WORLD TRADE ORGANIZATION  
ORGANISATION MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL DEL COMERCIO 
WT/TPR/M/255/Add.2 
17 February 2012 
 (12-0919) 
Trade Policy Review Body 
28 and 30 November 2011 Original: English/ 
 Anglais/  inglés 
 
  
TRADE POLICY REVIEW 
THAILAND 
Record of the Meeting 
Addendum 
Chairperson:  H.E. Mr. Mario Matus (Chile) 
 
 This document contains the additi onal replies provided by Thailand.1 
__________________________________________________________________________________ 
 
Organe d'examen des politiques commerciales 
28 et 30 novembre 2011  
EXAMEN DES POLITIQUES COMMERCIALES 
THAÏLANDE 
Compte rendu de la réunion 
Addendum 
Président:  S.E. M. Mario Matus (Chili) 
 
 Le présent document contient les réponses additionnelles fournies par la Thaïlande.1 
__________________________________________________________________________________ 
 
Órgano de Examen de la s Políticas Comerciales 
28 y 30 de noviembre de 2011  
EXAMEN DE LAS POLÍTICAS COMERCIALES 
TAILANDIA 
Acta de la reunión 
Addendum 
Presidente:  Excmo. Sr. Mario Matus (Chile) 
 
 En el presente documento figuran las res puestas adicionales facilitadas por la Tailandia.1  
                                                      
1 In English only./En anglais seulement./En inglés solamente.  WT/TPR/M/255/Add.2 
 Page 3 
 
 
  ADDITIONAL REPLIES PROVIDED BY THAILAND 
HONG KONG CHINA AND JAPAN 
 
(WT/TPR/S/255, p. 123, paragraph 92)  
 We note from the Secretariat report that, as of end 2010, three Thai insurance companies were granted 
an exception to the limits on foreign ownership.  Among the three, one was authorized to have up to 99.9% foreign ownership.  We woul d like to know if this is a standing policy for the Thai authorities 
to consider granting such an exception, and whethe r the authorities may later withdraw the exception.  
We would also like to know the guidelines for th e companies to apply for such an exception.  
 
Answer 
According to Section 10 of the Life Insurance Act B.E. 2535 (1992) Amended by the Life Insurance 
Act No. 2, B.E. 2551 (2008) and Section 9 of the Non-Life Insurance Act B.E. 2535 (1992) Amended 
by the Non-Life Insurance Act No. 2, B.E. 2551 (2008), "If the Commission deems appropriate, it 
may permit persons of non-Thai nati onality to hold shares in a proportion of up to forty-nine percent 
(49%) of the total number of voting shares that have been sold, and permit persons of non-Thai 
nationality to serve as directors, in an amount excee ding one-fourth (1/4), but less than one-half (1/2), 
of the total number of directors.  In granting such  permission, the rules regarding shareholding by the 
persons under the first pa ragraph shall apply, mutatis mutandis . 
 
In the event the Company's standing or operations are in a condition that might cause damage to the 
insured or the public, the Minister, upon the recommendation of the Commission, is empowered to grant a relaxation to permit the Company to have  shareholders or directors otherwise than as 
stipulated under the second paragraph. When gr anting such relaxation, the Minister may also 
prescribe the rules or time conditions for such."   
 
In terms of the criteria used for considering an insurance company's request to increase its foreign 
ownership, the company's objective in increasing its fo reign ownership must meet at least one of the 
following:    
1. to solve the financial condition and the operation of the insurance company; 
2. to increase the insurance company's capab ility in expanding its business, which is 
 beneficial to the insurance industry;  and 
3. to develop the insurance business in the ar eas of technology, product innovation, human 
 resource, etc., which require knowledge  and expertise from other countries. 
 EU AND SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND 
MATSU  
 
WTO Secretariat's report, page 116, paragraph 62 
 
The Secretariat's report notes that for life and non-life insurance services, foreign equity participation 
is capped at 25%.  
 
Could Thailand please confirm if this statement is still correct? It is our understanding that the 
amended Life Insurance Act (No. 2) B.E. 2551  (2008) and the amended Non-Life Insurance Act 
(No. 2) B.E. 2551 (2008) the Office of Insurance Commission the discretion to allow up to 49% of the 
shares (as well as its voting rights) to be held by foreigners as well as the power to relax the 
requirement regarding the nationality of the directors provided always that not more than half of the total number of directors on the board of directors can be foreigners.  WT/TPR/M/255/Add.2 
Page 4  
 
  Answer  
According to Section 10/9 of the Life/Non-Life Insurance Act B.E. 2535 (1992) Amended by the 
Life/Non-Life Insurance Act No. 2, B.E. 2551 (20 08), "The Company must have directors who are 
Thai nationals in a number equivalent to not less th an three-fourths (3/4) of the total number of its 
directors, and must have persons as stipulated under (1 ) or (2), or (1) and (2) below, holding its shares 
in an aggregate proportion of more than seventy-five  percent (75%) of the total number of its voting 
shares that have been sold:  
(1) Thai individuals, or non-registered ordinary  partnerships, in which all partners are Thai 
 nationals;  and 
(2) Juristic persons registered in Thaila nd and possessing the following characteristics: 
 (a) having the persons under (1) holding its shar es in excess of fifty percent (50%) of the 
  total number of its voting shares that have been sold, or  (b) having the persons under (1), or the juri stic persons under (2)(a),  or the persons under 
  (1) and the juristic persons under (2)(a), holding its shares in excess of fifty percent 
  (50%) of the total number of its voting shares that have been sold. 
 If the Commission deems appropriate, it may permit pers ons of non-Thai nationality to hold shares, in 
a proportion of up to forty-nine percent (49%) of the total number of voting shares that have been sold, and permit persons of non-Thai nationality to serve as directors, in an amount exceeding 
one-fourth (1/4), but less than one-half (1/2), of the total number of directors. In granting such 
permission, the rules regarding shareholding by persons under the first paragraph shall apply, mutatis 
mutandis . 
 In the event the Company's standing or operations are of a condition that might cause damage to the insured or the public, the Minister, upon the reco mmendation of the Commission, is empowered to 
grant a relaxation to permit the Company to have  shareholders or directors otherwise than as 
stipulated under the second paragraph. When gran ting such relaxation, the Minister may also 
prescribe rules or time conditions for such".   
WTO Secretariat's report, page 122, para-s 91-92  
 
The Secretariat's report states that "Amendments to the Life Insurance Act (1992) and Non-Life 
Insurance Act (1992) entered into force in February  2008. The main changes included a relaxation of 
the limit of foreign ownership." and "/…/The rela xation of the limits on foreign participation is 
considered as part of the second stage of the on-going liberalization ./…/. "  
 
Beyond what has been mentioned in the TPR report, can Thailand confirm that  the amended Life and 
Non-Life Insurance Act of 2008 introduced a new lega l framework on the issue of voting share sold or 
voting rights of foreign shareholding in an insurance company? 
 
Answer  
Please refer to the answer to the previous question.  
Can Thailand elaborate on the interpretation of  the introduced voting shares sold concept, 
particularly whether or not this entails that an insurance company must have Thai nationals holding 
at least 75% of the total shares sold and at least 75% of the voting rights in the company? If so, how 
can this be reconciled with Thai land's commitments in Schedule of Specific Commitments, which on 
life and non-life insurance sub-sections refer to 'non e' on mode 3 limitations to national treatment?  
 
Answer  
Section 8 of the Non-Life Insurance Act B.E. 2535 (1 992) (section 9 for Life Insurance) provides that 
shares of an insurance company must be comm on shares. Hence each share has one vote.  WT/TPR/M/255/Add.2 
 Page 5 
 
 
  Amendments to the Life Insurance Act B.E. 2535 (1992) and the Non-Life Insurance Act B.E. 2535 
(1992) entered into force in February 2 008 and section 8 and 9 are amended as follows: 
 - "The Company's ordinary shares and preference shares shall be in the form of a named  certificate, and shall have a registered par valu e of not more than one hundred baht (Baht 100) 
 per share. 
 
- The issuance of preference shares under the foregoing paragra ph shall be in accordance with 
 the Law on Public Limited Companies. The Re gistrar may prescribe the rules, procedures, 
 and conditions for protecting the interests of the insured, provided that those rules, 
 procedures, and conditions are not in conflict with the Law on Public Limited Companies."  
 
This amended section is intended to accommodate the fact that insurance company will transform to 
public company limited and as a public company limited, it should be able to issue preference share. 
Nevertheless, the issuing of preference share is subject to Registrar Notification stating that 
preference share must be one share one vote. Hence, th e voting rights of shareh olders remain the same as 
prior to the amendments to the Li fe Insurance Act B.E. 2535 (1992)  and the Non-Life Insurance Act 
B.E. 2535 (1992) entering into force in February 2008.  In addition, all companies licensed in Thailand are treated equally. 
 
Can Thailand confirm that, under the current amendm ents to Life and Non-life Insurance Act, existing 
companies not qualifying as Thai by February 2013 will not be allowed to open up new branches and 
be subject to a fine up to THB 200,000, and a further fine up to THB 10,000 for every day the contravention continues? 
 
Answer  
According to Section 89  of the Life Insurance Act B.E. 2535 and Section 84 of the Non-Life 
Insurance Act B.E. 2535, "Any Company which violates or fails to comply with the provisions of the fifth paragraph of section 8 (life)/7 (non-life), sec tion 9 (life)/8 (non-life), section 10 (life)/9 
(non-life), section 11(life)/10 (non-life), section 17(lif e)/16 (non-life), or section 21(life)/20 (non-life), 
or fails to comply with the cond itions prescribed by the Minister unde r the fourth paragraph of section 
7(life)/6 (non-life), the first paragraph of section 8 (life)/7 (non-life), or the conditions prescribed by 
the Registrar under the second paragraph of section 33(9) (life)/31(10) (non-life), or the second 
paragraph of section 34 (life)/33 (non-life), shall be  liable to a fine from Baht 20,000 up to Baht 
200,000, and to a further fine not exceeding Baht 10,000 per day, for every consecutive day during 
which such violation continues."  Can Thailand confirm if insurance companies establishe d before the effective date of 1992 insurance 
law, who have enjoyed previous grandfathering (all owing foreign shareholdings in excess of 25 per 
cent), will also have to comply with the 2008 amendments on 'voting shares sold' by 2013?  
 
Answer  
According to Section 55 of the Life Insurance Ac t No. 2, B.E. 2551 (2008) and Section 57 of the 
Non-Life Insurance Act No. 2, B.E. 2551 (2008), "W ithin five (5) years from the date this Act comes 
into force, a Company under Section 54, paragraph one (life), Section 56, paragraph one (non-life) of 
this Act shall change the ratio of its shareholders or directors to be in accordance with section 10/9 of 
the Life/Non-Life Insurance Act B.E 2535 (1992), as amended by this Act. If the Company is unable 
to make such change within the specified time, the Company may continue its activities, but may not 
open new branches."  This law does not apply to existing foreign branches. 
 
Is Thailand considering amending the Life and N on-Life Insurance Act before its retroactive 
application on February 2013 subjecting foreign national s controlling a Thai company to a daily fine 
or loss of control of the company?  WT/TPR/M/255/Add.2 
Page 6  
 
  Answer 
The Office of Insurance Commission has propo sed the amendment of Section 10/9 of the 
Life/Non-Life Insurance Act (No. 2) B.E. 2551 (2 008), which has been approved by the Cabinet in 
December 2010 and is currently under the consideration of the Council of the State.  The draft provides that the company can increase the por tion of foreign shareholders at 3 levels: 
 
(1) not more than 25 percent of the total numbe r of its voting shares that have been sold; 
(2) not more than 49 percent of the total number  of its voting shares that have been sold, 
 which must be approved by the Commission;  and 
(3) in the event the Company's standing or ope rations are in a condition that might cause 
 damage to the insured or the public, the company may ask to have foreign 
 shareholders more than 49 percent of th e total number of its voting shares that have 
 been sold, which will be granted by the Minister of Finance, upon the  recommendation of the Insurance Commission.     
However, the paragraph that described the character istics of Thai nationals has been deleted and the 
wording of the amended section is consistent with Section 16 of th e Financial Institution Business Act 
B.E. 2551 (2008).    
WTO Secretariat's report, page 123, paragraph 92 
 The Secretariat's report states that  "/…/In practise, as of end of 2010, three Thai insurance companies 
had been granted an exception to the limits on forei gn ownership; in two, the foreign equity limit was 
allowed to be increased to 49%, while  the third company was authorised  to have up to 99.9% foreign 
ownership/…/".  Can Thailand disclose the nationality of the fore ign company exempted based  on capital solvency 
requirements and need to strengthen its financial position amidst the recent global financial crises?  
 
Answer 
Every insurance company licensed in Thailand, whethe r it is a local company or a foreign branch, is 
subject to equal treatment and must all comply with  the capital solvency requirement.  In terms of 
additional information on foreign shareholder participation, ple ase refer to Section 10/9 of the 
Life/Non-Life Insurance Act B.E. 2535 (1992) Ame nded by the Life/Non-Life Insurance Act No. 2, 
B.E. 2551 (2008).    The EU notes that foreign participation in the life and non-life insurance sector remains restricted and 
has been further limited with the enactment of the Insurance Act of 2008, which requires existing 
foreign majority controlled life and non-life in surance companies to amend their voting share 
structures to become majority Thai controlle d by 2013.Recognizing the importance of foreign 
investment, the EU encourages Thailand to review the 2008 Insurance Act of Thailand because it will 
restrict operations of existing foreign insurers by making foreign voting control illegal and subject to a 
daily fine from February 2013 onwards. This w ould increase Thailand's attractiveness for foreign 
investment and enhance economic development.   
 
To what extent did Thailand consult with stake holders in the development of its law reform in 
insurance sector, in particular with those com panies whose operations the government has noted may 
need to be "restructured" as a result of the law? 
 
Answer 
Prior to passing a new or amended insurance law,  the OIC will go through a regular process, which 
include the following steps.  Firstly, the OIC will ga ther information/problems from the stakeholders 
and undergo a consultation and review process, wh ich includes a consultation with the OIC's legal  WT/TPR/M/255/Add.2 
 Page 7 
 
 
  representatives, insurance companies, and insura nce associations such as the General Insurance 
Association, the Thai Life Assurance Association,  the Insurance Brokers Association, and the Thai 
Life Underwriters Association.  Secondly, the law will be reviewed by the OIC's Legal Subcommittee, 
which is composed of representatives from the OI C and other financial regulators in Thailand.  
Thirdly, the law will go through a public hearin g.  Finally, the OIC will undergo necessary 
adjustments to the law before it is passed. 
 
CANADA AND THE UNITED STATES 
 Part IV . Trade Policies by Sector: (4) Services ; (ii) Financial Services: paragraphs 67-110, 
pages 116-127:   
According to the Secretariat Report, on financia l services, Thailand's long-term Financial Sector 
Master Plan intends to accelerate the liberaliza tion of its banking and insurance sector to boost 
competition.  It notes that in the insurance sector, "the authorities have indicat ed that the third stage 
(i.e. full market liberalization) will be implem ented once Thai insurers have enough capacity to 
compete internationally".  
Could Thailand please elaborate on the consultation and criteria to be used to assess Thai insurers' 
capacity to compete internationally?  
Answer 
In terms of Thailand's liberalization plan for insu rance, at the moment, the first and second stages of 
the liberalization plan have been implemented. The first stage of the liberalization plan encouraged 
Thai insurance companies to adap t themselves, strengthen their fi nancial status, and expand their 
businesses. In this stage, 25 new insurers were regi stered, of which 12 were life insurers and 13 were 
non-life insurers. The first stage was successfully implemented since 1998.  In the second stage of 
implementation, the percentage of foreign sharehol der was increased to more than 25 percent but not 
exceeding 49 percent under section 10 of the Life Insurance Act B.E. 2535 (1992) Amended by the 
Life Insurance Act No.2, B.E. 2551 (2008) and secti on 9 of the Non-Life Insurance Act B.E. 2535 
(1992) Amended by the Non-Life Insurance Act No. 2, B.E.2551 (2008).  Finally, full market liberalization will be implemented once Thai insurers have enough capacity to compete 
internationally.  In order to prepare the Thai in surance business for full market liberalization, the OIC 
has incorporated measures in the Insurance Development Plan V ol. 1  (2006 - 2010) and V ol. 2 
(2010-2014) that will help strengthen the Thai insura nce system and develop the quality of the system 
to meet international standards.  Once the Thai insu rance industry is ready to compete internationally, 
the OIC will consider preparing the indus try for full market liberalization.   
 The full text of Life/Non-Life Insurance Act B.E. 2535 (1992) Amended by the Life/Non-Life 
Insurance Act B.E. 2551 (2008) can be found at the links below: 
http://www.oic.or.th/upload/lifei nsurrance/downl oad/883-4137.pdf. 
http://www.oic.or.th/upload/nonlifeinsurrance/download/884-9305.pdf. 
 
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