The Bank of Thailand (BoT) is closely monitoring the trend of non-performing loans in commercial banks as the economy shows signs of recovery, albeit concentrated in certain sectors. The criteria for controlling personal loan ceilings will take effect next week, while the Ministry of Finance assures that the private sector need not worry about the new excise tax law set to be implemented this September.

Mr. Veerathai Santiprabhob, Governor of the Bank of Thailand, stated that the BoT is keeping a close watch on the trend of non-performing loans in commercial banks, even as the Thai economy shows a clear recovery trend. The BoT has already revised its economic growth forecasts for 2017 and 2018. However, it acknowledges that the recovery is not evenly distributed, with some business sectors still facing ongoing impacts from previous economic slowdowns, as evidenced by the increase in bad debts among large businesses in the second quarter of 2017.

“The increase in bad debt is not a major concern as commercial banks have set aside high reserves, which has led to a decrease in profits in the second quarter of 2017,” Mr. Veerathai said.

He further mentioned that the adjustment of criteria for unsecured personal loans and the control of credit card loans will be published in the Royal Gazette and will take effect next week. The principles have already been approved, and the new control criteria will not apply retroactively to customers who have previously applied for loans.

Regarding the situation of the Thai baht, it is confirmed that the strengthening of the baht aligns with the regional currencies and is not unique to the baht, as it is influenced by the weakening of the US dollar.

On the other hand, Mr. Wisut Srisuphan, Deputy Minister of Finance, revealed after presiding over the seminar “Reforming Excise Tax: Impact on Business Operations in Thailand,” organized by the American Chamber of Commerce in Thailand (AMCHAM Thailand), that the new excise tax law will promote transparency, efficiency, and fairness for taxpayers. Initially, there are no expectations for increased revenue from tax collection, but it aims to lay the foundation for fair, transparent, and clear tax collection for both domestic and foreign operators.

The new excise tax law, which took over a year and a half to develop, has been continuously discussed with the private sector, which has expressed no concerns regarding the upcoming excise tax law. Currently, the legislation is in the process of drafting subsidiary laws, with close coordination and exchange of opinions with operators. The new tax rates will not increase the tax burden in the initial phase.

Ms. Judy Ben, Executive Director of the American Chamber of Commerce in Thailand, expressed appreciation for the government and the Ministry of Finance for reforming the excise tax to be more international and fair, allowing operators to compete equally by changing the tax base from factory gate prices or declared import prices to recommended retail prices, among others.

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