New models in 2008
Bark@themoon
First of I would like to say "sawaddee" to our readers. This is my first column writing for Hua Hin Mirror who have given me the chance to write about the automobile business, and its marketing, products, car users, etc. The column will appear in the Business and Technology section. Readers should know that this article is written based on objective information and news that I have consumed through my experience. I hope that our readers would benefit from this article. If you want to make any suggestions of comments please contact me through Hua Hin Mirror.
The first month of the new year passed very quickly. Maybe it's because we are in a fast paced business with fierce competition. In the car business we work very hard and often forget about the time. Just like automobile market moves fast because of the competition. This year there are many new models and products on offer and more importantly, our customers are more wealthy and spend a lot. Let's have a look of what's new.
Starting late last year, in December 2006, 2 new multi purpose vehicles (MPV) were introduced to the Thai market. The Honda CR-V has a totally new look from head to tail and inside out. Better yet, the starting price makes you drool. New CR-V comes with 2-wd and 4-wd with 2.0L and 2.4L.
At the same time Ford brought out the Ford Everest, 2nd edition, to the market. Ford claims they made 75% change to this one and they offer facilities such as new technology 5-speed automatic gears, 4 airbags, etc. This Ford will not compete with the major market leaders such as Toyota Fortuner. Ford still comes second when it comes to shape and fame in Thailand. However, Ford versus MU7 will make an interesting competition.
For those who like the Ford Escape there will be a new model this year. I've talked with a local dealer and they told me "it will be at the end of this year".
One of the most interesting models of the new year Jan 2007 is the Nissan Navara. Nissan put all kinds of technology in this car to attract buyers and to make it compatible with the big body. The engine is new with versions of a Commonrail diesel 2.5L. at 174 and 144 horsepower. The Navara features a glamorous interior with open cab. The Nissan company believes that this one has a bright future with Nissan. I'd recommend you to have a test drive to see if this one has been worth waiting for.
In second quarter Chevrolet will send an MPV "Captiva" to compete with CR-V and Fortuner. You can choose from either Diesel or Benzene. Usually Chevrolet surprises its fans with prices. Let's see what it's going to be this time.
Back to Thailand comes Hyundai, the Korean car under the management and marketing team from Japan is struggling for a bigger share of the Thai market. This time they will not use price as their strategy. The first model introduced will be to be the Sonata in the 4th quarter.
Finally, Thailand welcomes new car from India for the first time. TATA will feature its own pickup truck with small block 2.0L diesel engine. I think they're going to use that price strategy I mentioned to try to get some market share.
All this is just a part of our automobile market of course. Next month I will be discussing a different aspect of the industry. Meanwhile I would like to remind our readers to drive safe with full concentration and have a Happy New Year!
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Proposed Changes to Foreign Business Act Don’t Affect BOI Scheme
Source: BOI
BOI affirms that the BOI investment promotion scheme will not be affected by the proposed changes to the Foreign Business Act.
Mr. Satit Chanjavanakul, Secretary General of the Board of Investment (BOI), said that the approval of the Cabinet on the amendment to the Foreign Business Act does not interrupt the Board’s investment promotion policies and procedures. According to the Investment Promotion Act, the BOI allows foreign equity participation up to 100 percent in all activities eligible for investment promotion, except those specified in list 1 whereby BOI has already required Thai majority ownership, and in activities that fall under specific laws such as telecommunications, and marine, air and land transport.
Therefore, companies that have already received or seek BOI investment promotion will not be subject to the proposed ownership rule revision, except those in the activities mentioned above. Currently, there are 7 categories covering over 273 activities in both manufacturing and services eligible for BOI promotion.
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Thai Government remain committed to the free market: PM said
Source: Prime Minister’s Office
An address by His Excellency General Surayud Chulanont (Ret.), Prime Minister of the Kingdom of Thailand to the Joint Foreign Chambers of Commerce in Thailand
Conrad Hotel, Bangkok
“I am pleased to be here today to address the members of the Joint Foreign Chambers of Commerce in Thailand. I thank you for your invitation and kind introduction.
This opportunity to meet with distinguished investors, diplomats and other friends of Thailand is most timely. I am sure all of you are interested in hearing about the priorities of this Government over the coming year. Many of you are doubtless concerned about the future of political reform and economic policy. Thank you for your interest, and look forward to our dialogue today.
It should be clear to you all that since the peaceful military intervention last September, Thailand has entered another period of strategic transition. We are moving through uncharted waters but with a clear destination to be reached within a very limited time.
Every nation faces such watershed moments in its political and socio-economic development and Thailand is no exception. The events of October 1973 and 1991-1992 are the most recent in our own modern history. Both times the Kingdom emerged with enhanced democratic credentials, with stronger foundations to deliver a better life for the majority of its citizens.
I am confident that this current transition will also be accomplished successfully, although no one should underestimate the great challenges we face. Deeply entrenched vested interests will struggle to defend their special access to power and money while this Interim Government is committed to eradicating their influence once and for all. No one should underestimate our resolve in this matter either.
To achieve our stated and unshakeable goal of free and fair elections before the end of this year, this Government is addressing four major reform themes:
-- Successful political reform;
-- The restoration of national unity, which will require healing the political divide between Bangkok and the rural majority and bringing reconciliation and justice to our brothers and sisters in the deep South;
-- Reducing the income gap; and most importantly,
-- Strengthening the rule of law, so that justice is available to all citizens which will require rooting out corruption and reforming the administration of justice and the police.
I will address each of these themes and then discuss some specific economic issues…which may be of passing interest to you. But please keep in mind that each and everyone of this Government’s actions is designed to help Thailand become a more transparent, more efficient, more productive, more equitable and more sustainable society, goals which I am sure you share.
Looking first at our goal of successful political reform, I wish to assure you that the tragic events of New Year’s Eve will not deter us from pushing forward according to the timeline prescribed in the Interim Constitution. My Government deeply regrets the loss of innocent lives and is pursuing the perpetrators vigorously. At the same time, we are putting in place more effective systems of surveillance to ensure the safety and security of Thais and foreign visitors alike.
Political reform remains our top priority. The Constitution Drafting Assembly (CDA) and its chairman have been selected and work will begin on drafting the new Constitution within days. The Government will seek to promote large scale public participation and inclusive national debate. We will also ensure that the new Constitution provides for the effective functioning of a vibrant system of checks and balances. Although we are not an elected government, we will ensure the swift return to a more democratic government that can fully reflect the aspirations of the people.
Secondly, restoration of national unity means that we will reinvigorate our peaceful approach to promoting reconciliation in the Deep South. This year, we will ensure that the newly-restored Southern Border Provinces Administrative Centre (SBPAC) is given the resources it requires to pursue its coordination work. It will be difficult to eliminate violence altogether, but over the next few months the space for extremism will be reduced. Development activities will be strengthened, including cooperation with neighboring countries in the Indonesia-Malaysia-Thailand Growth Triangle, so as to expand opportunities for people living in the area.
Thirdly, tackling income inequality and promoting social justice will be further pursued. Improved access to education and health, as well as improvements in the quality of the public services offered, will pave the way for a more knowledgeable and healthy workforce. Addressing these concerns will truly open up Thai society and make it more robust to face future challenges.
Finally, progress in strengthening the rule of law will bring benefits in terms of eradicating corruption in government as well as in business life. Indeed, we are determined that the rule of law will apply in all spheres, with no double standards. The work of administering justice has already been revitalized. I am currently studying the recommendations put forward for reform of the police, who are our front line in the administration of justice. Again, difficult choices are involved, but it is my determination to press forward this reform within the term of this Government.
If 2007 is to be the Year of Great Reforms, this also means putting the economy on a sustainable track. Our economic agenda is clear. Guided by our key operating principles of transparency, justice, efficiency and the economical and sustainable use of resources, we will be moving ahead to pursue further economic progress. Our efforts in 2007 will be geared towards expanding business opportunities and improving productivity to adjust to the world economic slowdown, while expediting prioritized infrastructure development projects and proceeding on legal reform.
On this point, I can categorically say that Thailand will continue to engage with the global economy. Amidst the competition in the global market place, no country can take another course. Even as we build up our internal resilience, Thailand will continue to embrace international trade and investment as key drivers of our economic dynamism.
Let me remind you of some key facts and figures that support the picture of strong fundamentals in the Thai economy. Despite the successive shocks of drought, flood, high oil prices and political uncertainty, our exports continue to show a strong performance with an increase of around 16.9 percent year on year. Long term investors continue to show substantial interest in Thailand, with the Board of Investment approving approximately 3 billion US dollars in foreign direct investment during the last 3 months. This is compared to the figure of 11 billion US dollars during the first 9 months of last year. New investments have been announced in the past weeks, including by Ford and Panasonic. And although this year Thailand and other Asian economies may be constrained by the world economic slowdown, we are confident that a growth rate of 4-5 percent can be maintained. Despite upward pressures on the baht, our exchange rate regime and expansionary fiscal policy are designed to ensure this growth.
Globalization and regional cooperation will continue to provide Thailand with many opportunities. The recent East Asia Summit in Cebu which I attended laid out bright prospects for the future of East Asian countries. This Government will do its utmost to grasp these opportunities. It will doubtless mean change. However, what we are doing is to ensure that Thailand can manage this change successfully.
Promoting the “Sufficiency Economy Philosophy” of His Majesty the King as a fundamental principle of development policy means that we will focus on stable growth, sound macro-economic discipline and the equitable sharing of economic benefits as we compete in the globalized world. Growth with quality means greater concerns for good governance and management of risk. But such concerns do not impact on the market mechanism, nor do they influence the openness of the Thai economy. In fact, the “Sufficiency Economy Philosophy” is a Thai model for sustainability, the importance of which is only now becoming recognized around the world. As an early adopter of a sustainable approach to development, Thailand should, I believe, be praised, for it is a path down which every country or company will have to travel sooner rather than later.
Close scrutiny of the Government’s record shows that we promote openness. We remain committed to the free market, to the liberalization of trade in goods and services. Thailand has thrived, and will continue to thrive, on foreign trade and investment. We very much look forward to pursuing FTAs in the ASEAN framework which will benefit the regional economy as a whole. At the same time, to ensure transparency we have subjected our bilateral FTA negotiations to scrutiny in terms of the key principles of transparency, justice, efficiency and cost-effectiveness. As such the Japan-Thailand Economic Partnership has been debated by the Cabinet, undergone a public hearing and will be submitted to the National Legislative Assembly for consultation. Above all, this process will ensure that, for once, our people are able to manage the changes that are to come.
We are actively stimulating economic activity through continuing the implementation of carefully selected mega projects. While ensuring continuity, we have also subjected mega projects to the same means testing. Those that are beneficial to the general public will be expedited.
Accordingly, the expansion of the mass rapid transit system in Bangkok will be realized, involving 5 additional lines covering 118 kilometres. The Ministry of Transport, together with other agencies concerned, is currently conducting feasibility studies and detailed design for further submission to the Cabinet. We expect procurement for these projects to commence soon and to be completed within the tenure of this Government.
Other high priority infrastructure projects involve improvement of the logistics network, which will reduce transportation costs, and an integrated water resource management system to address floods and droughts. Over the coming months, we will be ensuring the facilitation of budget disbursements so as to promote maximum feed-through effects for the entire economy.
Infrastructure is also a major focus for our economic cooperation with neighboring countries. The expansion of communication routes with neighboring countries, such as the Second Friendship Bridge across the Mekong, will bring increased opportunities from leveraging Thailand’s geographical and logistical advantages. By promoting common prosperity with our neighbors, we are also actively enhancing our own potential.
New opportunities are being fostered in several sectors. In the energy field, these result from pro-active approaches in addressing the energy crisis. For instance, the Petroleum Act will be revised to attract more investments in the exploration and extraction of petroleum fuel. Invitations for investment in new Independent Power Producers (IPP) will be announced around March, calling for some 400 billion baht in fresh investment in power generation. Meanwhile, cooperation is being sought on bio-fuels.
In the automobile sector, the Board of Investment has announced new incentives for the manufacturing of low-cost, fuel efficient automobiles. The so-called ECO Car will benefit from Thailand’s strong production base in the automobile sector, and by responding to market demand will complement our existing specialization in the field of pick-up trucks.
In addition, the Government believes that market opportunities will expand when competition is fair. Thus we are leveling the playing field in previously distorted industries such as the telecommunications sector, ensuring the proper operation of independent regulators. Retail and wholesale trade are being examined to ensure balance. Competition law is also being strengthened through the setting of clear criteria.
At the end of the day, I firmly believe Thai consumers and all foreign investors in the Kingdom will benefit. Through all these measures, the Royal Thai Government is improving governance and investing in the physical and intellectual infrastructure of the country. By focusing on stimulating the real economy, we are establishing a firmer basis for economic growth.
The same concerns for transparency and predictability guide the proposed revision of the Foreign Business Act (FBA). Let me stress that the proposals will not affect existing foreign companies in manufacturing industries, export businesses, BOI-promoted industries or those businesses not listed under the Act. We merely seek to put an end to the previous precarious position many investors had been put into as a result of the investigation into complaints about Foreign Business Act violations. This determined, above all, the timing of the revision.
We know businesses welcome predictability. We know businesses like to see fairness and transparency, without selectivity. The measure is aimed to achieve these objectives by creating a level playing field. The amended Act is expected to strengthen our oversight capacity, address previous loopholes, while avoiding the creation of unnecessary obstacles to FDI. Indeed, where impediments are found, we will be looking to see how we can inject additional elements of liberalization into the measure, just as increasing flexibility is being shown over the question of capital reserve requirements.
I thank the JFCCT for making its views on this matter known at an early stage, including as reflected in the letter to me from Mr. van Haren. Let me assure you that the Government takes into serious account the JFCCT’s concerns. We are serious about dialogue and ensuring transparency in all that we do. This is why I, together with the Government economic team, am here today at your kind invitation. And this week, Ministers and officials concerned will be making additional clarifications. The Cabinet decision 2 weeks ago was a decision on the principle, and the final text will still have to undergo various processes before it is approved by the National Legislative Assembly.
I wish to reiterate that the proposed revision should not be construed as an act of “deliberalizing” the Thai economy. It represents legal and technical adjustments rather than any change in overall economic direction. Thailand and Thai companies will continue to welcome foreign partners and external participation. Indeed, the undertaking is already given that the list of restricted activities attached to the Foreign Business Act will be reviewed on an annual basis. As I have repeatedly stressed, the Royal Thai Government will uphold its international obligations. What we do will therefore be WTO-compliant and will be consistent with our international undertakings.
I would urge that all stakeholders take time before coming to any firm conclusion about proposed adjustments. You can be assured that we are looking at the long term. We will not, by design or by default, kill the goose that lays the golden egg.
In the meantime, we are continuing to lay down the crucial foundation for Thailand’s long term competitiveness. The national vision will need strong building blocks for our economic resilience and efficiency and productivity. We are moving ahead on these long term improvements, including through preparation of the National Productivity Improvement Plan and the National Intellectual Infrastructure Plan. In order to achieve quality growth, we need to constantly develop the quality of our human capital, physical capital and technology, particularly where SMEs are concerned. We also need better ways to combine them to produce goods and services, and develop new ones. This will require a better innovation system to nurture new ideas.
I hope that our foreign partners will join us in this great collective enterprise for us to prosper together. Indeed, we urge you to put forward recommendations for improving efficiency, transparency and productivity, not only in your businesses, but also in government. Join us in the fight to promote corporate and government responsibility. In so doing you will be renewing your commitment to the Kingdom of Thailand as we celebrate the auspicious occasion of His Majesty the King’s 80th Anniversary.
With regard to this auspicious event, I wish to take this opportunity to invite all foreign businesses operating in Thailand to join the Kingdom’s celebrations by launching your own “sufficiency economy” or sustainability projects under the theme of “From His Majesty’s wisdom, sufficiency for our children”.
You can launch such projects within your own organizations or in connection with the communities in which you operate. The sustainable use of resources means seeking greater efficiency in every area in which you operate which in the long term is, I believe, good for the bottom line.
The Year of Great Reforms that I have outlined represents our progress toward a more sustainable development path, both in political and economic terms. In view of the many challenges along the way, it will require cooperation on the part of all Thais. It also will require the active cooperation of all our friends. You can be assured that Thailand does not take the contributions of the foreign business community for granted. We need the trust and confidence of our partners for these actions to succeed.
It is my fervent hope that our good friends in this room will continue to support our efforts to build successful political reform and establish the socio-economic preconditions for quality growth. Through our actions in 2007 I fully expect that Thailand will become a better place in which to invest and do business. It will indeed become more transparent, more efficient, more productive, more equitable and more sustainable--all long-term goals to which every nation should aspire.
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Amending Foreign Business Act surely would not affect export industry
Source: Prime Minister’s Office
Deputy Prime Minister (MR.Pridiyathorn Devakula) chairs the press conference on the amendment of the Foreign Business Act B.E. 2542 (1999). He confirms that the amendment will not affect the existing foreign companies in manufacturing industries, export businesses, other business not listed under the Act, and any other businesses under the promotion of BOI which are exempted from the Act. The details of the amendment are as follows:
1. Definition of “Foreigner”: Previously “Foreigner” was defined by the promotion of investment value or capital shares held by a person not of Thai nationality. The new amendment will include into the definition a voting right as well. A business where “Foreigner” holds majority voting right that is 50 percent or more will in this case be regarded as a foreign business.
2. Adjustment time frame:
2.1 Existing businesses with foreigners’ voting right of 50 percent or more will be allowed to continue their operation under the following condition;
- Businesses under List Three (3) are eligible for continued operation provided that they reported themselves to the Authority within 1 year of the enactment of this Amending Act.
- Businesses under List One (1) and List Two (2) of this Act that have reported themselves to the Authority within 1 year and have reduced foreigner’s voting right to the level not exceeding 50 percent within 2 years of the enactment of this Amending Act.
Note: Authority means the Ministry of Commerce
2.2 Existing businesses where both foreigners and nominees are holding 50 percent or more of the total shares will be allowed to continue their operation under the following conditions:
- Businesses under List One (1), Two (2) and Three (3) of the Act that have reported themselves to the authority within 90 days of the enactment of this Amending Act will be given an adjusting period of 1 year to reduce foreigners’ voting right to the level not exceeding 50 percent.
3. List of Businesses
3.1 List One (1) and List Two (2) Businesses remain unchanged
• List One refers to businesses not permitted for foreigners to operate due to special reasons.
• List Two (2) refers to businesses related to the national safety or security or affecting art and culture, tradition, folk handicraft or natural resource and environment.
3.2 List Three (3) Businesses, refers to businesses which Thai nationals are not yet ready to complete with foreigners, amended by
1) Termination of the regulation of businesses that are under jurisdiction of other authorities, consisting of;
- Tour-guide business
- Future trading of commodities and related businesses
- Stock and security trading business
- Banking business
- Financial service business
2) Regulation on retail businesses of all sizes (previously covered only a business with minimum capital less than 100 million Baht)
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What You Need to Know about Setting up a Business in Thailand
Source: BOI
The following is an overview of establishing a business in Thailand.
As in most countries, there are three kinds of business organizations in Thailand: Sole proprietorships, partnerships, and limited companies. The most popular form of business organization among foreign investors is the private limited company.
Private limited companies require a minimum of seven promoters and must file a memorandum of association, convene a statutory meeting, register the company, and obtain a company income tax identity card. They must also follow accounting procedures specified in the Civil and Commercial code, the Revenue Code and the Accounts Act. A balance sheet must be prepared once a year and filed with the Department of Revenue and Commercial Registration. In addition, companies are required to withhold income tax from the salary of all regular employees.
The Ministry of Industry administers The Factory Act, which governs factory construction and operation, as well as safety and pollution-control requirements. In some cases, factories do not require licenses, in other instances the requirement is simply to notify officials in advance of start-up, and in some cases licenses are required prior to commencing operations. Licenses are valid for five years, and are renewable.
Thailand recognizes three kinds of intellectual property rights: patents, trademarks, and copyrights.
The Patent Act protects both inventions and product designs and pharmaceuticals. The Copyright Act protects literary, artistic works, and performance rights, by making it unlawful to reproduce or publish such works without the owner's permission. The Trademark Act governs registration of, and provides protection for, trademarks.
The Alien Occupation Law requires all foreigners working in Thailand to obtain a Work Permit prior to starting work in the Kingdom, except when they are applying under the Investment Promotion Law, in which case they have 30 days to apply.
Non-Immigrant visas provide the holder with eligibility to apply for a work permit, and allow the holder to work while the work permit application is being considered.
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Rules and Practices Regarding the Reserve Requirement
Source: Bank of Thailand/Unofficial Translation
1. Collection of Reserve Requirement on Foreign Currency Purchased or Exchanged against Baht
In undertaking a purchase or exchange of foreign currency against Baht in an amount valued at 20,000 US dollars or above or its equivalent, the authorized juristic persons shall request the seller of the foreign currency to submit documents indicating the purpose of the foreign exchange transaction. In addition, the authorized juristic persons shall seek the consent of the individual as stipulated by the Competent Officer to withhold part of the foreign currency exchanged as reserve requirement. The authorized juristic persons shall comply as follows:
1.1 With respect to foreign currency originating from trades of goods and services, or repatriation of investments abroad by resident, the authorized juristic persons shall demand supporting documents according to the notice of the Competent Officer. Once it has been verified that the foreign currency is indeed for the aforementioned purposes, the full amount of foreign currency can be exchanged against Baht.
1.2 With respect to foreign currency for purposes other than those stipulated in item 1.1, the authorized juristic persons shall withhold 30 percent of the foreign currency purchased or exchanged (hereafter known as the reserve requirement) while the remaining shall be fully exchanged into Baht.
1.3 The authorized juristic persons shall provide a copy of the signed consent agreement and proof that reserve requirement has been withheld to the seller or exchanger of foreign currency. The authorized person shall certify and endorse documents with regards to the foreign currency transaction or on the SWIFT order form as proof that funds have been withheld as reserve requirement and may be refunded subject to the practices stipulated.
1.4 In the case of transactions with non-residents, the authorized juristic persons may specify the non-remunerated reserve requirement conditions in the foreign exchange agreement instead of in the agreement form provided.
1.5 Foreign exchange transactions with trade date prior to 19 December 2006 are exempt from the reserve requirement as stated in 1.2.
1.6 Before purchasing or exchanging foreign currency for the purposes under item 1.2, the authorized juristic persons must notify the seller or exchanger of foreign currency of the following:
(1) Funds held under the reserve requirement will be non-remunerated.
(2) Funds under the reserve requirement will be refunded subject to evidence that the Baht obtained by the seller or exchanger of foreign currency has remained in Thailand for a period not less than 1 year.
(3) Should the seller of foreign currency wish to repatriate funds earlier than one year, only two-thirds of the amount held in reserve will be refunded in accordance with the signed consent agreement.
(4) Funds held in reserve that is not redeemed by the seller of foreign currency within 2 years from the date of sale or exchange of foreign currency will be considered forfeit.
(5) Practices for requesting the refund of reserves and timeframe associated with such requests are explained in item 3.
(6) Once the seller or exchanger of foreign currency has acknowledged and signed an agreement to proceed according to items (1) through (5), the authorized juristic persons may conduct the foreign exchange transactions.
1.7 The authorized juristic persons shall ensure that the customer specify the actual amount of the foreign exchange in the foreign exchange transaction form that are sold to the authorized juristic person.
1.8 Inter-bank transactions between authorized juristic persons for management of foreign exchange risk are exempt from the reserve requirement as set out in item 1.2.
2. Remittance of Funds Withheld in Accordance with the Reserve Requirement to the Bank of Thailand
2.1 The authorized juristic persons shall set up a separate account for the reserve requirement. If the setting up of a separate account is not desired, a system must be in place to keep track of and clearly identify the reserve requirement. This information must be readily available for inspection by the Competent Officer.
2.2 The authorized juristic persons must maintain detailed records of the reserve requirement according to the stipulated rules and practices to ensure accurate refund of the reserve requirement. At a minimum, the documents must include the following: transaction number, transaction date, settlement date, name, surname, currency denomination and amount exchanged, amount withheld as reserve, purpose of transaction, date of remittance of funds held under reserve to the Bank of Thailand, due date in 1 year, and the reserve redemption date.
2.3 The authorized juristic persons must remit foreign currency held under reserve each month to the Bank of Thailand. The remitting procedure shall comply with international standards in the foreign exchange market. The procedures are as follows:
(1) Notify the Bank of Thailand o f the remittance in writing as well as complete and sign the "Report on Remittance of the Reserve Remittance" and the "Foreign Exchange Transaction Report for Transactions Not Subject to the Reserve Requirement" in accordance with the procedures set out in item 5. The reports shall be sent to the Bank of Thailand by the 5th of the following month.
(2) Remit total reserves withheld during each month to the Bank of Thailand on the 7th of the following month. The Bank of Thailand will specify the account number to be used for this purpose at a later date.
(3) Maintain records and other evidence related to the reserve requirement for at least 5 years and ensure that these are available on request for inspection by the Competent Officer.
3. Requesting a Refund of the Reserve Withheld
A customer seeking refund of the reserve withheld should submit a written request to the authorized juristic persons who will then request the customer to submit supporting documents. Once the authorized juristic persons examined and certified the legitimacy of the application, the authorized juristic persons shall proceed as follows:
3.1 If the funds have remained in the country for at least 1 year, the authorized juristic persons shall refund the full amount of the reserve requirement withheld.
3.2 If the funds have remained in the country for less than 1 year, the authorized juristic persons shall refund only two-thirds of the amount in accordance with the customer's signed consent agreement.
3.3 In requesting a refund, the authorized juristic persons shall compile a list of names of customers that the authorized juristic persons deems a refund should be granted, along with the amount to be refunded and other details according to the "Report Requesting Refund of Reserve Requirement from the Bank of Thailand" indicated in item 6. This form should be endorsed and sent to the Competent Officer within 5 days of the date on which the refund was requested.
3.4 Once the application has been successfully lodged, the Competent Officer will notify the authorized juristic persons of its decision within two business days and the funds will be transferred to the authorized juristic persons within three business days of the notification date.
3.5 An authorized juristic persons receiving notification stated in item 3.4 shall, in accordance with its own rules and practices, refund reserves withheld to the customer on the same day which the refund is transferred by the Competent Officer to the authorized juristic persons.
4. Other Related Rules and Practices
The authorized juristic persons must examine and oversee Baht deposit/withdrawal activities in the Non-resident Baht Account (NRBA) to ensure compliance with the following rules for withholding the reserve requirement:
4.1 The authorized juristic persons must verify evidence regarding the purpose of all foreign currency purchased or exchanged against Baht and deposited into the NRBA. In the case that the authorized juristic persons can ascertain that the funds are for payment of goods and services, repatriation of investment by Thai residents, or repayment of loans made by Thai residents, the authorized juristic persons shall deposit Baht into the NRBA and ensure that they are used for the stated purpose within the same day.
4.2 Reserve requirement must be withheld in accordance with stated rules and conditions on foreign currency purchased or exchanged against Baht by the authorized juristic persons and deposited into the NRBA for purposes other than those stated in item 4.1. To facilitate the subsequent refund of funds held under reserve as well as ascertain the length of investment in the country, the authorized juristic persons shall advise the seller or exchanger of foreign currency against Baht to state clearly the purpose of the Baht funds before the funds are deposited into the NRBA.
4.3 Baht funds that non-residents wish to deposit into the NRBA which is not obtained by selling or exchanging foreign currency but originate from a Thai resident for payment of goods, services, or goreign investment can be deposited once the authorized juristic persons has satisfactorily examined related evidence. The authorized juristic persons must ensure that such funds are withdrawn and exchanged into foreign currency by the non-resident within the same day.
5. Reporting and Documents
5.1 The authorized juristic persons shall maintain related documents for at least 5 years and be available to provide information and evidence related to the transactions upon request by the Competent Officer.
5.2 The authorized juristic persons shall use the enclosed report format and submit the reports to the Bank of Thailand according to the methods and time frames stated below:
Report |
Send to |
Deadline |
Report on Remittance of the Reserve Requirement |
FOG_RR@bot.or.th |
Within the 5th of every month |
Foreign Exchange Transaction Report for Transactions not subject to the Reserve Requirement |
FOG_RR@bot.or.th |
Within the 5th of every month |
Report Requesting Refund of Reserve Requirement from the Bank of Thailand |
FOG_RR@bot.or.th |
Within 5 days after submission of application for the refund from the customer |
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Rules and Practices on Currency Exchange (No.6)
Source: Bank of Thailand
By virtue of the power conferred in Clause 3 of the Notification of the Ministry of Finance on Directions of the Minister to Authorized Agents dated 31 March B.E. 2547, the Competent Officer hereby issues directions as follows:
Clause 1: Authorized juristic persons shall act in compliance with the following practices with respect to foreign currency purchased or exchanged against Baht:
(1) Authorized juristic persons shall have an agreement with persons selliing or exchanging foreign currency consenting to the withholding of the 30 percent of the amount as reserve requirements except in the following cases:
(a) Foreign currency not exceeding 20,000 US Dollar or its equivalent at market prices.
(b) Foreign currency for the trading of goods, services or repatriation of investments abroad by residents. Authorized juristic persons shall request supporting documents from persons selling or exchanging foreign currency in accordance with Clause 15 of the Notice of the Competent Officer Regarding Rules and Practices on Currency Exchange dated 31 March B.E. 2547. After the authorized juristic persons have verified that the supporting documents are true and correct and the foreign currency are for the trading of goods, services or the specified investments, the authorized juristic persons can proceed to exchange the foreign currencies without being subject to the withholding of the reserve requirement.
(c) Foreign currency withheld as reserve requirement and subsequently refunded to residents.
(d) Foreign currency withheld as reserve requirement from non-residents and subsequently refunded by authorized juristic persons and sold to authorized juristic persons.
(e) Foreign currency permitted by the Competent Officer on a case by case basis.
(2) Authorized juristic persons shall provide evidence of withholding the reserve requirement under consent to to the seller or exchanger of the foreign currency and keep the consent form and copy of the evidence at the authorized juristic persons for examination by the Competent Officer upon request.
(3) Authorized juristic persons shall report on the withholding of reserve requirements in the form and practices as prescribed by the Competent Officer within the 5th of the following month.
(4) Authorized juristic persons shall buy or exchange the remaining foreign currency after withholding the reserve requirement into Baht with the consent of the seller or exchanger of foreign currency by submitting the foreign exchange transaction form. The authorized juristic persons shall follow the practices related to the documentary evidence and the reporting requirement as prescribed under Clauses 44 through 47 of the Notice of the Competent Officer Regarding Rules and Practices on Currency Exchange dated 31 March B.E. 2547, as well as affix the stamp and certify in the foreign exchange transaction forms that the required reserve requirement has been withheld.
Clause 2: Authorized juristic persons shall collect and remit the reserve to the Bank of Thailand on the 7th of the following month according to the prescribed criteria and procedures.
Clause 3: If any person shall request for the refund of the reserve requirement, the authorized juristic persons shall act according to the following practices:
(1) In the case that the reserve requirement is being requested for refund after the authorized juristic persons has exchanged the foreign currency for Baht after 1 year, the authorized juristic persons shall request supporting documents from the person demonstrating that the funds have remained in the country for a period of not less than 1 year. Once the authorized juristic persons has examined and verified that the documents are true and correct as well as ascertained that the funds have remained in the country within the specified period, the authorized juristic persons can submit the request to the Bank of Thailand for the refund in the amount withheld under the prescribed criteria and procedures.
(2) In the case that the reserve requirement has been maintained in the country for less than 1 year and is being requested for refund, the authorized juristic persons shall submit the request to the Bank of Thailand under the prescribed rules and practices to refund in the amount two thirds of the reserve withheld as consented by the person to sell or exchange the foreign currency into Baht with the authorized juristic persons in Clause 1.
The reserve requirement is non-remunerated. As such, any refund of the reserve requirement will not include any returns on reserve. If refund of the reserve requirement is not requested within 2 years after the initial sale or exchange of foreign currency for Baht, the amount is considered forfeit.
Clause 4: Authorized juristic persons shall inform the persons seeking to sell or exchange foreign currency into Baht regarding the practices on the request for refund as stated in Clause 3 prior to the transaction.
Clause 5: Authorized juristic persons shall treat the refunded foreign currency as foreign currency originating from abroad.
Clause 6: Any other practices apart from that are stated in Clause 1 through 5, authorized juristic persons shall act in accordance with stipulated rules and practices or as permitted by the Competent Officer on a case by case basis.
Clause 7: This Notice is effective from 19 December B.E.2549 onwards.
Given on 19 December B.E.2549
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The World Wide WHY?
Will Shankly
Many of us in Hua Hin were left twiddling our fingers at our keyboards over the past couple of weeks, clicking the “Refresh” button occasionally and wondering “why the wait?”
As we sat frustrated, in front of our computers, we blamed the Internet Service Provider again, or the staff in the Internet café, or maybe even Thailand altogether!
When we experienced the major slow down in Internet communications on December 26th 2006, we at MK Internet Café called our Service Provider to ask why our 4Mbps ADSL bandwidth was behaving like a dial up connection and were told that it was due to an earthquake in Taiwan!
First thoughts were “well, that’s original, if nothing else!” I’d never heard that excuse before!
Most of you reading this will now know that this “phantom” earthquake did actually happen and did actually disrupt internet not only in your house or internet cafe in Hua Hin, but communications across Asia and beyond.
The Internet has taught us how much everything in this world is connected, and we don’t realize how fragile many of these connections are until they are taken away.
For most expats or tourists in Thailand, the Internet is as much a part of our daily routine as breakfast in the morning. When we don’t eat it, we get hungry. We feel starved of information. Without taking that metaphor any further, we have come to rely greatly on the Internet for so many things.
But how exactly can an earthquake near Taiwan stop us from connecting to Hotmail, Yahoo, Skype or YouTube.com?
CAT or the Communications Authority of Thailand--the major player in Communications in Thailand, when it comes to the Internet, they have a major say in everything that goes on because they control the “International Gateway” that we must pass through to get to all websites outside of Thailand.
There is a common misconception that data transfers happen in the “ether”. While I guess this could be said for satellite and wireless communications now (both still in their infancy in Thailand) most of the data we send still ends up going through copper wire or fiber optic cables. Even satellite communication in Thailand ends up leaving the country through fiber optic cable.
So if these cables are damaged then data flow from all sources is restricted or worse, stopped. Which is precisely what happened on Dec 26th near Taiwan. Six main undersea data transmission cables were ruptured and, as the red lines on the CAT map shows, this disrupted all traffic flow to the USA.
Since the flow of world Internet traffic is dominated by the USA--up to 90% of the world’s internet traffic passes through the USA--then the disruption is more understandable. Even getting to European web sites was as “slow as molasses” but where there is a problem in one part of the Internet there will often be a problem in many parts as providers re-route traffic through other cables and other countries causing congestion there. For example, traffic to the US (all the Hotmail, MSN, Yahoo etc etc) had to be re-routed through Europe, causing major bottlenecks there. Everything is connected!
I am writing this on Jan 12th and as of a couple of days ago, things seem to have improved with close to “normal” service being resumed with CAT, my service provider. No “refresh” button required; and less cursing now. Smiling customers again.
In fact, I am thankful that as I sat in my Internet cafe with my unsatisfied customers in the New Year, most people had things in perspective. While Internet problems do inconvenience most of us, and some people even lose money from them, an earthquake can have far more devastating effects, as two years ago on the same day, in the Andaman Sea, proved beyond doubt.
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