Thursday, May 3, 2012

Thai industries hail Myanmar incentives

Thai companies have hailed Myanmar's promise of tax privileges and have downplayed concerns over a threat by Karen rebels to close a border checkpoint between the two countries.

The Federation of Thai Industries (FTI) last week led members on a four-day trip to the rapidly reforming country including Dawei, the site of an industrial megaproject in which SET-listed Italian-Thai Development is the lead contractor.

The FTI executives said they had been awaiting confirmation of Myanmar's investment promotion measures, including a cut in the corporate income tax rate to 25% from 30% at present.

Myanmar's industry minister, who met with the FTI delegation, also vowed to waive taxes on repatriated funds, said FTI vice-chairman Tanit Sorat.

"The MIC (Myanmar Investment Commission) said such policies have been agreed to but have not yet been endorsed by parliament," he said.

More than 80 executives representing 32 companies from 16 sectors took part in the trip. They included executives from Toyota, Siam Cement Group, Kubota, Isuzu and Denso, who met with 100 potential Myanmar partners.

"The automotive sector, for instance, has room to expand to Myanmar where there is demand for auto service centres," said Mr Tanit.

By having production in Myanmar, Thai companies would enjoy lower taxes for exports to markets such as Australia and the EU. Footwear, for example, is subject to 15% tax if it is made in Thailand and exported to Australia.

Mr Tanit said her was not worried by news reports that the Democratic Karen Buddhist Army (DKBA) had threatened to retaliate unless Thai authorities removed its leader's name from a list of drug traffickers.

Tak provincial governor Suriya Prasartbundit yesterday cautioned Thai nationals about crossing the border in Phop Phra district after the DKBA issued a statement defending its commander-in-chief General Saw Ler Pwe, who is on the Narcotics Control Board's 25 most-wanted list.

Mr Tanit said the threat should not affect border trade worth 170 billion baht a year. He is also confident Thai companies will seek to invest in the neighbouring country. "These minority groups in Myanmar do not want to have a problem with Thailand," he said.

Suparat Sirisuwannangkura, head of the FTI automotive industry club, said the issue of a possible shutdown at Phu Nam Ron checkpoint was raised during the visit to Dawei, which is 150 kilometres from the Thai border in Kanchanaburi.

"Myanmar consumers have spending power on the back of its rich resources," said Mr Suparat, a senior vice-president of Toyota Motor Thailand. "But we would like to see the promises of tax benefits and legal reforms happen first."