Table of Contents. Page. a. Bangkok office rents break 20 year record 1. b. Medical tourism 1. c. Infrastructure and megaprojects 2

Transcription

1 Table of Contents Page Thailands economy a. Bangkok office rents break 20 year record 1 b. Medical tourism 1 c. Infrastructure and megaprojects 2 d. Labour market 3

2 Thailand s economy a. Bangkok office rents break 20 year record Bangkok s real estate market, and in particular office space, is on the rise. Bangkok office rents reached their highest levels last year, surpassing the previous peak in 1992, according to a report by CB Richard Ellis (Thailand) (CBRE), the international property consultancy firm. Rents in the CBD of Bangkok rose by 9% last year. Despite the 9% increase in grade A rents, Bangkok remains the cheapest Asia-Pacific office location. Grade A rent in the central business district (CBD) averaged Bt770 per sq m per month, with the Park Ventures Ecoplex on Wireless Road named as Bangkok's most expensive office building at Bt925 per sq m per month. Net take-up or growth in the volume of occupied Bangkok office space was 160,000 sq m in 2012, almost double from 83,000 sq m in "Sathorn Square and the Park Ventures Ecoplex, the two most recently completed grade A developments, are now 70% and 87% committed respectively. Tenants wanting more than 3,000 sq m on consecutive floors have few choices" said James Pitchon, CBRE's Executive Director and Head of Research and Consulting. Hong Kong was the most expensive in 2012, with prime office rents equaling Bt6,600 per sq m per month, making it eight times more expensive than Bangkok despite falling by 18% during the year. Of the 31 Asia-Pacific cities surveyed by CBRE Research, rents rose in 20 and fell in 11. Four of the five most expensive office locations in the world were in Asia-Pacific last year. Hong Kong's Central district topped the list, followed by London's West End, Tokyo's Marunouchi Otemachi area, Beijing and New Delhi. Globally, office markets cooled last year with the economic slowdown in China, the recession in Europe and the tepid economic recovery in North America. Source: Bangkok Post b. Medical tourism Medical tourism has been described as one of the fastest growing businesses in the world, and by 2012 it is predicted to be worth US$100bn annually. Thailand embraces medical tourism and plans to become an international leader in the field. More than 1.6m foreigners are treated in Thai hospitals annually, with an estimated 500,000 travelling specifically for medical treatment. These are phenomenal figures given the nascent state of the medical tourist industry only a few years ago. The former Thai Prime Minister Thaksin Shinawatra initially proposed making Thailand an international leader in medical tourism in 2003 through aggressively marketing the country as a medical hub, and curbing restrictions on foreign doctors practicing there. Proponents for this policy argue that it will provide huge financial benefits for Thailand. Indeed, the foreign medical services sector is already expected to make Bt100bn (US$3.3bn) by The government also states that it will create more medical expertise and greater accessibility to new medical equipment. Additionally, it could help reverse the "brain drain" away from western countries by attracting highly qualified Thai doctors currently living abroad back to Thailand. However, critics

3 described the medical hub plan as "the worst policy that the government could ever think of". The salary for doctors is about eight to ten times more in a private clinic than in a state hospital, so Ammar warns that private expansion will result in even greater wage inflation in the state sector. "The ministry has already increased their salaries again and again but it is never enough. How can they compete with the private sector?" Dr Amphon Jindawattana, Secretary General of the National Health Commission of Thailand (NHC) agrees, saying: "The medical hub policy is the accelerator causing the brain drain of doctors, super specialists and other medical workers to private hospitals." Thailand already has a shortage of doctors compared with other countries in the region, and health reforms to expand provision to the low paid have put a greater burden on the public health system. However, in 2005 the government only managed to train 1,300 doctors, and saw nearly 700 doctors resign in the same period many to work in the expanding private sector. The Rural Doctors Society is also scathing in its criticism of foreign medical expansion. Bangkok already has eight times as many doctors per capita as in the worst served rural regions, and the RDS points out that concentrating resources in the larger cities will simply worsen this discrepancy. There are also concerns over the growing divergence between state and private health provision. Some of the big private hospitals now resemble five-star hotels. Doormen will guide you to a gleaming marble foyer before elevator attendants take you to your waiting room. One possible solution for Thailand is to exploit the upcoming liberalisation of doctor movement between south-east Asian nations, and import doctors from other countries in the region. However, this will have an adverse affect on countries such as Vietnam, Laos and Cambodia, and Thailand may soon become responsible for causing a regional brain drain of its own. Strong safeguards, such as a significant medical service tax and greater investment in medical training, need to be in place to ensure that they too benefit from the globalisation of healthcare and the medical tourism revolution. Thailand plans to offer 90-day visas on arrival to citizens of six Middle Eastern countries for private health treatment in a bid to boost its status as a medical tourism hub, officials said on Tuesday. The visas will be available to nationals of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates provided they can show proof of their medical appointment in Thailand. "Thailand wants to be Asia's medical hub and in the past the length of stay was inconveniently short so the government decided to extend it to not more than 90 days from 30 days currently", a government spokeswoman told reporters. Source: The Guardian, Agence France- Presse c. Infrastructure and megaprojects A massive programme of investment in Thailand s infrastructure, designed to enhance international connectivity and competitiveness, is set to be implemented this year amid a renewed commitment to investment and regional development. The government is lining up 55 projects worth Bt2.27trn ($76.27bn) to be executed by 2020, with Bt100bn ($3.36bn) allocated in the 2013 fiscal year, the local press reported on 18 January. The projects come under the government s long-term development plan, but are being accelerated due to new commitments to investment and regional development, including liberalisation in neighbouring Myanmar, and the roll-out of the ASEAN Economic Community (AEC). Chinese officials have shown strong interest in the rail links to Chiang Mai and Nong Khai, as they will eventually connect to the Chinese network. The Ministry of Finance is expected to present a plan to the Cabinet to borrow Bt2.2bn ($73.91m). If given the green light, 64% of this figure will be allocated to 31 railway projects, 24% to 13 road schemes, 7% to seven water transport projects and 5% to four air transportation development

4 ventures. The aim of the investment is to improve Thailand s connectivity with its ASEAN neighbours, boost trade, lower transportation costs, ease existing bottlenecks, and support the growth of the crucial tourism sector. By developing alternatives to road transport, Thailand also hopes to lower its carbon emissions. Thailand lies at the heart of South-east Asia, a region which has enjoyed strong economic growth in recent years, and has recovered from the global economic crisis considerably more quickly than countries in Europe and North America. As well as the AEC, Thailand is a participant in a number of other regional bodies intended to support growth and integration, including the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation and the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy. Important transportation corridors likely to be the focus of infrastructure investment include the Southern Economic Corridor (from Bangkok to Phnom Penh in Cambodia and Ho Chi Minh City in Vietnam) and the North-South Economic Corridor (linking Thailand with Laos, Myanmar and China, and terminating in the Chinese city of Kunming). While the transportation plans are certainly capital-intensive, the minister said financing would be available through 3% government bonds as well as other revenue streams, and that the economic benefits of transport development would off-set the cost in the long term. There should also be considerable scope for private investors as well as contractors, since public-private partnerships are expected to account for 14% of the total spend; this proportion could increase, thus lowering the burden on the public purse. Foreign investors are expected to play a leading role, and Japanese Prime Minister Shinzō Abe has reportedly already expressed interest in Japanese firms participating in tenders, particularly for the upcoming high-speed rail projects. Chinese officials have shown strong interest in the rail links to Chiang Mai and Nong Khai, as they will eventually connect to the Chinese network. With such large investments planned, Thailand has shown a commitment not only to overhauling its own transportation infrastructure but to providing greater connectivity in the region. However, for the AEC to succeed, new railways and roads need to be partnered with a renewed commitment to free trade and economic liberalisation, including lowering tariff and non-tariff barriers and legislation restricting foreign investment. Thailand has one of the more liberal economies in the region, but across ASEAN, there is still some way to go before the ideal of an integrated economy open to globalised world markets is achieved. Source: Oxford Business Group d. Labour market The summary of the labour force survey of December 2012 describes an interesting picture of Thailand s labour market. It was found that for the population aged 15 years and over of 54.74m, 39.82m were in the labour force or available for work, (39.55m were employed, 0.19m unemployed and 82k seasonally inactive) m were not in the labour force or available for work, such as housewives, students or seniors. The number of persons employed was 39.55m, and of those 16.31m were in the agricultural sector, and 23.24m in the non-agricultural sector. Employed persons who don t effectively work and are available for additional work are called underemployed workers (0.21 million or about 0.5% of the total persons employed). Although this group is employed, they have enough free time and are available for additional work to increase their earning capacity. In December 2012, the total number of unemployed persons was 0.19m or 0.5%. In comparison to the same period in 2011, the number of unemployed persons increased by 19k (from 0.17m to 0.19m). Taking the unemployment rates by age group: 1.6% were in the

5 youth group (aged years), the unemployment rate was high in this group; and 0.3% in the adult group (age 25 years and over). Comparing it to the same period in 2011, the youth group increased from 1.5% to 1.6% and by comparison with November 2012, the youth group increased from 1.3% to 1.6%. Concerning the unemployment rates by region, it was found that the Northeast was the highest at 0.6%, followed by the South (0.5%), Bangkok and Central (0.4%), and the North (0.2%). Comparing these figures to the same period in 2011, the unemployment rates of the whole kingdom increased. When looking at each region in turn, the figures showed that the Northeast increased, while the North and Bangkok decreased. The Central and the South remained unchanged. Source : The labour force survey of December in 2012 Bangkok Base - Antares Consulting Ltd. - Legal I Tax I Accounting I Audit I Outsourcing I Company Set up and Registration I Offices Suite 4/5, 10th Floor, RSU Tower571 Sukhumvit RoadBangkok 10110, Thailand Tel. +66 (0) Fax +66 (0) info@bangkokbase.com Twitter.com/BangkokBase We advise and provide pragmatic legal expertise to industrial corporations, SMEs, as well as individuals. Our clients deserve more than keen legal or tax analysis. They can expect clear and well-founded recommendations. Our practise team consists of Expatriate and Thai lawyers, CPA, and qualified accountants. We provide legal, tax and accounting services and we concentrate on the areas of corporate law, real estate, labour law and taxation. We also provide Serviced Offices at the RSU Tower. We maintain a customized office approach for clients and companies on the 10 th floor. Offices may be rented for all-inclusive rates, which simply means that all fees and charges are known up front (including phone, meeting rooms or refreshments and no further surcharges are been made. We also offer virtual offices. Legal Disclaimer While we make every effort to keep the information on our Web site current, we accept no liability whatsoever for the content provided. We further pay great attention to keeping all information, publications and newsletters complete and accurate. Nevertheless, please take note that questions related to Thai and International legal matters as well as tax issues are exposed by rapid change. Therefore, all information published is of a general nature and is intended to serve as preliminary information only. Such general information cannot substitute or replace an individual consultation with a legal or tax adviser. The complexity and the constant change of legal matters make it necessary to exclude liability Antares Consulting Ltd.