By Ekarin Bumroonpguk
The Nation
Published on April 9, 2009

Many companies are in the pipeline to snap up foreign assets, Siam Commercial Bank said on Tuesday.

It aims to lend to strong Thai companies that wish to buy cheap foreign assets in order to expand their core business.

Recently, SCB was the solely provider of a Bt12-billion, 10-year loan to energy conglomerate PTT, part of which would be used to buy a coal mine in Australia.

Vichit Suraphongchai, executive chairman of SCB, said many foreign firms are in need of cash. Many of them had overleveraged in expanding their business.

When the crisis erupted, creditors called back loans from them. These companies are forced to “deleverage” by selling assets amid the gloomy economic environment.

“Asset prices in foreign countries have plunged, so it’s a good opportunity to expand for many strong Thai companies by buying those assets.

“This is better than starting a business themselves. PTT is an example of such a company as it aims to buy a coal mine in Australia,” Vichit said.

In the past, local companies were considered lacking the ability to take over foreign companies. But now, those in relatively good financial shape have a chance to go for it.

SCB has many deals queued up and those customers are the big, strong players in their industries.

“We have been speaking with many customers about their prospects to expand their business horizons, while asset prices in foreign countries have plummeted.

“Therefore, we need to talk with them on how they would like the bank to help, by raising funds either via loans or debentures,” Vichit said.

However, the bank would only support acquisitions that were in the customers’ core businesses. The assets that are presently being divested overseas mostly are not in the core business of the sellers. They would like to dispose of them for cash.

SCB has assigned some its bankers as relationship managers to take care of big corporate customers that need structured finance, foreign currency, cash management and other financial service packages.

Before, banks only functioned as a lender but now they have already changed to acting as a solution provider for customers.

Prasert Bunsumpun, president and CEO of PTT, said PTT needed Bt230 billion to use over the next five years, of which 70 per cent was for investing in natural gas and the rest for rolling over debt.

PTT aimed to become a premier multinational company, which built up its business in foreign countries, while PTT Exploration and Production had invested in 40 projects in 13 countries.

PTT Group has a capital expenditure budget of Bt800 billion, of which 80 per cent was for domestic investment, which could boost domestic employment and reassure foreign investors, and 20 per cent was for foreign countries.

More freedom than you think

Working American expats enjoy a modest exemption of around USD 80,000 for income earned abroad, which can protect many overseas American expat employees from most of their liability to US taxes and allow them to sleep soundly at night!

Working American expats

By investing offshore in a recognised International Financial Centre, working American expats can safely invest unlimited amounts as part of their retirement planning. You can also take your retirement money when you choose rather than at an age set by your Government.

These retirement savings plans permit a far wider range of assets than would typically be available in the US, including the opportunity to diversify your investments away from US dollars.

For working American expats, the relatively low cost of living in Thailand and often generous remuneration packages, provide disposable incomes far greater than would normally be achievable back home. With proper financial planning this means that you could be in a much better position to retire comfortably wherever you choose to live.

Retired American expats

Retired American expats might very well be financially much better off simply by investing offshore (outside of America) in currencies other than US dollars, EVEN if they are still fully liable to US taxes!

For those American expats living in Thailand, on income from cash and investments held in America, the facts are quite plain and painful. At the time of writing in the last week of January 2007, over the last 5 years the value of the US Dollar has fallen from around 45 Baht to 33.5 Baht or 26%. Over the past 12 months alone this devaluation has accelerated with the value of the US Dollar dropping from around 39 Baht to 33.5 Baht or 14% and remember this is a ‘tax’ on savings NOT on income.

Bank accounts

We usually recommend that all expats hold most of their bank balances outside of both their country of residence and their home country, in one of the OECD Group 1, International Financial Centres. This keeps American expats firmly in control of their cash and gives them access to their money at any time, wherever they happen to be. Another reason to hold both your cash and investments offshore is probate avoidance.

We usually recommend that surplus cash which expats may have is held in a currency other than US Dollars, regardless of your citizenship.

Real estate planning

Many American expats who choose to include real estate as part of their financial planning investment strategy do so indirectly through offshore real estate property funds. This strategy provides the benefit of liquidity as well as tax free growth.

For those who choose direct investment in real estate property, other considerations apply. One of these factors is Estate Tax which is triggered by the death of an individual. One of the key considerations with real estate financial planning is to structure the ownership so that real estate property is NOT owned by an individual, therefore avoiding situations that trigger Estate Tax. There are several options available for structuring real estate in this way (see our articles on Estate Planning, trusts, foundations and offshore companies).

The right advice

Professional financial planning can help American expats to achieve their long term financial goals. This may include restructuring your real estate and other assets to mitigate your liability to tax, investment management and succession planning.

Your financial planning should be built around your circumstances in a way that simplifies your personal finances and is flexible enough to change with you.

Unlike most developed countries, a person giving financial advice in America has no legal requirement to hold any professional qualifications at all!

In most English speaking countries and the EU countries of Western Europe, professional exam tested qualifications are a legal requirement for giving financial advice

A professionally exam qualified financial adviser who has completed advanced professional financial planning exams will have detailed knowledge of estate taxes and estate planning, pension planning, succession planning, ownerships structures for holding real estate and of course investment management; All key financial planning areas for American expats.