Emerging Markets Rates and Currencies Handbook

45 Citi | Emerging Markets Currencies Handbook 2021 Thailand There is a single foreign currency account for all FCD purposes. Thai residents can receive, buy/borrow a foreign currency and deposit it into a “single FCY account” with authorized bank without limit, regardless of whether there is an obligation. Domestic transfers among FCDs owned by Residents can be done freely. Outbound transfers can be done in accordance with the amount as stated in the obligations, or for the purpose of investments in foreign securities. For onshore markets, underlying documents are required for booking spot and forward transactions. FX hedging shall be done with onshore Financial Institution where by the size and tenor shall be in line with foreign currency obligations and exposures. There is exception on obligation related to Goods and Services where by forecasted hedge can be done up to 1 year. Hedging longer than 1 year requires an invoice, unless prior approval has been obtained from the BOT. Non-deliverable forward (NDF) on FCY/THB is not allowed. In addition, THB invoices or USD invoices between two resident counterparties that would be settled in THB could not be used as an underlying for FX hedge. Deal Management Rollover : Permitted with supporting documents, for net settlement only allowed with the same original hedging bank. Unwinding : Unwind of FX contracts on goods and services is allowed if reasons fall under BOT pre-approved reason lists. Early Maturity : Early take-up is allowed with the required provision of supporting documents at maturity. Documentation Requirements Trade flows The underlying documents such as invoices or summary of invoices are needed for outward remittance. However, only purpose code is required for inward remittance. Capital flows/FDI Investment in Business abroad, the following evidence must be required: • Board Resolution for investment. • Certificate of registered capital and list of shareholders or partnerships certified by the Ministry of Commerce, in case of a juristic person. • MOU (Memorandum of Understanding) or Tender offer, documents proving the acquisition. • For investments of at least USD 10 million or equivalent at market rate, an “Acknowledgement of a Request for Investment in a Business Abroad” issued by the Competent Officer must be additionally required. Lending to Business abroad, the following evidence must be required • Intercompany Loan Agreement. • Certificate of registered capital and list of shareholders. • Evidence indicating the percentage of shareholding or ownership . • Related evidences regarding the borrower such as a permit for business registration of the borrower, memorandum of association. • For investments of at least USD 10 million or equivalent at market rate, an “Acknowledgement of a Request for Investment in a Business Abroad” issued by the Competent Officer must be additionally required. Repayment of principal of loans from abroad, the following evidence must be required: • Intercompany Loan Agreement. • Evidence of inward remittance of the loans for which the transferor’s name, country of origin, receiver’s name, loan amount can be verified such as credit advice Swift MT103. Remittance of dividend, the following evidence must be required: • Board of meeting or Dividend declaration. • List of shareholders. Additional Comments Effective in January 2021, the BOT has relaxed Rules and Practices under Measures to Prevent Baht Speculation, in the form of pilot project, to allow each type of financial institutions to enter into Baht-related transactions with NRs that are juristic persons and meet the qualifications as specified by the BOT (Non-resident qualified companies: NRQCs) in a more flexible manner. This aims that NRs that have trade and investment in Thailand can more flexibly engage in transactions in the domestic markets. To request for the “qualified companies: QCs” status approval, NRs must: 1. Be a juristic person as specified in Rules and Practices under Measures to Prevent Baht Speculation. 2. Not operate business relating to financial transactions except treasury center business abroad and not operate gold-related business. 3. Have an obligation to make a payment or receive to/ from residents, or be responsible for managing foreign exchange risk relating to Baht of other NRs having obligation to make/receive a payment to/from residents (not including portfolio investment).