
holiday in thailand
Opportunities Thailand has a well-developed infrastructure and a free-enterprise economy. It has fully recovered from the 1997-1998 Asian Financial Crisis and was one of East Asia’s best performers in 2002-2004.
A number of foreign enterprises have discovered that Thailand is an ideal location to establish operations, due to the availability of a cost effective and increasingly well-educated labour force and also raw materials (e.g. precious stones, minerals, natural latex, marine products, agricultural products).
Thailand is also seen as a gateway to the emerging markets of Indochina – Vietnam, Myanmar, Laos and Cambodia.
Foreign Investment Foreign investment has been the driving force behind the rapid economic growth in Thailand. Large foreign investors in Thailand come from Japan, Europe, Singapore, the United States, Taiwan and Hong Kong.
Japan is by far the largest foreign investor in Thailand, involving mainly auto parts manufacturing and electronic parts production.
Although the government encourages foreign investment, there are still restrictions in respect of foreign ownership of many activities in accordance with the Foreign Business Controls.
There are a number of incentives available to those enterprises which obtain Board of Investment privileges which are usually granted to manufacturing operations that are deemed to be of benefit to the Thai economy or which are export-orientated.
Banking The Government regulates the Thai banking system through the Bank of Thailand, which sets restrictions in accordance with Thai Government policy.
There are various domestic banks, all of which are listed on the Stock Exchange of Thailand (SET).
These domestic banks have extensive networks of full-service branches across the country, and several, particularly the Bangkok Bank, have established overseas branches mainly within the Asia-Pacific Region.
Foreign banks are restricted, although some have been granted permission to open one branch within the Bangkok Metropolitan area (e.g. Hong Kong and Shanghai Banking Corporation (HSBC), Deutsche Bank, Citibank, etc.)
Exchange Control Foreign exchange transactions are conducted through authorized financial institutions and other authorized dealers. Authorized financial institutions are permitted to engage in all types of exchange transactions.
Authorized money exchangers can buy foreign notes and travellers’ checks and sell foreign notes to travellers. Authorized money transfer agents can accept foreign currency from abroad and remit foreign currency abroad for prescribed purposes.
Since 19 December 2006, foreign currencies exchanged or sold against the Thai Baht with authorized financial institutions in the amount of USD 20,000 or more is subject to a 30% reserve requirement, whereby authorized financial institutions must withhold 30% of the foreign currency as a reserve, except for transactions that are exempt from the reserve. The reserve will be refunded in full if the Thai Baht funds have remained in Thailand for at least 1 year. Otherwise, two-thirds of the reserve will be refunded.
The following inwards remittances of foreign currency are exempted from the 30% reserve requirement:
Foreign currency remittances for trading of goods and services; Repatriation of investments from abroad; Investments in equities in the Stock Exchange of Thailand, the Market for Alternative Investment, theFutures Exchange and the Agricultural Futures Exchange of Thailand;Investment in Thai companies, government loans and investment in immovable property;Inwards remittances from Thai embassies, Thai consulates and Thai government agencies locatedabroad;Inwards remittances by foreign embassies and consulates, the specialized agencies of the UnitedNations and international aid organizations in Thailand;Rollover of swap transactions with the same authorized financial institution;Travellers’ checks and foreign banknotes;Inter-bank transfers between authorized financial institutions for their own business;Foreign currency loans or foreign currency for the purchase of debt instruments in accordance with the rules and regulations;Purchase of non-performing loans or the payment of guarantee obligations under order of a Court or a specific authority; andInvestments in debt securities and unit trusts in accordance with the rules and regulations. Any person with foreign currency receipts from abroad may deposit them in a foreign currency account with an authorized financial institution, as follows:
1. Foreign currency account with a future obligation: a depositor must submit evidence of the obligation to pay in foreign currency within 12 months of the date of deposit. The balance of the account must not exceed USD 1 million for individuals and USD 100 million for companies.
2. Foreign currency account without any future obligation: the balance of the account must not exceed USD 100,000 for individuals and USD 5 million for companies.
Any person who is a permanent resident of Thailand can buy, exchange or borrow foreign currency from an authorized financial institution and can deposit it in a foreign currency account with an authorized financial institution, as follows:
1. Foreign currency account with a future obligation: a depositor must submit evidence of the obligation to pay in foreign currency within 12 months of the date of deposit. The balance of the account must not exceed USD 500,000 for individuals and USD 50 million for companies.
2. Foreign currency account without any future obligation: the balance of the account must not exceed USD 50,000 for individuals and USD 200,000 for companies.
Withdrawals from the foreign currency accounts are permitted for the payment of obligations abroad or for converting the foreign currency into Thai Baht with an authorized financial institution.
Board of Investment The Board of Investment (BOI) is the principal government agency responsible for providing incentives to stimulate investment in Thailand and conducts extensive investment promotion activities both in Thailand and abroad.
Investment Policies
The BOI may approve investment projects, which strengthen the industrial and technological capability of Thailand, as follows:
Use of domestic resources; Create employment opportunities; Develop basic and support industries; Earning of foreign exchange; Contribute to the economic growth of regions outside Bangkok; Develop infrastructure; Conserve natural resources; and Reduce environmental problems. Criteria for Project Approval For projects with investment capital (excluding the cost of land and working capital) not exceeding 500 million Baht, the following criteria are used:
The value added is not less than 20% of sales revenue, except projects that manufacture electronic products and parts or processed agricultural produce, and projects granted special approval by the Board;Ratio of liabilities to registered capital should not exceed 3 to 1 for a newly established project. Expansion projects are considered on a case by case basis.A promoted project shall be required to use modern machinery and production processes. In cases where old machinery will be used, its efficiency must be certified by reliable institutions and must obtain the Board’s approval;Adequate environmental protection systems are installed. For projects with investment capital (excluding the cost of land and working capital) over 500 million Baht, a feasibility study of the project, as prescribed by the Board, must be submitted.
Criteria for Foreign Shareholding When considering approval of foreign investment in a wholly foreign-owned project, or foreign equity participation in a joint-venture project to which investment promotion has been granted, the Board utilises the following criteria:
For investment projects in agriculture, animal husbandry, fishery, mineral exploration and mining and service business under list one of Foreign Business Act, Thai nationals must hold shares totaling not less than 51% of the registered capital.For manufacturing projects, in all zones, foreign investors may hold a majority or 100% of shares in promoted projects;For some promoted projects, the Board may fix the shareholding of foreign investors as deemed appropriate.Investment Promotion Zones
There are 3 Investment Zones based on economic factors, such as the level of income and the availability of infrastructure in each province, as follows:
Zone
Provinces
1
Approved projects located in Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut
Prakan, and Samut Sakhon
2
Approved projects located in Ang Thong, Ayutthaya, Chachoengsao, Chonburi, Kanchanaburi,
Nakhon Nayok, Ratchaburi, Samut Songkram, Saraburi, Suphanburi, Phuket, and Rayong
3
Approved projects located in one of the following 58 provinces: Chai Nat, Chaiyaphum,
Chanthaburi, Chiang Mai, Chiang Rai, Chumphon, Kamphang Phet, Khon Kaen, Krabi,
Lamphang, Lamphun, Loei, Lopburi, Mae Hong Son, Mukdahan, Nakhon Ratchasima, Nakhon Sawan, Nakhon Si Thammarat, Nongkhai, Phang Nga, Phattalung, Phetchabun, Petchburi, Phitsanulok, Pichit, Prachin Buri, Prachuab Khirikhan, Ranong, Sakaew, Singburi, Songkhla,Sukhothai, Surat Thani, Tak, Trang, Trat, Udon Thani, Ubon Ratchathani, Uthai Thani,Uttaradit, Amnat Charoen, Buriram, Kalasin, Maha Sarakham, Nakhon Phanom, Nan,
Narathiwat, Nong Bualampu, Pattani, Phayao, Phrae, Roi Et, Sakhon Nakhon, Sathun, Si
Saket, Surin, Yasothon, and Yala.
Investment Incentives A promoted enterprise may be granted certain guarantees, privileges and tax incentives, as follows:
GuaranteesAgainst nationalisation;Against competition from new state enterprises;Against state monopolisation of the sale of products