THAILAND Trends and Developments Contributed by: Jessada Sawatdipong, Sarunporn Chaianant and Supawich Nimmansomboon, Chandler Mori Hamada
condition for these business categories is that these entities may serve only non-resident clients, thereby helping to protect Thailand’s domestic markets while encouraging cross-border activity. Some exceptions are permitted, including reinsurance arrangements with Thai insurers, interbank transactions for risk management and collaboration with local operators to facilitate overseas investment. A key feature of the draft is the creation of a dedi- cated “one-stop authority” (OSA) to serve as the central agency for licensing, oversight and policy co- ordination. This body will streamline administrative processes, enhance efficiency and support the devel- opment of a robust financial ecosystem. Supervision will be exercised by a board chaired by the Minister of Finance, with the participation of major regula- tors to ensure compliance with domestic regulatory requirements as well as alignment with international standards, particularly in areas such as anti-money laundering and financial governance. The Act also introduces significant incentives to attract foreign investment. These include competi- tive tax benefits, exemptions from foreign owner- ship restrictions in designated zones, and the right for approved businesses to bring in foreign experts and their dependents under simplified visa and work permit procedures. Property ownership rights are also extended to cover both business and residential use. Collectively, these incentives are designed to create an environment conducive to global operations while maintaining strong regulatory safeguards. In addition to the financial benefits, the Act outlines rules for the classification of operators under Thai- land’s foreign exchange laws, under which operators within the financial hub are treated as non-residents. This will allow greater flexibility in foreign exchange transactions but also requires strict compliance with measures to prevent speculation against the Thai baht. This balance aims to enhance global competi- tiveness while protecting financial stability within the country. Ultimately, the Draft Financial Hub Act is more than just a piece of legislation; it is a strategic instrument to accelerate Thailand’s integration into the global
financial system. By attracting international financial institutions, promoting technology and knowledge transfer, and upskilling Thai professionals, the law is expected to foster innovation and generate long- term economic benefits. Once it has completed the full legislative process, it could become effective in the near future, marking an important step in Thailand’s journey towards becoming a recognised international financial centre. Responsible Lending Regulation The BoT issued a new Notification re: Responsible Lending in January 2025, replacing the 2023 version. This regulation is intended to enhance the stability and transparency of the Thai financial system by estab- lishing clear standards for loan quality assessment, provisioning and reporting. Key provisions include updated definitions of NPLs and restructured loans, requirements for timely and accurate loan classifica- tion, and guidelines on the recognition of losses and provisioning for impaired assets. Financial institutions are required to implement robust internal controls and risk management practices to identify and address credit deterioration at an early stage. The BoT also emphasises the importance of fair treatment for borrowers undergoing debt restructur- ing, including the need for transparent communica- tion and appropriate restructuring solutions tailored to the borrower’s financial capacity. The notification further sets out reporting obligations to the BoT to ensure regulatory oversight and consistency across the sector. Overall, these measures are designed to support prudent lending practices, promote financial discipline and strengthen the resilience of Thailand’s financial market. Temporary Relaxation of LTV Rules by the BoT The BoT announced a temporary relaxation of loan-to- value (LTV) requirements in response to the ongoing slowdown in the real estate sector. Following consul- tations with property developers and financial institu- tions, the Monetary Policy Committee (MPC) and the Financial Institutions Policy Committee (FIPC) agreed that easing LTV rules would help support the property sector and related businesses by alleviating the issue of high housing supply overhang. Although the meas- ure may only provide limited stimulus to the broader
637 CHAMBERS.COM
Powered by FlippingBook