Thailand will shortly enact
legislation covering financial technology (fintech) to answer the challenges that will emerge as it embraces new forms of financial transactions and related services online. Thailand lags behind some of its neighbours in Southeast Asia in terms of adopting digital technology, but it is not too late to catch up with the likes of Singapore and Malaysia.
First, the new law has to assist both domestic and foreign digital entrepreneurs in launching tech initiatives in Thailand. Second, it has to ensure that consumers are adequately protected when they use the electronic services in their financial dealings.
The new law is needed because there is a clutter of existing fintech-related laws and they cannot viably be amended or consolidated. It was preferable that a brand-new bill be drafted to connect all the dots and take into account the boom in electronic banking and the like, which needs to be promoted among both investors and consumers. Such services are a crucial component of the digital economy.
Over the past year or two, the growth of fintech start-ups has been phenomenal, and they account for 60 per cent of all tech start-ups. That surge has forced regulators to play catch-up as increasingly more consumers rush to use the new services – despite the lack of specific laws governing these services.
There are several legal shortcomings that negatively affect both consumers and businesses. For instance, companies are still required to gather their shareholders together in one physical location for meetings. Yet modern technology makes it easy to hold those meetings conveniently and securely via teleconferencing. That’s something the new legislation will address.
In another example, opening a bank account currently requires a personal visit to the bank and the presentation of a physical ID card. Increasingly, people would rather do this online, and again, the technology is readily available to facilitate it. The new law should allow the use of government databases to verify applicants’ identities and thus legitimise non-face-to-face identification, based of course on certain restrictions.
A related new law covering both electronic and traditional payment systems will sanction e-payment platforms such as PromptPay and the wider use of QR (Quick Response) codes as a means of payment. The Bank of Thailand will have to introduce a single QR code system for such payments and block the use of too many formats. We need a unified system applicable to all vendors, big and small. This will help facilitate all forms of payment with the use of smart mobile phones, since both payees and payers can be electronically verified in the QR system.
The payment system will also boost online commerce to an extent that consumers in more remote areas will benefit from more convenient purchases and have greater opportunities to sell their own products online.
The new law will aid both entrepreneurs and consumers. It will be easier to launch fintech and other kinds of start-ups and more attractive for foreign venture capitalists to invest here. Locally registered VC funds will be entitled to tax exemptions on capital gains for up to 10 years. Start-ups’ income taxes will be exempt for up to five years and pay no taxes on capital gain when selling a profitable business.
The new legislation should bode well for Thailand’s digital economy and society.
Published : September 28, 2017
By : The Nation