HSBC Treasury Management Profiles 2018 -

Current section, Introduction

Introduction

Thailand is Southeast Asia’s second-largest economy (behind Indonesia). As an export-oriented economy, exporting primarily manufactured goods and electronics, Thailand relies on its trade partnerships to keep its economy healthy. The recent slump in global trade, and fall in demand from its main trading partners, saw GDP growth of just 2.9 per cent in 2015 and 3.2 per cent in 2016. However, an upswing in exports (exports rose 9.9 per cent in 2017 and are predicted to expand by 6.6 per cent in 2018), expansion of private consumption (set to increase 3.5 per cent in 2018) and a recovering manufacturing sector, saw GDP expand by 3.8 per cent year-on-year in the nine months to September 2017. GDP is projected to be 4 per cent in 2017 and 4.2 per cent in 2018. While trade accounts for almost 74 per cent of the country’s GDP, the government is embracing and promoting the economic benefits that repositioning the country as the digital hub of Southeast Asia will bring. The Ministry of Digital Economy and Society’s ten-year vision will see digital sectors contribute at least 25 per cent to GDP. In 2016, the third phase of the Financial Sector Master Plan, focused on developing the country’s digital economy, was launched, and the Thailand 4.0 initiative unveiled. Thailand 4.0 has a four pillared strategy for achieving economic growth, one of which is developing a knowledge-based economy driven by innovation, technology and creativity. The Thailand 4.0 scheme will run in tandem with, and support, the development of the Eastern Economic Corridor, which is designed to be the future economic hub of the region.

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Legal and regulatory

  • Foreign exchange accounts can be held by residents domestically and abroad. Resident domestic currency (THB) accounts can be held abroad with central bank approval. Resident domestic currency accounts are convertible into foreign currency
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-residents are permitted to open Special-purpose Non-resident Baht Accounts to facilitate investment in Thailand or investment in infrastructure or project finance in neighbouring countries. Non-resident domestic currency accounts are not convertible into foreign currency
  • A local currency settlement framework between Thailand and Malaysia for the settlement of THB and MYR make it easier for exporters and importers to obtain THB in Malaysia and MYR in Thailand

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Taxation

  • Resident companies are taxed on worldwide income
  • Non-resident companies are taxed on Thailand-sourced income only
  • The corporate tax rate is 20 per cent
  • As a general rule, interest, royalties and technical service fees paid to a non-resident company are subject to a 15 per cent withholding tax. Dividends paid to a non-resident company are subject to a 10 per cent withholding tax

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Payment instruments and systems

  • Cash is an important payment medium in Thailand, particularly for low-value transactions. Electronic credit transfers are used for both high-value corporate and low-value retail payment transactions, although cheque use remains high particularly for commercial payments. Cheques account for 68.5 per cent of the total value of cashless payments. Electronic money schemes and mobile payments are proving increasingly popular among consumers: in 2016, the total value of mobile payments reached THB90 billion
  • Thailand operates three national payment systems: BAHTNET, an RTGS system; the Bulk Payment System, subdivided into a Direct Credit service and the SMART Credit service; and the Imaged Cheque Clearing and Archive System, for cheques

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Cash management

  • There are no clear guidelines on notional pooling in Thailand. Cash concentration is permitted for resident entities only. A Treasury centre licence is required for cross-border cash pools; regulatory restrictions can make such arrangements difficult to operate
  • Cash collection services are available

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Electronic banking

  • Electronic banking is available in Thailand. There is no bank-independent electronic banking standard
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail purposes. In 2016, the number of internet and mobile banking users increased 26 per cent and 50 per cent respectively on 2015 figures

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To read the full report on Thailand and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.

Sources:

  • Asian Development Bank
  • World Bank
  • Organisation for Economic Co-operation and Development
  • Office of the National Economic and Social Development Board (NESDB)
  • International Telecommunications Union
  • Finance Ministry

The materials contained in this page were assembled in May 2017 (unless otherwise dated).

 

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