We all know that how welcoming Thailand is towards foreign investment and the restrictions put on foreign equity are a critical element of their economic plan. Like any other country, they have their rules and regulations too. And when it comes to business and investments, they are governed by the Foreign Business Act 1999 (FBA).
Under this, there are actually forty-three business categories that are further divided into three lists that are subjected to certain limitations for foreigners. FBA defines a company “foreign” if it is not registered in Thailand, or even if it is, half or more of its shares are with non-Thai natural. However, expansion of this definition was suggested that says companies that have the majority of Thai shareholders but are managed by foreigners can be considered as “foreign”. But this possibility was dismissed.
For your information, foreigners cannot operate a business in Thailand, if it falls under any of the 9 categories of the List 1 of the FBA. This includes;
- Newspapers
- Radio or television stations
- The fishery in Thai territorial waters
- Rice farming
- Land trading
- Forestry
And for activities under List 2, any foreigner will need a license from the Business Development Department and approval from the Thai cabinet. In addition, the company should be 40% Thai owned while two-fifths of managing directors should be Thai nationals. As for business categories under List 2 of the FBA includes businesses dealing with;
- National safety or security such as arms trade,
- Arts
- Culture and traditional customs
- Folk handicrafts and businesses affecting the natural resources or the environment
- Businesses affecting the environment
And for activities under List 3 of the FBA, an expat needs a license from the Director-General of the Commercial Registration Department of the Ministry of Commerce along with approval from the Foreign Business Committee. Similarly, it includes service businesses such as;
- Accounting
- Engineering
- Legal architecture, and
- Other categories of service business other than the ones included in the ministerial regulations
- Hotel business
- Selling food and beverages
- Constructions and others
Also, there are restrictions on foreign ownership in some specific sectors including telecommunications, insurance, or banking. However, exceptions are there depending on the international treaties the nation has entered into such as Treaty of Amity, the ASEAN Comprehensive Investment Agreement, and the Thai-Australia Free Trade Agreement, so on and so forth.
Want to know about these exceptions, write to us.
