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Emerging Markets Direct (EMD) released the latest Indonesia Palm Oil Industry Report 2H10. In the report, it says that palm oil is the most important agricultural export crop of Indonesia, with exports increased at 10.7 million tons or 274% over the past decade or roughly 27.4% per annum (1.1 million tons). As of August 2010, exports rose 45% month-on-month to 1.72 million metric tons and expected to rise further approaching the last months of 2010 owing to higher demand driven by year-end festivals.

Ever since 2006, Indonesia has been replacing Malaysia as the largest producer of palm oil. The government stimulated the growth of palm oil industry by introducing some of the core reforms like decentralizing the land-use licensing rights to provincial governments, granting subsidies to smallholders, establishing the pro-rated export tax system for crude palm oil. As the global demand for palm oil grows at 2.2 million tons per year, it is estimated that Indonesia could even satisfy 57% of the annual growth in demand. The high demand even drives crude palm oil prices up to USD750 per ton as of mid-2010.

Indonesia has the potential to grow into a world biodiesel leader and a model for plantation sustainability, as supported by two of its most valuable assets, namely its oil palm plantations (which is expected to increase to ten million hectares by 2015), and its people. The government encouraged the use of bio-diesel to reduce the use of diesel oil for transportation and industrial use. State oil and gas company, Pertamina started selling bio-diesel mixed with automotive diesel oil in 2006.

What are the problems faced in the industry?

– Difficulty in procuring lands results in the failure of implementing oil palm plantations projects.
– Insufficient supply of high yield seedlings give rise to falsely certified seedlings.
-Processing factories operate without having plantations means a mismatch of capacity.
– Rising environmental concerns trigger anti-palm oil expansion campaigns staged by environmental NGOs.

Rising environmental concerns lead to the withdrawal of major clients like Unilever, Kraft and Nestle. As a result, the palm oil industry supported the proposal of environmental NGOs to declare a moratorium on new licenses for the development of plantation in natural forest and on peat lands, effective from January 2011. How does Indonesia Palm Oil industry strike a balance between environmental concerns and productivity? What are the sustainable measures taken by the industry?  What are the prospects and outlook of Palm Oil Industry?

Want to have an overview and competitive analysis of the major industry players?

– PT Astra Agro Lestari TBK
– PT Sinar Mas Agro Resources and Technology TBK
– PT Perusahaan Perkebunan London Sumatra Indonesia TBK
– PT Bakrie Sumatera Plantation TBK.

Check our pages to see more details about our latest Indonesia Palm Oil Industry Report:
http://www.emergingmarketsdirect.com/products/Indonesia-Palm-Oil-Industry.html

Table of Content

1. Industry Profile
1.1    Indonesian Palm Oil
1.2    Production
1.2.1    Production of Palm Kernel Oil
1.3    Palm Oil Exports
1.3.1    Crude Palm Oil Shipment
1.4    Prices
1.5    World Major CPO Producers and Major Oils
1.5.1    Malaysia Palm Oil Industry
1.5.2    Major Oils
1.6    Development in the Palm Oil Industry
1.6.1    Oleochemical Industry
1.6.2    Biodiesel Industry
2. Market Trends and Outlook
2.1    Greenpeace and the Indonesian Pam Oil Industry
2.2    Problem Faced in the Industry
2.2.1    Scarcity of Land
2.2.2    Falsely Certified Seedlings
2.2.3    Issues Over CPO Factories Without Plantation and Plantations without Factory
2.3    Development in the Industry
2.4    Roundtable on Sustainable Palm Oil (RSPO)
3. Leading Players and Comparative Matrix
3.1    Leading Players
3.1.1    PT Astra Agro Lestari TBK (AAL)
3.1.2    PT Sinar Mas Agro Resources and Technology (SMART)
3.1.3    PT Perusahaan Perkebunan London Sumatra Indonesia TBK (LONSUM)
3.1.4    PT Bakrie Sumatera Plantation TBK (UNSP)
3.2    Comparative Matrix
3.3    SWOT Analysis

4. Tables and Charts
Table 1 : Area and Production by Category of Producers 2006 – 2010
Table 2 : Indonesia Crude Palm Oil Exports by Major Destination Countries 2006 – 2010
Table 3 : Shipment Size Distribution
Table 4 : Average Annual Production of Major Oils and Fats 1958 – 2009
Table 5 : Plantation Statistic of AAL  2008 – 2009
Table 6 : Palm Oil Planted Area of AAL (as of June 2008)
Table 7 : Operational Highlights of SMART 2005 – 2009
Table 8 : Operational Highlights of LONSUM 2005 – 2009
Table 9 : Operational Highlights of UNSP 2008 and 2009
Table 10 : Financial Highlights of Major Players 2008 and 2009

Chart 1 : Indonesia Regional Palm Oil Production
Chart 2 : Indonesia and Malaysia Palm Oil Production 1996 – 2008
Chart 3 : Historical Palm Oil Area & Production 1985 – 2009
Chart 4 : Indonesia Annual Palm Area Growth  
Chart 5 : Indonesia Palm Area Growth by Location
Chart 6 : Production of Crude Palm Oil by Country in 2008
Chart 7 : World Production of Palm Kernel Oil 2005 – 2010
Chart 8 : Indonesia Palm Oil Exports 2001 – Jun 2010
Chart 9 : Indonesian Crude Palm Oil Export by Port 2006 – 2010
Chart 10 : Shipment Size per Month 2010
Chart 11 : Export Price and Volume of Indonesian CPO Jan 2006 – April 2010
Chart 12 : Palm Oil Production in Malaysia and Indonesia 2004 – 2009

About Emerging Markets Direct

Emerging Markets Direct is the online research store from ISI Emerging Markets, a Euromoney Institutional Investor Company. We deliver in-house industry research report, industry analysis and data vital to support all kinds of business decision, academic and research purposes. Our flagship product – Emerging Markets Direct Report covers the top 20 industry sectors of India, China, Malaysia, Thailand, Indonesia, Vietnam and Indonesia. ISI Emerging Markets in-house analysts crunch the numbers from our proprietary CEIC databases and combine the results with on-the ground industry insight. The result is reliable, hard-to-get industry data, analysis and insight. Previously available only to subscribers of the ISI Emerging Markets Information Service, Emerging Market Direct reports are available now at our online research store. Our Other products are: CEIC snapshots, CEIC datatalk, Intellinews. To view our full catalogue of products, please visit http://www.emergingmarketsdirect.com

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Source by Emerging Markets Direct

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In Thailand, all of the laws in connection with taxation are governed by the Thai Revenue Code. The Ministry of Finance administers the procedures in connection with tax collections. The government’s Revenue Department collects taxes under four main categories such as corporate income tax, value added taxes (VAT), stamp duty, and personal income tax.

The country’s tax collecting authorities also include the Customs Department, which collects import as well as export duties; the Excise Department, which is responsible for the collection of excise tax; and other local authorities which collects municipal and property taxes. Above mentioned is just a brief info on the taxation system in Thailand. In this article, discussed further in detail is regarding corporate income tax as well as its features and rates.

Corporate Income Tax (CIT) is in the form of direct tax, and is imposed on juristic companies as well as registered partnership firms that are formed under the laws of the country, such as limited partnerships, private limited companies, public limited companies, and ordinary registered partnerships.

Corporate income tax is imposed on both local and foreign companies. It is calculated on the net profit and has to be paid at the end of every accounting period. But, a Thai company is entailed to pay tax on the basis of its worldwide net profit. On the other hand, a foreign company operating in the country is required to pay corporate tax only on the net profit that it has derived from carrying out of the business in Thailand. But, a foreign company would be levied corporate tax on its overall receipts, provided it is engaged in businesses such as international transport business.

Likewise, a foreign company, although it does not have any business in the country, may be imposed corporate tax on its receipts, in case, it derives any kind of income from Thailand, such as, interests, service fees, professional remuneration, and dividend.

Mostly, corporate income tax (CIT) is calculated on the net profit of the company and that too on the accrual basis. While calculation, a company takes into account all revenues derived during an accounting period, and deducts them all of the expenses that have been incurred during an accounting period as per the Revenue Code.

On calculation of corporate income tax, deductible expenses include ordinary and necessary expenses; interest with exception of company’s funds and interest on capital reserves; taxes, with exception of VAT and CIT paid to Thai government; net losses that have been carried forward from the previous five years; bad debts; wear and tear and depreciation; contributions in connection with provident fund; donations up to 2% of net profit; and entertainment expenses which can be up to 0.3% of the overall receipt however, it should not exceed ten million baths. Further, special rates have been fixed for deductible expenses. For instance, deduction is about 200% in the case of Research and Development expense. Likewise, in the case of job training, it is 150% deduction in connection with its expenses.

Now we will discuss at what rate corporate income tax is deductible. Usually, corporate income tax rate in the country is 30% of net profit. However, rates differ depending upon the nature of tax payers.

For example, in the case of small companies with a paid up capital less than five million baths, corporate income tax rate would be on the basis of below mentioned

– If net profit does not exceed one million baths, then the rate at which corporate income tax would be charged is 15%
– If net profit is more than one million baths and up to three million baths, then CIT rate would be 25%
– In case, the net profit is more than three million baht, CIT rate would be 30%

In the case of companies listed in SET (Stock Exchange of Thailand), the corporate income tax rate would be as follows

– For net profit up to 300 million Baht, the rate would be 25%
– For the balance net profit, the rate is 30%

For companies newly listed in the SET, the rate would be 25% of the net profit. Likewise, in the case of banks that derive profits from IBF (International Banking Facilities), the rate would be 10% of net profit. Corporate income tax rates also vary in the case of foreign companies. For example, For instance, the CIT rate would be 3% of net profit in the case of foreign companies engaged in the business of international transportation. Similarly, the rate is 10% in the case of foreign companies that receive any kind of remuneration or dividend from the country.

Both Thai and foreign companies that carry out businesses in the country are entailed to submit their tax submission form within 150 days from the closing date of their accounting period. During tax submission, tax payment should also be done.

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Source by Wolfgang Jaegel

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For the past couple of decade; Philippines have been in the verge of defining the most outspoken program on Population Control which is supported by the United Nation and several Non-government Agencies.  Its policies and guidelines are very much ideal that no other nation can provide the same structure as far as definition of the program is concern.

In fact, Philippines is among the few country who operates a department specific to Population Control Program (PCP). 

Today; the author wishes to identify results from the profound structure of the project.  Because the Philippine Government owns the responsibility to present an outlined outcome of the PCP; not only to the Filipino people but to include the UN who is involve in funding the project.

Should the Philippine Government failed; the Commission on Population Control should publish the figure – and if the PCP Project is a real failure – presentation of grounds should be made available at the same time. Thus, UN can justify the multi million funding from a so called ravage project.

The Real Picture:

Artificial birth control is often taboo in this staunchly Roman Catholic country. Yet with a birth rate that is one of the highest in the world, sustainable population growth is becoming a burning issue, especially to the millions of poor people struggling to feed themselves at these times of high food prices.

This year’s global food crisis, which saw prices of basic commodities such as rice soar beyond the reach of millions of poor people, created shock waves in the Philippines where over 40 percent of the population live on a pay less than Php. 100.00 a day.

Spooked by a precarious political and economic situation, some lawmakers are trying to pass a bill that will compel the central government to promote artificial family planning rather than solely focusing on natural birth control methods; an acivity supported by the Church.

Twenty-seven economists, including four former economic planning secretaries and one former budget secretary, have signed a paper supporting the bill.

“The absence of an unambiguous population policy reflects a lack of seriousness in promoting long-term economic growth and poverty reduction,” said Ernesto Pernia, a professor of economics at the University of the Philippines, and one of the 27 signatories.

He compares the Philippines to Thailand.

In 1975 both countries had similar population sizes of 41 to 42 million. Then Bangkok launched a major family planning effort.

Now Thailand has a population of around 64 million and is the world’s top exporter of rice. Meanwhile, the Philippines with a population of 90 million and become the world’s top importer of the grain.

Thailand had a gross annual income per capita of about 7,880 in U$ in 2007, while in the Philippines was 3,730 in U$.

According to the UP Professor, that if the Philippines had followed the (population) growth pattern of Thailand between 1975 and 2000 the per capita income would have been at least 22 percent higher and there would have been 5 million less poor people, said Pernia. “That is a conservative estimate.”

Yet the proposed reproductive health bill will likely never see the light of day as the influential Catholic Church is violently opposing the artificial birth control – defined as a violation of its religions norms.

The Church has denounced the bill as “morally unacceptable” and warned politicians, particularly senators who will be running for the presidency in 2010, that their stance will be remembered.

“The Catholic Church knows how to mobilize its members not to vote for anti-life politicians,” said Father Melvin Castro of the Catholic Bishops Conference of the Philippines in a statement.

Priests at some Sunday masses gave PowerPoint presentations reiterating the Church’s stand on family planning and one archbishop even suggested denying communion to politicians who supported the law.

Nearly half of the estimated 3.1 million pregnancies that occur every year in this Southeast Asian country are unplanned. Around half a million end in illegal and often dangerous back-street abortions.

While a relatively small middle class in the Philippines can easily afford contraceptives, millions of poor women cannot. A month’s supply of the pill costs 40.00 pesos or around $1.00, around half the average daily salary of almost half of the population.

Backlash after the UN withdraw the PCP Funds

A lack of accurate information and access is also a problem.

Local governments often do not have the money to provide pills and condoms in public clinics and mayors that prefer to toe the Church line can ban them from clinics.

Officials who defy the Church sometimes risk a backlash.

Joseph Juico, a councillor in Quezon City in Manila, was denounced for introducing a family planning program in schools.

“Some priests and some lay ministers were calling me an abortionist. They were calling me a worker of Satan,” Juico said.

Couples attending compulsory family planning seminars before their weddings are often warned off using artificial methods.

“One of the women leading our workshop told us the pill had given her varicose veins, diabetes and made her deaf in one ear,” said one newlywed, who declined to be named.

Catholic clerics say natural family planning methods such as abstinence when the woman is ovulating are effective.

But in practice they are often unreliable and difficult to follow. Many couples in the Philippines only see each other once or twice a month because either the man or the woman has a live-in manual job elsewhere. It’s even less if one of them works abroad.

Extra-marital affairs rarely alluded to by priests in the Philippines, are common and men sometimes have second or third families.

A lack of artificial contraception means that many women literally burst into tears when their period is even one day late as the only recourse for an unplanned pregnancy is an illegal abortion or giving birth to another child they can ill afford to feed.

Without an effective birth control policy, the Philippines, already the world’s 12th most populous country is projected to have a population of over 140 million by 2040, then there will be no place to live on grounds but in shanties, swamps and shorelines. This will put a huge strain on its creaking health system, schools and other services, and its ability to feed itself. 

Extreme scarcity of food will be the canvass, looters, hold uppers, killers; one will survive synonymous to a life in jungle; everyone will battle hard for food. Sick people will outnumber, hospitals and healthcare facility will be deserted – hence only a few will afford medical services.  Criminalities, lawlessness and civil disobedience will skyrocket beyond controllable figures destroying the human race – where to breath a life for survival will no longer be probable.

Are we now ready to find an outcome of an impartial, poor and garbage population control policy that is influenced by our pious leaders?

Think again and support the best scientific alternative means – close at hand.  

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Source by Arvin Antonio Gumato Pareja

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Korean drama and entertainment industry is busy carving a niche for itself in many parts of the world, including Japan, China, Thailand, Philippines and the United States of America. Koreans who have migrated to different parts of the world are regular watching Korean drama on television that helps them to connect with their own countries, culture and tradition. Many Korean dramas are in the format of short series that are mostly aired for a few weeks. Korean movies are short stories that people can watch at a stretch for two to three hours.

Korean girls who feature in these dramas on television have been gaining immense recognition due to the widespread popularity of these dramas and soaps. Television artists from Korea are talented professionals who display their acting potential on a number of topics and categories that are high in demand around the world. These television dramas and soaps may be based on romantic plots, historical facts that depict real stories from the past, thriller mini series, family dramas, healthy comedies, actions series that can be a mixture of one or more categories.

There are many Korean actors, male and female, who have created and established their unique space in the hearts of the people across the world. With their immense performing talents and great Asian looks that attract many; they have been able to uplift the Korean entertainment industry, specifically the sub-categories of drama and feature movies.

Models from Korea are world’s favorite when it comes to looks. Racing models from Korea are preferred for their innocent looks, flawless skin, silky hair textures and hot bodies. These hot Korean girls have captivating looks that define a sports event in its true terms that are racing and excitement. These girls have established themselves in the country and shoveling their way into the international level racing and sport events.

Korean girls are now coming out of their shells and turning their heads towards more bold and courageous professions such as modeling. Korean models are into fashion modeling as well as many other entertainment sub-categories. These models are can also be seen on cover pages of fashion magazines and at the same time, daily soaps and Korean dramas highlight their multi-talent.

Internet is the most convenient and relevant platform for the Korean talent to convey their potential to the rest of the world. Websites that contain fan clubs, discussion groups and forums about these Korean actors, actress, racing models and supermodels are actively being used from across the globe and the Korean talent is now being seen under a broad spectrum of light. Their potentials have been recognized and appreciated in the form of International assignments and acclaims.

The Korean entertainment Industry is turning its head towards a more free, mature and broad-minded society where the people recognize the capabilities and talents of the artists and encourage their efforts to enter into this venture even deeper. The television and movie artists and the models are now challenging the internationally acclaimed faces.

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Source by jaiprakashsrivastva3

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Bangladesh will continue its ban on rice exports, possibly into next year, in order to hold down local prices of the staple food.

According to the Pius Costa, government director general of food, the decision on rice export for both aromatic and non aromatic may continue after 2009 to keep the rising price within the capacity of common people, The government has issued the order to reimpose the ban last week prohibiting export of both aromatic and non-aromatic rice till the year-end of 2009. Since May last year the government has imposed a ban on exporting rice which ended last month.

K. A. Mannan, the managing director of Mabco Food Limited, a leading importer and exporter of wheat and rice welcomed government’s decision as we do not know about the output of Aman rice. But Bangladesh produces around 30 million tonnes of rice, nearly sufficient to feed its more than 150 million people. Moreover Indian traders are negotiating with us for importing rice from our country.

India, also a major rice exporter, may not lift its own ban on rice exports after of the worst monsoons in two decades, Mannan said. The Philippines, another major rice exporter, will also import more rice this year because of crop failures due to repeated typhoons, he said.  As in India, farmers in Bangladesh could not transplant rain-fed Aman seedlings in time this year because of the late arrival of the monsoon. At the moment the government has a stock of a little over one million tonne of rice, officials said, adding the government planned to check the output of Aman rice to ensure food security.

They said the agriculture ministry had set a target of cultivating transplanted Aman on 5.4 million hectares of land across the country this season while the production target was set at 12 million tonnes.

India, harvesting its smallest rice crop in seven years, plans to increase purchases from local farmers to avoid imports that are as much as 73 percent more expensive, said a government official.
The federal government will not subsidize supplies from overseas, said the official, who didn’t want to be identified. Glencore International AG and other suppliers last month offered to sell for as high as $598.75 a ton, or 27,600 rupees. That’s higher than 16,000 rupees the government pays for the grain.

Rice prices have jumped 37 percent from this year’s low in March on imports by the Philippines and as drought cut output in India, fueling speculation the country will be a net buyer for the first time in more than two decades. India may purchase as much as 3 million tons, Olam International Ltd. said last month. “Import of rice at prices higher than what we pay farmers is always political dry gunpowder,” R.S. Seshadri, a director at Tilda Riceland Pvt., one of India’s biggest rice exporter, said yesterday in an e-mailed response.

India’s state trading firms, PEC Ltd., MMTC Ltd. and State Trading Corp. on Oct. 30 sought to buy 10,000 metric tons each. Trade Minister Anand Sharma said Nov. 20 the nation won’t import because it has adequate supplies, days after saying the country is in talks with Thailand and Vietnam to secure rice supplies.

The government will have to pay importers as much as $250 a ton to cover losses for selling imported rice at domestic rates, Rakesh Singh, a trader at Emmsons International Ltd., one of the companies that participated in the tender.

State Reserves:

India’s monsoon-sown rice production may decline 18 percent to 69.45 million tons from a record 84.58 million tons last year because of drought, according to the farm ministry. Warehouses had 15.35 million tons on Oct. 1, three times the buffer level. The government bought 12.3 million tons from farmers as on Dec. 2, up from 11.5 million tons a year earlier.

When the government says we have supplies that are enough to last 13 months, it means we are in a comfortable position, Vijay Setia, former president of the All India Rice Exporters’ Association, said in an interview.

Rice for January delivery was little changed at $15.725 per 100 pounds in after-hours trading on the Chicago Board of Trade. Futures surged to a record $25.07 per 100 pounds last year as concerns over food shortages led nations including India and Vietnam to curb exports, sparking food riots from Haiti to Egypt.

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Source by Parkash Trading

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Abstract:

This academic research paper is based on the exchange rate and its volatility that affect on the export growth of Bangladesh. This paper consists of four parts. In first part we will give a short description of Bangladesh and its export industry. In second part we will focus on previous research. In this part we will critically evaluate other researchers work along with their point of views. In the third part which is our evidence part we will give example as well as cite from previous established research to support our statement. And in the fourth part we will set some recommendation and conclude our paper.

All the information we use here is secondary data. As our time is limited and collecting data was not an easy process so we rely on our previous researcher. We collect data from different resources like newspaper articles, journals as well as research some reputed nonprofit organizations like USAID and IMF.

Introduction:

Exchange rate is the value between two currencies shows how much one currency is worth in terms of other currency. The value of exchange rates affects the demand for exports and imports.  An appreciation of the dollar will lead to exports becoming more expensive and imports cheaper.  This will harm exporters and increase the leakages from the circular flow of income. Were the dollar to depreciate the opposite effect would occur.

There is a traditional view that exchange rate depreciation improves exports for developed countries.. But is it also true for mid developing countries like Bangladesh? In this research paper we will discuss on such issues like exchange rate volatility and its impact on the volume of international trade of Bangladesh.

Bangladesh is a low-income third world country. According to IMF Mean wages were $0.58 per man hour at 2009 in Bangladesh. Since the independence on 16th December 1971 Bangladesh economic ground is not sufficient enough to fulfill its huge number of population with its basic needs. Bangladesh is a very small country with a population of 160 million. GDP in Bangladesh has more than doubled since 1975, and the poverty rate has fallen by 20% since the early 1990s. The country is listed among the “Next Eleven” economies. Dhaka, the capital, and other urban centers have been the driving force behind this growth. From 1971 to 2010 Bangladesh economy has gone through several major policy changes. In early 70’s it was dominated by socialist ideologies, then in late 70’s with IMF- World bank suggestion it jumped in to market economy.

Eventually its export sector was also given a break-through with policies like reducing/ demolishing maximum amount on private borrowing and investments, export-led industrialization etc. Exchange rate policy in Bangladesh also change progressively. Since independence Bangladesh export earnings increased and Bangladeshi currency which call ‘Taka’ also depreciated significantly.  But how much contribution this depreciation has to the export growth of Bangladesh is not clear. From 31st May, 2003 Bangladesh has introduced free-floating exchange rate system. Naturally depreciation is expected to be more free and frequent under free floating exchange rate system. And the pattern and destination of our export expected to change significantly due to free floating exchange rate system.

Literature review:

The literature on exchange rate depreciation favors country’s export or not may depends on country’s economic concerned, technique they used, content consider and so other factors. According to Junz and Rhomberg (1973) and Wilson and Takacs (1979), using data from a fixed exchange rate period, and Bahmani-Oskooee and Kara (2003), using data from a flexible exchange rate period, proved that depreciation improves exports for developed countries. In 1993 Arslan tried to find the causes of export growth of the Turkish at mid 80’s, and he find that an export rate depreciation robust their export growth recover them rapidly from the debt crisis that they are facing from late 70’s. Same result was found by Nabli and Marie at 2002 when they tried to found the causes of huge lose in the export of Middle East and North African countries. They found that an appreciation of their currency caused this huge lose by decreasing their export competitiveness. According to Thapa (2005) ” a depreciation of real exchange rate enhances international competitiveness of domestic good and net export of Nepal”

However many researcher are not agree with this statement. At 2004 Fang and Miller conducted a research on Singapore where they found that in Singapore depreciation doesn’t improve export. Moreover this exchange rate risk slow down their export rate. In their research paper they suggest Singaporean policy maker to promote export goods by stabilizing the exchange rate rather than depreciating their currency. A similar research conducted by Fang, Lai and Miller at 2005 where they  shows that in 8 Asian countries including Malaysia, Indonesia, Singapore, Japan, korea, Taiwan and Thailand currency depreciation have a weak contribution on their export growth. In their research both researchers show that exports are not negatively affected by an appreciated currency because the lower import price due to appreciation reduce the cost of export production.

Devkota (2000) pointed out that in Nepal export is dominated by imported raw materials. So depreciation their currency might increase export but cannot decrease their trade shortfalls. In Bangladesh circumstance this trade deficit also differs but dominated by the pessimist views that depreciation has little effect on export earning or trade balance.

Evidence:

According to Ahmed. M (2009) “In 2004-05, Bangladesh exported largest volume of merchandise and commodities to US and held the top position in respect of importing Bangladeshi commodities. During this period, goods worth of US$ 2,412.05 million were exported to the US, which was 27.87 percent of the total export of the country.” It’s a remarkable improvement for a low developing country like Bangladesh.

More than a decade Bangladesh followed a free floating exchange rate policy. Beforehand, the exchange rate of Taka used to be attuned from time to time to keep it competitive based on the rate of inflation and movement of exchange rates as well as trade weights with partner countries.  As we mention earlier In recent times, the Government has taken an audacious step in exchange rate management. According to Ahmed. Md.(2009) “Although the US dollar linger stronger against Taka during the period of late 2003 through April 2004 but the situation after that did not aggravate and the value of Taka remained stable between May 2004 to August 2004. Since August 2004 Taka showed stability and from August 2004 to March 2005 Taka showed some flexibility against US Dollar. Despite the rapid development of private sector with increasing credit flow; much higher growth in import of capital machinery and primary goods due to devastating flood and hike of the oil price in international market were mainly responsible for the fluctuation of exchange rate. Due to constant monitor and supervision by the central bank of Bangladesh and booster of greenback into foreign exchange market the exchange rate remained stable. On June 30, 2004 the official and interbank market exchange rate of Taka-Dollar remained firm, whereas, the value of Taka was 59.30 and 61.50 correspondingly. Even though, in open market the dollar was charged comparatively more than interbank market exchange rate. However, on June 30, 2004 the exchange rate of dollar was moving upward slightly from Tk. 61.00 to 62.20 in this market.” According to IMF(shown in appendix table-1) at 2005 the exchange rate against dollar was 63.92 which depreciated significantly and at 2008 it jumped to 68.65.

This rate of deprecation has a little impact on Bangladesh export industry. A research was conducted by Rahman. M from CPD( central policy Dialogue) at 2006 where they argue that  a real exchange rate depreciation might not have played a significant role in boosting exports in Bangladesh. This statement is also supported by many researchers over the ages as reported in Hossain (2000).

There is a common believe that although a deprecation will led a country to a high volume of export but import will become more expensive and it will affect the specific country’s trade balance. But in their research paper Rahman. M (2006)  proved that no visible correlation is present between the movements in the REER( real effective exchange rate) and the growth rates of either Bangladesh’s exports or imports. They argue that instead of exchange rate other structural factors like supply side constraints and global market dynamics play a more important role in stimulating exports and improve the balance of payments position. In order to support their statement they provide a statistical document which was cited from IMF, Bangladesh Bank and EPB.

From the above graph we can see that during 2005 when the value of ‘Taka’ was depreciated most the export and import growth was lower and at 2010 when the currency was appreciated a bit surprisingly both export and import growth significantly become higher. In order to support our statement we need to go much deeper in Bangladesh export industry.

Bangladesh’s textile industry, which includes knitwear and ready-made garments along with specialized textile products, is the nation’s number one export earner, accounting for 80% of Bangladesh’s exports of $15.56 billion in 2009. Bangladesh is 3rd in world textile exports behind Turkey. China is the first in the world textile export with a amount of $120.1 billion in 2009 The main importer of Bangladeshi Textile goods are US an EU nations. Bangladesh’s expedition to increase the quantity of textile trade is supported by US and EU caps on Chinese textiles. The US cap restricts growth in imports of Chinese textiles to 12.5 per cent at 2007 and between 15 and 16 per cent in 2008. The EU deal similarly manages import growth until 2008. This statement is also supported by Gajewski and Riley ( Bangladesh export trade practices and their effect on the competitiveness on the garment industry) where they mention that  The Multi-Fiber Arrangement (MFA) and the WTO Agreement on Textiles and Clothing contributed to Bangladesh’s greater trade integration with world markets and a rapid expansion of garment sector exports, which showed increases from USD$866 million in 1991 to USD$5.8 billion in 2004. And Bangladesh has enjoyed sustained rates of overall economic growth during the last 15 years. So we can argue that it the global political and supply side constraints that are playing more important role rather than exchange rate velocity in Bangladesh export industry.

Another factor that are affecting Bangladesh export sector is its low labor cost and government policies. According to USAID(Bangladesh export trade practices and their effect on the competitiveness on the garment industry)  “After massive labor unrest in 2006 the government formed a Minimum Wage Board including business and worker representatives which in 2006 set a minimum wage equivalent to 1,662.50 taka, $24 a month, up from Tk950. In 2010, following widespread labor protests involving 100,000 workers in June, 2010, a controversial proposal was being considered by the Board which would raise the monthly minimum to the equivalent of $50 a month, still far below worker demands of 5,000 taka, $72, for entry level wages, but unacceptably high according to textile manufacturers who are asking for a wage below $30. On July 28, 2010 it was announced that the minimum entry level wage would be increased to 3,000 taka, about $43”. This amount of low production cost gives Bangladesh’s textile industry a competitive advantage to compete with other country in global market. So we can say that its not only the currency depreciation that improve Bangladesh’s export industry but some political and supply side constrains along with low production cost and government policy plays a motivator to boost up the export.

Conclusion:

According to USAID the total export of Bangladesh was $14.11 billion which increase to 15.56 billion at 2009. Although some researcher argue that it’s the currency deprecation that led Bangladesh into this export boosting but our findings shows that instead of currency deprecation low labor cost and some external environment factors like global politics and local government policy help Bangladesh to improve its export volume. Although Bangladesh have some limitation like poor transportation and a volatile currency but we hope with a strong government and free floating currency exchange policy Bangladesh will able to continue its export boosting.

Reference:

-Ahmed. M (2009) “Exchange rate volatility and International Trade Growth: Evidence from Bangladesh” Munich Personal RePEc, Paper No. 19466

-Arslan,I,1993, Export Inmcentives ,Exchange Rate Policy & Export Growth in Turkey.

The Review of Economics and Statistics,vol-75,No.1(Feb.1993) pp-128-133.

-Bahmani-Oskooee, M. and Kara, O. (2003) “Relative Responsiveness of Trade Flows to a Change in Prices and Exchange Rate,” International Review of Applied Economics 17, 293-308.

-Devkota,S.C.,2000,: Impact of Exchange Rate change in Foreign Trade Balance in

Nepal. Internet Slide ,http://129.3.20.41/eps/it/papers.

-Fang,W. and Miller,S.M.,2004, Exchange Rate Depreciation and Exports: The Case of Singapore Revisited. Internet Slide. http//www.unlv.edu/faculty/similar/Singapore revisited.

-Fang,W. and Miller,S.M. &Lai.Y ,2005, Export Promotion through Exchange Rate

Policy: Exchange Rate Depreciation or Stabilization? Internet Slide. http//

www.unlv.edu/faculty/smiller.

-Gajewski and Riley, (2006) “Bangladesh export trade practices and their effect on the competitiveness on the garment industry”, United States agency for International Development.

-Hossain,A. (2000) Exchange Rates, Capital Flows and International Trade.(The Case of

Bangladesh). The University Press Limited, Dhaka.

-Junz, H. and Rhomberg, R. R. (1973) “Price Competitiveness in Export Trade among Industrial Countries,” American Economic Review, Papers and Proceedings 63, 412-418.

-Nabli.M.K & Marie-Ange Véganzone’s Varondakis, 2002,: Exchange Rate Regime and Competitiveness of Manufactured Export. Internet Slide. The Case of MENA. http//nweb/8worldbank.org.

-Rahman. M (2006), “Bangladesh’s Export Sector: Changes and Challenges”, Center for Policy Dialogue.

-Thapa,N.B ,2002, An Econometric Analysis of the impact of Real Effective Exchange Rate on Economic Activities in Nepal. Internet Slide.

http//www.nrb.org.np/red/publication/Economic Review

-Wilson P. and Tat, K. C. (2001) “Exchange rates and the trade balance: the case of Singapore 1970 to 1996,” Journal of Asian Economics 12, 47–63

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Source by Hasnat Chowdhury

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Reporting requirements and accounting policies are decided by the Civil and Commercial Code, the Revenue Code and the Accounts Act. The accounting standards in Thailand are issued by the Institute of Certified Accountants and Auditors of Thailand.

These standards have usually been manufactured from International Accounting Standards (IAS), or from generally recognized accounting standards (GAAP) prevalent in the United States.

There are mainly two taxes that have a direct impact on businesses functioning in Thailand. They are the Corporate Income Tax and Value Added Tax.

All business firms operating there must possess a taxpayer identification card inside sixty days after establishment. The corporate income tax rate is calculated as 30% of net profit. Corporate taxes are payable semi-annually. Financial statements must be created by a company auditor annually.

The Revenue Department insists that accounts must be in the Thai language. The books must be placed at the business centre for ten years. Corporate Income Tax (CIT) is a direct tax imposed on a juristic company or alliance which is functioning under Thai or foreign law and performs business in Thailand or makes certain types of income from Thailand.

The usage “juristic company or alliance” implies a limited company, a limited alliance or a registered ordinary alliance operating under Thai or foreign law as well as an association and an institution involved in business which brings revenue. The usage also covers any joint venture and any trading or profit-seeking activity performed by a foreign government or its agency or by any other juristic body listed under a foreign law.

Value Added Tax was established in 1992. The VAT is imposed to each stage of the production process, and is payable at a monthly basis. The VAT is levied at a rate of 10%. Exports, domestic transportation and some other sales are freed from VAT. Any person or entity who supplies goods on a continuous basis or delivers services in Thailand and has an annual income in excess of 1.2 million Baht has to pay VAT in Thailand.

Service is regarded to be provided in Thailand if the service is carried out in Thailand no matter where it is made use of or if it is carried out somewhere else and made use of in Thailand.

Some other taxes also need to be considered. It includes the Specific Business Tax, the Remittance Tax, and the Personal Income Tax. Specific Business Tax (SBT) is another type of indirect tax launched in 1992 to substitute Business Tax. Certain businesses will come under Specific Business Tax in place of VAT.

Businesses that come under SBT comprise of Banking, Financial and similar business, life insurance, pawn brokerage, real estate and any other business acknowledged by the Royal Decree i.e. business involves in repurchasing agreement (REPO) and factoring.

While the Remittance Tax has an impact on branch offices, the Withholding Tax, the Personal Income Tax, is calculated at 30-37% for income crossing the mark of $40,000, and the petroleum, stamp duty on some transactions, excise taxes on numerous goods such as liquor and tobacco, and property taxes.

When you consider the Taxation in Thailand the impact of Double Taxation Treaty must have to be mentioned. The U.S. and Thailand agreed on a tax treaty in the year 1996. The treaty will exempt double taxation, allowing U.S. investors to have a credit against their U.S. tax obligations for taxes spend in Thailand, as well as other benefits. The treaty will come into effect in 1998.

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Source by Gregory Smyth

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Personal Income Tax Thailand:Gains from sale of shares not listed on the stock exchange
“Tax law interpretation is not as simple as this and it is wrong to interpret Section 40(4)(g) of the  Revenue Code in this way.”

In 1991, two important amendments were made to the Revenue Code in relation to the imposition of personal income tax on a sale of shares in Thailand.
Section 40 of the Thai Revenue Code was amended by the addition of sub-paragraph (4)(g) to Section 40, prescribing that the following shall be income that is subject to income tax in Thailand:

“Benefits derived from transfers of shares, partnership holdings, debentures, bonds, bills or debt instruments that are issued by a company or a juristic partnership or by any other juristic person, which exceeds the costs of the investment.”

Clause 2(23) was also added to Ministerial Regulation (No 126) prescribing that the following shall not be assessable income in Thailand:
“Benefits derived from sales of securities listed on the Stock Exchange of Thailand, not including debentures or bonds.”

It is pretty clear from the addition of these two amendments as to what the Revenue Code subjects to tax and what it doesn’t.

But if you ask an advisor in Thailand how a gain on sale of shares is determined for the purposes of Section 40(4)(g), it’s just about a certain bet that you’ll receive back the answer (even in the form of a written opinion) that the amount of the gain under Section 40(4)(g) is the difference between the sales price and the purchase cost of the shares only.

And if you ask the advisor if you can make allowance for any additional costs that you might have incurred besides the purchase cost of the shares, it is almost a certainty again that you’ll receive back the answer that no costs are allowed.

The determination of the gain or income under Section 40(4)(g) on the basis that the words “benefits derived” mean just the sales price of the shares and the words “the costs of the investment” mean just the purchase cost of the shares, is a simplistic interpretation of these words.
But tax law interpretation is not as simple as this and it is wrong to interpret Section 40(4)(g) of the Revenue Code in this way.

Unfortunately, in the 20 years the gain on sale of unlisted shares law was enacted, the officials at the Revenue Department have never issued any rule, regulation or notification, nor any tax ruling dealing with the meaning of the words.

The lack of “official” interpretation by the Revenue Department has contributed to advisors’ use of a simplistic interpretation for Section 40(4)(g), but for international tax advisors who have been brought up in the capital gains world, who have studied the concepts and the principles of what  capital gains are, and for whom a determination of a capital gain is almost second nature, Section 40(4)(g) is really quite clear in its application.

The “benefit derived” from a sale of shares is the amount a seller realizes from a sale, so that if, for example, a seller effected a sale of shares through a broker for which the seller is liable to pay a broker’s fee out of the sales proceeds, then the amount of “benefit derived” is what the seller realizes  or has left over after the broker’s fee.
Secondly, Section 40(4)(g) does not state that the gain is the benefit derived, which exceeds the purchase cost of the shares, but instead, it states that the gain is the benefit derived, which exceeds “the costs of the investment”.

The costs of an investment are more than just the cost of purchase of the shares. In addition to the cost of purchase there are other costs of an investment such as costs of establishing and maintaining ownership of shares.

So that where, for example, a share owner incurs government fees or duty tax costs or other capital-type costs, including even lawyer fees, to establish or maintain his or her ownership of shares, those costs too form part of “the costs of the investment”.
Both the UN and the OECD International Tax Committees describe the tax principle of capital gains on sale of shares as being the following:
Whilst the taxation of capital gains must be left to the applicable domestic laws, the tax principle for the calculation of capital gains is deducting costs from proceeds derived, and to arrive at costs, all costs incidental to establishing and maintaining ownership are added to costs of purchase of the shares.

The personal income tax payable on gains on sales of shares under Section 40(4)(g) of the Revenue Code is a high 37%, and it can be quite an injustice for you if you are required to pay more tax on a sale of un-listed shares than you have to pay.
For those who are going to earn a capital gain on a sale of unlisted shares under the provisions of Section 40(4)(g) of the Thai Revenue Code, Advantage would advise you to get the right professional advice and ensure that your gains are calculated and determined in a right and proper way.

Value Added Tax:Easing of the 0% VAT rule for export services
The Notification of the Director-General on VAT (No 105) prescribes the rules and conditions when a service performed by a registrant in Thailand for a recipient in a foreign country shall be entitled to the 0% VAT rate (i.e. the export VAT rate).
Clause 2(1) of the Notification on VAT (No 105), as amended by the Revenue Dept in 2002 permitted a service that’s performed in Thailand for a recipient in a foreign country to be entitled to the 0% VAT rate, when the entire output of the service was used in a foreign country .

There were many challenges by Revenue Department audit officers over this matter, and it became widely known that even if only a very small part of a service that’s performed in Thailand for a recipient in a foreign country was in fact used by the recipient in Thailand (for example, in the case where the recipient of the service had a meeting in Thailand or where a filing of a document was made for the recipient in Thailand) this caused the service fee to be disqualified from entitlement to the 0%  VAT rate.

The Revenue Department has now further amended the rules and conditions under Notification on VAT (No 105) and effective 29 March 2011, a service that’s performed in Thailand for a recipient in a foreign country shall be entitled to the 0% VAT rate, for that part of the service used in a foreign country .

You should note that this new amendment does not apply retrospectively and applies for services performed for a recipient in a foreign country from 29 March 2011.

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Source by RSM Thailand

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Japan’s Nissan Motor Company launched a new pickup truck called the Frontier Navada in Thailand. The truck was set forth with high hopes and with an aim: to increase sales in the country to 55,000 units in the 2007-2008 business year and help it catch up with rivals.

“Our strategy is to restore the Nissan brand to the Tier 1 market in Thailand by 2009 alongside Toyota and Honda, partly through the introduction of more new products,” Thierry Viadieu, the president of local unit Siam Nissan Automobile Co., told reporters in the Thai capital.

The automaker expects the new pickup truck to sell 40,000 units in the business year starting in April, exceeding its total sales that include passenger cars. Nissan, held 44 per cent by France’s Renault SA, intends to start exports of the locally produced Frontier Navara for the first time in the third quarter of this year. Nissan’s spokeswoman in Tokyo also divulged this information.

The Nissan Frontier Navara uses upgraded parts for Nissan to improve its performance and capabilities. The Navara’s existence could be traced since 1986. The automaker was the pioneer in the compact pickup truck segment and industry. Nissan has started truck manufacturing in 1959. The aftermath of the venture is the Nissan Frontier. The Frontier was introduced in 1997 for the 1998 model year as a replacement for the aging 1986. Toyota followed the truck manufacture in the 1960s.

Where Toyota Motor Corp. and Isuzu Motors Ltd. are profitably selling in Thailand, Nissan is deemed a laggard. In addition, Toyota and Isuzu seize approximately four-fifths of the pickup market. Nissan vehicles, on the other hand, accounted for just 4.5 per cent of the total Thai vehicle market in 2006.

Viadieu added that 2007 was a “critical” year in which Nissan hoped to raise its market share to 8 per cent in Thailand. He also said the automaker would beef up its Thai dealership network and offer better financing packages through its wholly-owned unit – Nissan Leasing Thailand. The latter started business ventures last year.

With the downturn in Thailand, Nissan intends to make better this year and in the next years to come. It is eager to put up a tough battle with auto giants in the territory to achieve its targets under a 3-year plan that runs until March 2008.

It can be recalled that the automaker in 2004, announced its plan to sell 130,000 units over the 2005-2007 business years, the launch of 8 to 9 new models, and a ramp-up in local production capacity to 200,000 units a year. Nissan is now powered to manufacture 46,000 vehicles every year. A new 3-year plan for 2008-2010 is due to be announced in July, the spokesperson of the automaker added.

From its very first truck manufacture, the automaker is famed for its notable Nissan truck parts. These advanced auto parts paved way for the introduction of Nissan’s firsts in the compact pickup truck market including the first extended cab bodystyle in the 1979 Nissan King Cab, and the first crew cab bodystyle compact pickup in the D22 Navara.

Since 1986, Nissan has created 3 generations of the Navara. The first generation was the D21, a small pickup. The second generation of the Nissan Navara came a decade after D21 existence. The Nissan Navara D22, a compact pickup, was manufactured from 1998 and went until 2005. The second generation Navara was replaced by bigger, taller, longer D40 – a midsize pickup truck.

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Source by Correy Putton

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One: You can start an import export business using your own money

Most people think of getting involved buying product overseas with their own money, on their own account. This is the most logical and preferred way for most. Buy a product, pay for it, take title to the goods, import your purchases into the country you want to sell them in, sell them, and do it all over again.

Two: Import export agent – putting buyers and sellers together

If you’re familiar with a particular country, especially if you have been there numerous times, and may already know what is manufactured there and where to find suppliers of those products, you can offer your knowledge to others. If for example you have been to Thailand many times, may had lived there before, and know the Thai product, you can approach a retail store buyer in the United States, in the city where you live or elsewhere, and offer to be his buyer, especially if he carries products from Thailand. In this case, the US-based retailer may hire you to place an order on a product he sells from Thailand. You will order the product in Thailand, put the shipment together, pay for the product not with your money but with his money, and ship the good to his store in the United States, with his store’s name as the consignee on the shipping documents. For your services, the US-base retailer-importer will pay you agreed upon commission. The amount of the commission is negotiable, not a fixed percentage. The amount may depend on the amount of your time you’ll put into putting the shipment together, your overhead associated with the export side of the process, expenses you will incur at the country of origin, needing to travel back and forth to the manufacturer’s factory or dealing with the export shipping company. The retailer will be the importer, he will pay not only for the goods but for the cost of preparation of the export documents, packing and actual international freight from a country of origin, Thailand, to a destination, wherever may be his store or warehouse. Your commission may be a percentage of the total invoice value or a negotiated amount between the two of you. Under this scenario, you are using other people’s money but your expertise. You can get started tomorrow. Obviously, if you have never been to Thailand you may not want to offer your services as import export agent of Thai products.

There are two basic variants of this involvement. One described above where your commission is paid by the importer on whose behalf you have worked. Similarly, however, while you are in Thailand, a Thai manufacturer may offer you a sample of his product to introduce to prospective buyers in the United States. In this case, you may return from your last trip to Thailand as “Manufacturer’s Representative” – perhaps not with an exclusive contract to represent his products in the United States but with the understanding that should you find buyer for his product who may want to place an order, he, the Thai-based manufacturer will pay you an agreed upon commission on the shipment.

From these two examples, it is clear that you can work with other people’s money, not just your own, putting buyers and sellers together where commissions may be paid to you by either or both of the parties, the buyer as well as the seller.

Three: Import Export Sourcing Agent

You can work as an independent import-export sourcing contractor, an involvement in import-export business that is very much in the same category as described above, but with more responsibilities in the entire import-export process. Say for example a clothing store in the United States will hire you to find a manufacturer in Bali, Indonesia that could manufacture garments based on their product design specifications. Armed with drawings of product given to you by the retailer you’d source more than one prospective manufacturer in Bali to prepare samples of a product to be eventually ordered by the retailer in quantity. Each manufacturer would prepare the sample as well as a quote sheet showing quantity discounts and delivery time. The retailer would select one of the suppliers you had sourced based on product quality, price and delivery time, and then ask you to award the contract to that supplier. You would then have to oversee production, quality control, preparation of documents and pay for the goods with the retailer’s money, not you with yours, who would become the actual importer and consignee on the shipping documents. As above, you would get paid by the retailer-importer on a commission basis, plus expenses as well as possibly be kept on a retainer to be available next time.

Export Shipment Broker

Last is an example that is based once again on using other people’s money to put buyers and sellers together. In this example, a manufacturer in Thailand is offering a container load of a product, for example, toys. The shipment is ready to be shipped, and must be bought as is, whatever the qualities of each item style inside. The shipment may be assorted, and it may contain some attractive products but also some less marginal ones, perhaps even seconds, or discontinued products. The manufacturer-exporter is looking for a buyer. You are an agent that knows who may be interested, who are the buyers for these type of products. It could be a store in Miami, Florida or in Berlin, Germany, or in any other country that you know buyers in for this type of product. You provide samples from the seller-exporter to the buyer-importer. If the buyer agrees to buy the container at the agreed upon price, you may handle the wholesale transaction on what could be a “back-to-back letter of credit” using your bank in Denver, or wherever you are located. The buyer in Berlin pays you by an L/C in the amount of $40,000 and once the funds clear your bank, your bank cuts an L/C in the amount of $30,000 to the seller’s bank in Thailand and you pocket the difference less bank expenses. The container goes from Thailand to Berlin, Germany, not via the United States – you never take title to the goods. You only connect the seller with the buyer and broker the deal. Needless to say, the export shipment can be brokered by countless other brokers who will come across the export offer by the manufacture-exporter located in Thailand.

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Source by Tomas Belcik