Thai Government Clarifies Foreign Business Rules in Thailand

On May 20, 2024, the Department of Business Development under the Commerce Ministry held a meeting to explain foreign investment regulations in Thailand to help foreign investors understand the law and invest more easily in the country without any violations.

Participating Organizations

There were 36 participants from 19 entities, which included representatives from:

• The Australian, British, Chinese, and Japanese Embassies
• European Union
• Joint Foreign Chambers of Commerce in Thailand (JFCCT)
• Japan External Trade Organization (JETRO Bangkok)
• Korea Trade-Investment Promotion Agency (KORTA Bangkok)
• European Association for Business and Commerce (EABC)
• Office of the Board of Investment
• Department of Trade Negotiations

Foreign Investment Law

The meeting reiterated that foreign shareholders can hold no more than 49% of shares in business operations, according to the Foreign Business Act (1999). However, it was noted that export-oriented manufacturing businesses are exempt from this law, as they fall under the jurisdictions of agencies like the Board of Investment (BOI Thailand).

New Business System

To ease the application process for investors looking to obtain foreign business licenses/certificates under the Foreign Business Act in Thailand, the department introduced the “e-Foreign Business” system which is expected to launch in July 2024. This new system will not only shorten the processing time of business registrations, but also reduce the volume of required documents.

Investors will be able to use the system to perform tasks that previously needed to be done on paper and/or in person, taking up significant time. The e-Foreign Business system will enable applicants to:

• Submit applications for foreign business licenses/certificates online 
• Make payments online (e-Payment)
• Receive electronic receipts (e-Receipt)
• Utilize electronic signatures (Digital Signature)
• Receive digital licenses/certificates for their businesses (e-Foreign Business License/e-Foreign Certificate)

Law Reform

The department also indicated that it intends to reform laws in Thailand by removing 10 service business types from Annex 3 (21), which include telecommunications service businesses, treasury center businesses under the law on exchange control, and software development service businesses by juristic persons registered in Thailand. This means that these service businesses will no longer be obligated to the conditions set in any Free Trade Agreement such as regulatory transparency and restricted data processing.

However, the Deputy Prime Minister and Minister of Commerce, Phumtham Wechayachai, has yet to give his approval for reform. It is expected that the measures will be approved, but they will still need to be submitted to the Cabinet for further consideration.

Category: Business in Thailand, Foreign Related Laws