Photo Credit: Myanmar Times
TRADE, ECONOMY, AND INVESTMENT
Cambodia becomes the largest importer of Vietnam’s steel thanks to booming construction sector
(23 August 2018) A boom in the construction sector has propelled Cambodia to become the largest importer of Vietnamese steel, accounting for 37 per cent of Vietnam’s total steel exports. The growth of high rise developments was behind this increased demand. According to an official from the Ministry of Land Management, Urban Planning and Construction, the ministry had approved 1,643 projects worth US$2.15 billion in total for the first half of 2018. For the first half of 2018, Cambodia imported 717,572 tonnes of steel from Vietnam, far greater than other major importers; U.S (532,779 tonnes), Malaysia (391,607 tonnes) and Indonesia (372,514 tonnes). The period between January and July this year saw a strong growth of 48 per cent in the volume of imported steel into the Kingdom, while its value shot up by 77.9 per cent, coming in at US$462.73 million.
Myanmar considers holding tax rates to constant amidst currency pressure
(20 August 2018) Myanmar’s public accounts joint committee has proposed the government to maintain the current tax rates for 2018 amid the appreciation of the US dollar. The government is considering other revenue streams to the economy such as raising tariffs at the border, strengthening the enforcement of commercial tax and a special commodities tax. Apart from that, tax revenue can be raised by making it easier for the people to pay taxes and increasing tax compliance by providing incentives. Currently, banks and mobile service operators are jointly developing an online platform that will allow tax payments through mobile banking. Total tax revenue as a percentage of Myanmar’s GDP is the lowest in the region, with a forecasted tax-to-GDP ratio of 7 per cent for 2018-2019. Thailand is the most efficient tax collector in the ASEAN region, it’s total tax revenue is 17 per cent of its GDP. This is followed by Malaysia with 15.5 per cent.
Vietnam’s local automotive market regains momentum
(20 August 2018) Regulatory changes introduced by the Vietnamese government, such as Decree 116 on the manufacturing, assembly and imports of automobiles, automobiles warranty and maintenance services, have resulted in a sharp decline in the number of imported cars into Vietnam. This is occurring despite import tariffs having been cut to zero on vehicles originating from the neighbouring ASEAN countries, in accordance to the implementation of the Vietnamese Government’s Decree 125. The number of imported cars into Vietnam for the first half of 2018 was 12,380 units at US$329 million, shrinking by 75.7 per cent in quantity and 68.3 per cent by value compared to the same period last year, according to the General Department of Vietnam Customs. Meanwhile, the volume of locally-produced and assembled cars for the first half of 2018 has seen a strong rebound, rising by 15.5 per cent year-on-year to 114,600 units. Nevertheless, the rise in the local car production failed to offset the decrease in the Vietnamese auto market as the total sales of Vietnam automotive market for the first half of this year fell by 6 per cent.
Vietnam must overcome M&A bottlenecks in order to continue attracting foreign investors
(18 August 2018) Vietnam’s Merger and Acquisition (M&A) market has been a stellar performer in the eyes of foreign investors, but that growth may be coming to a halt. Vietnam has been urged to overcome bottlenecks hindering the growth of Vietnam’s M&A market as the value of M&A is forecasted to fall to US$6.5-6.9 billion in 2018 from last year’s US$10 billion. There are large disparities in the time taken for the completion of an M&A deal in Vietnam compared to others nations. The duration for a successful M&A deal takes only 3-6 months in other countries, while the process in Vietnam can take a whole year, at times even extending as long as 2-3 years to be executed. Apart from that, hurdles like an incomplete legal system pushes up transaction costs, and further delay the already onerous process. According to experts, there are numerous obstacles to be overcome during the legislative process such as developers being only allowed to sell projects after securing land use rights certificates for all or part of the projects.
EEC emerges as a new engine for Thailand’s economic growth
(19 August 2018) Thailand’s Eastern Economic Corridor (EEC), the country’s largest-ever infrastructure and industrial scheme along three provinces; Chonburi, Rayong and Chachoengsao, is emerging as Thailand’s new economic growth engine in 2018. An official from the EEC Office of Thailand stated the EEC is projected to generate US$3.05 billion in terms of tax revenue and generate more than US$13.7 billion in terms of revenue to the local community. The EEC project is seen as a suitable platform to turn these provinces into a hub for technological manufacturing and services with a strong connectivity to its neighbouring countries. As part of the EEC, Thailand has identified 10 industries, with an emphasis on developing new technologies such as next-generation automotive and smart electronic manufacturing, medical tourism and aerospace.
About Greater Mekong Subregion (GMS)
The Greater Mekong Subregion (GMS) Economic Programme was launched by the Asian Development Bank in 1992 connecting five developing ASEAN countries, namely Cambodia, Laos, Myanmar, Vietnam and Thailand, and Chinese provinces of Yunnan and Guangxi Zhuang Autonomous region. The region has some of the most robust economies sharing the Mekong River Basin thanks to its reform and liberalisation. The subregion is growing at a faster pace than the whole of East Asia and the Asia Pacific as the GDP growth rate for 2017 was at 6.4 percent, according to the World Bank. The population at the subregion as of 2016 is at 340 million while the GDP at PPP is at US$3.1 trillion in 2016. In 2015, trading within the region was at US$444 billion.