Foreign Business License: Regional Office

Foreign multinational companies with business operations in the ASEAN region or Asia may consider setting up a regional office in Thailand as a support hub for their corporate network in the region. Nevertheless, the regional office is considered a “service” business within the definition of category (21) of List Three annexed to the Foreign Business Act of 1999. Therefore, foreign companies that will be setting up a regional office in Thailand must apply for a Foreign Business License according to Section 17 of the Act. A brief guideline regarding the process involved are as follows:

• The applicant must be a company registered in a foreign country that will be setting up an office in Thailand that will be acting on behalf of the company in offering services to affiliate companies or branch offices in Thailand or in Asia.
• The regional office must offer its service to affiliate companies or branch offices without receiving any income, other than operational funds from the head office.
• The regional office must not have any authority to receive purchase orders, to make sales, or to engage in business negotiations with any other persons or companies.
• Regulations issued by the Office of the Prime Minister specifically restricts the regional office to the following 7 activities:
1. Coordination and direction of business operations: For example, the regional office could be acting as a central coordination hub for petroleum surveys in the region by acting as liaison between the head office and a branch office in Vietnam.
2. Consultation and management services: For example, if the branch office is experiencing trouble with financing, marketing, or petroleum surveys, the regional office may provide advice and support to the branch office.
3. Human resources training and development: An example would be offering training to employees in order to ensure that financial reports conform to standards established by the head office.
4. Financial management: An example would be offering financial advice and sourcing finance for branch office operations in the Philippines, Taiwan, and Japan.
5. Marketing and sales planning: This activity refers to reporting on financial movement in the region and compiling information related to finance, capital, markets, and international trade for the purposes of marketing and sales planning.
6. Product development: For example, the regional office may analyze test results of motor vehicles produced by the branch office in order for the manufacturing of the product to be adjusted to improve its efficiency.
7. Research and development services: An example may be coordinating with an R&D center of the company in Vietnam in order to improve the quality of the market offering in order to conform with consumer demand.

Setting up a regional office in Thailand is complex. Foreign companies are advised to consult with competent legal counsel in order to understand the best way to proceed.

 

Category: Administrative Law, Business in Thailand, Company Registration