Professional services/Forvis Mazars

Forvis Mazars highlights risks amid changes in Thailand’s financial system

Editorial staff 

Operators must closely examine and understand the new structure to mitigate risks, following a major initiative by the Bank of Thailand to regulate AI use in the financial sector and enhance the country’s financial efficiency, according to Forvis Mazars.

Forvis Mazars emphasizes eight potential risks ranging from AI governance and cybersecurity to complex multinational taxation management and creditworthiness reports. It advises financial institutions to monitor policy developments post-implementation. To navigate these changes, organizations must adapt their operations to ensure transparency, ethical standards, and readiness for emerging factors.

Tippawan Pumbansao, financial services audit partner of Forvis Mazars in Thailand, said that in response to the Bank of Thailand’s draft on AI risk management in the financial sector—which covers all financial services and aims to create a more organized financial system—financial companies must adapt to the evolving environment and remain vigilant of such potential risks.

Among potential risks is the OCEC Global Minimum Tax (Pillar Two). It is designed to manage complex multinational taxation, especially for large corporations receiving Board of Investment (BoI) privileges. Companies must review tax frameworks, balance sheet liability methods, and financial disclosure readiness. Compliance will involve detailed reporting, active tax credit management, and maximizing existing privileges.

Thailand’s policy of interest rate reduction also poses a potential risk. The Bank of Thailand has lowered the policy interest rate from 1.75% to 1.5%, the lowest in over two years, due to disinflation, high household debt, sluggish tourism, and elevated US import tariffs. Amid political uncertainty, organizations should reassess asset valuations and fundraising strategies. They are advised to review stress test assumptions and prepare precautionary plans to address the direct and indirect impacts of lower interest rates. 

In terms of non-performing loans (NPLs), Forvis Mazars advises strict credit risk calculations, adherence to credit allowance requirements, and robust bad debt provisioning aligned with the expected credit loss approach. In Q1 2025, NPLs in the banking system rose to 548 billion baht, primarily from housing and SME loans. 

Ms Tippawan added that Thailand’s financial services sector may experience changes sooner than anticipated due to regulatory reform, economic sluggishness, and digital transformation.