Foreign business as usual: Thailand schools diplomats on investment

The Department of Business Development in Thailand hosted a briefing for diplomats and international organisation representatives to clarify the Foreign Business Act (FBA) of 1999. The objective was to educate foreign investors on the law to ensure compliance and proper investment practices in Thailand.

The Director-General of the Department, Auramon Supthaweethum, stated that the meeting aimed to help foreign investors understand the law, emphasising the prohibition against using Thai nationals as nominees to circumvent the regulations.

Participants in the briefing included members from the Joint Foreign Chambers of Commerce in Thailand, the Japan External Trade Organisation, the Korea Trade-Investment Promotion Agency, and the European Association for Business and Commerce.

The FBA serves as the primary legislation governing foreign involvement in Thai businesses, detailing the procedures for establishing a business, the types of businesses permitted, and the application process for foreign business licences and certificates. The department highlighted that some foreign investors were not adhering to legal procedures, such as using Thai nationals as proxy shareholders to disguise foreign ownership and operate businesses illegally in Thailand.

This year, the department plans to investigate 26,019 nominee cases across four business sectors: tourism and related enterprises, real estate trading, hotels and resorts, and logistics. These investigations will be conducted in six major tourist provinces: Chiang Mai, Chon Buri, Surat Thani, Phuket, Bangkok, and Prachuap Khiri Khan, Auramon said…

“After an initial screening, 460 cases warranted examination of additional evidence.”

Partner agencies

Recently, the department collaborated with partner agencies to conduct on-site inspections in four provinces: Chiang Mai, Phuket, Bangkok, and Chon Buri. They investigated 91 legal entities suspected of having shareholding structures that violated the FBA. The inspection focused on establishment locations, accounting documents, and shareholding arrangements.

In addition to these efforts, the department is preparing to launch an online service system called e-Foreign Business. This platform, expected to be operational by July 2024, will assist in applying for permissions to operate businesses under the FBA.

The department is also working on amending the list of restricted businesses for foreigners, known as List Three, on an annual basis. Ten service businesses are identified as sectors where Thai nationals can compete with foreigners. Consequently, these service businesses will no longer require a foreign business license before conducting business.

Ministerial regulations are being developed to specifically exclude these ten service businesses from List Three. These regulations will be submitted to the commerce minister and cabinet for approval, according to the department, reported Bangkok Post.