Financial Sector Reform In Thailand

In the year 1997 October, the government in Thailand adopted financial sector reform in Thailand. This was effected by the establishment of Financial Sector Restructuring Authority to look into matters related to the failure of the financial companies.
The Financial Sector Restructuring Authority as part of the financial sector reform in Thailand dissolved as many as 56 to 57 financial institutions in the country and disposed off the assets belonging to these financial institutions. Once the financial institutions were dissolved, to attract investors, the government in Thailand adopted a different approach for the remaining financial companies.

These financial companies were restructured and recapitalized from a market based point of approach. However, this approach did not work out because the incentives offered by these financial institution were meager.

Moreover, the non performing loans shelled out by these financial companies were plenty and were increasing in number with every passing day. Regulatory as well as supervisory model encircling the financial sector reform in Thailand has made greater progress in the country.

Foreign direct investment in Thailand:
An important external finance source, foreign direct investment in Thailand has always played a vital role in the financial sector reform in Thailand. Foreign direct investment has been instrumental in the restructuring process of the corporate as well as the fiscal sector. As per norms, the country permits an investor to own 100% equity pertaining to financial institutions as well as banks within the country. Several measures have been taken by the government in Thailand to entice foreign investors. The measures adopted by the Thai government include making the rights of the foreign investors stronger, adopting simplified methods pertaining to acquisitions as well as mergers, reworked the laws related to bankruptcy, standards pertaining to evaluation of assets were also worked upon. Another measure adopted by the Thai government was the introduction of measures associated with short term taxes. The tax was launched to simplify the transfer of assets.

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Last Updated on : 26th June 2013

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