In the News: 2002

Asia Private Equity Review
1 May 2002

Four and a half years after the 1997 Asian financial crisis, Thailand is turning to venture capital as one of the potions to cure its bruised economy. Local management firms established in Thailand and registered with its Securities Exchange Commission ("SEC") will benefit from exemptions in both dividend withholding and capital gain taxes. However, the fund management company must have a minimum capital of Baht200 million (US$4.66 million) and a focus of investing in small and medium sized companies for no less than seven years. There is also a fixed investment schedule for the firms which benefit to follow.

The incentive is not regarded as a strong inducement to foreign capital. "Foreign fund managers would not see much benefit in this privilege because they can set up a fund in a Thailand tax-treaty country", commented Mr Virapan Pulges, chairman of the Thai Venture Capital Association.

Thai's SEC joins its counterparts in Southeast Asian countries in setting up a matching fund for foreign firms to invest in Thailand. In addition to sponsoring the Baht1 billion (US$23.3 million) SMEs Venture Capital Fund, it is also considering the granting of tax privileges to funds investing in debt-restructuring companies, such as Thailand Equity Fund which is managed by Lombard Investments. (for details, please refer to APER, November 2001 issue, p.11 - All Smiles in Thailand) (Thailand)