Foreign Direct Investment
According to the Foreign Business Act BE. 2542, foreigners are not allowed to operate some categories of businesses. While some businesses are able to operate, they need to obtain a license or certificate. Depending on the type of business which will be allowed on a case-by-case basis which must consider the general criteria as follow.
A. Definition of a Foreigner
The following person or juristic person is defined as a foreigner:
Natural person not of Thai nationality
Juristic person not registered in Thailand
Juristic person registered in Thailand having half or more of its capital shares held by person or juristic person as mentioned in (1) or (2)
Juristic person registered in Thailand having half of more of its capital shares held by (1), (2) or (3)
B. The Business Lists
Business List 1
The business that an alien is not allowed to perform with special reasons:
Journalistic enterprise, broadcast radio station enterprise, television station enterprise
Farming and gardening
Animal husbandry
Forestry and transforming of natural wood
Fishery especially in Thai territorial waters and in specific economic zone of Thailand
Thai herb extraction
Trade and sale by auction of Thai antiques or Thai historically worthy items
Founding Buddha images and Buddhist monk's alms-bowls
Land trade
Business List 2
Foreigners can operate business if permitted by the Minister of the Ministry of Commerce with the approval of the Cabinet. These are divided into three groups as follow.
Group 1: Business involving with the safety and the security of the nation
Production, distribution and repair of:(a) Weapon, cartridge set, gunpowder, explosive(b) Weapons' accessories, cartridge set, explosive(c) War materials, ship, aircraft, military vehicles(d) Equipment or accessories of all kinds of war materials
Transportation by land, by water and by air in the country, including domestic aviation
Group 2: Businesses affecting art and culture, custom and tradition and local crafts
Trade of antiques, art materials that are art objects and crafts of Thailand
Production of wood carvings
Silk worm husbandry, production of Thai silk thread, weaving of Thai silk cloth and printing design on Thai silk cloth
Production of Thai musical instruments
Production of goldware, silverware, nielloware, polished stone goldware or lacquerware
Production of Thai art crockery, pottery
Group 3: Businesses affecting natural resources and environments
Granulation of sugar from sugar canes
Salt Farming including salt farming from salty soil
Rock salt farming
Mining including blasting and crushing rock
Transformation of furniture and utensils
Business List 3
Foreigners can operate business if permitted by the Director - General of the Department of Business Development with the approval of the Committee. These are 21 businesses that Thais do not have prompt operating abilities to compete with foreigners.
Rice milling and production of flour from rice and farm crops
Fishery especially of aquatic animal
Forestry from planted forest
Production of plywood, veneer, chipboard and hardboard
Production of lime
Accounting service business
Law service business
Architect service business
Engineering service business
Construction except(a) The construction of public fundamental services for public utilities or communication that requires special equipment, machines, technology and skill and that has the capital from Foreigners at minimum of 500 million baht(b) Other constructions stipulated in the ministerial orders
Broker or agent enterprise except(a) Being a broker or an agent for stock trade or service relating to a forward trade of agricultural goods or financial printed document or stocks(b) Being a broker or an agent for trading or providing necessary goods or services for the production and services in the enterprise's group(c) Being a broker or an agent for trading, purchasing or distributing or providing materials both in the country and in foreign countries for selling domestic products or importing product as an international trade with an alien's capital at minimum of 100 million baht(d) Being other kinds of brokers or agents as stipulated in the ministerial orders
Sale at auction except(a) The international auction that is not an auction of ancient objects, antiques, art materials that are art works, crafts or relics of Thai or historically worthy relics of the country(b) Other kinds of auction stipulated in the ministerial order
The domestic trade relating to local agricultural products or produces that has not been forbidden by other laws
Retailing trade of all goods that has the entire capital at the maximum of 100 million baht or has the least capital of each store at the maximum of 20 million baht
All kinds of wholesaling trade that has the least capital of each store at the maximum of 100 million baht
Advertising business
Hotel business except hotel managing service
Tourism
Sales of foods and beverage
Cultivation, propagating and improving plants
Other service businesses unless otherwise stipulated in the ministerial order
However, some foreigners do not need to apply for a license. Just apply for a certificate which is a easier procedure than submitting a request for a license. Those foreigners are as follows:
Foreigners, who are eligible for the privilege under the Treaty, can request for a certificate for operating a business in List 1, List 2 and List 3.
Foreigners, who are promoted under the investment promotion law, can request for a certificate for operating a business in List 2 and List 3.
C. Minimum Capital and Conditions:
Either licensees or certificate grantees under the Treaty must have the minimum capital as prescribed in the ministerial regulations
No required minimum capital for certificate grantees under the Investment Promotion Certificate.
The followings are the conditions for the foreign licensees to be comply with:(a) The ratio of the capital and loans to be used in the permitted business is 1:3.(b) At least one of foreign directors must have domicile in Thailand.(c) The minimum capital must be kept up until stop operating a business in Thailand ie the minimum capital can be retained in various forms such as fixed assets or current assets.(d) Certificate grantee under the Treaty must comply with the conditions specified in the Treaty.(e) Certificate grantee under Investment Promotion Certificate must comply with the conditions specified in Investment Promotion Certificate.