Foreigners Operating Businesses in Thailand
Under the Foreign Business Act or FBA, foreigners are generally prohibited or restricted from engaging in business while in Thailand. However, an alien business operation permit can be obtained from the Director-General of the Department of Commercial Registration with the Foreign Business Committee’s approval. Foreigners operating businesses in Thailand are subject to the provisions of the law.
According to the FBA, there are three main categories that businesses can fall under. The first category provides for absolute prohibition on foreigners to engage in specific businesses including newspaper, radio broadcasting or television station business; rice farming; animal farming; forestry and wood fabrication from natural forest; fishery for marine animals in Thai waters; extraction of Thai herbs; trading and auctioning Thai antiques or national historical objects; making or casting Buddha images and monk bowls, and land trading. The only exception to this prohibition needs to be embodied in a special law or treaty.
There are businesses in Thailand which foreign ownership is deemed critical but have been allowed prior to the enactment of FBA and were required to obtain a Special Alien Business License. These businesses belong to the second category which prohibits opening of new businesses by foreigners unless a Special Permission is successfully obtained from the Minister with the approval of the Cabinet. These are businesses related to national safety or security as well as those related to arts, culture, tradition, folk handicrafts, or natural resource and environment.
The third category consists of businesses wherein Thais are deemed not yet ready to compete with foreigners. These would include rice milling and flour production, fishery, forestry, production of plywood, veneer board, chipboard or hardboard; production of lime; accounting service business, legal service business, architecture service business, engineering service business, construction subject to some exceptions; auction subject to specific exceptions; internal trade subject to provisions of law; food retail and wholesale; advertising, hotel, guided tours, food and beverage selling; and plant cultivation and propagation. Approval for operating businesses under this category is similar to the second category.
Because it is highly complicated for a foreigner to establish a business in Thailand, many opt to operate under a Thai company as a Thai Limited Company. The use of Thai Nominee shareholders to circumvent prohibition on foreign ownership is a loophole being sought to be remedied by the government. Closely related to foreign business ownership are the prohibition on foreign land ownership.
About the Guest Blogger
Jeremy is a business entrepreneur presently looking into the possibilities of opening a business in Thailand. He is currently enrolled in a local school to learn Thai.