House Approves Telecoms Bill

11 November 2010

The Frequency Allocation Bill, which would pave the way for development of the National Broadcasting and Telecommunications Commission (NBTC), has quickly passed through the House of Representatives.

If the bill is signed into law, it will be effective within 18 months. The NBTC will be responsible for providing new licenses to use telecom and broadcasting spectra, including wireless broadband. The quick progress of the bill comes after the court’s suspension of plans to auction off licenses for third generation (3G) wireless broadband service.

If passed, the bill will head the effort to reform the highly lucrative internet broadcasting and telecom markets, worth several hundred billion baht.

On November 10th, 228 MPs voted the bill, with only two opposing it and 24 MPs choosing to abstain.

Prior to this, auction prices for 3G licenses reached to as much as 10 billion baht each. The process of setting up the NBTC and selecting commissioners is expected to take at least a year.

In the meantime, local telecom operators are waiting to receive their new spectrum license by the NBTC, or the National Telecommunications Commission, as their mobile concessions will end in three to eight years from now. The plan will go ahead for the Thai government to convert these mobile-phone concessions into new 3G NBTC licenses, although there is some speculation that the government will be able to accomplish this task due to the complexity of the situation.

Once their mobile concessions expire, telecom operators will be forced to transfer their network assets to their concession holders, TOT or CAT Telecom. NBTC would then request the return of their spectra, however, the operators would still keep their customer accounts.

The NBTC is expected to provide a clear model and path for the broadcasting industry to follow, and in effect attract more investors.

Thailand Relaxes Rules for Re-export Production

11 November 2010

In a move by the Finance Ministry to increase outflows of the US dollar and decrease the Thai Baht’s appreciation, Thai exporters are now able to make payment on local purchases in US dollar-denominations in order to re-export the products.

The Federation of Thai Industries (FTI) is also considering measures to help Thai exporters and decrease the volatility of the baht. On the list submitted by the FTI are a suggestion to soften the rules in order for shipping payments to be made in US dollars, an increase from 100 per cent to 150 percent  for imported machinery depreciation costs, and more loans for exporters that have been affected by the rising baht.

The Bank of Thailand and the Thai Revenue Department have decided to loosen up the rules to permit using US dollars to pay costs for ocean freight, to foreign shipping businesses. The payments in USD would be sent to the foreign-based parent companies of local agents, which will create invoices to be used as receipts. This process would create a different exchange rate between the date of shipment and the payment date. If there is a forex gain, the gain will be taxed, but any losses can be written on the books as an expense and thus be exempt from taxation.

With the baht strengthening against the dollar by 12.5 percent over the past year, the FTI is also proposing that state-owned banks should offer additional packing-credit worth 10 billion baht. Exporter would be charged 3 percentage points lower than the minimum lending rate, and get a grace period of two years.

To encourage more investment in new machinery, the FTI has asked the Thai government to allow booking of the cost in one year, which would equal out to 60 percent in the first year.

Concern is growing that without more stringent measures in place, export revenue could take a big hit next year due to the strengthening of the baht. Thai banks have voiced concern that the hardest hit segment of exporters will be small and medium-sized exporters, as the number of export orders tend to decrease as the baht strengthens.