Thailand

Commentary

ASEAN (The Association of South East Asian Nations) has a population of over 600 million. This is more than the EU (450m) or the United States (340m). Its ten member states provide an impressive level of diversity, for history and culture, but also in politics, economic development and prosperity. The broad range of rules and approaches make it a challenge to manage treasury operations. But the population, economic dynamism and key role in global supply chains make it a crucial player in world trade.

The pattern on this call is not a surprise: Singapore is the most advanced and open economy in ASEAN. For most companies, it is part of their international cash pooling and sweeping mechanisms, along with Hong Kong, Australia and, to some extent, China. The Philippines, Indonesia, Malaysia and Thailand are open economies, but they generally require FX to be executed onshore, and cash pooling is usually via intercompany loans: automated sweeping is not allowed. Vietnam remains more difficult. Myanmar, Cambodia and Laos, continue to be highly regulated and short of hard currency. 

Despite their FX restrictions, several countries have incentives for MNCs to set up Regional Treasury Centres (RTCs). These are usually able to transact outside the exchange controls – usually excluding domestic transactions.

Cash pooling: Singapore is the only country in ASEAN where cross-border cash pooling does not present any issues. Regional cash pools are usually based there or in Hong Kong. Most of the other countries allow domestic pooling and sweeping, though experiences vary. They typically do not allow automated cross border pooling, which is instead achieved by making intercompany loans, usually manually, and subject to various approvals. 

Exchange controls: most ASEAN currencies are convertible, at least for goods imports. However, in many cases (again, excluding Singapore), the FX trade has to be executed onshore, with the USD or EUR then transferred outside the country. These trades are usually done from an offshore location. Thai baht can be paid out of Thailand, but the regulation is not ...