UK/Thailand: Lord Mayor’s Visit - Financial Services Liberalisation, But At Thailand’s Pace

British Embassy Bangkok

June 2012

Summary

The Lord Mayor, accompanied by a business delegation, visited Bangkok from the 22-24 May. Excellent access for the Lord Mayor and business delegation including meetings with the Deputy Prime Minister, Secretary General of the Insurance Regulator and Governor of the Bank of Thailand. Well attended “Unlocking Disputes” seminar and British Chamber hosted lunch. Clarification provided on banking, capital markets, PPP and insurance market access issues with several potential areas for further engagement. Good media coverage.

Detail

Banking

Deputy Prime Minister  Kittiratt, who has the finance portfolio, confirmed that banking liberalisation will continue under the Financial Sector Masterplan Stage 2 (which allows foreign banks to open up to 20 branches and ATMs). Finance Minister also saw potential for more banking licences to be offered to new market entrants as Thailand seeks to increase access to finance for SMEs (2/3rd lack access to finance). The banking members of the business delegation emphasised the importance of ensuring a level playing field for foreign banking entrants already in Thailand.

Capital Markets

The Finance Minister said liberalisation will continue in accordance with the Capital Markets Development Plan. There is potential for new stock broker and investment bank licences to be issued, but the Stock Exchange of Thailand (SET) will not be demutualised. The Finance Ministry is keen to see the SET forge international partnerships, including with the London Stock Exchange, to make it easier for Thai investors to trade in stocks listed overseas. Kittiratt also highlighted the importance of the SET upgrading its technology to ensure AEC regional connectivity.

Insurance

The Secretary General of the Office of the Insurance Commission (OIC) confirmed that the 2011 floods had a serious impact on domestic insurance company’s balance sheets. These companies need an injection of new capital. The OIC will allow foreign insurers to own up to 49% of a Thai insurance company (up from 25%). The Secretary General also confirmed that the Ministry of Finance could, on a case by case basis, approve 100% ownership of a domestic insurer.

The Secretary General also confirmed that the Life and Non Life Insurance Acts will be amended to remove the requirement that Thai individuals must hold more than half of the voting rights in a "Thai" insurance holding company. However, he didn’t think that the Act would be amended by February 2013, when it is due to come into effect.

Upgrading Thailand’s insurance expertise, especially in underwriting, is another priority.

PPP

The Finance Minister confirmed that the PPP law amendment is currently with Parliament for approval. The Governor of the Bank of Thailand and Finance Minister agreed that PPP is very relevant to Thailand and that UK expertise has a role to play.

Legal Services

The Lord Mayor delivered a keynote speech at an Unlocking Disputes seminar organised by Allen & Overy. The Lord Mayor was able to showcase the new Rolls Buildings and highlight the strengths of English law and UK expertise in arbitration to 25 representatives from leading Thai and international corporates.

Financial Action Task Force On Money Laundering

The Finance Minister assured the Lord Mayor and business delegation that steps were being taken to remove Thailand from the FATF’s grey list for money laundering.   Revised Anti-Money Laundering legislation could be approved in time for FATF's February 2013 review.

Comment

A worthwhile visit – and the first by a Lord Mayor since 2006 - that successfully raised the profile of the UK’s financial and professional services expertise. The Lord Mayor’s visit allowed us to clarify Thailand’s plans for liberalisation across the financial services sector. Insurance sector engagements were particularly appreciated.  Potential for renewed UK engagement in insurance, PPP and capital markets. There will be further opportunity to raise the profile of the UK capabilities in these sectors when PM Yingluck visits the UK in July.

Disclaimer

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