The Foreign Business Act and Other Foreign Business Restrictions

By
Chaninat & Leeds Co., Ltd., Thailand Attorneys

Categories:

The following are the categories of the Foreign Business Act:

Category One

(1)    Newspaper business, radio broadcasting or television station business.
(2)    Rice farming, farming or gardening.
(3)    Animal farming.
(4)    Forestry and wood fabrication from natural forest.
(5)    Fishery for marine animals in Thai waters and within Thailand specific economic zones.
(6)    Extraction of Thai herbs.
(7)    Trading and auctioning Thai antiques or national historic objects.
(8)    Making or casting Buddha images and monk alms bowls.
(9)    Land trading.

Category Two

The businesses related to the national safety or security or affecting arts and culture, tradition, folk handicraft or natural resource and environment.

Group 1: Businesses related to the national safety or security:

(1)    Production, selling and maintenance of:
        (a)   firearms, ammunition, gun powder, explosives.
        (b)  Accessories of firearms, ammunitions and explosives.
        (c)  Armaments, ships, air-crafts or military vehicles.
        (d)  Equipment or components, all categories of war materials
(2)    Domestic land, waterway or air transportation, including domestic airline business.

Group 2: The businesses affecting arts and culture, traditional and folk handicraft:

(1)    Trading antiques or art objects being Thai arts or handicraft.
(2)    Production of carved wood.
(3)    Silkworm farming, production of Thai silk yarn, weaving Thai silk or Thai silk printing.
(4)    Production of Thai musical instruments.
(5)    Production of goldware, silverware, nielloware, bronzeware or lacquerware.
(6)    Production of crockery of Thai arts and culture.

Group 3: The businesses affecting natural resources or environment:

(1)    Manufacturing sugar from sugarcane;
(2)    Salt farming, including underground salt;
(3)    Rock salt mining;
(4)    Mining, including rock blasting or crushing;
(5)    Wood fabrication for furniture and utensil production.

List Three

The businesses which Thai nationals are not yet ready to compete with foreigners:

(1)    Rice milling and flour production from rice and farm produce.
(2)    Fishery, specifically marine animal culture.
(3)    Forestry from forestation.
(4)    Production of plywood, veneer board, chip board or hardboard.
(5)    Production of lime.
(6)    Accounting or service business.
(7)    Legal service business.
(8)    Architecture service business.
(9)    Engineering service business.
(10)  Construction, except for:

(a)	Construction rendering basic services to the public in public utilities or transport requiring special tools, machinery, technology or construction expertise having the foreigner's minimum capital of 500 million baht or more.
(b)	Other categories of construction as prescribed by the ministerial regulations.

(11)  Broker or agent business, except:

(a)	Being a broker or agent for underwriting securities or services connected with future trading of commodities or financing instruments or securities.
(b)	Being broker or agent for trading or procuring goods or services necessary for production or rendering services amongst affiliated enterprises.
(c)	Being a broker or agent for trading, purchasing or distributing or seeking both domestic and foreign markets for selling domestically manufactured or imported goods in the manner of international business operations having the foreigners minimum capital 100 million baht or more.
(d)	Being broker or agent of other category as prescribed by the ministerial regulations.

(12)  Auction, except:

(a)	Auction in the manner of international bidding not being the auction of antiques, historical artifacts or art objects which are Thai works of art, handicraft or antiques having the historical value.
(b)	Other categories of auction as prescribed by the ministerial regulations.

(13)	Internal trade connected with native products or produce not yet prohibited by law.
(14)	Retailing all categories of goods having the total minimum capital less than 100 million Baht or having the minimum capital of each shop less than 20 million Baht.
(15)	Wholesaling all categories of goods having minimum capital of each shop less than 100 million Baht.
(16)	Advertising business.
(17)	Hotel business, except for hotel management service.
(18)	Guided Tour.
(19)	Selling food or beverages.
(20)	Plant cultivation and propagation business.
(21)	Other categories of service business except that prescribed in the Ministerial regulations.

Other Laws Affecting Foreign Business Operations

Banking and finance businesses, under their own special laws, must be at least 75% Thai owned. Likewise companies engaged in domestic shipping must be at least 70% Thai. By regulation, insurance companies and insurance brokers must be at least 75% Thai.

Companies which own land must under the provisions of the Land Law be a full 51% Thai owned unless they have special promotional privileges. Consideration is being given to requiring a greater degree of Thai ownership.