Thailand achieves low overall compliance with international standards and codes, with a score of 39.17 out of 100 in our Standards Compliance Index. Thailand's compliance in the area of macroeconomic fundamentals is reasonably high, although certain issues related to decentralization hamper fiscal transparency. In the market infrastructure category, Thailand is trying to keep pace with revisions in international accounting and auditing standards. Its corporate governance laws comply with international standards but lack effective enforcement, and Thailand's insolvency legislation as well as its implementation requires further action since it is still tailored towards the interests of debtors. Thai authorities have indicated their desire to bring their anti-money laundering regime on par with international standards. Thailand's ongoing efforts to improve financial sector regulatory oversight are reflected in recently enacted financial supervision laws, but the sector still lacks comprehensive assessments. The results of a joint IMF/ World Bank Financial Sector Assessment Program conducted in 2007 should change that, but have not been released as of March 2008.

Macroeconomic Policy and Data Transparency

Thailand became a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS) in August 1996 and started posting its metadata on the IMF's SDDS website in September 1996. According to the SDDS website and the 2006 IMF Report on Observance of Standards and Codes (ROSC), Thailand observes all SDDS requirements for the coverage, periodicity, and timeliness of data and provides advance release calendars for all data categories. However, with regard to central government debt data, there is no clear indication on the IMF's SDDS website as to whether the data are released simultaneously to all interested parties. Per the IMF's SDDS website and its 2006 ROSC, Thailand's data dimension observes most of the SDDS requirements on integrity and quality of data. Nevertheless, information on the SDDS website indicates that Thailand does not provide advance notice of methodological changes as prescribed by the SDDS. Instead, for several data categories, changes in methodology are presented only at the time of the change. The IMF's SDDS website also discloses that actual documentation on the methodology used for population data is expected to be published only at a future date. More »

In its yearly update on Monetary Policy Transparency in Thailand, Oxford Analytica (OA) stated that Thailand's overall score of "Compliance in Progress" remained unchanged from 2005. As a subscriber to the IMF SDDS, Thailand conforms to the requirements for coverage, periodicity, and timeliness of monetary data and makes a wide range of such data available to the public. A new Bank of Thailand (BoT) Act to replace the 1942 original had been stalled in the Legislature since it was first drafted in the wake of the 1997/98 Asian Financial Crisis. It achieved passage through Thailand's National Legislative Assembly (NLA) and entered into force on March 3, 2008. The new BoT Act will strengthen the independence of the BoT and formalize institutional procedures, including the terms of office and accountability of the governor and the Monetary Policy Committee. The NLA has already passed the Financial Institutions Business Act, making the BoT fully accountable for banking supervision. The BoT will be the sole banking trouble-shooter. No full report of the yearly Article IV Consultations between the IMF and Thailand has yet been published. In the abbreviated version, the Public Information Notice to the 2006 Article IV Consultation with Thailand, IMF Directors applauded the BoT's commitment to a market-determined exchange rate despite rising capital inflows and a strong appreciation of the baht, which should help absorb balance of payments shocks in the future. The IMF did not consider the economy likely to become uncompetitive due to the appreciating currency, since exports have performed well. More »

Thailand retains its "Enacted" rating in the 2006 Fiscal Policy Transparency Report by OA. The recent enactment of the BoT Act and the Financial Institutions Act, and the as yet still pending Currency Act and the Deposit Insurance Agency Bill should further improve Thailand's compliance with the IMF Code on Fiscal Transparency. A formal IMF ROSC was scheduled for 2007. The decentralization process has proved slower than initially hoped, but the current military government is committed to decentralize 35% of the budget to local administrative organizations, as set out in the Constitution. However, concerns remain that local government entities do not possess the necessary skills or capacity to be able to handle such a significant increase in the size of their budgets. Privatization, which previously had been seen as vital for reducing public debt, has been stalled. Thailand produces its public data in accordance with the IMF's SDDS and is in observance of its requirements on coverage, periodicity, timeliness, and the dissemination of advance release calendars. More »

Institutional and market infrastructure

The financial crisis of late 1990s highlighted the need for the complete revamping of the insolvency legislation in Thailand. The World Bank has been supporting reforms in Thailand through a direct aid and through a number of development partnerships programs. In a 2006 report on the completion of the Country Development Partnership on Financial and Corporate Competitiveness in Thailand (CDP-FC) aimed at increasing the competitiveness and fiscal strength of Thai companies, the World Bank noted that some progress had been achieved in addressing problems of corporate debt and restructuring. Nevertheless, further actions are required because the insolvency legislation and its implementation are still tailored towards the interests of debtors, and the proceedings are time-consuming and uncertain. Prior to the amendment of the Bankruptcy Act in 1998 and 1999, the only option available for companies in distress was a liquidation procedure. The amendments introduced a reorganization procedure modeled after U.S. Chapter 11, which allows debtors and creditors to reorganize a distressed company instead of being forced into liquidation. The U.S. Department of Commerce reported in 2007 that additional amendments to the Bankruptcy Act were introduced in 2004. More »

All companies in Thailand are required to prepare financial statements following Thai Accounting Standards (TASs) issued by the Federation of Accounting Professions (FAP). In cases where there are no TASs on the specific subject matter, companies must follow standards issued by the "authoritative body." (In practice, companies would choose to adopt International Financial Reporting Standards, or IFRSs.) According to a 2006 World Bank report, the Securities and Exchange Commission (SEC) and the FAP have announced their intent to adopt IFRSs as the accounting standards for the Thai capital market, and the FAP was planning to "substantially adopt" IFRSs by the end of 2006. However, according to the PricewaterhouseCoopers Quarterly Financial Reporting Update published in August 2007, the FAP had thus far published a total of 28 draft TASs, the final adoption of which was pending. The World Bank concluded that the FAP should continue to carry on its convergence project in order to eliminate the differences between TASs and international equivalents. In April 2007 the SEC reported that the SEC, the Bank of Thailand, and the FAP signed a memorandum of understanding in January 2007 that would provide support to the FAP in its convergence efforts. More »

According to a 2005 World Bank assessment, Thailand has made significant progress in improving its corporate governance since the financial crisis of 1997. The report indicated an overall satisfactory level of corporate governance in Thailand when compared to the Organization for Economic Cooperation and Development's (OECD) Principles for Corporate Governance. The Thai authorities have been active on many fronts to improve regulation, enforcement, and corporate governance culture. In March 2006 the Stock Exchange of Thailand issued a third updated version of a national corporate governance code. According to the Asian Corporate Governance Association, the new document follows closely the OECD Corporate Governance Principles and adopts recommendations made by the World Bank in 2005. The new code takes a "comply-or-explain" approach to corporate governance. The Thai Institute of Directors is running an effective Director Certification Program which is already mandatory for directors of companies applying for a listing. A 2006 OECD paper notes that the effectiveness of administrative sanctions by the SEC has increased, particularly against auditors and providers of securities-related services to investors. The SEC Director Registry is an effective tool for sanctioning directors of listed companies who fail to perform fiduciary obligations, as they can be removed from the "white list" and will subsequently be banned from taking directorships at any listed company. However, the World Bank notes that progress has been slow in revising relevant laws including the main laws dealing with corporate governance -- the Public Limited Companies Act and Securities and Exchange Act -- and the drafting of class-action lawsuit legislation. Legal enforcement of existing laws also remains a major challenge despite the positive developments. Enforcement is vitally important if corporate governance reforms are to result in improved practices. More »

All companies in Thailand must have their financial statements audited in accordance with the auditing standards issued by the FAP. The April 2007 issue of "Capital Thailand - Corporate Governance Updates" published by the SEC reports that the SEC, the Bank of Thailand, and the FAP signed in January 2007 a memorandum of understanding to provide support to the FAP in its convergence efforts. However, no further information as to Thailand's compliance with International Standards on Auditing issued by the International Auditing and Assurance Standards Board is publicly available. More »

In 2007, the IMF released a detailed assessment of Thailand's compliance with the Financial Action Task Force's (FATF) recommendations and special recommendations on anti-money laundering (AML) and combating the financing of terrorism (CFT). This assessment was based on the FATF 2004 methodology. Per this report, Thailand's AML/CFT legal framework is lacking in several key areas, and the overall regime is not completely in line with FATF requirements. The Anti-Money Laundering Act of 1999 is the main law governing AML/CFT activities in the country. According to the IMF 2007 assessment, the Act does not properly criminalize money laundering. Further, the report indicates that all financial institutions are not properly covered by AML/CFT regulations, the financing of terrorism is not criminalized fully in accordance with international standards, and the country does not fully implement key United Nations (UN) Security Council resolutions. The IMF report also notes that there are no legally enforceable requirements in place in relation to any categories of Designated non-Financial Business and Professions. The Anti Money Laundering Office acts as the financial intelligence unit in the country and, according to the IMF's report, lacks adequate resources and provides insufficient guidelines and feedback to the public regarding its AML/CFT efforts. Despite Thailand's current shortcoming in implementing the FATF recommendations, the 2007 IMF report notes that the Thai authorities have indicated their desire to bring Thailand's AML/CFT regime on par with international standards. More »

Thailand's systemically important payment system, as stated in the 2007 BoT publication, 'Payment Systems Report 2006,' is the Bank of Thailand Automated High value Transfer Network (BAHTNET) system. Other systems owned and operated by the BoT, such as the Retail Fund Transfer (SMART) system and the Electronic Check Clearing System (ECS) are deemed important by the authorities, but not systemically important. A 2004 working paper by Thavornchan and Hataiseree, staff at the BoT, assesses the BAHTNET system and concludes that the system observes 5 of the 10 Core Principles (CPs), broadly observes 4, and CP V is not applicable to BAHTNET system. The report, however, acknowledged the lack of an explicit payment system law and indicated that the BoT, at the time of the report in 2004, was working on a draft Payment Systems Act. However, there is no subsequent information on the BoT's website indicating the enactment of such legislation. The 2007 BoT report mentions that BAHTNET was assessed by the IMF and the World Bank in 2007 as part of their Financial Sector Assessment Program and that the assessment concluded that the BAHTNET system complies with most of the Core Principles for Systemically Important Payment Systems (CPSIPS). The actual IMF/World Bank assessment, however, is yet to be published. Thus, apart from the 2004 report by Thavornchan and Hataiseree of the BoT, there is little further information addressing Thailand's compliance with the CPSIPS. More »

Financial Regulation and Supervision

Thailand's financial sector has transformed significantly since the financial crisis of 1997, and the authorities have taken several reform measures in recent years to ensure a sound and stable system. For example, Thailand's Financial Sector Master Plan is a 5-10 year development plan that began its first phase in 2004 and had as one of its primary goals the implementation of an efficient, sound and competitive financial sector in Thailand. Further, according to a 2006 report by the World Bank, the Thai authorities together with the World Bank launched the CDP-FC that resulted in the enhancement of the regulatory and supervisory regime of the financial sector. A 2006 Selected Issues paper by the IMF also alludes to Thailand's ongoing reforms to improve regulatory oversight, including its significant legislative changes. For instance, the authorities have drafted the Financial Institutions Business Act, which is expected, among other things, to strengthen the BoT supervisory powers and its independence. Per a 2008 International Financial Law Review article, Thailand enacted the Act in late 2007. T. Watanagase, the present governor of the BoT, mentions in a 2006 report that the regulatory authorities in Thailand were in the process of working towards achieving compliance with international standards and codes in anticipation of the IMF's Financial Sector Assessment Program of Thailand in 2007. Apart from reports indicating Thailand's ongoing reforms and progress, there is little information publicly available in terms of Thailand's actual compliance with the Basel Core Principles for Effective Banking Supervision. More »

In 2004, The Thai Securities and Exchange Commission participated in the International Organization of Securities Commissions (IOSCO) self-assessment pilot program, in which IOSCO sent experts to assist pilot jurisdictions in assessing their levels of implementation of the IOSCO Principles. The findings indicated that the overall rules and regulations in Thailand are "in line with IOSCO Principles." Currently, the principal laws governing the capital market are the Securities and Exchange Act and the Public Limited Companies Act. The Thai Capital Market Master Plan II (2006-2010) aims to raise the standard and size of the capital market and necessitates amendments to the relevant laws to allow and develop an information exchange system among local and foreign regulators. A 2006 World Bank progress report notes a lack of progress in revising relevant laws such as the mentioned Acts. In 2007, a joint IMF/World Bank team visited Thailand under the Financial Sector Assessment Program, which included an assessment of Thailand against the IOSCO Principles. The findings have not been published as of January 2008. More »

In a 2006 report, the World Bank, which has been supporting reforms in the country first through a direct aid and later through a number of development partnerships programs, concluded that although significant results in implementing the reforms had been achieved, they were somewhat offset by the slow pace of legislative changes. Supervision of the insurance industry was found to be lagging behind that of other sectors, but improvements were expected. Finally, in September 2007, as reported by Bhaopichitr et al. in 2007, the Office of the Insurance Regulation and Promotion Commission Act was adopted. This Act established the Office of the Insurance Commission (OIC). The OIC supersedes the Department of Insurance under the Ministry of Commerce as the new insurance sector regulator in Thailand. Moreover, the long-awaited amendments to the Life-Insurance Act and the Non-Life Insurance Act were approved by the Cabinet on September 18, 2007. These key changes introduced new corporate governance, licensing, prudential, and consumer protection requirements. In addition, the foreign share ratio restriction rose from 25 percent to 49 percent, and all insurance companies are now required to convert to public companies. Although it is evident that the reforms of the insurance sector in Thailand are going in the right direction, there is insufficient information as to Thailand's compliance with the Insurance Core Principles promulgated by the International Association of Insurance Supervisors. More »

Legend:

Credit Ratings

Moody's Baa1/Stable

Fitch BBB+/Stable

Standard & Poor's A/Stable

Macroeconomic Data

2007 GDP (Current Prices): 245.7 billion USD (IMF)

2007 GDP (Per Capita): 3,737 USD (IMF)

2008 GDP (Growth Forecast): 5.2% (IMF)

2008 Inflation (CPI): 3.5% (IMF)

2007 Unemployment: 1.7% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 9.8 billion USD (UNCTAD)

FDI (Outward): 0.8 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): -216 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)