Thailand’s Fiscal Policy Office (FPO) has released a draft of its planned Financial Business Hub Act, which is in line with the government’s aim of positioning Thailand as a regional financial hub and a critical player in the global economy. The draft act, on which the FPO is accepting comments until January 9, 2025, details the framework for promoting and attracting international financial businesses and related services to operate in Thailand, proposes various incentives, and outlines supervisory guidelines.

This article examines key elements of the draft Financial Business Hub Act relevant to financial business operators.

Incentivized Financial Businesses

The draft act identifies the financial businesses to be promoted and incentivized. These target businesses include:

• Commercial banking businesses,
• Payment service businesses,
• Securities businesses,
• Derivatives businesses,
• Digital assets businesses,
• Insurance and reinsurance brokerage businesses, and
• Other financial-related businesses as determined by the Committee for the Supervision and Promotion of Financial Centers.

Thailand’s finance minister explained that initially, the draft law intends to target businesses using an “out-out” model, which describes the raising of capital abroad for investment abroad, before expanding to an “out-in” model, in which capital is raised abroad for investment domestically. Therefore, the draft law currently specifies that the target businesses must only provide services to nonresidents without soliciting residents of Thailand to use their services.

Authorization

Targeted financial business operators will need to receive authorization from the Committee for the Supervision and Promotion of Financial Centers. The main eligibility criteria for authorization are the incorporation an entity (e.g., a company registered in Thailand, a branch of a foreign juristic person) with an office in designated areas to be specified in a royal decree (currently expected to be Bangkok and adjacent provinces) and the possession of other qualifications as prescribed in the draft act.

Target businesses in Thailand will be exempted from complying with the relevant industry-specific Thai laws (e.g., Financial Institution Business Act, Securities and Exchange Act, Royal Decree on Digital Asset Business) under the draft Act. In addition, authorized business operators will be exempted from complying with the Foreign Business Act, which is the main law supervising all foreign business activities in Thailand.

Authorized business operators will be subject to certain conditions, such as:

• Not soliciting Thai residents,
• Maintaining the ratio of Thai to foreign personnel specified by the committee,
• Having a place of business in the designated area,
• Having a separate account for customers’ assets,
• Having directors, authorized managers, or major shareholders possessing required characteristics, and
• Having directors and authorized directors being approved by the committee.

Incentives for Authorized Businesses

Various business promotions and incentives will be provided to authorized businesses, including exemptions from compliance with:

• Foreign ownership restrictions under the Condominium Act. Authorized business operators will not be subject to the foreign national quota for condominiums.
• Immigration restrictions for foreign workers. Authorized business operators will be exempted from the limitation on the number and duration of stay of foreign personnel under Thai immigration law. This exemption applies even if the number or duration exceeds the limits set by the law. These foreign personnel will also be deemed residents under immigration law. An authorization certificate to operate a target business will be deemed as a work permit for foreign personnel, superseding the need to obtain separate work permits.
• Exchange controls. Authorized business operators will be deemed as nonresident under exchange control laws and measures. Moreover, authorized FX business operators will be exempted from FX licensing requirements.
• Professional licensing restrictions. When professionals in the designated area are required to be of Thai nationality or possess a certification to practice, the committee may grant exceptions to those requirements.

In addition to the exemptions, if a business discontinues, merges, or transfers its operations, any benefits granted will remain valid for up to three months.

For more information or assistance regarding the Draft Financial Business Hub Act, public hearing period, and its development, please contact Athistha (Nop) Chitranukroh at [email protected], Pornpan Wichawut at [email protected], Rujaporn Paritsantik [email protected], or Karnravee Jitvilai at [email protected].