Thailand Central bank to relax rules, diversify risks

Move aims to ease global transfers
29 March 2016

The central bank will relax rules governing investment in products linked to foreign exchanges and transferring money internationally via mobile phones at the end of this month.

The move is primarily aimed at diversifying risks for investors and easing international mobile transfers under the Bank of Thailand’s Capital Account Liberalisation Master Plan, said Nutt Lumbikananda, director of the foreign exchange administration and policy department.

The second phase of the master plan covering 2015-17 will enable retail investors to invest in products linked to foreign exchanges but issued in Thailand, such as structured products linked to exchange rates issued by onshore banks, Mr Nutt said.

“We want the [financial] market to develop further in terms of asset class diversification for investors,” he said.

“What we did earlier to ease regulations [on capital outflows] has not affected [local] currency or caused economic volatility.”

The master plan’s first phase began in 2012, with the aim of encouraging Thai companies and depositors to diversify their investments and upgrade their efficiency in business operations by creating a supporting environment as well as increasing the flexibility of Thai residents in overseas investment and in foreign exchange risk management.

According to the latest rules adopted in July 2015, Thais can purchase foreign currencies for deposit up to a limit of US$5 million compared with $500,000, while the purchase value of properties abroad will be raised to $50 million per year from the previous $10 million.

The outstanding limit for non-residents in borrowing the baht from domestic financial institutions for transactions undertaken without underlying trade and investment in Thailand will be doubled to not exceeding 600 million baht, up from 300 million baht previously.

Regulations on international money transfers by telecommunication companies engaged in mobile payment will be relaxed to facilitate digital transactions, said Mr Nutt.

“Money transfers can currently be made via mobile devices and we [the central bank] only facilitate them [telecommunication companies] to be able to conduct international money transfers,” he said.

Money- changing operators will also be permitted to conduct international money transfers, of which further details will be revealed later, he said.

Mr Nutt said regulations concerning treasury centres are expected to be eased by the end of this month to be compatible with government incentives to attract foreign companies to set up international headquarters in Thailand.

They are currently about 12 operating licences for corporate treasury centres in the country, while 10 to 12 companies, most of them Thai, have expressed interest in setting up treasury centres here, he said.

Investors will also be allowed to directly invest in securities abroad in a bid to encourage them to diversify their portfolios.