Commerce Ministry cracks down on hidden foreign ownership

The Commerce Ministry intensifies its scrutiny of businesses allegedly using Thai nominees to hide foreign ownership, focusing on sectors like tourism, real estate, and logistics.

Auramon Supthaweethum, director-general of the Department of Business Development, stated that under the Foreign Business Act of 1999, foreign firms must secure permission as outlined in specific lists before starting operations.

A Thai limited company typically restricts foreign business ownership to a maximum of 49%.

Operating a business without permission or hiding foreign ownership by using a nominee to hold over 51% of shares is illegal.

The department reviewed 26,019 nominee cases across four business sectors: tourism and related enterprises, real estate trading, hotels and resorts, and logistics.

These investigations spanned six major tourist provinces: Chiang Mai, Chon Buri, Surat Thani, Phuket, Bangkok, and Prachuap Khiri Khan.

“After an in-depth investigation, including financial statements in 498 cases, 165 cases warranted examination of additional evidence.”

Following a meeting chaired by Caretaker Commerce Minister Phumtham Wechayachai with executives from 28 agencies to address the flood of cheap, poor-quality imported products, the department inspected four more business sectors: wholesale and retail, warehouses, construction and engineering, and metal trading.

“Entrepreneurs who identify companies at risk and affected by any business using nominees are encouraged to inform the department for investigation and further action by related agencies such as the Department of Special Investigation (DSI).”

Regarding Chinese online retailer Temu’s entry into the Thai market, the Commerce Ministry seeks cooperation with the Chinese Embassy for the portal to establish an office in Thailand to ensure legal compliance and taxation.

The Commerce Ministry assigned the Digital Economy and Society Ministry (MDES) to follow up on this matter.

Auramon noted that new business registrations for the first seven months of 2024 rose by 0.16% to 54,220, with a combined registered capital of 169 billion baht, down 62.1% year-on-year.

The department anticipates new business registrations this year to total between 90,000 and 98,000, marking a 5 to 15% increase.

Auramon attributed the uptick to government initiatives, such as the disbursement of the fiscal 2024 budget, the approval of the digital wallet handout, measures to attract foreign investment like the long-term resident visa scheme, and corporate income tax exemption for foreign companies doing business in Thailand, as well as the harvest season for crops.

However, consumers remain concerned about the slow economic recovery, high levels of household debt, political stability, and ongoing geopolitical conflicts, reported Bangkok Post.