Thailand

Overview

Official name : Kingdom of Thailand

Government : Constitutional monarchy

Head of State : King Maha Vajiralongkorn

Capital City : Bangkok

Main towns : Bangkok , Nakhon Ratchasima, Hatyai, Nonthaburi, Khon Kaen, Chiang Mai

Land area : 514,000 sq km

Population : 69.43m (2018 est.)

Climate : Subtropical

Currency : Baht (ISO currency code: THB)

Exchange rate : USD 1=THB 31.54 (August 2020)

Measures : Metric system

Language : Thai

Time : 7 hours ahead of GMT

Regulatory Scheme

The main institutions with responsibility for policymaking and supervision of the financial system in Thailand are the Finance Ministry and the Bank of Thailand (BOT, the central bank). The BOT supervises banks, finance firms, housing loan officials, and plays a key role in instituting market reforms. The Finance Ministry has general regulatory authority. The Securities and Exchange Commission (SEC) oversees the Stock Exchange of Thailand (SET) and monitors the activities of securities firms. Insurance companies are the responsibility of the Ministry of Commerce. All purchases or remittance of foreign currency must be cleared with the BOT, but transactions of less than 5,000 are automatic. Anyone leaving Thailand with more than US$10,000 must report the cash to customs. Any transaction in excess of Bt2m cash or Bt5m assets must be reported to the BOT. A maximum of US$10m in investment capital (except in real-estate and portfolio investments) may be taken out of Thailand without prior approval. No restrictions apply to Thai or foreign currency (or negotiable instruments) brought into Thailand by foreign individuals or businesses. Such remittances must not exceed US$500,000 in a single day for individuals or US$5m for corporations, and they must be converted into baht or deposited in a foreign-currency account within 15 days of remittance.

Banking

In response to the 1997-98 crisis, the authorities set up a number of new institutions to restructure the financial sector and restore public confidence. The Financial Institutions Development Fund (FIDF) was established to guarantee the deposits and liabilities of financial institutions. The government also created the Financial Sector Restructuring Authority (FRA) to auction off the assets of closed financial companies. There are several reporting requirements in Thailand . Banks must report the account activity of non-residents to the BOT. The report to the BOT must include the client's reasons for the underlying transaction, the nature of their business, and their nationality. Banks need not include their client's name in the report. The Asian financial crisis forced 56 Thai banks out of business and put 12 others under state management. The NPL crisis in Thailand has been handled through the creation of AMC's in a similar fashion to that of China .

Stock Exchange

The Thai capital markets began with the "Bangkok Stock Exchange", which closed down shortly after its establishment because of lack of official support. Shortly thereafter, "The Securities Exchange of Thailand" was created under the Securities Exchange of Thailand Act, BE 2517 (1974). (This act was superceded by the Securities and Exchange Act, BE 2535 (1992).) The Securities and Exchange Commission (SEC) is the regulator of the Thai Capital Market and the BOT is responsible for the country's money market. The secondary market comprises the Stock Exchange of Thailand (SET) and the Thai Bond Dealing Center (TBDC). The secondary market falls under the authority of the SEC.

Insurance

The Department of Insurance and the Ministry of Commerce are the primary insurance regulatory authorities in Thailand . T he minimum capital requirement for non-life insurers is THB30 million and a THB3.5 million security deposit with the required for each class of business authorized. The solvency margin is 10% of the preceding year's written premium net of reinsurance and subject to a minimum surplus of assets over liabilities of THB30 million. Fire, motor and other insurance businesses are subject to a tariff. All motor vehicles are required to have bodily injury insurance, and employers with one or more workers are legally required to contribute to the Workmen's Compensation Fund managed by the Department of Labour. Foreign ownership in excess of 25% (but below 50%) is allowed however, establishment of foreign branches or subsidiaries is currently not permitted. The last invitation for application of new insurance licenses was in 1995. There are about 70 non-life insurers of which 5 are foreign branches. The share of top 5 non-life insurers is about 38%. Life insurance regulations are similar to the non-life regulations with some minor differences. The minimum capital requirement is THB50 million for existing life insurers and the capital requirement for new life insurers is THB500 million. Life insurers must put down a security deposit of THB20 million. There are around 24 domestic life insurance companies and one foreign branch (AIA). The share of top 5 life insurers is around 85%. The total market share of AIA is about 50%. The major lines of business are ordinary (88.6%), industrial (6.0%) and group (5.4%).