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Is Financial Technology (Fintech) the Next Major Sector in Thailand?

Transcript of the above video:

Today, we're going to be discussing Fintech Legislation. What are we talking about here? We're talking financial technology and in recent months, this has been an issue not only specifically for myself in a sort of financial capacity as I've had not a few increase with respect to issues surrounding the Fintech industry and Fintech generally.

But specifically, we're talking about financial technology here in the Kingdom of Thailand. In a recent article in the Bangkok Post, the article's headline is "Fintech Bill Secures Its Important Backing" June 10th, 2017. Just to quote quickly from this article and I quote "An all governing Fintech is key to making the ecosystem complete because no current laws are designed for Fintech business" said Korn Chatikavanij, the TFA chairman and former finance minister. TFA is The Fintech Association. That is the former finance minister here in Thailand.

This is interesting. Fintech is fast moving. It's a very dynamic area that's quickly evolving in real time as we speak and such things do not work very well when put up against legal frameworks, let's put it that way. The law has a tendency to constantly be looking backwards because that's effectively what the law does. It looks because all the law can do is look back to what we have experienced dealing with what laws were previously drafted, what decisions were previously made, how factual situations were dealt with in the past and how we're going to be dealing with them in the future. With Fintech, we don't have a lot to look back on because quite simply, it didn't exist.

I mean, really, more than 15 years ago, okay there was PayPal. Going back a little further than that, I can remember a time when everybody had to use checks. You know, financial technology has basically moved really warp speed the past few decades. Just in my lifetime, literally, I can remember when you had to be at the bank on Friday afternoon to get money for the weekend or you don't have money for the weekend. These days, you can pay virtually anything including the phone that's in your pocket.

So financial technology is moving fast and legally, that can be problematic. I find it very reassuring that the former finance minister is sort of leading the way in trying to come up proposing in that article, and I urge the viewers to go ahead and read that article, as that article points out they're proposing legislation to go ahead and create a framework for dealing with fintech here in Thailand. Candidly, with respect to inquiries I've gotten with respect to financial technology, it's very difficult to say where exactly this kind of instruments and firms and service providers fit in the legal framework that we're dealing with at the present time because if you fit them in the wrong category, the real difficulty it's not so much legally, oftentimes a legal practitioner can find a legal solution to a given set of circumstances. That's not so much the issue.

The issue is tax. If you fit it in the wrong loophole and you're doing something that happens to fit a certain definition under say, the Thai revenue code, a definition that you really don't want that endeavor to fit under because that's not what really is doing, the definition is ill-suited to what's actually occurring, it can result in a significant tax liability that can result in significant cost to be borne by the individuals who are undertaking this type of endeavors and if that's the case, it could be cause prohibitive to even get started in that industry. Hence the reason I think these folks are trying to figure out a framework that everybody can operate under in order to move this very dynamic sector into the Thai economy but do so in such a way that's legally transparent and also reasonable from a standpoint of revenue collection, from a standpoint of tax here in Thailand.

At present, I can't provide any clear or well-articulated guidance on Fintech in Thailand. I can say that depending on what an individual or individuals wish to do here in Thailand, it may be possible to do it even under the current legal framework. That being said, it's strong advised to contact an attorney, a legal professional here in Thailand, someone like us. We can put you in contact with Thai attorneys who deal with things like this on a day to day basis here in our firm or a legal professional in general just to get a good idea on how this stuff is working.

Again at present, it's very difficult to say how this stuff is going to work out but I can say I think it's pretty reasonable to presume that some sort of framework is going to be developed in the relatively near future and when it is, as these things are evolving, we're going to keep you up to date on this channel with respect to this issue because it's something I find rather interesting generally and it's something that's really quite a hot topic at the moment.