On November 5, 2019, the Bank of Thailand (BOT) announced further relaxations of foreign exchange (FX) control regulations on investment in foreign instruments, such as securities and derivatives, in order to facilitate capital outflows and cope with the strengthening of the Thai baht. The key relaxation will, for the first time, allow Thai retail investors to send money offshore to invest directly in foreign instruments. These relaxed FX regulations, which came into effect on November 8, 2019, are summarized below.
Investment in foreign securities and derivatives
Prior to the issuance of the new regulations, there were 11 types of investors who were permitted to invest directly in foreign instruments, including (1) most institutional investors, (2) high net worth investors, and (3) qualified investors (QI)—entities or natural persons that have investments in instruments, derivatives, or deposits worth THB 50 million or more. The new regulations make the following changes:
In addition to the foreign instruments that QI were already eligible to invest in, the new regulations now also include OTC derivatives, endowment life insurance, unit-linked life policy, and universal life insurance. In addition, the new regulations also cancel the restrictions on countries where QI are allowed to make investments.
Retail investors are entities or natural persons that do not qualify as QI. They were previously only permitted to invest in foreign instruments through a Thai intermediary, but now retail investors are also permitted to invest directly in foreign instruments, with an annual cap of USD 200,000 per investor. The types of foreign instruments are similar to those for QI, and there is likewise no restriction on destination countries in which retail investors can invest. Any interested retail investor must first complete a one-time online registration with the BOT (www.bot.or.th).
- Aggregate investment limit
The BOT has announced that the aggregate investment limit, which is allocated to all investors regulated by the Securities and Exchange Commission, will be increased from USD 100 billion to USD 150 billion.
Repatriation of export proceeds
Exporters that have proceeds below the threshold of USD 200,000 per bill of lading will be able to keep the proceeds abroad, without a time limit. This is a significant relaxation from the previous threshold of USD 50,000.
In addition, exporters with foreign currency proceeds exceeding USD 200,000 per bill of lading will be able to use the revenues to offset foreign currency expenses, without the need to repatriate the funds.
When conducting outward transfers of foreign currency in an amount less than USD 200,000, the customer is no longer required to provide supporting documentation to commercial banks. This represents an increase from the previous threshold of USD 50,000.
Settlement of gold trading in foreign currency
Through foreign currency deposit (FCD) accounts, Thai investors are now permitted to trade gold in foreign currencies with certain gold trading companies that have received approval from the BOT. Previously, such transactions could only be conducted in Thai baht.