"They can park their money denominated in foreign currencies in Thai banks. It will not be subject to the 30-per-cent withholding, if it is not converted into baht," Suchart Sakkarnkosone, director of the central bank's Financial Markets Operations Group, said yesterday.

Local companies can hold up to US$50 million (Bt1.8 billion) in foreign-currency deposits at local banks if their loan proceeds are not immediately needed.

The deposits would not have to comply with the central bank's reserve requirement until they are converted into baht.

These borrowers have to clarify details of their obligations, particularly the foreign debts that would be used within six months. The $50-million ceiling could be lifted on a case-by-case basis, which would give local debtors more room to stash their money temporarily.

The new guideline will help companies save their capital from the non-interest bearing reserve at least for a time.

PTT Group is among the local corporations seeking funds abroad. But it has hesitated to make the borrowing decision for its Bt200-billion investment plan because the central bank's capital-reserve requirement would increase its cost of borrowing.

The Bank of Thailand encourages Thai companies to put their foreign-currency loan proceeds in domestic accounts rather than offshore accounts, which will allow the authority to monitor money flows more easily.

Local companies have to report to the central bank all new foreign debts, if they want to hold some foreign-currency money abroad for purposes such as payment for goods.

This allows the central bank to get an idea of their overall obligations and prevent any problem when they need dollars to settle debts.

For example, if a company borrows $100 million from overseas but parks $20 million overseas for goods purchased in foreign countries, it will draw in only $80 million and then report this amount to the Bank of Thailand. The central bank wants the company to tell it the entire amount of debt rather than only the $80 million brought in. Otherwise, the bank's figures will not match the total indebtedness, and the company would not be allowed to exchange baht into dollars to retire the entire debt.

"Under the rule, they will not be able to buy dollars back, if the central bank does not have any evidence of the entire borrowing," Suchart said.

Non-residents can change their non-resident baht account into a non-resident baht account for securities (SNS) to trade in the Stock Exchange of Thailand, Market for Alternative Investment, non-voting depository accounts, Thailand Futures Exchange and Agricultural Futures Exchange of Thailand.

This makes it more convenient for non-residents as they do not have to open new accounts, but the SNS will not be allowed for other purposes aside from stock investment.

Commercial banks must file weekly reports to the central bank on the details of the accounts.

Anoma Srisukkasem

The Nation