|ICT Update | August 1, 2019
Authors: Kim Yaeger, Ella Duangkaew, Chase Blazek
|THE COUNCIL'S TAKE|
Indonesia, Vietnam Look for Ways to Tax Online Services
Iwan Djuniardi, Director for ICT in Indonesia’s Taxation Directorate General, recently announced that the Directorate is preparing the means to collect taxes on all services and transactions related to the digital economy, including those occurring on social media and in the financial technologies sector. Since 2012, the Taxation Service Office has been engaged in a broader effort to improve data collection mechanisms for the sake of appropriately taxing online transactions, but obstacles to such data collection are still plentiful, including the difficulty of monitoring peer-to-peer transactions. In an effort to tax foreign companies participating in online sales, the tax directorate is also developing a system of value-added taxes (VATs) to collect revenue from online transactions. This VAT would apply to content providers, e-commerce participants, and startup companies, though the scope of activities targeted by such a VAT is unclear. With the value of Indonesia’s digital economy projected to reach US$100 billion by 2025, Jakarta is hoping to emulate the success of Australia and Japan in collecting taxes from growing digital markets.
Officials in Vietnam’s Ho Chi Minh City (HCMC) are also contemplating taxes on transactions over social media platforms in order to modernize revenue streams, according to the Deputy head of the HCMC Tax Department, Nguyen Nam Binh. The Law on Tax Management already mandates that companies engaged in e-commerce must cooperate with tax agencies, but the Tax Department intends to strengthen compliance by collaborating with banks to monitor revenues of online transactions. In addition, officials intend to mandate the use of e-invoices to audit otherwise uncooperative companies. Last year, HCMC officials attempted to collect tax revenues from major American online service providers using written requests, but had only limited success. Currently, the HCMC Tax Department relies heavily on tax declarations and voluntary payments by online vendor, but this system is plagued by delinquency and underreporting.
In both Indonesia and Vietnam, American online vendors should expect stronger efforts by Government officials to collect elusive tax revenues on e-commerce activities. This appears to be a rising trend across the region, particularly following Thailand’s plans to pass a VAT on foreign e-commerce activity (which have not yet passed, but may be likely to with the new Government) and Malaysia’s passage of a digital services tax this past April (the bill will go into effect January 2020). The current mix of voluntary and ineffective collection methods could soon be replaced by stricter tax regulations with little leniency for tax evasion. In light of this, American firms would be wise to reconsider the exact combination of compliance and regulatory opposition with which they will respond to these newer and, assumedly, more effective online tax policies. It will also be important for all countries in the region, particularly those actively pursuing digital taxation such as Indonesia, Vietnam, Thailand and Malaysia, to ensure that their taxation approaches comply with the WTO moratorium on imposing customs duties on electronic transmissions. While the developments described above do not violate the moratorium, Indonesia has established a tariff line for “intangible goods” that raises compliance concerns, though the tariff line is currently set at zero. As countries become more aggressive in these approaches, it will be critical for industry to advocate for effective taxation practices that are in line with international standards and agreements.
Thailand Releases Reporting Requirement for Digital Asset Trading
On July 11, the Thai Securities and Exchange Commission (SEC) announced that all parties planning to engage in digital asset trading would have to report transactions worth more than 5 million THB (approximately US$162,000) to the Anti-Money Laundering Office (AMLO). The aim of this new decree is to expedite criminal investigations for the SEC, whose leaders intend to crack down on money launderers in light of the recent high-profile bitcoin fraud of 979 million THB (approximately $31 million USD) by Jiratspisit “Boom” Jaravijit. Though Jaravijit was eventually arrested, his case solidified the Government’s commitment to better regulate digital asset trading. By early August, the Finance Ministry is expected to issue a follow-up clause to this decree.
In May 2018, the Government announced that all parties wishing to host portals for initial coin offerings (ICOs) - the only Government-approved platforms for digital asset exchanges in Thailand - would have to first register with the SEC. To date, the SEC has granted licenses to 5 companies for hosting digital asset exchanges in Thailand, including Huapee Company Limited, whose license was just granted last week. Considerations for new licenses include whether the applicant has routine cybersecurity checks, a robust system for mitigating conflicts of interest, and a board of highly qualified management professionals. This latest licensure rounds out two years of reform and oversight efforts by the Government to both secure Thailand’s place as a global leader in digital asset trading and protect the people of Thailand from predation by money launders and other cyber criminals.
Though these reforms only apply to companies based in Thailand, American firms intent on participating in Thailand’s budding digital asset trading industry should take note of Bangkok’s proactive stance toward preventing foul play. Given the limited roster of ICO hosting companies permitted to operate in Thailand, America’s digital asset traders would be wise to understand the regulatory guidelines of their Thai counterparts in order to better cooperate, or compete, in future transactions.
Malaysia Deploys its First 5G Cluster Trial
Celcom Axiata Bhd recently announced that they would be launching Malaysia’s first 5G live cluster field trial, which is meant to test real use cases of 5G technologies in various environments. The field trial is expected to last six months and will be conducted on new technological verticals like education, security, agriculture, and transportation. Office spaces, homes as well as indoor and outdoor locales will be included in the test area, while the affected population will include 4,600 individuals in a 1.22 square kilometer zone. The trial is a collaboration between Celcom and Huawei Technologies Sdn Bhd, and will leverage 5G non-standalone architectures that build off existing 4G systems. This initiative, however, is not the extent of these two firms’ collaboration.
Celcom and Huawei signed an MOU on July 9 with the intent of creating a joint working group to explore new business opportunities available in Malaysia’s 5G market; Huawei’s existing commitment to establish a 5G Innovation Hub at Celcom will also support bilateral efforts to develop a robust 5G rollout plan. Though 5G trials like this are the early stages of network development, they display Malaysia’s commitment to turning 5G into an infrastructure reality for the country. They also indicate China’s commitment to developing Southeast Asia’s 5G connectivity using Huawei’s equipment and expertise.
Malaysia’s 5G trial is just one of many underway in Southeast Asia as regional actors strive for 5G connectivity by as early as 2020. Singapore’s providers have started network trials with full support from the Info-Communications Media Development Authority (IMDA), and Singapore is also currently developing its Regulatory Framework for 5G Networks and Services (the Council participated in the most recent public consultation in May 2019). In addition, the Philippines’s PLDT has cooperated with Huawei and Ericcson since 2016 to deploy 5G cell sites in the Makati Central Business District. Viettel is expected to lead Vietnam’s 5G trials this year, and Thailand has already launched a testbed in Chonburi for Huawei’s 5G technologies. For more information on 5G initiatives like these, please see the Council’s Analytical Update on 5G Developments. There are many economic and technological benefits of 5G, including more efficient services for industry, better support for Internet of Things (IoT) connectivity, and faster internet service for civilian use. In addition, 5G networks are seen as the linchpin in the ASEAN Smart Cities Network Initiative, as many smart cities goals are dependent on these faster, more reliable networks. Though regional 5G initiatives are just beginning, these trials demonstrate that ASEAN members are taking serious strides to integrate 5G into their plans for developing more productive, highly connected economies.
Final Call for Input on Vietnam's Regulation on Online Curated Content
The Council has developed a second draft industry submission for Vietnam's Online Curated Content (OCC) Regulation (Draft Decree to Amend Decree 06/2016) based on member comments. Thank you to all members that submitted comments for this draft.
Members may contact Ella Duangkaew (firstname.lastname@example.org) or Jamie Lim (email@example.com) for copies of the Council's second draft submission, the original Decree 06/2016, the updated decree, and US-ABC's past submission on April 25 to MIC on amendments to Decree 06/2016. Please provide your revisions in tracked changes to the second draft by COB, Friday August 12 to Ella Duangkaew (firstname.lastname@example.org) or Jamie Lim (email@example.com).
The Council will plan to send the final submission to the Government on August 15 (following translation).
The latest draft still contains key concerns, including:
Process and timeline: The Office of the Government is processing the draft and will send it to members of the cabinet for review and comments. A cabinet meeting to discuss the draft has not been scheduled but the earliest it could take place is at the end of August.
Data Governance Sub-Committee Submits White Paper on Key Elements for a Data-Driven Economy
Since April, the Council's Data Governance Sub-Committee has been working on a US-ABC White Paper on "Key Elements for a Data-Driven Economy". The deadline for final member feedback has passed and the document will be undergoing only design changed before final submission. The publication will be launched at our ASEAN-US Digital Policy Consultative Forum in Bangkok on August 23.
The purpose of this Data Governance sub-committee is to develop regional and in-country guiding principles on data governance in ASEAN, in support of the ASEAN Framework on Digital Data Governance and its endorsed initiatives. The Data Governance Sub-Committee is open to all members of any committee of the Council (not exclusive to ICT). For questions, please contact Jamie Lim (firstname.lastname@example.org) and Ella Duangkaew (email@example.com).
Second Draft of the Council's Submission for Vietnam's Draft Decree of the Law on Cybersecurity (LOCS) Pending
In July, the Council obtained a more recent draft of the cybersecurity decree (as of May 15, 2019), (herein referred to as the "July draft"). The Vietnamese Ministry of Public Security (MPS) will conduct a workshop in Ho Chi Minh City on August 9, 2019, to share the LOCS and provide an opportunity for participants to ask about provisions of the July draft decree. The decree will not be issued by August 9.
The Council has received member comments on a first draft submission for this decree and will circulate the second draft submission on August 5. Please contact Jamie Lim (firstname.lastname@example.org) or Ella Duangkaew (email@example.com) with any questions.
The Council will also plan to submit a position paper on this draft. The updated timeline for inputs is as follows:
It will take several days to translate the submission and the Council will plan to submit the document to the government by August 15, 2019.
Potential Draft Submission on Singapore IMDA's Review of the Electronic Transactions Act (ETA)
Last month, the Infocomm Media Development Authority (IMDA) launched a public consultation to seek feedback on reviewing the Electronic Transactions Act (ETA). Members may access the Public Consultation paper at this link and a factsheet on the Public Consultation at this link. The Council's initial call for input has just ended and, pending member interest, we will be developing a first draft submission on ETA. The public consultation is expected to end on 27 August 2019 at 12 noon. For questions, please contact Jamie Lim (firstname.lastname@example.org) and Ella Duangkaew (email@example.com).
IMDA is seeking feedback on key aspects of the review of the ETA, particularly on:
Singapore first enacted the ETA in 1998 to adopt the Model Law on Electronic Commerce from UNCITRAL. In 2010, the ETA was repealed and re-enacted, and implemented the 2005 UN Convention on the Use of Electronic Communications in International Contracts.
IMDA is conducting a review of the ETA as part of its efforts in ensuring that this policy remains progressive, encourage innovation in the Digital Economy and strengthen Singapore’s position as a hub for electronic transactions. In reviewing the ETA, IMDA has taken a whole-of-government approach in reviewing the ETA, collaborating closely with 14 Government Ministries and agencies and is also consulting industry stakeholders.
|IN THIS UPDATE|
APEC builds higher trust quotient with data protection system Antara News 24th Jul 2019
The New World of Virtual Banks: Profitable Growth Will Define Success Jakarta Globe 1st Aug 2019
Blockchain in logistics shows promise but local adoption continues to lag The Jakarta Post 31st Jul 2019
Huawei Projects Adoption of 5G Network in Indonesia at the latest 2022 Katadata 31st Jul 2019
Criticism mounts over plan for more industrial zones across Java The Jakarta Post 30th Jul 2019
Kadin and Singaporean forum kick off blockchain learning center The Jakarta Post 30th Jul 2019
Home Ministry coordinates with Informatics Ministry on data Antara News 30th Jul 2019
Kominfo to Rule Contents Allowed or Banned on Internet Tempo 29th Jul 2019
Because of Kimi Hime, Kominfo Will Revise Creative Content Rules Katadata 29th Jul 2019
Kadin: Blockchain Increases Competitiveness of National Companies in the Global Katadata 29th Jul 2019
Indonesia Drafting Rules to Apply VAT on Online Products and Services Myanmar Business Today 29th Jul 2019
Kadin recommends blockchain application in operation of ports Antara News 29th Jul 2019
Rudiantara Proposes How to Reduce Import Floods through E-commerce Katadata 26th Jul 2019
Soon Indonesia will have a Personal Data Protection Act Katadata 25th Jul 2019
Govt completes personal data protection bill amid privacy concerns The Jakarta Post 25th Jul 2019
Indonesia also to tax ads, trading in social media The Jakarta Post 24th Jul 2019
Tech risks urge tighter financial cybersecurity The Jakarta Post 22nd Jul 2019
Lao delegates push for regional media cooperation Vientiane Times 24th Jul 2019
Laos Telecoms, Mobile and Broadband Market Growth Analysis Financial Planning 24 19th Jul 2019
Laos Moves to Register Private Online News Sites in a Bid to Control ‘Fake News’ Radio Free Asia 19th Jul 2019
5G network service to be implemented by 1H20, says Gobind The Malaysian Reserve 1st Aug 2019
Govt aims to establish robotics hub by year-end The Malaysian Reserve 1st Aug 2019
Mida gives 187 firms tax incentives to move into automation Free Malaysia Today 1st Aug 2019
Disruption, network problems remain top telco issues The Malaysian Reserve 1st Aug 2019
Getting SMEs to join e-commerce is a challenge, says MITI deputy minister The Malaysian Reserve 31st Jul 2019
Report: Astro to gain from anti-piracy measures The Star Online 23rd Jul 2019
Govt reassures data protection on digital economy expansion, says Gobind The Malaysian Reserve 23rd Jul 2019
Malaysia to expand 5G testbed areas to five more states SoyaCincau 29th Jul 2019
Mytel fined K300m, Telenor and another telecom company warned for violations Eleven Media Group Co., Ltd 29th Jul 2019
Myanmar Govt to Launch Satellite, Improve Communications The Irrawaddy 31st Jul 2019
US, PH sign 10-year pact on science and technology The Manila Times 1st Aug 2019
Give Duterte emergency powers to resolve slow internet speed Politiko 1st Aug 2019
PHSAT Expands Connectivity in Philippines With Hughes Jupiter System Via Satellite 31st Jul 2019
Duterte hits the jackpot as China fuels online gambling boom Nikkei Asian Review 29th Jul 2019
NOW Telecom inks deal for fiber rollout PhilStar 27th Jul 2019
SSS vows to hasten digitalization process BusinessMirror 26th Jul 2019
PLDT: No launching of 5G service in 2019 The Manila Times Online 19th Jul 2019
DOST pitches PHL resort to science diplomacy BusinessMirror 19th Jul 2019
Singapore Telcos Demand Rethink of 5G Standalone Plan Light Reading 1st Aug 2019
SSA Forms Digital Transformation Committee MarineLink 31st Jul 2019
Singapore launches program to attract talent in 'frontier technologies' Nikkei Asian Review 31st Jul 2019
IMDA and NRF injects $40m to boost 5G initiatives Singapore Business Review 29th Jul 2019
Pilot programme to help tech firms in S'pore recruit talent Bangkok Post 31st Jul 2019
NBTC looks to allay fears over conduit monopoly Bangkok Post 1st Aug 2019
China’s Huawei to host IoT summit in Bangkok The Nation Thailand 1st Aug 2019
Smart city scheme tempts 20 candidates Bangkok Post 31st Jul 2019
NBTC seeks band recall for 5G service The Nation Thailand 30th Jul 2019
NBTC: New ratings system costly Bangkok Post 26th Jul 2019
Depa project gets backing from 14 firms Bangkok Post 24th Jul 2019
Digital asset scope may grow Bangkok Post 23rd Jul 2019
Facebook-like social media app launched in Việt Nam vietnamnews.vn 29th Jul 2019
Sandbox regulations to be sumitted for approval in Q3 vietnamnews.vn 29th Jul 2019
PM calls for stronger efforts to build e-Government The Saigon Times 29th Jul 2019
HCMC taxman resolved to tax online vendors The Saigon Times 29th Jul 2019
Vietnam quietly avoids Huawei in building 5G network Bangkok Post 29th Jul 2019
Huge opportunities await foreign telco investors VietNamNet 27th Jul 2019
VN banks undergoing digital transformation VietNamNet 31st Jul 2019