Bangkok Post: “Parsing E-commerce tax options”

E-commerce, the online trading phenomenon breaching global boundaries, has enabled companies and even individual vendors to increasingly engage in transactions with customers without any of the contacts traditionally associated with sales of goods and services.

With an estimated value that runs into trillions of baht a year, it’s little surprise that the Revenue Department has been tempted to claim a piece of the online business pie.

The department last week announced its plan to catch up with the booming e-commerce business by levying a 5% withholding tax on all online purchase payments to be collected at the banks…

Bunyati Kirdniyom, director of government affairs for Vriens & Partners Pte Ltd, a Singapore-based advisory firm, said the withholding tax (WHT) is a deduction from payments made to suppliers who provide a service in the respective jurisdiction.

A WHT is enforced by most countries as a common tax practice imposed on both residents and non-resident people, he said.

But he added: “The nature of online or over-the-top content business models, which operate via the internet or digitally and across borders, will challenge the WHT philosophy, which was designed for the physical world.

Mr. Bunyati said issues determining jurisdictional authority to impose a tax on internet activities include where such service is being delivered and how to track each transaction.

To ensure fair tax collection and distribution in a digital, trans-border world, there has been a global discussion of possible taxation models based on origin of the service, destination of the service, and nationality of service providers or buyers. An unfair, fragmented and complicated tax landscape could stifle innovation and create unnecessary barriers to small domestic players and startups, he said.

“Certainly this is not something only one country can decide. Regulators need to collaborate in the digital world.”

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Bangkok Post: “NBTC Warned over OTT move”

Thailand’s move to control foreign over-the-top content (OTT) service providers by making them set up local entities is putting the government on rocky ground as there are no legal provisions for this, legal experts said this week.

No country has regulated its OTT services yet. This means Thailand would become the first to do so if the National Broadcasting and Telecommunications Commission goes ahead with its plan, said Paiboon Amonpinyokeat, founder of P&P Law Firm.

Many are experimenting. European countries regulate the electronic communications services, and the information society services and the information society services, while in the US the Federal Communications Commission keeps tabs on online video distribution…

“Regulators around the world are struggling to deal with incoming OTT players with disruptive business models, said Bunyati Kirdniyom, director of Vriens & Partners, a Singapore-based advisory firm. Too-swift regulation could kill innovation while tardy implementation may put the OTT service providers beyond the scope of regulators, he warned.” 

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Straits Times: “Malaysia’s Proton sale fuels debate: Counting on Geely to jump-start ailing firm”

Malaysian taxpayers have pumped more than U$3 billion (S$4.14 billion) over the last three decades into Proton to keep it afloat, and many hope that Chinese giant Zhejiang Geely’s planned purchase of 49.9 per cent of the company will mean they no longer have to subsidise the national carmaker.

Malaysian former prime minister Mahathir Mohamad has said that selling Proton is bad for the country, likening it to controversial land sales by the government which “forfeit our country; like we forfeit Proton”. “I am sure Proton will do well… but I cannot be proud of the success of something that does not belong to me or my country,” he wrote on Thursday. Tun Dr Mahathir has been critical of Prime Minister Najib Razak’s efforts to woo investors from China, accusing him of selling the country’s assets to reduce massive debts.

But this appeal to nationalism appears set to fall on deaf ears so long as Proton’s operations remain strong.

“If the new ownership structure does not translate into loss of jobs, then it will have little impact on Mr Najib politically,” Vriens & Partners’ political risk and government relations consultant Adib Zalkapli told The Sunday Times.

Under Proton, the British marque lacked the scale or investment needed to make it into a global sports brand, something that could change as part of a broader Volvo-Geely group.

Still, there’s a major difference between buying Volvo Cars and Proton, said Hong Kong-based consultancy Dunne Automotive president Michael Dunne. “With Volvo he inherited a talented corps of automotive executives and strong leaders. At Proton, Geely-Volvo will need to bring fresh energy and capabilities.”

Mr Li will also need to wring cost savings and integrate Proton into his Geely-Volvo set-up. “No matter the odds, (it’s) best to never ever bet against Li Shufu,” said Mr Dunne. “He has that golden touch, bundles of charm and incomparable tenacity.”

Said state-backed China Association of Automobile Manufacturers vice-chairman Dong Yang two weeks ago after touring Geely’s facilities in Ningbo, China: “Geely has evolved from an ugly duckling to a white swan.”

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Channel News Asia:”Malaysia’s PAS splits with opposition partner PKR”

May 11, 2017 | Melissa Goh

KUALA LUMPUR: Malaysian opposition party Parti Islam Se-Malaysia (PAS) officially severed relations with Parti Keadilan Rakyat (PKR) on Thursday (May 11).

In a statement issued by the secretary of the Ulama Syura Council, Dr Nik Muhammad Zawawi Salleh, PAS said the decision was made after the PKR broke the terms of its cooperation with PAS.

When asked about the possibility of PAS quitting the state government, political analyst Adib Zalkapli of Vriens and Partners said there would be a “heavy price to pay”. 

“PAS will have to quit exco and local council positions to severe ties with PKR,” he said, adding that Islamists are taught to choose the least destructive option in politics. “In this case, losing their seats in the Selangor government and their influence in how their state should be run would be damaging to the Islamist cause.”

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Reuters: “After facing down scandal, Malaysia’s Najib vulnerable on rising costs”

Sat May 6, 2017 | By Joseph Sipalan and Praveen Menon | KUALA LUMPUR

Malaysia’s 1.6 million public servants have long been one of the most reliable vote banks for Prime Minister Najib Razak’s ruling coalition, but as he prepares to seek re-election he faces warnings that soaring living costs risk eroding that support.

Prices have risen sharply since Malaysia cut state subsidies and launched a national goods and services (GST) tax to plug a hole in its finances caused by falling oil and gas revenues, and rank-and-file government workers say they are feeling the pinch.

Malaysia’s annual inflation hit an eight-year high of 5.1 percent in March, among the quickest in Southeast Asia and far outpacing Singapore, Indonesia, the Philippines and Thailand.

Private sector wage growth is expected to average 5.7 percent between 2013 and 2017, based on data compiled by the Malaysian Employers’ Federation.

But public sector wage growth was between 2 and 3 percent over the same period, according to the Congress of Unions of Employees in the Public and Civil Service (Ceupacs).

Ceupacs President Azih Muda said civil servants have ended up heavily indebted to manage rising living costs, to the point that more than 60,000 of them risk bankruptcy.

“This is a direct effect of the hike in cost of living. Civil servants end up taking up a lot of loans and this is unsustainable and they are unable to manage their finances,” Azih told Reuters.

Adib Zalkapli, an analyst with political risk consulting firm Vriens & Partners, agrees cost-of-living issues threaten to eat into a core component of UMNO’s support.

“The hardest hit would be the rank-and-file civil servants working and living in major cities like Kuala Lumpur or Penang,” Adib said, adding that civil servants had less flexibility to take part-time jobs than other low-paid urban workers.

Najib last month assured the public that managing cost of living remained his government’s priority, arguing that Malaysia remained among the cheapest countries in the region.

“We have done a lot of work to ease the people’s burden related to the rising cost of living,” the 63-year-old son of a former prime minister said in a statement.

The government had increased payouts for poor households, implemented measures to control prices and provided affordable housing and healthcare, Najib said.

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