31 ASIAN LEGAL BUSINESS – SEPTEMBER 2023 WWW.LEGALBUSINESSONLINE.COM making scene. “We see a steady flow of transactions in the TMT and manufacturing sectors (whether acquisitions or disposals). The move towards diversification of supply chains will result in some new investment in Thailand,” says Nuanporn. Nuanporn notes that Thailand remains a popular investment destination from countries across Asia, including Japan and China, because of its “well-established manufacturing base and incentives.” “Investment from Japan remains strong, and we are seeing increasing interest from China,” she notes. Across the board, Nuanporn points out trends, including energy transition, adoption of ESG principles, and digital transformation will drive some M&A transactions. “For example, traditional energy companies have been diversifying into other industries, and investment into clean energy remains strong,” she says. Despite the optimistic predictions, investors have been cautiously keeping an eye on Thailand’s political situation, which since the general elections in May has been marred in uncertainties. In August, real estate tycoon Srettha Thavisin of the Phew Thai party was voted as the country’s 30th prime minister, putting an end to three months of political deadlock after Pita Limjaroenrat, the progressive Harvard graduate who won the most votes, failed to secure enough parliamentary support to claim the premiership. Sooksun believes the appointment of a new prime minister will conclude the political uncertainty in Thailand and thus is good news for investment. “Investors are now anticipating a clear stance from the new government regarding their strategies for business investments. A heightened sense of stability is anticipated within the investment landscape, consequently leading to an upswing in M&A activities,” says Sooksun. “We anticipate forthcoming government announcements concerning business policies, along with the resumption of deliberations on critical bills that have a significant impact on investments in Thailand—examples being regulations on electric vehicles and climate change policies. Overall, the presence of a new leadership dynamic is anticipated to infuse a renewed sense of certainty, consequently stimulating a surge in M&A transactions,” he adds. Looking more broadly across Southeast Asia, foreign direct investment continues to be robust. Law firms in Thailand, hence, need to position themselves to advise on the rising cross-border investment within ASEAN jurisdictions, according to Nuanporn. “To effectively address the complexities of this evolving landscape, law firms must invest to cultivate a deep-seated understanding of the local legal intricacies, prevailing business environment, and geopolitical risks. This multifaceted understanding is necessary in rendering legal services that are efficient and streamlined within the realm of crossborder investment across the ASEAN region,” says Nuanporn. In Thailand, a significant spotlight is now directed toward the adoption of Environmental, Social, and Governance (“ESG”) principles, attracting the attention of regulators, investors, and other stakeholders. This resonates with the global implementation of ESG-related regulations and societal expectations. Thailand’s ESG policy framework consists of a series of guidelines that may be observed by enterprises in those relevant sectors. Presently, ESG-related disclosures are mandatorily required only for listed companies and sustainable and responsible investing funds (“SRI Funds”). Listed companies must comply with the guidelines set out by the Thai Security Exchange Commission (“SEC Reporting Guide”). This comprehensive guide encompasses all aspects that must be reported annually through the 56-1 form (“One Report”), with a specific focus on areas like climate change, environmental preservation, low carbon footprint, and inequality reduction. The disclosures are on a “comply-orexplain” basis. For instance, if a listed company does not disclose its GHG emissions, the company must clarify its reasoning for not making the disclosure. Listed companies are not required to align with international standards, although are encouraged to do so. Furthermore, asset managers overseeing SRI Funds are subjected disclosures under this policy as the adoption will allow financial institutions to manage risks, attract investors and customers, and contribute to long-term business viability in a sustainabilityfocused landscape. In parallel, to facilitate the implementation of ESG policies, the country has established various sustainability policies, such as mobilizing transition finance for decarbonization projects and implementing the Bio-Circular-Green framework. Additionally, private companies are voluntarily reassessing their practices to prevent human rights violations, implement stringent corporate governance measures to prevent corporate oversight and engage in initiatives related to carbon credits aimed at reducing their carbon footprint. A noteworthy recent development is Thailand’s introduction of the Thailand Taxonomy, aligned with the ASEAN and EU taxonomy. In its initial phase, this framework will adopt a targeted approach, focusing on the energy and transportation sectors. While not mandatory for companies to formulate transition plans, listed companies have the option to utilize the Thailand Taxonomy as a means of showcasing their commitment to sustainability, which can encompass transition plans, among other aspects. Thailand’s ESG Journey: Sustainability and Progress BROUGHT TO YOU BY CHANDLER MHM to stringent reporting requirements to prevent instances of greenwashing. In addition, The Bank of Thailand has introduced a policy on the business operations of financial institutions related to the environment and climate change. Although not mandatory, financial institutions may be expected to make ESG 1 - Nuanporn Wechsuwanarux Partner E: nuanporn.w@mhm-global.com 2 - Supavadee Sirilerkwipas Associate E: supavadee.s@mhm-global.com Chandler MHM W: www.chandlermhm.com 2 1
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