, physician, dental, architecture, surveying and accounting. The agreements between the 10 ASEAN member countries mean licensed and recognised professionals in these fields can move to other ASEAN countries to practice, but they are still subject to pass that country’s licensing test. In addition, you can’t be an independent practitioner in some fields, such as engineering and architecture. Any foreign professional intending to work in Thailand must collaborate with a local professional, yet another reason why the AEC is unlikely to foster a “free flow” of labour.

Saowaruj Rattanakhamfu, Thailand Development Research Centre

“I know of only one ASEAN non-Thai nurse who has passed the local certification test, and she was partAmerican but lived in Thailand for a decade,” said Dr Saowaruj. “Keep in mind that the local exams are all in Thai language. And ASEAN professionals under MRAs are still subject to all domestic laws and regulations, such as alien employment rules requiring work permits and the 39 protected professions in which foreigners are not allowed to work. Even the visas we allow for business visitors are not different than what Thailand agreed to in GATS.

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Continued from page 21

“So in practice you can see MRAs don’t work very well. I don’t see this changing by 2015. The framework for MRAs was set in 2003 but we only have them for seven professions at this point.” She was also sceptical about whether ASEAN members had the political will to liberalise the service sector. “Only Singapore is trying to promote the free flow of skilled labour. Thailand doesn’t want to change anything anytime soon, and most ASEAN members want to keep the status quo. Don’t forget the implementation of MRAs is still voluntary. “I think many Thais are afraid they will lose their jobs to foreigners if the service sector opens up. Of course the answer is to get better training and pick up more

skills so they can acquire better jobs, but both the government and professional councils seem to not pay much attention to this point. The government needs to formulate a national strategy to develop the services sector and announce a national policy regarding opening up the services sector to investment and labour. So far Thailand’s commitments to liberalise its service sector is mostly not beyond the extent of existing domestic laws and regulations. There simply is no economic reason to continue protectionism in this sector. The Thai economy is becoming increasingly dualistic as most of the manufacturing sectors have to face intense competition while the service sectors are still tightly protected. In the long run, the inefficiency of the latter is likely to erode the competitiveness of the former.

Dr Saowaruj doesn’t want to cast a negative light on the AEC. After all, she supports much of what it is trying to accomplish. “ASEAN has had great success in eliminating most tariffs for inter-regional trade,” she said. “And I think the AEC can provide good motivation for the government to do something about the service sector. “I’m an economist—of course I support a competitive, free and fair market. But we have a long way to go in many sectors. Just look at telecommunications; it is not competitive and is run by very few companies. It would be better to open the market up to foreigners and allow more money and technology to flow in. In fact, any industry that is high-capital and high-tech should be opened up.

“And as an academic, I also want the education sector to liberalise. I would like to see knowledge transfer between universities so intelligent Thai students can stay in the country to study if they want.” Like a lot of economists, she sees the way forward for the Thai economy comprising improving skills and providing better products and services. “The most important factor in this whole discussion is dual impact—making sure the government does something to prepare its domestic firms in the service sectors it eventually plans to open up,” said Dr Saowaruj. “For example, the government should offer training to increase productivity if they’re going to increase the minimum wage. A higher wage should come with higher productivity. But much like with the planned AEC, the government has not offered any significant preparation. “Thailand needs to adopt a bottom-up approach to these ASEAN agreements because then the stakeholders including professional councils or related associations will actually support what is proposed. With a top-down policy negotiating can take forever. “Some educated Thais do want to practice abroad, but usually not in ASEAN. They would prefer to go to the US, Canada, Australia or Europe. If the government develops agreements with other countries outside Asean voluntarily, this would enable freer movement.”

Think tank A think tank (or policy institute) is an organisation that conducts research and engages in advocacy in areas such as social policy, political strategy, economics, military, and technology issues. Most think tanks are non-profit organisations, other think tanks are funded by governments, advocacy groups, or businesses, or derive revenue from consulting or research work related to their projects. “Source: Wikipedia”

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Smiles Across the Spectrum An Interview with Jon Eddy Abdu by Eric Baker photo from dtac

For all the dramatic media stories about foreign dominance, findings of impropriety in True’s deal with CAT, or delays in 3G licensing, dtac chief executive officer Jon Eddy Abdullah is serene. He is excited about the potential of the Thai market going forward, especially as mobile data usage is exploding. “I think you have to be optimistic,” said Mr Abdullah, breaking into a grin. “They just did a study in the UK and found that 60% of respondents actually sleep with their mobile phone in their hand so they won’t miss a call or text. Not many products are so beloved consumers want to sleep with them.” One of the reasons for his enthusiasm was the launch of dtac’s 3G service last year. “A few years back data usage in Thailand was very low, in the single digits percentage-wise, even as it was very high in all our neighbours,” he said. “When the 2.1 gigahertz 3G bidding process was derailed, this led to vendors launching 3G within their own concession. Within one day of launching 3G, we gained a third of our data usage, reaching 20,000 gigabytes, from a base that took years to accumulate.” And as Mr Abdullah scans the Thai market, he doesn’t see an alternative to mobile access to the internet and data transfer in the future. For most people in Thailand, wireless is their only way to connect, and Mr Abdullah drew a distinction between dense urban markets in Europe where people still tether themselves to a landline and the local scene. He predicts growing demand for social networking, e-commerce and e-government here, so long as the planned 2.1 GHz3G licensing auction takes place as planned. Besides the simplicity of having licensed 3G providers, the 2.1 band is the industry standard and the one that most phones use. Mobile operators want to make sure consumers don’t have to buy a new device to access their service. 24

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With the planned ASEAN Economic Community (AEC) set to take effect by 2015, Mr Abdullah doesn’t foresee a lot of labour or expertise movement, but he does see lots of opportunities as the region opens up. “Everyone should look at industries that are related to each other,” he said. “When we started in this business, our goal was to put a SIM card in every hand. Now we want to make sure everyone has a device that allows them to do lots of things with that card. Getting involved in banking is logical, especially as Southeast Asia has so many unbanked and so many youths. “Our industry can help solve that problem. If you can get to a distributor to top up, you can remit and deposit and communicate with the customer. With a lot of youth today, if it’s not on their phone it doesn’t exist. “If I told my daughter she had to physically go to a bank to fill out a form for a credit card, and also make sure you bring your ID, she’d roll her eyes and blow it off. Look at the way people buy music now—albums are obsolete. People buy what they want when they want, and industries have to adapt to that.” He also doesn’t predict much competition in the industry due to the AEC, as it is extremely expensive and time-consuming to build a network infrastructure. Going forward, Mr Abdullah noted the single most important task for the industry is freeing up spectrum. “None of the three players have enough spectrum, so that’s why the 2.1 3G bid is crucial,” he said. “And with consumers, regulators and the government all talking about 4G as some of our neighbours plan launches, we want the government to free up the 1800 MHz spectrum for this purpose. Both of these bands are going to be required in the future. “Regulators have granted dtac 50 MHz of access but only allowed 25 MHz to be used, so this is another issue we’re lobbying hard on with the regulator.” Speaking of which, Mr Abdullah is pleased with the progress of the new National Broadcasting and Telecommunications Commission, which seems to have more of a mandate. “There was nothing wrong with the National Telecommunications Commission, but since the NBTC has come in things have really started moving. The agency is listening to operators’ concerns and the

dullah new master plan is a pretty good document, calling for open access and refusing to protect state enterprises.” He isn’t too concerned about Skype and Viber as calls and texts access a data plan, but noted roaming needs to become more transparent. “Roaming is a niche, lucrative market,” said Mr Abdullah. “It’s not mature enough to be transparent, but the EU seems to be trying to regulate it more in an effort to drive down prices. The problem is each outpost is its own entity, so the operating model needs to be changed, not the restrictions. “A lot of people in Asia are trying to get to one rate, one region for roaming. There are bilateral tariffs on data and voice for each operator, so if you could create a roaming alliance that would standardise rates, that would clear up some of the confusion.” As for the True-CAT deal, dtac has filed a plaint alleging three prongs of the deal to be improper. One of those points — that the CAT board did not have the authority to grant the agreement — has been echoed by a couple of preliminary findings. At this point dtac is content to let the argument play out in court, as neither side seems likely to budge. But Mr Abdullah is sanguine about the thorny issue of foreign dominance regulations which Thai regulators bring up from time to time. “The matter is still in the authorities’ hands,” he said. “We’re listed on the Stock Exchange of Thailand and fully compliant with the law. If the government determines there is some standard we have to meet, then we will work with them.” The firm is currently upgrading much of its network to 3G software-controlled radio slots so it can avoid the crashes it experienced in December and January.

Jon Eddy Abdullah, CEO of dtac

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Annual General Meeting 2012 text and photo by Kristine Hasle

Thai-Norwegian Chamber of Commerce’s Annual General Meeting was held 29 March at Pacific City Club. Two new board members were welcomed to the board, and one member retired after 16 years. Mr. Axel Blom guided the about 30 present members through the Chamber’s activities in 2011. All in all, there have been 19 different activities during the year, including our Seafood under the Stars, Wine tasting event for the members, breakfast seminars, dinner talks and social networking events. Some events have been Nordic, other have been arranged for the members of Thai-Norwegian Chamber of Commerce. TNCC has published three issues of Thai-Norwegian Business Review; one about Tourism, one about CSR

Mr. Axel Blom, President, Ms. Vibeke Lyssand Leirvåg, Vice President and Mr Petter Furberg

Thai-Norwegian Chamber of Commerce

and the last one about the Flooding and its aftermaths. In addition to the activities in 2011, Mr. Axel Blom informed about three important activities in 2012.

• 23 February Ambassador Katja Nordgaard

welcomed almost 200 guests on behalf of ThaiNorwegian Chamber of Commerce to her garden to a Networking dinner with Seafood under the Stars. • TNCC together with Norwegian Business Association in Singapore, NBAS, will arrange a Fact finding Mission to Myanmar in May. • Joint Foreign Chamber of Commerce, JFCCT, is planning for a Prime Minister Luncheon with Jingluck Shinawatra The new board We can welcome to new board members to our board: Mr. Gunnar Thoresen is new Managing Director for Jotun Thailand Ltd. Mr Thoresen lived in Bangkok between 1986 and 1994 and has, after eighteen years, returned to Thailand. Since 1994, Mr. Thoresen has

been working for Jotun in Norway, Turkey, Czech Republic, Saudi Arabia and the United Arab Emirates. Ms. Aina Eidsvik is finance manager for the Aibel companies that are located outside Norway. Ms. Eidsvik has been in Thailand in four of the last five years and has also been located in Brazil, UK, Australia and Singapore. Aibel is a leading supplier of services related to oil, gas and renewable energy. The company has around 5,000 employees in Norway and abroad, working on fields and facilities, both on and offshore. Aibel Thailand was established in 2004 and the main activities in Thailand are manufacturing of modules and engineering. Aibel became Premium Member of the Chamber early this year. Mr. Sverre Golten, owner of A&S Thai Works Co. Ltd, decided to retire from the board after 16 years. Thank you to Mr. Golten for being a part of ThaiNorwegian Chamber of Commerce for such a long time.

Mr. Sverre Golten, leaving the board after 16 years

As of March 2012, the Board of Governors in Thai-Norwegian Chamber of Commerce consist of: Axel Blom (Blue Business Solutions), Major Choakdee Dhamasaroj (NERA), Petter Børre Furberg (dtac), Vibeke Lyssand Leirvåg (Felicia), Jon Anders Aas Haug (WebOn), Bent Kilsund Axelsen (Yara), Gunnar Bertelsen (Telenor Asia), Niels Henrik Hansen (SAS), Aina Eidsvik (Aibel), Dr. Paisan Etitum (Thai Transmission Industry), Piyanuj Ratprasatporn (Tilleke & Gibbins), Gunnar Thoresen (Jotun) Torpong Tongcharoen (Norske Skog). Remaining Special Advisors to the Board: Tove Bjerkan, Dr. Kristian Bø

New board member, Gunnar Thoresen in Jotun

Obeserver: Erik Svedahl, Minister Counsellor of the Norwegian Embassy

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Thai Technology is good News fo by Nadia Willan photos from ABC Tech

Every day 800,000 web users connect to ABC Startsiden, one of Norway’s leading web portals. Out of a country of five million people the figures are more than impressive. As users log on, they can catch up on news and events at home and around the world, and gather information from A-Pressen’s 65 online publications. The digital technology is being provided thousands of miles away, from ABC Tech’s office base in Bangkok. Here, the programmers and coders set up, upgrade and maintain Norwegian websites to feed the developing digital appetite. ABC Startsiden and A-Pressen, one of Norway’s media heavyweights, are part of Telenor, Norway’s largest telecommunications provider. However, whilst the target market is the whole of Norway, Thailand has become an integral part of providing products and services to these two subsidiaries, with the setting up of

their jointly owned technology company, ABC Tech. With plans to develop Bangkok as a digital hub for their web-based future projects, Thailand seems set to be at the centre of Norway’s online news and web portal industry. CEO of ABC Tech, Bjørn-Olav Strand, explains that choosing Thailand to build the Telenor subsidiary websites was not an immediate decision. What made the difference was the expertise and skill-sets available. Whilst Thailand might not have an ingrained reputation for its technology industries there is a focus amongst the young career-minded Thais to see the need for these skills. “We spent 18 months using a headhunting company in Norway and we just couldn’t find enough qualified people. We easily found the right people in Thailand. Young Thais might be more focused on job-orientated studies. They want career stability and it seems like there are more people trained-up in this field available in Bangkok.” Other parts of Asia were less appealing according to Bjørn-Olav because of worries about staff retention. “We weren’t interested in India or China as a base. Employees in these countries have a reputation not to stay in a job for a long time. If employees only stay for a few months it is not enough for our training to be finished. It is important for Norwegian executives to be good at keeping knowledge workers.” Scandinavian companies do seem to have a reputation for trying to create a feel-good culture amongst employees, whereby status comes from working at the company, and is less about social standing. “Keeping knowledge workers is about acknowledging who is really visibly good at what they do,” explains Bjørn-Olav. Social events and a relaxed but focused working environment are all part of this management strategy. This business strategy seems to be a success in Thailand where ‘all work and no play’ is a big employment turn-off.

Bjørn-Olav Strand, CEO of ABC Tech.

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ABC Tech has been operational in Thailand since August 2010. 24 programmers and coders have already set up 10 websites and the work is increasing and seemingly never

or Norway ending. With upgrades, maintenance and constantly improving user functionality, the Bangkok team are a core part of product and service development for ABC Startsiden and A-Pressen. “However, we still have a development team in Norway and this is a necessary link. Both Norway and Thailand work on the same projects in distributed teams. The coding is done in Thailand but not the uploading of content – this is for a few reasons one of which is connected to taxation rules here,” explains Bjørn-Olav. With 10 new projects on the slate this year, there are plans to increase the team in Thailand to 48 by the end of 2012 but Bjørn-Olav predicts it might be more like 30-35. However, with more websites and mobile phone applications planned, as well as the demand

for continuous improvements, and the high volume of end users, there is more than enough work for the team to continue growing. Some sites take a month to build, and others take one or two years, and one of the projects has been the redesign of ABC Startsiden’s homepages. The web portal was created in 1995 and 2011 saw its most profitable year to date. With salaries in Thailand substantially less than in Norway, in many cases by over 60%, the running costs in terms of payroll are certainly adding to this profit. Other projects have included news sites, a video website, and a directory of 80,000 categorised links, as well as an administration site for classified ads. A ‘How To’ video site is also being launched. Interestingly, many people from Norway’s business network were doubtful about the chance of success in Thailand. “Quite a few people said that what we would get would be different than what we wanted, in terms of the products delivered. I think people have tried and failed here but we found the skills and I think that we put any potential problems at the top of our agenda right from the start,” explains Bjørn-Olav. “We have Norwegian management in place and we have addressed potential issues before they have become a problem. I think it is because we have not been naïve about some of the challenges of setting up a company in Thailand that we have been a success.” One of the challenges is connected with culture and communication and ABC Tech’s company policy has been to provide ongoing training about working together, talking about what is going on, as well as an understanding of Norwegian culture and what the working environment is about, as well as what is expected and acceptable. “When we started we studied at what might go wrong. We have never stopped doing this. We pre-emptied any problems. One issue here in Thailand on an daily work level has been about training staff to handle mistakes. I found initially that problems like this were often either not addressed by employees or addressed in the wrong way.” Good internal communication and a positive workplace culture are key to the success of many home-grown companies and setting up a company in Thailand that is owned by businesses abroad, as in the case of ABC Tech, seems no different. What is clear is that in this case the profit margins and skill-set advantages are an attractive business proposition. Thai-Norwegian Business Review

A Letter from Chiang Mai What would you expect from a by Colin Jarvis

Letâ&#x20AC;&#x2122;s be realistic, as a Second City Chiang Mai is tiny compared to Bangkok. There are only about 1.5 million residents and the main industry is looking after the, perhaps, one million visitors that come to the city each year. But size can be deceptive. Like an optical illusion, Chiang Mai is much bigger than it looks. Currently the city is seeking international approval for its status as a Creative City. Frequently, in many surveys throughout the world, Chiang Mai is nominated as the best city in the world to retire to. Once you look below the obvious surface of a tourist resort you see the city of great quality and ability. There are no fewer than five universities serving a relatively small population. Many of them are internationally recognised for their work in certain specialised areas. These universities attract bright people from around the world and they, in turn, demand and provide many activities of international standard in what would otherwise be a small town. Apart from a great number of organisations and associations relating to science, business and the arts there are concerts several times a week featuring just about every style of music you can think of and after the entertainment you can sample world-class cuisine in one of the thousands of restaurants, spas or hotels. In other words, if you have to work Chiang Mai there are few better places in the world. Traffic jams are unusual, parking is easy and travelling from one side of the city to another can take as little as 30 minutes. If you have to go to Bangkok, something which Chiang Mai people hate, the flight is about 50 minutes. That means you can leave home and start your meeting in Bangkok in about two hours. The time it sometimes takes to go from one end of Sukumvit to the other. Of course, flying may not be your thing, in which case there is a new, high-speed, train planned to run

Thai-Norwegian Chamber of Commerce

to Chiang Mai from Bangkok. Then again, you may prefer to drive. If you choose the right time of day, or night, the drive between Bangkok and Chiang Mai is not too bad but there are new expressways planned for the future which will not only link Chiang Mai and Bangkok but also the whole region. Chiang Mai will become like a major road interchange between China, Myanmar, Laos, Cambodia and even Vietnam. Other forms of communication such as telecommunication and Internet are extremely good in Chiang Mai as it is a relatively small geographical area at present. As a place to do business, there are very few places in Thailand better than Chiang Mai. All the usual government agencies such as the BOI have offices here; labour is well educated, enthusiastic and inexpensive. In fact, although it is small in the area and in population, Chiang Mai is everything you would expect and could hope for in a Second City. Because of its location the city is expected to become a major business hub in Southeast Asia. This little cityâ&#x20AC;&#x2122;s ambitions are likely to be fulfilled because of the huge investment in infrastructure together with the enthusiasm and determination of the local people, both Thai and foreign. This potential future has been recognised by a number of organisations who have set up in this part of the world. The British Chamber of Commerce in Thailand is the most recent and notable organisation to expand its activities in the city. There are not normally enough members in northern Thailand to justify a separate branch of an organisation such as a Chamber of Commerce. It is virtually impossible to arrange a meeting with more than a handful of members. After experimenting for the past couple of years the BCCT has decided to increase its activities in the area. At first they thought about inviting membership from anyone who might be interested but at a recent meeting they decided they should focus on promoting trade between Thailand, particularly in northern Thailand, and the UK. This will mean that the number of members likely to be involved will be relatively small but it is felt that quality is more important than quantity. An attitude I applaud.

Second City? One problem for small regional organisations such as the BCCT is that some of the services offered by the main office in Bangkok cannot be replicated in Chiang Mai. That is why there is some consideration being given to set up a service organisation to service all business groups in Chiang Mai to provide activities such as training, major speaking events and so on to support the various business organisations which will be the members that run this new organisation. If such an organisation is set up it will mean that business organisations, such as the Thai-Norwegian Chamber of Commerce, will be able to have a significant presence in Chiang Mai even if they only have one member in the area. I really do believe that Chiang Mai is a great place, both to live and to do business. In future issues of this magazine I will attempt to bring you the latest business news from this great little city.

Seafood under the Stars by Kristine Hasle photo Thapanan Thongsubhiran

23 February, H.E Ambassador Katja Nordgaard welcomed almost 200 guests to her residence to Seafood under the Stars. Thai-Norwegian Chamber of Commerce had invited their members with business partners and associates to join a networking dinner with seafood. The garden was a perfect frame for a dinner under the stars, professionally catered by Sheraton and soft jazz music and beautiful pictures of Norway.

In her welcome speech, Ambassador Katja Nordgaard took the opportunity to talk about Norway; as a seafaring nation, as the world’s sixth largest oil exporter, and also as a country protecting the environment as a part of the agenda. Seafood under the Stars is a networking event, and the Ambassador emphasised the relation between Norway and Thailand. Asia is increasingly important for Norway, both for imports and exports. Thailand is Norway’s fifth largest import market in Asia. In 2010, two-way trade between Thailand and Norway amounted to around 574 million USD. Trade has grown remarkably over the last ten years. Imports from Thailand have tripled and Norwegian exports have doubled. Thailand and Norway’s economic cooperation is strong, particularly within the sectors of telecommunications, pulp and paper and fertilizers. Companies from all these sectors were present at the dinner. Thai-Norwegian Chamber of Commerce would like to thank Ambassador Katja Nordgaard for hosting this dinner. We would also like to thank our members who brought their guests to use this evening as a networking event.

H.E Ambassador Katja Nordgaard

Thai-Norwegian Chamber of Commerce

Thai-Norwegian Business Review

Today is Norway’s

Constitution Day

Space in the Thai Market for Swe by Nadia Willan photo from Ikea

We can finally visit IKEA in Thailand after they opened a long-anticipated store in November. IKEA Bangna is now the largest store in Southeast Asia, and the fifth largest outlet in the world. Dreams of meatballs, nightlights and Billy bookcases could finally become a reality for all the expats and well-travelled Thais who know and love the unique Scandinavian home furnishing store that sells affordability, style and function. Group trips on the shuttle bus from Udom Suk and family days out make IKEA more than a shopping experience but a veritable city attraction, with cameras clicking excitedly throughout the 43,000 square foot showrooms that lay out not just home décor ideas but a new way Asian lifestyle too.

Thai-Norwegian Chamber of Commerce

If past successes in Asia are anything to go by, and with two more stores in the city planned to open within the next decade, it will soon be hard to remember the days BI – Before IKEA. However, given that Hong Kong had an IKEA nearly 40 years ago, as did Singapore, and with Malaysia opening the market in 1996, it is interesting why it has taken so long for flatpacks and Allen keys to hit Bangkok’s blooming market. “It is really about internal resources, available opportunities and that we can secure the supply chain to respective market”, explains Lars Svensson. He is Project Manager for IKEA Bangna, and has spent years in IKEAs in Singapore and Malaysia. He says that the expansion focus has been on China and Japan recently for IKEA worldwide. And China is where we make close to 20% of our purchasing. (Europe 63%, Asia, Russia, Australia 33%, and North America 4%). Ceramics, flat line produced storage such as ward robes and shelves are already made locally. Despite plans for an initial fanfare, IKEA cut the opening campaign due to the flood situation. With risk management coming from Europe and a planned for opening date that could not be changed, during an already pressured time, the message was changed to a softer invitation and an expression of empathy, plus a 20 million baht donation to The Mae Fah Luang Foundation under Royal Patronage, for flood relief. However, nothing seems to have deterred the crowds with around six thousand people visiting the store at any one time during the weekdays and over 12 thousand during the weekends. With 450 staff, the doors are definitely open, as are the wallets of those coming to spend. “Singapore is just getting to the average spend level of Europe. We were really surprised that customers in Bangna are spending 100% more than expected already. They are on European levels and yet Thailand is still considered a developing

eden’s Home country,” says Lars. “If you compare this to other countries it is not your typical pattern. However, there is a large middle income in Bangkok and research shows that people are house proud and that there is a high level of ownership.” Perhaps another reason why the appetite for IKEA has been so huge in Asia is that along with the rest of the world so many people are looking for solutions about ways to improve their living space with low to medium priced products and there is little advice out there. In the past the car, clothes and phone was seen by many as more important in Thailand than the home. There isn’t a great tradition of entertaining at home either, with more people eating out more often. However this trend is changing and IKEA seems to be in the right place at just the right time. “The differences in the room functions in Thailand are interesting. There is a greater history of multi-generational living so bedrooms become private oases. This means people want a TV and a study area, and maybe even a fridge, to create a real getaway area. In the West the focus is more on the kitchen, and living rooms as social areas,” explains Lars. The Bangna store is fairly unique with its extensive outdoor range to reflect the year round hot weather missing from the colder climes of Scandinavia. With cultural and economic differences in mind forecasts about sales predicted customers in Thailand would be more price driven. The higher priced products have sold far better than imagined, with function being more highly regarded than price. Whilst some key products are cheaper than in European stores, some are more expensive, but according to Lars the feedback has been positive. “We run the business based on volume with low margins and in fact over time many of our products are cheaper. Over 30 years ago our Billy bookcases were selling in Singapore for $287 whereas today they are just $69. The price profile has gone down whilst salaries have developed.” With IKEA estimating around 50 percent of the Bangkok population have a disposable income large enough for home furnishings, this spending trend will undoubtedly rise. IKEA is always quick to point out that its low prices are not at any price, meaning that ecological awareness has long been recognised as a key component of the company’s corporate image. It is something that the company is proud of; seeing itself as a positive ambassador for other retailers. “We don’t have any

Thai-Norwegian Business Review

Continued from page 39

plastic bags, we sell re-useable bags which customers buy. We have even had an impact on policy decisions in other places. However, in terms of recruiting the right people it is more of a challenge in Thailand as we are a foreign brand, not as well known and there is very little unemployment,” admits Lars. “However, attitude and believing in the same values is more important to us than aptitude through exam results.” An exciting range of Asian tableware, unique to the Bangna store has been made by Doi Tung, a foundation which tries to create and develop sustainable livelihood in a holistic way. It is an organisation close to the hearts of many Thais. IKEA has commissioned ethnic products designed with the different indigenous hill tribes of North Thailand in mind, with fair pricing, to create a positive business relationship. “By being involved in these self-

Thai-Norwegian Chamber of Commerce

sustainable projects IKEA can offer valuable advice to companies about such things as water processing and technology,” suggest Lars. “And we are looking at other foundations involving the educational needs of women and children too.” Anecdotally at least, the frenzied fashion for furnishings in the West seemed to peak in popularity a decade ago. However, there is no doubt that as happy Asian couples try out the sofas in IKEA’s perfect showroom set-ups, the time for flatpacks is here to stay, and with IKEA’s transparent corporate attitude and down-to-earth customer relationships, fits the retail market in Thailand and no doubt traditional Thai houses of the future will not be without an IKEA nightlight holder or two.

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Thailand’sEconomy EconomyatataaGlance Glance Thailand’s Basic Figures Thailand (2011)

MY CN TH ID PH IN VN LA KH MM

4 3 2 1

-2

-10.0

Oct11 Nov11 Dec11 Jan12 Feb12 Mar12

0 2007 2008 2009 2010 2011p 2012p

Q4/11

Q3/11

Q2/11

Q1/11

2013p

2011

-5.0

2012p

0.0

Stock Exchange Index (SET)

Exchange Rates 7.00

1,200

6.50

1,000

6.00

800

5.50

600

5.00

400

4.50

THB/NOK

0501 0507 0601 0607 0701 0707 0801 0807 0901 0907 1001 1007 1101 1107 1201

0903 0906 0909 0912 1003 1006 1009 1012 1103 1106 1109 1112 1203

1,400

Manufacturing Index

Bilateral trade 2011

2000=100

Import 1,394 (1,175) MNOK Export 2,382 (2,284) MNOK

600

220 200 180 160 140 120 100

400 200

Thai-Norwegian Chamber of Commerce

Thai-Norwegian Business Review

Clothing

Computers

Cars

Machinery

Electronics

Food

Other

Pulp

Fish

Engineering

Chemicals

Jan12

Feb12

Dec11

Oct11

Nov11

2006

Basic Figures: BOI. Comparisons: Wikipedia. GDP/Capita and Thai Population: Wikipedia/IMF. Thai GDP and CPI: Bank of Thailand. Quarterly GDP: NESDB. SET: Stock Exchange of Thailand. Exchange Rate THB/NOK: x-rates.com. Manufacturing Production Index: Thailand’s Ministry of Commerce. Bilateral Trade: Statistics Norway. Petrol and BigMac prices as of 30 April 2012

Sep11

0 2010

7.48 14.89 13.08 40.00

5 5.0

67.0 mill 5.0 mill 9,100,000 875,000 71/76 79/83

Other bits and pieces Petrol/litre (95 E10) NOK: TH Petrol/litre (95 Octane) NOK: NO McDonald BigMac price NOK: TH McDonald BigMac price NOK: NO

-2

2009

Female

Thai Consumer Price Index

10.0

2008

Male

-4

Mill

Thai GDP Growth (%)

2007

Geography Geographic Area: TH 514,000 sq. km Geographic Area NO: 385,199 sq. km Highest peak TH: Doi Inthanon 2,565 m Highest peak NO: Galdhøpiggen 2,469 m Inland water areas TH: 2,230 km Inland water areas NO: 16,360 km Coastline TH: 3,219 km Coastline NO: 25,148 km

Sources:

80+ 70-74 60-64 50-54 40-44 30-34 20-24 10-14 0-4

-1

Some comparisons

Demographics Population TH: Population NO: Population Bangkok: Population Oslo: Life expectancy M/F TH: Life expectancy M/F NO:

100

2010

Top 10 Exports 2011 %/value USD bill EDP equipment 7.5%/17.1 Cars and automotive 7.4%/17.0 Rubber 5.8%/13.2 Precious stones/jewellery 5.4%/12.3 Refined fuels 4.1%/9.3 Polymers etc. 3.9%/8.8 Rubber products 3.7%/8.4 Chemical products 3.6%/8.3 Electronic integrated circuits 3.5%/7.9 Rice 2.8%/6.5

2009

10-30% 10-15% 7% 0-37%

Thai Population 2010

120

NO US SG KE TW

Corporate income Tax Withholding Tax Value Added Tax Personal income Tax

GDP/Capita 2011 (TUSD)

2008

Export Growth 2011 16.4% Export Growth 2011 projected 17.2% Trade Balance USD 23.5 bill Current Account Balance USD 11.9 bill International Reserves USD 172.1 bill Minimum wage (Bangkok) Baht 300/day

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