Thailand’s global headquarters, treasury hub plans off to good start

That number is encouraging as corporate treasurers deliberate factors such as human-resource operations, systems support, change management, and streamlining of processes and governance to establish their operations in Thailand. 

The efficiencies delivered by treasury centres are well acknowledged, and critical to their success is the right location. 

Now, Thailand has upgraded the IHQ and TC schemes from the previous Regional Operational Headquarters (ROH) regime to provide more tax incentives, which are a great door opener. 

Thanks to its geographical advantages, Thailand is considered an Asean hub. It has well-established manufacturing lines for many industries, low operational costs and abundant resources. More important, a number of relevant government agencies including the Board of Investment, the Bank of Thailand and the Revenue Department have been united in providing support for the IHQ and TC programmes. 

Under these schemes, companies will mainly gain from exemptions and lower rates of corporate income tax, personal income tax and withholding tax. 

Multinational companies originating in Thailand will have better control of liquidity and operations, such as centralised foreign-exchange transactions and inter-company funding arrangements to lower operational costs. 

Areas of improvement are financial benefits and improving operational efficiencies where companies mostly revamp their existing practices, stretching financial targets and streamlining their working processes.

Important aspects for setting up an IHQ or TC are market readiness, availability of local skilled labour, the country’s risk rating, the political environment, currency convertibility, the size of the FX market and legal controls. These are being reviewed to improve the overall competitiveness of Thailand’s programmes, relative to other established locations. 

In the medium to long term, the programmes are expected to attract more fund flows into Thailand, help improve local infrastructure to support business growth, and expand the market for and availability of skilled resources. 

These will help anchor Thailand’s aspiration to be a financial hub of choice among local and international investors. In terms of the next steps,| relevant stakeholders should closely collaborate and promote open |communication between corporates and government entities through a series of forums.

 Forming a committee drawn from the public and private sectors across the key industries as well as tax, law and finance specialists will be a key step to drive the scheme. 

Sharing the best practices as well as regular information updates in both Thai and English on public websites should also be one of the proactive tasks. 

Importantly, corporates should look to collaborating with a banking partner who is a trusted adviser on this journey to internationalise their treasury standards. 

An international bank with global depth in advising corporates in global treasury hubs as well as in Thailand is uniquely positioned to connect customers to opportunities, shed light on local regulations and practices, and provide treasury-management advisory with strong expertise to help customers achieve their business ambitions. 

 

Ai Chen Lim is head of global payments and cash management, HSBC Thailand.