Thailand Treasury Management Profile 2018 - Together we thrive - HSBC Group
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Thailand
Treasury Management
Profile 2018
Together we thrive
2 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 3
Contents Introduction and
Purpose
Introduction and Purpose 3 Thailand
This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a
Legal and Regulatory 6 snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make
informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to
Taxation9 be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the
information contained in this document without obtaining your own independent professional advice. The materials contained in this
Banking14
document were assembled in May 2017 (unless otherwise dated) and were based on the law enforceable and information available
Payment Instruments 15 at that time.
Payment Systems 18
Facts and Figures
Cash Management 20
Capital/Other major cities: Bangkok/Nonthaburi, Songkhla, Business hours: 08:30–17:30 (Mon–Fri)
Electronic Banking 22 Samut Prakan
Banking hours: 08:30–15:30 (Mon–Fri)
Trade Finance 24 Area: 513,120km2
Stock exchange: Stock Exchange of Thailand
Population: 68.2m (SET)
Useful Websites 26
Languages: Thai Leading share index: SET Index, SET50 Index,
SET100 Index
Currency: Thai baht (THB)
Sectoral distribution Agriculture 8.2%,
Country telephone code: 66 of GDP (% of GDP): Industry 36.2%,
Source: https://www.cia.gov/library/
Weekend: Saturday and Sunday Services 55.6%
publications/resources/the-world-
factbook/index.html. (2017 estimate)
National holidays: 2018 — 1, 2 Jan, 1 Mar*,
Source: www.goodbusinessday.com. 6, 13, 14, 16 Apr, 1, 29* May, * The date shown may vary by plus or minus one day. These dates are derived
by converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the
1, 27, 30 Jul, 13 Aug, 23 Oct,
Gregorian calendar. Some of these dates cannot be determined in advance with
5, 10, 31 Dec absolute accuracy, even by the governing authorities. In the case of Muslim dates
in particular, the feast days are determined by the sighting of a new/full moon.
2019 — 1 Jan, 19 Feb*,
8, 13, 15, 16 Apr, 1, 20* May,
1, 15, 29 Jul, 12 Aug,
14, 23 Oct, 5, 10, 31 Dec
Government Head of state
Legislature King Wachiralongkon Bodinthrathepphayawarangkun since
Constitutional monarchy. Since May 2014, Thailand has been 1 December 2016.
ruled by a military junta, the National Council for Peace and Order.
Political leader
General Prayut Chan-ocha, prime minister since 21 August 2014.
4 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 5
Country credit rating
Fitch Ratings rates Thailand for issuer default as:
Term Issuer Default Rating
Short F2
Long BBB+
Long-term rating outlook Stable
Source: www.fitchratings.com, February 2018.
Exchange rate & Interest rate (%) Consumer inflation & GDP volume growth (%)
Economy Thailand Thailand
2016 2017
2011 2012 2013 2014 2015 40 40 7.5 7.5
Q4 Year Q1 Q2 Q3
Exchange rate* (THB/USD)** 30.492 31.083 30.726 32.480 34.248 35.392 35.50 35.115 34.301 33.387 5.0
30 30 5.0
Interest rate (Local currency MMR) (%) 2.80 **
2.89 2.54 2.00 1.59 1.45 1.45 1.45 1.45 1.45
Unemployment (%) 0.7 0.7 0.7 0.8 0.9 1.0 1.0 1.2 1.2 1.2 20 20 2.5 2.5
Consumer inflation*** (%) + 3.8 + 3.0 + 2.2 + 1.9 - 0.9 + 0.7 + 0.2 + 1.3 + 0.1 + 0.5
10 10 0.0 0.0
GDP volume growth*** (%) + 0.1 + 6.5 + 2.7 + 0.8 + 2.8 + 3.0 + 3.6 + 3.3 + 3.8 + 4.2
GDP (THB bn) 10,539 12,349 12,902 13,132 13,538 – 14,361 – – – 0 0 -2.5 -2.5
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
GDP (USD bn) 346 397 420 404 395 – 407 – – –
Exchange rate (THB/USD) Consumer inflation %
GDP per capita (USD) 5,191 5,916 6,225 5,970 5,816 – 5,911 – – – Interest rate (local currency MMR) GDP volume growth %
BoP (goods/services/income) as % GDP – 0.6 – 3.4 – 3.7 + 1.6 + 6.3 – + 10.2 – – –
* Official Rate. ** Period average. *** Year on year. Sources: IMF, International Financial Statistics, January 2018 and 2017 Yearbook. Sources: IMF, International Financial Statistics, January 2018 and 2017 Yearbook.6 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 7
Legal and
Regulatory
Central bank Resident domestic currency (THB) accounts can be held abroad Reporting is conducted through the International Transactions Residents in Thailand are permitted to invest or lend up to
The Bank of Thailand (BoT) is an autonomous institution operating with prior approval from the BoT. Resident domestic currency Reporting System (ITRS) maintained by the BoT, which publishes USD 50 million per year to non-affiliated companies. Resident
in accordance with the March 2008 Bank of Thailand Act. accounts are convertible into foreign currency for specific balance of payments information quarterly. Banks are responsible lending to affiliated companies is unlimited.
payments, including payments abroad. for submitting transactions data to the BoT on behalf of their
Bank supervision clients (although the accuracy of all reported information remains Individuals travelling from Thailand to Vietnam, the People’s
The BoT supervises the banking sector in Thailand. Non-resident the client’s responsibility). Republic of China (only Yunnan province) and Thailand’s
Non-resident bank accounts are permitted in both foreign and bordering countries require authorisation to carry THB exceeding
Resident/non-resident status domestic currency. Under new regulations (effective from 5 June Exchange controls THB 2 million. If travelling to other countries, travellers require
A company is considered resident in Thailand if it is incorporated 2017 onwards), non-residents are permitted to keep more than The Thai baht (THB) is Thailand’s official currency. authorisation to carry THB exceeding THB 50,000. Any person
in Thailand. THB 300 million in non-resident domestic currency accounts bringing into or taking out of Thailand Thai baht bank notes,
provided that the non-resident can prove to the satisfaction of the ®® Foreign exchange controls are administered by the BoT. foreign currency bank notes or negotiable monetary instruments
Bank accounts commercial bank that the non-resident has an obligation to pay in an aggregate amount exceeding THB 450,000 or USD 15,000
Resident the excess THB on the next business day. Non-residents are permitted to engage in forward foreign (or its equivalent) must declare to a custom officer.
Foreign exchange accounts can be held by residents domestically exchange contracts with authorised banks to hedge underlying
and abroad. Foreign exchange accounts can be opened abroad Recent amendments to exchange control law and regulations trade or investments in Thailand. Persons receiving foreign currencies are required to sell these
by resident institutional investors for investment in securities; permit commercial banks to grant THB loans to non-residents for currencies to an authorised bank or to deposit them in a foreign
funds may be repatriated freely. There is no limit to the value of investment in Thailand and neighbouring countries. As a result, Liquidity provided by financial institutions to non‑residents currency account with an authorised bank within 360 days of
funds held within foreign exchange accounts held abroad by commercial banks can now allow the opening of a Special- without an underlying trade or investment is limited to receipt. Foreigners temporarily staying in Thailand for not more
resident institutional investors, if the accounts are used for the purpose Non-resident Baht Account by a non-resident in order to THB 300 million. Borrowing from non‑residents is limited to than three months, are exempt. The same rule applies to foreign
purpose of investing in securities abroad. However, the foreign facilitate investment in Thailand or investment in infrastructure or THB 10 million. embassies and international organisations including their staff
currency account held abroad by a qualified investor in aggregate project finance in neighbouring countries (Myanmar, Cambodia, with diplomatic privileges and immunities.
with the outstanding of other permitted overseas investment shall Proceeds of more than USD 50,000 from exports, invisible
Laos, Vietnam, and Yunnan province of China).
not exceed USD 5 million. transactions, current transfers and capital transactions must The central banks of Thailand and Malaysia launched the
Non-resident domestic currency account balances cannot be be repatriated within 360 days from the exportation date and operation of a local-currency settlement framework for the
Foreign exchange accounts can also be opened by a qualified transferred between different types of accounts and are not freely immediately after receipt of payment. settlement of MYR (Malaysian ringgit) and THB in 2016. The
investor in the ASEAN countries or countries where the convertible into foreign currency. bilateral framework will make the process of obtaining THB
supervisory agency is a member of International Organization Non-resident investors are not permitted to hold more than a
in Malaysia and MYR in Thailand to settle import/export trade
of Securities Commissions and where that agency is included Interest can be offered on savings accounts with maturities of six 25% stake in domestic financial institutions, and no more than
accounts much more efficient. The framework also covers THB
on the Signatory A List of the Multilateral Memorandum of months or over. Overdraft facilities are available to residents and a 49% stake in other domestic companies. The BoT may give
and MYR‑denominated financial services such as deposits and
Understanding Concerning Consultation and Cooperation and the non‑residents. permission, in some cases, for greater foreign ownership and
foreign-exchange hedging.
Exchange of Information. the MoF can authorise up to100% foreign ownership of some
Reporting domestic companies. As a member of the Association of Southeast Asian Nations
Resident domestic foreign exchange accounts can be freely used All foreign currency transactions between residents and non- (ASEAN), Thailand is a participant in the ASEAN Swap
for funds received from abroad and funds bought, exchanged or residents equal to or above USD 50,000, or its equivalent, must The sale or issuance of capital market securities or money market
Arrangement and the Bilateral Swap Arrangements under
borrowed from authorised banks, in an amount not exceeding be reported daily to the BoT for balance of payments purposes. instruments domestically by non‑residents requires permission
ASEAN+3.
future foreign currency obligations. If funds exceed future foreign from the MoF, the BoT and the Securities and Exchange
currency obligations, foreign currency bought, exchanged or All foreign exchange transactions must be conducted through Commission.
borrowed from banks in Thailand can be held in no obligation authorised financial institutions or non-banks granted foreign
accounts for amounts up to USD 5 million. exchange licences by the Ministry of Finance (MoF).8 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 9
Taxation
1
Anti-money laundering/counter-terrorist financing1 Anti-Bribery and Corruption Resident/non-resident Tax year/filing
The Office of the National Anti-Corruption Commission (NACC) A limited company is tax resident if it is incorporated in Thailand. The tax year is 12 months (a shorter year is allowed only in the
Thailand has implemented anti-money laundering and counter- proposed for adoption of the Organic Act on Counter Corruption A branch of a foreign company or a partnership is considered tax year of incorporation, when there is a change of accounting
terrorist legislation. Notable legislation includes: (No 3) B.E.2558 to amend the Organic Act on Counter Corruption resident if it is registered with the Ministry of Commerce (MOC) to period or in the year of dissolution).
B.E. 2542. Under the amendment, Section 123/5 was added to conduct business in Thailand.
®® The Anti-Money Laundering Act B.E. 2542 of 1999, as impose liability of an individual who bribes public officials, foreign The CIT assessment is based on the company or branch’s
amended, most recently in 2015 by Anti-Money Laundering public officials and agents of international organisations, as well For corporate income tax (CIT) purposes, a joint venture (JV) accounting year, and income tax is charged at the corporate tax
Act No 5 B.E. 2558; and as liability for legal entities involved in such bribery. can be considered a taxable entity (separate from the JV rate for the period.
®® The Counter-Terrorism and Proliferation of Weapon of Mass partners) even if the JV is not incorporated or registered with the
Destruction Financing Act of 2016. Whoever grants, offers to grant, or promises to grant any MOC but is registered with the Revenue Department. In these A taxpayer must self-assess and make an advance corporate
property or benefit to any state official, foreign public official, circumstances, the JV is liable for CIT (separately from the JV income tax payment for the first six months of the tax year. The
The AMLO, Thailand’s financial intelligence unit, has also issued a or agent of a public international organisation with intent to partners). half-year return must be filed within two months after the first
series of related Ministerial Regulations and Ordinances. persuade such person to wrongfully perform, not perform or six months of the tax year. The annual income tax return must be
delay the performance of any duty in his office shall be subject A branch of a foreign company that carries on a business in filed within 150 days from the company’s year-end. Extensions
Thailand is a member of the Asia/Pacific Group on Money Thailand or has an employee, representative, or intermediary who are not available.
to imprisonment for a term not exceeding five years or a fine
Laundering (APG). The AMLO, an independent agency within the engages in business activities for the foreign company in Thailand
not exceeding THB 100,000, or both. If the offence above is
Department of Justice, is a member of the Egmont Group. is deemed to carry on a business in Thailand and is subject to CIT Consolidated returns are not permitted for corporate income tax
committed by any person related to any entity, and the action is
taken for the benefit of such entity, and the entities do not have on Thai‑sourced income. purposes and each company must file its own tax return.
Account opening procedures require formal identification of the
appropriate internal control measures to prevent the commission
account holder and beneficial owners. Financial institutions are Tax authority
of such offence, the entity shall be deemed to have committed
required to conduct ongoing customer due diligence. ®® Thailand Revenue Department.
the offence under Section 123/5 and shall be subject to a fine of
Customers making occasional cash transactions of THB 700,000 one to two times of the damages caused or benefits received.
and above, or wire transfers or electronic transactions of
Withholding tax (subject to tax treaties)
THB 50,000 and above, must be identified. All cash transactions
equal to or above THB 2 million have to be recorded and reported Royalties
Payments to: Interest Dividends** Branch remittances
automatically. For electronic transactions the threshold is and technical fees***
THB 100,000.
Resident companies* 1%/10% 10% or exemption 3% NA
Financial institutions in the broadest sense must record and Non-resident companies 10%/15% *
10% 15% 10%†
report large (such as cash transactions equal to or more than
* Interest paid on loans from a bank, financial institution or an insurance agency is subject to a 10% withholding tax rate if the lender is resident in a country that has concluded
THB 2 million) and suspicious transactions to the AMLO. a tax treaty with Thailand, but an exemption applies if the interest is paid by a government or a Thai financial institution on loans granted under a law intended to promote
agriculture, industry or commerce. A 1% advance withholding tax applies to interest payments made by a corporation to a financial institution for interest on debentures or bonds,
All records must be kept for a period of ten years from the except for interest on deposits or negotiable instruments paid between a bank or finance company.
date an account was closed, or from the date the transaction ** Dividends paid to another Thai company are subject to a 10% withholding tax, or are exempt if certain conditions are satisfied.
*** Royalties paid to another Thai company are subject to a 3% advance withholding tax, which may be credited against the final corporate income tax due for the accounting
occurred, whichever is longer. period. Technical service fees paid to another Thai company are subject to a 3% advance withholding tax, which is used as a credit against the final corporate income tax due
for the accounting period.
† A 10% branch remittance tax is imposed on after-tax profits paid or deemed paid to a head office.
1.
Data as at May 2017. 1.
All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and
Deloitte Highlight, 2017.10 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 11
Corporate taxation ®® Fixes the rate of personal income tax at 15% for up to eight minus original cost) derived by resident companies are treated as Transfer pricing
Residents are taxed on worldwide income; non-residents are consecutive years. assessable income for CIT purposes. There are restrictions on the The 2002 transfer pricing guidance issued by the Thai Revenue
taxed only on Thailand-sourced income. Foreign-sourced income use of capital losses to offset net taxable profits. Department (Departmental Instruction No Paw. 113/2545)
derived by resident taxpayers is subject to corporate income tax Foreign income tax paid on profits that are subject to corporate requires that related-party transactions are on arm’s-length
in the same manner as Thailand‑sourced income. income tax in Thailand may be credited up to the amount of A capital gain arising from or in Thailand to a non‑resident terms (broadly interpreted in line with the OECD Transfer Pricing
income tax paid in Thailand on such foreign income. A tax company is subject to withholding tax at a rate of 15%, except Guidelines). Transfer pricing methods such as the comparable
A registered foreign branch or partnership is taxed the same exemption is available for dividend income received from foreign where more beneficial treatment is provided for under a tax uncontrolled price, resale price-minus, cost-plus, or other
as a limited company, but only on Thailand‑sourced income. affiliates, provided the foreign profits were subject to a minimum treaty. internationally accepted methods are acceptable.
Unregistered entities with a taxable presence in Thailand are headline income tax rate of 15%. Tax holidays of three to eight
taxed in the same manner as limited companies, but only on Withholding tax (subject to tax treaties) Under the transfer pricing regime, taxpayers must declare in
years are available for business activities promoted by the Board
Thailand‑sourced income. As a general rule, interest paid to a non-resident company is their annual corporate tax return whether revenue and expense
of Investment.
subject to a 15% withholding tax, unless the rate is reduced transactions are based on market prices, and the tax authorities
The corporate tax rate is 20%. Certain small and medium-sized An ROH and its foreign expatriate employees may benefit under a tax treaty. A 1% advance withholding tax applies to may adjust income to reflect a market price.
limited companies are subject to lower progressive rates up to a from a 0% to 10% rate on net taxable profits and a fixed interest payments made by a corporation to a corporation
certain amount of net taxable profits. A bank deriving profits from personal income tax rate of 15%, respectively. The International carrying on business in Thailand. APAs may be obtained and, while transfer pricing documentation
an International Banking Facility pays a 10% rate for ‘out-out’ Headquarters (IHQ) and International Trade Centre (ITC) grant is not formally required to be maintained, there is an assumption
deposits. Dividends paid to a non-resident company are subject to a 10% (based on filing requirements and directives to revenue officers)
comprehensive tax privileges on corporate income tax, personal
withholding tax. The withholding tax may be reduced under a tax that documentation should be available by the corporate income
income tax and specific business tax for 15 years.
Foreign companies that carry on the business of international treaty. tax return filing date. A taxpayer may initiate an adjustment (up
transportation and that have an office in Thailand may be taxed at Net operating losses may be carried forward for up to five or down) if there is adequate documentation to substantiate
a rate of 3% of gross proceeds rather than at the normal CIT rate Royalties paid to a non-resident are subject to a 15% final the adjustment. A new transfer pricing regulation is expected to
accounting periods. If the net operating losses relate to a
(and are exempt from the tax on profit remittances). There is no withholding tax, unless the rate is reduced under a tax treaty. come into force in 2017.
business promoted by the Board of Investment during a tax
surtax or alternative minimum tax. Technical service fees treated as royalties and paid to a non-
holiday period, the losses may be carried over to the first year
resident are subject to a 15% final withholding tax, unless the rate Stamp duty
after the tax holiday period and subsequently up to five years. The
There are special rates of CIT for qualified regional operating is reduced under a tax treaty. Normally, the transfer of shares, debentures, bonds and
carryback of losses is not permitted.
headquarters (ROH). The ROH regime: certificates of indebtedness is subject to stamp duty at a rate of
Tax treaties/tax information exchange agreements (TIEAs) 0.1% on the greater of the value of the paid-up registered shares
Advance tax ruling availability
®® Exempts the offshore income derived from ROH services from Thailand has exchange of information relationships with 47 or the value as defined in the instrument, unless an exemption is
Advance private rulings are available at the request of the
CIT for 15 accounting periods (i.e. ten accounting periods plus jurisdictions through 48 double tax treaties and no TIEAs. applicable. The transferer is liable to pay the stamp duty.
taxpayer. The status of a private tax ruling in Thailand is not legally
a five-year extension).
binding on the Thailand Revenue Department. There are several Thin capitalisation
®® Applies a reduced CIT rate of 10% for 15 accounting periods in past tax rulings that are available for reference on the website of Real property taxes
respect of: There are no thin capitalisation rules. There is no requirement A tax of 12.5% is levied on the appraised rental value of real
the Thai Revenue Department. governing the debt-to-equity ratio for a company registered in
• Income derived from ROH services provided to property. The tax is deductible in calculating the corporate income
Thailand, unless it is required under specific circumstances (e.g. tax liability. The law imposing this tax is expected to be repealed
Thai affiliates; Advance pricing agreements (APAs) are available under the
Thailand Board of Investment, terms with lender, foreign business and replaced with a new law on land and construction as from
• Interest charged on loans to an affiliate or a foreign branch transfer pricing regime.
licence, etc.). 2018, which would provide for various tax rates. Rates are
if the loans are financed through loans taken by the ROH;
and Capital gains tax expected to range from 0.2% to 5%.
• Royalties for R&D services performed in Thailand. There is no separate capital gain tax: capital gains (sale proceeds12 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 13
Cash pooling The effective SBT rate for a banking business is typically 3% of
Thailand has no specific tax rules for cash pooling arrangements. gross receipts (SBT at a rate of 3% and additional municipal tax
at a rate of 10% on the amount of SBT payable), or based on a
Sales taxes/VAT specific transaction. However, there are certain transactions in
VAT applies at a rate of 10%, reduced to 7% until 30 September respect of banking business (or businesses similar to banking) for
2017, to all retailers, wholesalers, manufacturers, importers, which the SBT rate is reduced from 3% to 0.1% of gross receipts
producers and others providing direct services, unless exempt (e.g. interest or discount on debt instruments or gain before
under the Revenue Code. expense on debt instrument trading, currency exchange gain
before expense, etc.). For life insurance and pawnshop brokerage,
The registration revenue threshold for VAT is turnover exceeding the tax rate on interest fees and service fees is 2.5% (including
THB 1.8 million for any given tax period. Non-resident suppliers municipal tax).
that are carrying on business on more than a temporary basis
must register. The effective SBT rate for the sale of immovable property is 3%
(including municipal tax of 10%). Furthermore, an advanced
Companies with a turnover not exceeding THB 1.8 million a withholding tax of 1% applies to companies that have sold
year are exempt, as are other business activities, including immovable property, and the transfer fee for immovable property
the import and sale of raw agricultural products and related normally applies at 2%.
goods, newspapers, magazines and textbooks, and basic
services such as health and educational services, domestic Financial transactions/banking services tax
transport, international transport by way of land, and the leasing Apart from VAT or SBT (see above), there are no specific financial
of immovable property. Goods exempt from import duty and transactions/banking services taxes in Thailand.
destined for export‑processing zones (zero-rate VAT) are included
in this category, along with research and technical services, Payroll and social security taxes
labour contracts, auditing and legal services. Exported goods and There is no payroll tax paid by employers. Thai employers are
services are zero rated. obliged to report and withhold tax at progressive rates on the
compensation elements (e.g. salary and any other benefits) that
For financial services, certain business activities (including, but are paid to an employee in or outside Thailand under certain
not limited to, services related to credit cards, hire purchase requirements and conditions. The progressive rates for personal
contracts, security brokers, underwriters, etc.) are subject to VAT income tax up to 35% apply.
if the amount of assessable income of the entity is more than
THB 1.8 million. The relevant withholding tax report (Por. Ngor. Dor. 1) needs
to be prepared by the employer and submitted to the Thai tax
Insurance premiums on non-life insurance business are subject to authorities on a monthly basis within seven days following the
7% VAT and withholding tax at the rate of 1% of gross payments end of the month in which the compensation is paid. Moreover,
(section 77/2 of the Thai Revenue Code). the employer is required to file an annual personal income tax
report (Por. Ngor. Dor. 1 Kor) to the Thai tax authorities within two
The Thai Revenue Department has issued a regulation that allows months following the end of each calendar year, showing details
taxpayers to prepare, submit and maintain tax invoices and of the personal income tax that was withheld during the year.
receipts electronically.
Social security contributions are charged at 5% of income,
Specific business tax capped at THB 750 per month, which should be made by both the
The Thai Revenue Code provides that business related to banking, employer and the employee.
finance, life insurance etc. is subject to specific business tax
(SBT).14 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 15
Banking Payment
Instruments
Overview If given permission by the BoT, they may control up to 49% and
Payment statistics
There are 26 banks operating in Thailand: 14 domestic occasionally the MoF may give permission for foreign entities to
commercial banks, one domestic retail bank and 11 branches control over 49% of a domestic financial institution. Millions of transactions % change Traffic (MUR billions) % change
of foreign banks. There are also four foreign bank subsidiaries 2016/2015 2016/2015
Digitalisation of the banking system for both corporate and 2015 2016 2015 2016
(ANZ Bank, Bank of China, Mega International Commercial Bank
and Sumitomo Mitsui Trust Bank) and 47 representative offices retail customers, is driving the transformation of the country’s Cheques 120.4 118.3 – 1.7 61,584 60,895 – 1.1
of foreign banks. Nine specialist finance institutions, two finance banking sector. According to the BoT, the number of branches
operated by the commercial banks dropped to 6,934 in May Direct credit transfers 221.4 228.8 3.3 15,173 16,309 7.5
companies and three credit finance companies provide a range of
financial services. 2017, from 7,052 in May 2016, as customers increasingly use Direct debit 96.9 104 7.3 5,112 7,755 51.7
mobile or online banking services for their daily banking needs. In
The four leading banks in the country control approximately January 2017, a national digital payment system was launched, Online retail transfers* 235.6 299 26.9 1,818 2,184 20.1
71.27% of the banking sector’s total assets. Bangkok Bank the PromptPay service, one of a number of initiatives under Debit cards 57.8 74.3 28.5 137 166 21.2
controls approximately 18.6% of total assets. the Thai government’s National E-payment initiative. Users are
able to transfer funds using mobile phone numbers or national Credit card 405.4 443.2 9.3 1,425 1,510 6
Phase two of the government’s ten-year Financial Sector Master identification numbers linked to bank accounts. The service e-Money 883.3 1,076.3 21.8 68 91 33.8
Plan is in the process of being implemented. Under the auspices has since been extended to allow e-payments for products and
of the Plan, two types of banking licence are now issued by the services. Total 2,020.8 2,343.9 15.9 85,317 85,317 4.2
BoT:
* Includes ATM, internet/mobile phone and counter transactions. Source: Bank of Thailand.
The BoT has signed agreements with the central banks of
®® A commercial bank licence is issued to banks with tier-1 Malaysia and the Philippines under the ASEAN Banking
capital greater than THB 5 billion: these banks offer a full range Integration Framework. The Framework seeks to integrate the
of banking, broking, trading and underwriting services; or banking market within ASEAN by allowing banking market Cash Direct debits
®® A retail bank licence is issued to banks with tier-1 capital access and operational flexibilities to Qualified ASEAN Banks in Cash remains an important payment medium in Thailand, Direct debits are available in Thailand for low-value recurring
greater than THB 250 million: these banks can provide the respective jurisdictions. particularly for low‑value transactions. payments such as utility bills. They can be initiated via bank
basic banking services to SMEs, but cannot trade in foreign branch, post office, ATM, telephone, PC or mobile phone.
currency. Credit transfers
Major banks All credit transfers in Thailand are automated. They can be High-value debit transfers are cleared and settled via BAHTNET
Finance companies and credit finance companies can apply initiated via bank branch, post office, ATM, telephone, PC or in real time. Low-value direct debits are processed via the Bulk
for one of these two licences, provided they merge with other Total assets (USD billions) mobile phone. Payment System’s Debit Next Day (DD3) service.
Bank
institutions. 31 December 2017
®® High-value and urgent interbank transfers are cleared and Direct debits accounted for 4.4% of the volume of all cashless
Foreign banks play an active role in the country’s financial sector Bangkok Bank 91,329
settled via BAHTNET, the national RTGS system, in real time. payments in 2016, and 8.7% of the value1.
– many of the commercial banks are foreign linked or owned. At Krung Thai Bank 85,538 ®® Low-value, non-urgent and high-volume credit transfers are
the end of 2016, foreign banks controlled approximately 9.6% processed via the Bulk Payment System’s SMART Credit Cheques
of the banking sector’s total assets. Foreign-owned banks are Siam Commercial Bank 83,813 The cheque is a popular cashless payment instrument for both
service. Low-value credit transfers include payroll, supplier and
generally permitted to acquire no more than a 25% stake in Kasikornbank 75,178 third-party payments. retail and commercial payments. Post-dated cheques are used by
domestic institutions. some companies to enhance accounts receivables ratios.
Bank of Ayudhya 61,494
Direct credit transfers accounted for 9.8% of the volume of all
Source: www.accuity.com, February 2018. cashless payments in 2016, and 18.3% of the value1. All cheques are truncated into electronic items and processed on
a same-day basis via ICS.
Cheques accounted for 5% of the volume of all cashless
payments in 2016, and 68.5% of the value1.16 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 17
The Mangmoom
% volume of all % value of all Electronic wallets
cashless payments 2016 cashless payments 2016 Electronic money schemes are available in the form of reloadable
pre-paid cards. There were approximately 40.4 million e-money
cards in circulation in February 2017, a 31.6% increase on the
same point in 2016 1. Card, an integrated
pre-paid card,
Credit Transfers 9.8% Credit Transfers 18.3%
Direct Debits 4.4% Direct Debits 8.7% The Mangmoom Card, the first integrated pre-paid card, is
Debit Cards 3.2% Debit Cards 0.2% scheduled to be launched in June 2018. The Mangmoom card
is scheduled for
Credit Card 18.9% Credit Cards 1.7% can be used to pay for travel on BTS (Skytrain), MRT (the metro)
Cheques 5% Cheques 68.5% and Airport Rail Link. The card will eventually be extended to
E-Money 45.9% E-Money 0.1% enable holders to pay for other transportation types.
launch in 2018. It
Online Retail Transfers 12.8% Online Retail Transfers 2.5%
The leading e-wallet providers in Thailand are the Jaew Wallet by
Source: Bank of Thailand. Dtac, AIS mPay and WeCard by True Money. In 2016, the total
value of mobile payments reached THB 90 billion1.
Other payments
will be used to pay
Payment cards
Payment cards are a popular method of payment in Thailand.
by domestically issued debit cards must be processed locally.
Krungthai Bank, Siam Commercial Bank, and Kasikornbank are
Promissory notes are available with and without guarantee and
can be discounted by banks. Promissory notes are processed by for travel on BTS
Credit and debit cards accounted for 18.9% and 3.2% expected to become TPN shareholders.
(Skytrain), MRT (the
ICAS.
respectively of the volume of all cashless payments in 2016.
The value of credit card transactions accounted for just 1.7% of There were 41,188 ATMs and 474,363 EFTPOS terminals in
metro) and Airport
all cashless payments; debit cards 0.2%1. Thailand in at the end of 20161. Twenty-two banks participate in
the BoT’s National ITMX shared system, a national ATM network
There were 50 million debit cards, 23.1 million credit cards and and clearing centre for funds transferred over the ATM network.
10.8 million ATM cards in circulation at the end of 20161. Visa
and MasterCard are the principal payment card brands issued.
Other card issuers include: KTC Co., General Card Services Co.,
The National ITMX system also supports internet and mobile
payments. National ITMX also connects Thailand’s ATMs
with ASEANPay.
Rail Link.
Cetelem, Diners Club, American Express, Tesco Card Services,
Aeon Thana Sinsap, AIG card and Capital OK Co. The Asian Payment Network (APN) initiative currently allows
ATM card holders in Thailand to perform cash withdrawals at the
Payments made with a Visa and MasterCard payment card ATMs of participating banks in each member country (Australia,
are cleared and settled by their respective international China, Japan, Indonesia, Malaysia, New Zealand, the Philippines,
card schemes. Singapore, South Korea, Thailand and Vietnam), through a linked
ATM network. The APN’s aim is to become a settlement network
The Thai Payment Network (TPN), in partnership with UnionPay for a range of retail payments across Asia. In Thailand, the
International and Bangkok Bank, launched the country’s first initiative is operated by National ITMX.
local-card network for processing electronic payments in
2016. The TPN supports the BoT’s policy that all payments
1.
Bank of Thailand, Payment Statistics.18 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 19
Payment
Systems
BATHNET,
Type Participants Bulk Payments System
BAHTNET (Bank of Thailand Automated High-Value Transfer BAHTNET has 65 participants. Debit and credit transfer data should be submitted one to 99 days
Network), Thailand’s national real-time gross settlement system, before settlement is to take place by the paying bank.
Thailand’s national is owned and operated by the BoT. BAHTNET has incorporated
delivery versus payment (DVP) settlement for Thai government
The Bulk Clearing System has 37 direct participants.
ICS has 36 bank participants.
Final settlement is via BAHTNET on a net settlement basis. Funds
securities. are available to beneficiaries on a same‑day basis.
RTGS system, ®® In 2016, the volume and value of payments processed via Transaction types processed ICS
BAHTNET processes high-value and urgent THB‑denominated Cheques are truncated into electronic items before being sent to
is owned and
BAHTNET increased by 10.8% and 10.5% respectively on 2015
figures, to four million transactions, with a value of interbank transfers. In addition, BAHTNET effects the final the BoT’s Electronic Clearing House (ECH) by online-participant
THB 874,105.6 billion. settlement of participants’ net balances originating from banks. The ECH processes the cheque images and accompanying
operated by the
Thailand’s other clearing houses. data before forwarding them to the paying bank for approval.
The Bulk Payment System, operated by the National
Transaction Management and Exchange (ITMX) company, is a The Bulk Payments System processes electronic credit and The BoT provides a central data and image archive for cheques
BoT. BAHTNET deferred net settlement system for electronic credit and debits. It debit transfers up to THB 2 million. via ICAS’s IAS archive, to which banks have 24 hour access.
is divided into two subsystems: the Direct Credit service and the
ICS processes all cheque and paper-based payments. ®® 14.30–15.30: cheques are processed for same-day clearing via
SMART Credit service.
has incorporated ®® In 2016, the volume and value of payments processed via
Operating hours
BAHTNET operates from 08:30 to 17:30 local time, Monday to
ICAS.
Funds are available to beneficiaries from 12:00 on a same-day
DVP settlement for
the Bulk Payment System increased by 5.6% and 18.3%
Friday. basis.
respectively on 2015 figures, to 38 million transactions, with a
value of THB 27,006 billion. The Bulk Payments System operates Monday to Friday.
Thai government ICS (Imaged Cheque Clearing System) is a centralised cheque
clearing system located in Bangkok. ICAS truncates all cheques
Clearing cycle details
Currency centre holidays
BAHTNET
securities.
2018 1, 2 Jan, 1 Mar*, 6, 13, 14, 16 Apr,
and processes them electronically on a same-day basis. ®® 08:30–17:30: BAHTNET settles transactions in real time and 1, 29* May, 1, 27, 30 Jul, 13 Aug, 23 Oct,
with immediate finality. Payment instructions are submitted 5, 10, 31 Dec
®® In 2016, the volume and value of interbank cheques processed
using SWIFT messages or via the BoT Web Portal.
fell by 2.2% and 0.8% respectively on 2015 figures, to 2019 1 Jan, 19 Feb*, 8, 13, 15, 16 Apr,
®® 10:00 T+1: confirmation of funds transfer must be returned to
69.4 million transactions, with a value of THB 37,133.2 billion. 1, 20* May, 1, 15, 29 Jul, 12 Aug,
the BoT after the funds transfer has been settled.
14, 23 Oct, 5, 10, 31 Dec
Final settlement takes place across the participant banks’ * The date shown may vary by plus or minus one day. These dates are derived by
correspondent accounts at the BoT. converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian
calendar. Some of these dates cannot be determined in advance with absolute
accuracy, even by the governing authorities. In the case of Muslim dates in particular,
the feast days are determined by the sighting of a new/full moon.
Source: www.goodbusinessday.com.20 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 21
Cash
Management
Domestic Short-term investments
Notional pooling ®® Interest can be earned on resident and non-resident savings
Notional pooling is offered in Thailand. However, notional pooling accounts.
lacks a clear legal framework and it is recommended to seek legal ®® Demand deposit accounts are available to residents and non-
advice. residents in THB or major foreign currencies. Interest cannot
be earned on demand deposits.
Cross-border notional pooling is not available due to difficulties in
®® Time deposits are available in THB or major foreign currencies,
enforcing cross-guarantees outside of Thailand.
with maturities of three, six and 12 months.
Cash concentration ®® Certificates of deposit are offered by commercial banks.
Cash concentration is permitted between residents with Maturities range between three months and three years.
zero balancing the most commonly used cash management ®® Treasury bills are auctioned weekly by the BoT, with maturities
technique. Regulatory controls restrict the participation of non- of one, three and six months. Government bonds are also
residents in cash concentration structures. issued weekly with maturities ranging from one month to two
years.
Cross-border cash pools are permitted if the resident entity ®® Money market funds are available.
has obtained a treasury centre licence from the BoT. However,
regulatory restrictions can make such arrangements difficult to Custody and securities settlement1
operate. Depository
®® Thailand Securities Depository Co Ltd (TSD).
Collections
®® Bank of Thailand.
Several banks in Thailand offer cash collection services to
corporate clients. The TSD is the sole central securities depository in Thailand. It is
also a clearing house, acting as intermediary in the clearing and
Cross-border
settlement of the cash and securities legs of trades on the Stock
Cross-border payments can be made through BAHTNET.
Exchange of Thailand, the Market for Alternative Investment and
Instructions are routed through SWIFT.
Bond Electronic Exchange, including scripless government bonds
A number of banks have entered into bilateral correspondent traded on the over‑the‑counter markets.
banking relationships in order to provide international services.
The Bank of Thailand acts as official registrar of government
Several banks use their reference shareholders’ international
securities.
networks to gain access to TARGET as well as the European
Banking Association’s EURO1 and, in the case of retail payments, BIS Model
STEP1 and STEP2. ®® Model 3.
Lifting fees ®® Model 2.
Payments between resident and non-resident accounts are Settlement cycle
difficult to effect, so lifting fees do not apply. ®® T+3 for equities.
®® T+2 for bonds.
®® T+2 for fixed income securities.
1.
Data as at May 2017.22 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 23
Electronic
Banking
The number of Electronic banking is available in Thailand and offered by all of
the country’s banks. There is no bank-independent electronic
banking standard; each bank offers its own proprietary system for
internet and mobile corporate banking purposes.
Internet and mobile banking is offered by all of Thailand’s banks
banking users for both corporate and retail purposes.
increased 26% and
®® In December 2016, there were 15.1 million internet banking
users in Thailand, a 26% increase on 2015 figures. The volume
and value of internet transactions increased 29% and 26%
50% respectively in respectively year-on-year, to 240 million transactions with a
value of THB 29,706 billion1.
®® In December 2016, there were 20.9 million mobile banking
2016. Transaction users in Thailand, a 50% increase on 2015 figures. The volume
and value of mobile transactions increased 121.7% and 91.5%
volumes increased
respectively year-on-year, to 584 million transactions with a
value of THB 5,361 billion1.
29% and 121.7%
Thailand had a 83.5% internet penetration rate at the end of June
20172; mobile penetration rate was 128%3.
over the same
period.
1.
Bank of Thailand, Use of Mobile Banking and Internet Banking.
2.
www.internetworldstats.com.
3.
Thailand - Telecoms, Mobile, Broadband and Digital Media - Statistics and Analyses.24 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 25
Trade
Finance
A licence from Key import partners Imports
Documents
The ASEAN-China free trade area eliminates 90% of tariff and
investment barriers between China and the ASEAN member
In order to import goods into Thailand, a commercial invoice states.
the Ministry of China 20.3%
(including a full description of the imported goods), bill of lading,
packing list, customs declaration and terminal handling receipts ASEAN has established free trade agreements with Australia,
India, Japan, New Zealand and South Korea and is negotiating a
Commerce (typically
are required.
Japan 15.4% free trade agreement with the EU.
USA 6.9% Licences
Malaysia 5.9% Thailand is a member of the 21-member Asia-Pacific Economic
valid for three
A licence from the Ministry of Commerce (typically valid for three
UAE 4% months) is required for importing certain goods, but most goods Cooperation (APEC) forum, which intends to lift all trade and
can be imported freely. investment barriers in the region.
months) is required Products that are controlled or restricted generally require Duties on imports are applied on an ad valorem and/or specific
basis.
Key export partners permission and a licence. Controlled products include certain
for importing animal and agricultural products, drugs, hazardous chemicals and
fertilisers, oils, flora and fauna, and ammunition and firearms. Prohibited imports
A negative list (of products that may not be imported) is in
certain goods, but USA 11.2%
Importers of food products and pharmaceuticals must be licensed
by the Thai Food and Drug Administration (FDA).
operation. It is prohibited to import certain commodities into
Thailand, in order to protect fauna and flora, and for national
China 11.1% security and social reasons.
most goods can be Japan
Hong Kong
9.4%
5.5%
Taxes/tariffs and other fees
Thailand is a member of the Association of Southeast Asian The import of tobacco, certain hazardous chemicals, poisons
imported freely.
Malaysia 4.8% Nations (ASEAN) and the ASEAN Free Trade Area (AFTA). and waste is prohibited.
Australia 4.6%
Vietnam 4.2% As a member of ASEAN and AFTA, Thailand has committed to Exports
Singapore 4.1% lower intra-regional tariffs of between 0% and 5% through the Documents
Common Effective Preferential Tariff (CEPT) scheme. Certain In order to export goods from Thailand, a commercial invoice,
goods such as sensitive agricultural products are exempt from customs declaration, terminal handling receipt, bill of lading and
Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017
this. certificate of origin are required.
(https://www.cia.gov/library/publications/resources/the-world-factbook/index.html).
Tariffs on 99% of the products in the inclusion list of the ASEAN-6 Licences
(Brunei Darussalam, Indonesia, Malaysia, the Philippines, Licences are required when exporting certain goods, e.g. rice,
Singapore and Thailand) have been reduced to no more than 5%. sugar, tinned tuna, types of coal, charcoal and textile products.
More than 60% of these products have zero tariffs. These goods may also be subject to quota restrictions.26 HSBC Treasury Management Profile 2018 | Thailand HSBC Treasury Management Profile 2018 | Thailand 27
Useful
Websites
Bank of Thailand www.bot.or.th
Leading banks: Bangkok Bank www.bangkokbank.com
Government Savings Bank www.gsb.or.th
Krung Thai Bank www.ktb.co.th
Kasikornbank www.kasikornbank.com
Siam Commercial Bank www.scb.co.th
Thai Bankers’ Association www.tba.or.th
Ministry of Finance www2.mof.go.th
Ministry of Commerce www.moc.go.th Disclaimer
Ministry of Industry www.industry.go.th
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National Statistics Office web.nso.go.th
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to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial,
Thailand Board of Investment www.boi.go.th legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The
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