You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

January 9, 2025

Draft Legislation to Aid Thailand’s Ambition of Becoming a Financial Business Hub

Subscribe to Updates

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].

Related Professionals

Industries

Fintech

Practices

Banking and Finance

Capital Markets

Location

RELATED INSIGHTS​ 

March 20, 2023
Thailand has enacted new legislation to counter cybercrime and scams. The Royal Decree on Measures for Protection and Suppression of Technology Crimes B.E. 2566 (2023) (“Cybercrime Decree”) was published in the Government Gazette on March 16, 2023, and took effect the following day. The Cybercrime Decree provides a new legal tool to interrupt the money-laundering process and aims to crack down on cybercrime perpetrators and scammers by providing stronger legal measures applying to certain types of offenders that had not been sufficiently covered by existing laws. This new legislation grants victims the right to have commercial banks and online payment platforms freeze suspicious transactions and obligates these banks and platforms to comply with such requests. It further requires these banks and platforms—as well as other service providers—to share data for the prompt prevention and suppression of cybercrime. The key rights, duties, and offenses established by the Cybercrime Decree are detailed below. Freezing Transactions The Cybercrime Decree requires commercial banks and online payment platforms to temporarily freeze (for 72 hours) any related transactions of their account holders upon receipt of an alert from the account holder that he or she is the victim of cybercrime. Victims can report these illicit transactions by phone or electronic means. If by phone, the relevant bank or platform must document the call. The victim must file a police complaint about the illicit transaction within 72 hours of the freeze being made. A police inquiry officer will then notify the bank or platform about the complaint, and the transaction freeze must be maintained for seven days from the filing of the complaint with the police. The police will then determine whether it is necessary to keep the transaction frozen for longer than seven days. If the seven days lapse without a further order to freeze the
Read More
February 10, 2023
On January 16, 2023, Thailand’s Securities and Exchange Commission (SEC) prescribed a set of security measures that digital asset business operators must implement if they provide custody of digital assets for their customers. The new security measures are prescribed in two notifications from the SEC and its office on digital asset wallet management systems and cryptographic key management systems, with the aim of safeguarding digital assets in custody against loss, fraud, and cybertheft. The notifications took immediate effect. The new security measures and the management systems are summarized below. Policy and guidelines for managing systems related to digital asset custody Digital asset business operators must have a written risk management policy for all systems relating to digital asset custody, approved by their board of directors and made accessible to all employees. The policy must be reviewed or revised at least once annually, or promptly if any potential risks are identified. Specific procedures must be implemented, such as establishment of a compliance team and internal controls. Management of systems for digital asset wallets and cryptographic keys Digital asset business operators must have policies and procedures for managing all systems relating to digital asset custody. This includes properly designing, developing, and managing digital asset wallets in a safe and secure manner. The same requirement on policies and procedures applies to cryptographic key management as well. Management of incidents that may affect systems related to digital asset custody Digital asset business operators must have measures in place to manage incidents that may impact systems related to digital asset custody. The measures include designating a person responsible for incident management, testing and reviewing the incident management policy annually, reporting any incidents affecting digital asset custody to the designated responsible person and the SEC immediately, and conducting a digital forensic investigation with an independent
Read More
July 25, 2022
Vietnam’s current Law on E-Transactions was passed in 2005 and has been effective since March 1, 2006. This law is considered a framework law, developed based on the Model Law on E-Commerce of the United Nations Commission on International Trade Law (UNCITRAL). According to the Ministry of Information and Communications (MIC), over the past 17 years, the implementation and application of e-transactions has shown significant evolution in certain areas demanding high levels of international integration, such as banking and e-commerce, but has faced difficulties in other areas due to a lack of detailed guidance. In addition, with the strong growth and breakthrough development of digital technologies such as artificial intelligence, big data, biometrics, and blockchain, and in the context of the ongoing Industrial Revolution 4.0 and the development of digital government, digital economy, and digital society, the 2005 Law on E-Transactions has revealed its shortcomings. Therefore, the government of Vietnam has entrusted the MIC to take the lead in drafting a new Law on E-Transactions, which will replace the old 2005 law in order to meet the country’s development needs. Accordingly, the MIC published a Draft Law on E-Transactions (“Draft Law”) for public consultation from May 4 to July 4, 2022. The latest accessible version of the Draft Law at the time of writing is Version 4. The effective date of the Draft Law is still not yet determined, though this law is expected to be submitted to the National Assembly for its review and comments in October 2022 and approval in May 2023. The following are some key contents of the Draft Law: 1. Scope of Application Unlike the current law, which explicitly excludes certain areas such as the issuance of certificates of land use rights and marriage certificates from the scope of application, the Draft Law attempts
Read More
July 19, 2022
On June 23, 2022, Thailand’s Securities and Exchange Commission (SEC) opened a public hearing period on regulatory controls for initial coin offering (ICO) portals that serve as financial advisors to digital token issuers. The proposed measures aim to prevent conflicts of interest; allow ICO portals to outsource certain functions; and establish additional notification obligations for ICO portals. The public hearing is open for general comments until July 23, 2022, and the new legislation is expected to be issued soon after that. During the public hearing period, any interested parties can comment on the SEC’s proposed principles. The key proposed points are outlined below. Conflicts of Interest Similar to SEC-approved financial advisors for securities offerings, ICO portals must be clear of conflicts of interest when representing issuers in a coin offering. According to the draft regulation, the following conflicts of interest are prohibited: The ICO portal (and certain individuals as specified by the SEC) directly or indirectly holds a prohibited amount of shares in the issuer, its affiliates, or its subsidiaries. If the issuer is not a listed company, any shareholding or portion thereof is prohibited. If the issuer is a listed company on the Stock Exchange of Thailand (SET), the shares held by the ICO platform may not total more than five percent of the total voting rights. The issuer (and certain individuals as specified by the SEC) directly or indirectly holds shares in the ICO portal in any amount if the ICO portal is not a listed company, or totaling more than five percent of the voting rights if the ICO portal is listed on the SET. Any of the ICO portal’s directors or executives, or the head of the department responsible for screening the ICO project, is also a director in the issuer. The ICO portal has
Read More