Beginning from March 30, 2001, individual provident fund contributors will be allowed to select what kind of securities they want in their investment portfolios.

However, fund managers are required to the investment portfolios. Under the new Security Exchange Commission (SEC) rules, the SEC will draw up investment categories covering deposits, capital securities, debentures, convertibles and new financial products. Provident funds would be subject to the same investment limitations as mutual funds, with a listed company's total investments in securities not allowed to exceed 15 per cent of the net asset value.

Provident funds would also be subject to reporting requirements that they disclose the details of their funds, which would include the money contributed by employees and employers and funds benefits. The SEC has also made regulations concerning mutual funds more stringent by requiring commission approval for employees of mutual fund companies and distributors responsible for unit trust transactions. According to the regulations, every branch of a unit trust distributor must have at least one staff member approved by the commission.

In reponse to the drop in the value of the Thai currency last week, the Bank of Thailand (BOT) has instructed all commercial banks to require more documents from customers seeking to exchange baht for dollars. A BOT source stated that the move was made in order to assure that dollar baht exchanges were for bona fide payments of debts outside of the country.

The BOT measure requires all bank customers buying dollars for payment of either loans or interest on loans to show loan documents proving that the transger of funds is legitimate.

In a reorganization plan announced yeserday, the Stoock Exchange of Thailand (SET), revealed plans to establish four core units in the following areas: (1) marketing and strategy development, (2) market operations, (3) regulations and risk management and (4) support. The objective of these changes is to assist the SET in preparing to compete with other international stock exchnages.

According to sources at the BOT, Thailand's loans are expected to decline. However, the anticipated decline will be due primarily to the write-off of bade debts. The BOT announced that non-performing loans ("NPLs") in November were 1.11 trillion compared to total loans from financial institution which amounted to 4.9 trillion. Lending within Thailand has signifiicantly dropped because of a decline in lending by domestic foreign banks. Because of the decline in new lending, the propration of NPL's appears to be greater than it actually is. Actually, NPLs are declining each month, but in proportion to total lending the NPLs seem high.

Subject toa BOT regulation, at the end of each accounting period banks may write off bad debts following a full provision.

The BAHT NET system was developed by the Bank of Thailand (BOT) as an online inter-financial electronic fund transfer. BAHTNET was first implemented on 24 May 1995. In every fund transfer through BAHTNET a debit is immediately recorded in the sending institution and credited in the receiving institution operating in real time. The fund transfer prcocess through BAHTNET is irrevocable and is considered to be compliant with international standards.

In order to order to uprgarde the BAHTNET systemto a more international standard and in order to establish a base for future bond trading and money market objectives, an upgraded BAHTNET system called BAHTNET/2 has been established. The upgraded system adds government security trading capabilities through Delivery Services Payment (DVP) and provides host to host capabilities with member institutions employing the SWIFT system. The Bank of Thailand's investment in BAHTNET /2 is 500 million a baht and it is expected to be up and running by the end of 2001.

On December 21, 2000, US President Clinton signed a sweeping legislative package entitled the Legal Immigration and Equity Act (LIFE). Under the new Act, a new temporary "K" US visa will be available for spouses of US citizens (and their children) living abroad. The current "K visa is available only to fiancées of US citizens who are coming to the United States to get married within 90 days of arrival.

Pursuant to the current structure of Value Added Tax (VAT) law in Thailand, a buyer purchasing imported goods from a seller in Thailand could get charged with double VAT; The first time would occur when the purchase is first made and the second time at the time of customs clearance.

To prevent the double VAT, the Revenue Department issued the Announcement of the Director General No. 80 dated 1 October 1998 setting out the guideline that the sale of the goods may be excluded from the tax base if the buyer pays VAT upon the import. However, to clarify the application of VAT in these situations, the Revenue Department issued Regulation No. Paw. 101/2000 dated 29 November 2000 which stated following guidelines:

1. The sale of the goods from a seller in Thailand to a buyer in Thailand may be excluded from VAT base only if the buyer pays VAT under its own name when importing such goods.

2. If the buyer is entitled to import tax privileges and no VAT is paid upon customs clearance, he will be subject to VAT upon the purchase of such goods. This principle is applied even if the buyer has an obligation to pay VAT when importing but he chooses to place a bank guarantee or collateral instead of cash payment.

3. If the buyer has made advance payment to the seller before he pays for VAT at the time of importation, said advance payment is subject to VAT. Subsequent payments incurred after the buyer has paid VAT upon importation can be excluded from the VAT base.

4. To claim the tax benefits, a copy of the receipt of VAT payment to the Customs Department in the name of the buyer must be kept with the seller.

These guideleines will be applied retroactively to the sales made before 1 October 1998.

The Bank of Thailand (BOT) has issued a notification requiring financial intitutions write off doubtful debts which appear to be unrecoverable that have already made provisions of 100 percent from the accounts immediately.

Subsequently, if the financial institution is able to arrange a debt restructuring with the debtors, the accounting framework prescribes for the recognition of income once economic benefits are realized and measurement is possible. Therefore a financial institution shall recognize a loan loss which it might revover later as income only for those items which are likey recoverable and for which can be reliably measured The financial institution shall recognize loan loss which may later be be recoevered (through restructred payments ) as income. Only the amount of payment actually received may be listed by the financial instiutions as income.