BoT eases up on exporters' rules

BoT eases up on exporters' rules

Move aims to rein in baht's appreciation

The Bank of Thailand has relaxed regulations related to exporters' foreign currency proceeds and foreign securities investment to encourage capital outflows and rein in the baht's strength.

The central bank on Wednesday announced four measures, taking effect tomorrow, to stimulate capital outflows and lessen pressure on the baht. The moves are also aimed at reducing Thailand's massive current account surplus.

For the first measure, the central bank will allow exporters to keep foreign currency proceeds overseas. Exporters with proceeds below US$200,000 per bill of lading shall be allowed to keep the proceeds abroad, without a time limit, a relaxation from the current $50,000 threshold.

In 2018, bills of lading with value of less than $200,000 amounted to export value of over $100,000, accounting for almost half of all exports.

Central bank governor Veerathai Santiprabhob said the relaxed regulations will help businesses reduce fund transfer costs and manage foreign exchange risks more efficiently.

The central bank has been talking with the Finance Ministry about increasing the threshold for export proceeds that don't need to be repatriated to $1 million per bill of lading within the next three months.

For the second measure, retail investors will be allowed to invest up to $200,000 per year in foreign securities, without having to invest via a Thai intermediary. Previously, they would need to meet specified criteria in terms of asset ownership in order to invest directly.

The aggregate investment limit allocated to investors regulated by the Securities and Exchange Commission will also be increased to $150 billion.

The third measure is associated with tweaking outward transfers, which are currently allowed based on a positive list of specific purposes. Such transfers will be allowed freely except for a few specific purposes, such as for settlement of foreign exchange or baht transactions with financial institutions abroad.

"Individuals who want to relocate abroad or transfer funds to relatives abroad shall be able to do so freely," the central bank said. "Those who want to purchase real estate abroad shall be allowed to do so up to $50 million per year as previously, but the property can now be in the name of a family member [rather than their own name]."

Documentation shall no longer need to be provided to commercial banks when conducting outward transfers of less than $200,000. This is an increase from the current $50,000 threshold.

For the fourth measure, the regulator has eased the settlement of gold trading in foreign currency. Thai investors shall be allowed to trade gold in foreign currencies, through foreign currency deposit accounts opened with onshore commercial banks, with designated gold trading companies that have received approval from the central bank.

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