Thailand. Country Profile

Transcription

1 Thailand Country Profile

2 Contents Country Overview 1 Clearing Systems 3 Foreign Exchange Controls 5 Taxation 6 Investment Opportunities Error! Bookmark not defined. Trade Regulations 9 Citi Solutions and Services 10

3 Country Overview Banking Holidays in Thailand New Year's Day January 1 January 1 Substitution for New Year s Eve and New Year s Day January 2 Makha Bucha Day February 18 March 7 Chakri Day April 6 April 6 Songkran Festival April April National Labor Day May 1 May 1 Labor Day (observed) May 2 Coronation Day May 5 May 5 Substitution for Coronation Day May 7 Wisakha Bucha May 17 June 4 Asarnha Bucha July 15 August 12 The Queen s Birthday August 12 August 12 Substitution for the Queen s Birthday August 13 Chulalongkorn Day October 23 October 23 Key Facts Capital City Bangkok Population 67,041,000 (2010) Currency Thai Baht Currency SWIFT Code THB Exchange Rate (1) USD/THB (Jun 2011) GDP USD billion (2010) GDP Growth Rate 3% (Mar 2011) Exports USD191.3 billion (2010 est.) Imports USD156.9 billion (2010 est.) Inflation Rate (1) 4.19% (May 2011) Credit Rating (S&P) BBB+ (Jun 2011) Source: IMF/CIA World Factbooks. (1) Chulalongkorn Day (observed) October 24 King's Birthday December 5 December 5 Constitution Day December 10 December 10 New Year s Eve (observed) December 30 New Year s Eve December 31 December 31 (1) Note: For financial institutions in Narathiwat, Pattani, Yala, and Satun, and extra holiday is given for the Eidilfitri Day (Ramadan Day) announced by the Sheikhul Islam Office if it does not fall on any of the holidays listed above or Saturday and Sunday. Thailand Country Profile 1

4 Country Overview Banking System The central bank in Thailand is the Bank of Thailand, established in It operates as an independent body under government supervision. Its entire capital is owned by the government. The Bank issues notes, a function previously handled by the Ministry of Finance. There are currently 32 banks in Thailand, of which 17 are commercial banks registered in Thailand and15 are international banks. Meanwhile, there are 3 financial and 3 credit foncier companies in Thailand. The top 10 banks hold almost 90% of total deposits (THB trillion). The ratio of gross NPL and net NPL to total loan declined to 3.6% and 1.9% in Citi Thailand Citi s presence in Thailand started in 1967 with a 50percent equity stake in Bangkok First Investment Trust. Two years later, First National City Finance was formed. In 1984, Citi acquired the Mercantile Bank in Thailand to obtain a full banking license and the Citibank name was formally registered on November 1, Citi is Thailand s largest and most diversified foreign bank, offering a full range of banking services across consumer, corporate, investment and private banking. Citi s major commercial banking businesses include foreign exchange and treasury, cash management, trade finance, custodian services, lending, securitization, and capital markets. On the consumer side, Citi is the leader in credit card, Ready Credit (cash product), personal loan and wealth management. Today, Citi serves more than one million customers across its local, international and retail businesses and employs nearly 2,600 staff, of which 99 percent are Thai. Citi is the recipient of numerous awards recognizing its successes in Thailand, including Best Foreign Cash Management Bank in Thailand by Asiamoney (2011), Best Consumer Internet Bank in Thailand by Global Finance (2010), Best Foreign Commercial Bank in Thailand by FinanceAsia (2010) and Best Bank in Thailand by The Asset (2011). Head Office Address Citibank N.A. 399 Sukhumvit Road Interchange 21 Building Klongtoey Nua, Wattana Bangkok Thailand Location of Branches Bangkok 2 Thailand Country Profile

5 Clearing Systems There is only one check clearing system in Thailand, of which Citi is a member. Checks drawn on remote bank branches can take up to 3 to 5 days to clear, depending on the clearing zone in which the check is drawn. Foreign Currency Checks All foreign currency checks are processed through Thailand s international cash letter services, where each check is sent for clearing in the originating countries. However, no clearing is final. Electronic Fund Transfers The Bank of Thailand Automated High-value Transfer Network (BahtNet) is the electronics funds transfer network that facilitates domestic payment between banks, allowing clients to order Electronic Funds Transfers (EFT) to and from any bank in the network. Transactions are settled within the same day. In July 2005, ITMX (Inter-bank Transaction Management and Exchange) was established under BOT s initiative. ITMX is collectively owned and operated by the Thai banking sector. In March 2006 ITMX established new pricing on services such as Online Retail Funds Transfer (ORFT) via ATM and Counter Payment as well as System for Managing Automated Retail Funds Transfer (SMART) Credit/Debit and checks. Thailand Country Profile 3

6 Clearing Systems Funds Availability Schedule Cut-off Time Funding Date Client DR/ CR Date Client Value Date RTGS Payment Local Currency Electronic Transfers (BahtNet) 12:00 PM Same Day Same Day Same Day GIRO Payment Local Currency Other banks 2 days in advance before 3:30 PM 2 days in advance 2 days in advance D-O Local Currency Book-to-book 3:30 PM Same Day Same Day Same Day Foreign Currency Transfers 3:30 PM Same Day Same Day Next business day Check Deposit Bangkok 11:00 AM Next Business Day Same Day Same Day Check Deposit up-country 10:30 AM Average D+2 Average D+3 4 Thailand Country Profile

7 Foreign Exchange Controls The government has significantly eased foreign exchange controls and shifted most of the administration of foreign exchange regulations from the BOT to a number of commercial banks. These changes have been implemented in line with Article 8 of the International Monetary Fund (IMF). Exporters can now pay for their goods in THB from a non-resident s THB account. Furthermore, a company can pay from its foreign currency account to suppliers on behalf of its affiliated companies, or to affiliated companies for settlement of their debts to suppliers. State enterprises can place unlimited amounts of foreign currency with local banks, and expatriates earning THB locally can freely exchange the funds into foreign currencies and deposit them locally. On 4 February 2008, BOT issued an amendment to the foreign currency regulations in the domestic market to encourage capital outflow. Resident companies will now have more flexibility in managing their foreign currency exposures and will be able to open foreign currency accounts more easily. The amended foreign currency regulations aimed at domestic companies include: Amend the period within which foreign currency proceeds from exports and other sources shall be acquired to 360 days, and such foreign currencies shall be brought into Thailand immediately upon receipt. Expand the scope for investment in and lending to affiliated business abroad by raising the limits and extending the definition of affiliated business entity to include businesses under the same group without direct shareholding as follows: To allow a parent company in Thailand to invest in or lend to its affiliated business abroad in an aggregate amount not exceeding USD100 million per year; To allow a company in Thailand to invest in or lend to its parent companies of affiliated business entities abroad in an aggregate amount not exceeding USD100 million per year; To allow a company, listed on the Stock Exchange of Thailand with positive shareholders equity value in the latest financial statements and not among those likely to have their registration revoked, to remit funds for direct investment in accordance with 3.1 and 3.2 without limit and for lending in accordance with 3.1 and 3.2 in an amount not exceeding USD100 million for each case per year. Relax the regulations regarding foreign currency deposits as follows: Any person obtaining foreign currencies originated from abroad can deposit such foreign currencies with an authorized juristic person without limit and proof of obligations. Any person in Thailand can purchase, exchange, or borrow foreign currencies from an authorized juristic person and deposit such foreign currencies with an authorized juristic person an follows: In the case with obligations, depositors shall submit proof of obligations to pay in foreign currencies to persons abroad in the future and can deposit in an amount not exceeding such obligations. The total outstanding balances of all foreign currency accounts of such a depositor shall not exceed USD1 Million for a natural person and USD100 million for a juristic person. In the case where the depositor wishes to deposit foreign currencies in an amount exceeding such limits, authorized juristic persons may accept such deposit up to the obligations within 12 months. In the case without obligations, the total outstanding balances of all foreign currency accounts of such a depositor shall not exceed USD500,000. Local currency is freely convertible domestically and different exchange rates apply for onshore and offshore conversions. Thailand Country Profile 5

8 Taxation Corporate Income Tax The standard corporate income tax rate is 23% for the net taxable income in 2012 and reduces to 20% thereafter. Certain public limited companies and SMEs are subject to lower progressive rates up to a certain amount of net taxable profits (and 23% thereafter). Withholding Tax Dividends: credit of 10%. Interest: Royalties: Dividends distributed by a Thai company to a non-resident are taxed at the rate of 10%, provided that the country of the non-resident foreign corporation allows a tax Interest paid to a non-resident is subject to a 15% withholding tax unless the tax is reduced under a tax treaty. Royalties paid to a non-resident is subject to a 15% withholding tax unless the tax is reduced under a tax treaty. Branch remittance tax: A 10% branch profit tax is levied on the after tax profits remitted by a branch to its head office. Value Added Tax Value-added tax (VAT) levied on the sale of goods and services in Thailand is 7%. Zero tax rate applies to exported good and services. The standard VAT is scheduled to increase to 10% in October 2012, although it may be postponed depending on the economic circumstance. Transfer Pricing Arms-length transfer pricing is recommended for any inter-company arrangement. 6 Thailand Country Profile

9 Investment Opportunities Overnight Investment and/or Sweeps Overnight investments are currently unavailable. Treasury Bills All T-Bills are THB-denominated bills (US$100,000 minimum investment). Bill of Exchange Bill of Exchange is offered in THB only, to resident accounts. Stock Market The Securities and Exchange Commission (SEC) overseas and regulates the primary market. A company wishing to issue new securities, carry out an initial public offering (IPO) or offer additional securities to the public must first apply for SEC approval and comply with its filing requirements. The Stock Exchange of Thailand (SET) and the Market for Alternative Investments (MAI) are the secondary equity markets. The operating hours are from Monday to Friday 10:00 AM 12:30 PM and 2:30 PM 4:30 PM. Foreign investors are not subject to any major regulatory controls. The SET was established in April 1975, and works on a member system. A Clearing Fund has been set up to prevent liquidity problems incurring from unpaid and non-delivery of securities trading at the SET. Initial contributions to the clearing fund totalled THB100 million by the SET and THB 900,000 by broker members. In addition, each general member of the Thailand Securities Depository (TSD) clearinghouse is required to make monthly contributions at a tiered rate of 0.008%, 0.012%, or 0.016% of the net value of their monthly securities transactions. This is dependent on the level of risk exposures faced by the general clearing members. For example, the higher the risk, the higher the required contribution rate. The minimum monthly contribution is THB1,000 per month. Essentially, the fund will be used to cover member s default. Only members who contribute to the fund are obliged to share the loss. Associate members like custodian banks do not participate in the fund and are not involved in loss sharing. Thai Bond Market Association (Thai BMA) is a securities business related association under the Securities and Exchange Commission Act B.E Its main purpose is to be a self-regulatory organization (SRO) for a fair and efficient operation of the bond market and to be an information centre for the Thai Bond Market. It also plays functional roles on market development, market convention and standards and is the Bond Pricing agency for the industry. The primary roles are to facilitate the operation of the secondary market for bond trading and to be a forum for discussing issues on bond market development. ThaiBMA was granted the license of a securities related association from Securities and Exchange Commission (SEC) on 8 September 2005, as an expansion from the previous Thai Bond Dealing Centre (ThaiBDC) in order to focus on SRO functions and information centre. ThaiBMA members are financial institutions whose debt securities trading licenses are granted by the SEC, a company with inter-dealer broker license and a dealer that has monthly average trading value in the past one year less than 100 million baht per month. The SET introduced Bond Electronic Exchange (BEX) in 2003, with the first trade taking place in November of that year. Securities eligible for trading on BEX are bonds issued by SET and MAI-listed companies. Thailand Country Profile 7

10 Investment Opportunities The First Futures Act was passed by the Thai Parliament in 2003 and came into effect on 6 January The SEC has laid down regulations and guidelines as well as educating the concerned parties, prior to the inauguration of the new Futures Exchange. The underlying securities of the futures include SET index, currency and interest rates. Initially, futures trading will begin with basis futures products and will expand to include gold prices, crude oil and financial indices, such as the Government Bond Index. All futures operators including brokers, fund managers, and clearinghouses will be required to apply for a new license from the SEC. The Thailand Futures Exchange (TFEX) opened for business on 28 April 2006, with the SET50 Index Futures as its first product. Additionally, bond futures, equity index options and stock options are all potential products to be offered by the TFEX Instruments Traded: equities, non-voting depositary receipts, transferable subscription rights, fixed income instruments, derivative warrants and options. Market Capitalization (SET): THB 8,513 billion (as the date of June 2011) Companies Listed: 475 (as the date of June 2011) 8 Thailand Country Profile

11 Trade Regulations The structure of trade policy formulation has not changed substantially since the previous Trade Policy Review in Thailand is committed to trade liberalization as a means of improving competitiveness. Such reforms are an important part of the Government s dual track development approach of strengthening the domestic economy while further integrating Thailand into the global economy. Export growth, including diversification of markets and moving into higher-valued products, is a major thrust of trade policy. The tariff remains a main instrument of Thailand s trade policy. The structure is rather complex due to the multiplicity of rates applicable to each of the 5,505 tariff lines. Import licensing for various items remains opaque and appears in some cases to be equivalent to quantitative restrictions. Most import licensing requirements are for national security, health, and environment reasons. Nevertheless, the government supports free trade and is committed to multilateral liberalization, especially in agriculture. Bilateral Trade Agreement Thailand has been actively pursuing trade partners to enter into bilateral trade agreements with countries such the US, Australia, and China. The objective is to focus and expand cross-country activities. The free trade agreement between Thailand and the US will lift both the tariff and non-tariff barriers on agricultural products, and should immensely benefit Thailand, which is currently the 18th largest trading partner with the U.S. The bilateral free trade agreement with Australia, which focuses mainly on agricultural products as well as motor vehicles and wine, will further increase the volume of imports from Australia, currently at US$800 million. Thailand has also been able to utilize a bilateral trade agreement with China, which positions Thailand as their 17th largest trading partner. The trade agreement is mostly applicable to agricultural products, industry parts and accessories. Thailand Country Profile 9

12 Citi Solutions and Services Account Services Allowed No Material Restrictions Allowed Subject to a Complex Set of Rules Allowed Straight Forward Regulations, Approval, or License Strictly prohibited Allowed Challenging Regulatory Approval, or License Non-Residents Residents Operating Accounts (1) Onshore Local Currency Onshore Foreign Currency Offshore Local Currency N.A. Offshore Foreign Currency Overdrafts Onshore Local Currency (2) Onshore Foreign Currency allowed allowed Interest-Bearing Accounts (3) (5) Onshore Local Currency Operating Accounts (6) Onshore Foreign Currency Operating Accounts (6) Time Deposits Onshore Local Currency : NR- THB- TD min 6 month Onshore Foreign Currency: One Week Minimum Tenor Domestic Notional Pooling (7) Onshore Local Currency Onshore Foreign Currency Inter-Company Lending (8) (11) Local Currency Foreign Currency Local Currency Foreign Currency Non-Resident to Resident Non-Residents (Onshore) Resident to Non-Resident Residents 10 Thailand Country Profile

13 Citi Solutions and Services Central Bank and Other Regulatory Requirements All cross-border payments would also require supporting documents to be reported to the Central Bank and limits Other Payment and Clearing Considerations for Treasury Netting of payments between parties is allowed with Central Bank approval and prior documentation submitted before each netting cycle Non-residents making pay-on-behalf-of residents is allowed but not recommended due to documentation requirements Notes: (1) Balance in non-residents THB accounts cannot exceed THB 300 million. (2) Regulations dictate that non-resident THB current account overdrafts are permitted only up to THB 50MM total outstanding, across all financial institutions, per legal entity. (3) Interest on current accounts is disallowed. ( none(5) Bank interest earned is subject to 1% withholding tax for residents and 15% withholding tax for non-residents unless subject to tax treaty. (6) Subject to account type. (7) Notional pool strongly rests on the bank s ability to enforce its right to set off balances in one account versus overdrafts in another account across legal entities. This right has been sufficiently provided for under Thailand law. (8) Thai parent company may or lend to affiliates offshore not exceeding USD100 million in aggregate per year. (9) Thai company may lend to non-thai parent company or affiliated business entities abroad not exceeding USD100 million in aggregate per year. (10) Inter-company attracts Specific Business Tax (SBT) at 3.3% of gross inter-company credit interest received. But if the lender has direct ownership of at least 10% of the borrower, SBT is exempted. (11) Supporting documentation is required to proof inter-company borrowing and lending. Thailand Country Profile 11

14 Notes

15 Citi Transaction Services Citibank, N.A. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its affiliates, used and registered throughout the world. The information contained in these pages is not intended as legal or tax advice and we advise our readers to contact their own advisors. Not all products and services are available in all geographic areas. Any unauthorised use, duplication or disclosure is prohibited by law and may result in prosecution. Citibank, N.A. is incorporated with limited liability under the National Bank Act of the U.S.A. and has its head office at 399 Park Avenue, New York, NY 10043, U.S.A. Citibank, N.A. London branch is registered in the UK at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, under No. BR001018, and is authorised and regulated by the Financial Services Authority. VAT No. GB Ultimately owned by Citi Inc., New York, U.S.A.