In Thailand, the Ministry of Commerce and its subordinate Department of Business Development ("DBD") are responsible for formulating and enforcing regulations and policies relating to foreign investment and supervising the business conduct of foreign-invested companies. In 1999, the Thai government enacted and promulgated the Foreign Business Act ("FBA"), which sets out the definition of "foreigner", the restrictions on foreigners conducting business in Thailand, the licensing procedures, and other regulatory requirements.

For foreign enterprises intending to invest and establish operations in Thailand, a thorough understanding of the FBA and other foreign investment regulatory requirements is essential for building a sound compliance foundation and securing long-term development. To help readers better understand Thailand's restrictions and licensing requirements for foreign investment, this article serves as the first issue of Starry Research's "Foreign Business Regulation Series" and provides an introduction to the basic requirements of the FBA regarding foreign business regulation, as well as the qualification requirements and application procedures for a Foreign Business License ("FBL").

I. Overview of the FBA

(I) Definition of "Foreigner"

Pursuant to Section 4 of the FBA, "Foreigner" refers to:

1. A natural person who does not hold Thai nationality;

2. A juristic person not registered in Thailand;

3. A juristic person registered in Thailand that meets either of the following conditions:

(1) At least half of the shares are held by persons described in categories 1 or 2 above, or the investment by persons described in categories 1 or 2 above constitutes at least half of the total investment;

(2) It is a limited partnership or a registered ordinary partnership, and its managing partner or manager is a person described in category 1 above;

4. A juristic person registered in Thailand, of which at least half of the shares are held by persons described in categories 1, 2, or 3 above, or the investment by persons described in categories 1, 2, or 3 above constitutes at least half of the total investment.

(II) Businesses Prohibited or Restricted for Foreigners

Pursuant to the FBA, three categories of business lists are set out in the annexes to the FBA, as follows:

List 1: Businesses prohibited to foreigners for special reasons;

List 2: Businesses relating to national security or public order, or affecting arts, culture, traditions, customs, folk handicrafts, or natural resources or the environment;

List 3: Businesses in which Thai nationals are not yet able to compete with foreigners.

Pursuant to Section 8 of the FBA, foreigners are prohibited from engaging in businesses listed under List 1; foreigners may engage in businesses listed under List 2 upon approval by the Cabinet and a licence granted by the Minister of Commerce; and foreigners may engage in businesses listed under List 3 upon approval by the Foreign Business Committee and a licence granted by the Director-General.

(Note: The specific contents of "List 1", "List 2", and "List 3" mentioned above are set out at the end of this article.)

From the above, it can be seen that for foreign enterprises intending to invest and conduct business in Thailand, instead of operating business directly or through a Thai company under their control, they should first assess whether their business activities are prohibited or restricted under the FBA. If so, the relevant licence required under the FBA must be obtained before commencing operations.

II. Overview of the FBL

(I) Meaning of the FBL

FBL stands for "Foreign Business Licence", which is a licence issued by the Department of Business Development (DBD) under the Ministry of Commerce of Thailand to foreign natural persons or foreign-controlled companies that wish to engage in businesses restricted to foreigners under the FBA.

If a foreigner engages in a restricted business without having obtained an FBL, such conduct constitutes an illegal act and may result in legal consequences including fines, imprisonment, and business closure.

In practice, the Thai government primarily utilizes the FBL mechanism to control and regulate the extent of foreign participation in sensitive or culturally and economically significant commercial sectors, with the aim of protecting Thailand's domestic industries and national economy, while continuing to encourage foreign investment in areas beneficial to national development. For businesses not falling within the scope of the FBA restrictions, foreigners remain free to conduct such businesses without restriction.

It should be noted that, in addition to the FBL, for foreigners who meet certain specific conditions (such as enterprises holding a BOI Investment Promotion Certificate, enterprises licensed to operate in IEAT industrial estates, or enterprises to which certain international treaties apply, such as the Treaty of Amity between Thailand and the United States), the DBD permits an application for a Foreign Business Certificate ("FBC") as an alternative means of obtaining the right to engage in businesses restricted to foreigners. Furthermore, the application procedure and timeline for an FBC are more expeditious compared to those for an FBL. We will introduce FBC-related content in other articles in this series.

(II) Application Conditions and Documents for the FBL

1. Application Conditions

Taking a foreign-controlled company as an example, the conditions that a foreign-controlled company (the "Applicant") must satisfy when applying to the DBD for an FBL include:

(1) Has been duly registered and incorporated with the DBD;

(2) The Applicant's registered capital must not be less than THB 3,000,000 or 25% of the estimated operating costs for the next three years, whichever is greater, per restricted business activity;

(3) At least one director must be resident in Thailand and remain incumbent during the period of operations;

(4) Submit to the DBD an application form and its attachments in accordance with the DBD's requirements.

2. Application Documents

The Applicant must submit the following application documents to the DBD:

No.

Application Documents

1

Application form, including but not limited to the following information:

  • Detailed business information

  • Shareholder information

  • Capital structure and financial status

  • Business scale (estimated annual revenue, estimated annual expenditure, total project output, etc.)

  • Technology transfer plan

  • Employment information (total number of employees, number of employees in the specific business, number of Thai and foreign employees respectively, and reasons for not planning to employ Thai nationals)

  • Analysis of the advantages and disadvantages of the business applied for in respect of: national security and stability, national economic and social development, public peace and morality, national arts, culture and traditions, conservation of natural resources, energy and environment, and consumer protection

  • Business characteristics (type of business applied for, method of operation, reasons and necessity for the application, and may demonstrate the relationship between the business applied for and existing operations)

  • Business process

  • Procurement and sales of products/services and market share description

  • Revenue and expenditure projections for the next three years

2

A certified copy of the  Affidavit/ incorporation certificate, which must contain the following information:

  • Company Name

  • Amount of registered capital and paid-up capital

  • Shareholder list

  • Number of shares held by each shareholder

  • Nationality of shareholders

  • Business objectives of the company

  • Office address

  • List of directors and information on authorized representatives with authority to sign and bind the legal entity

3

Copy of (foreigner’s) passport, copy of Thai identity card, or copy of identification document of the duly appointed representative(s)

4

A declaration issued by the applicant certifying that the applicant, directors or managers satisfy the qualification requirements under Section 16 of the FBA and that there are no disqualifying circumstances

5

A brief location map of the business premises in Thailand

6

Detailed description documents of the business proposed to be licensed

7

Power of attorney (applicable where the matter is handled by an authorized representative)

8

Where an FBL has previously been granted, the following must be submitted:

  • A copy of the original licence

  • Copies of financial statements for the past three years in Thailand

  • A copy of the most recent annual tax return (P.N.D. 50)

9

Corporate power of attorney, executed by the applicant's authorized signatory to appoint a business representative in Thailand

10

The duly appointed representative must provide a copy of one of the following documents:

  • Thai household registration certificate (Tabien Baan)

  • Thai proof of residence address (Bai Samkhan Thin Thi Yu)

  • Temporary entry permit issued under the Thai Immigration Act

(III) Application Procedure for the FBL

The procedure for the Applicant to apply to the DBD for an FBL is as follows:

No.

Procedure Steps

1

Submit the FBL application documents to the Foreign Business Administration Office on the 8th floor of the Department of Business Development (DBD) under the Ministry of Commerce of Thailand.

2

If the business applied for is listed under List 2:

The DBD drafts a written opinion and submits it to the Minister of Commerce for review. After the Minister of Commerce approves, the Minister submits an application for approval to the Cabinet. Upon Cabinet approval, the DBD notifies the applicant of the review result.

If the business applied for is listed under List 3:

The DBD drafts a written summary and submits it to the Foreign Business Committee for review. After the Committee approves, the DBD notifies the applicant of the review result.

The approval period for this stage is 60 working days. If the Council of Ministers is unable to complete the deliberation within this period due to unavoidable circumstances, the period may be extended as necessary but shall not exceed 60 days after the expiry of the original period.

3

The DBD shall issue the FBL certificate to the applicant within 15 days after the application is approved.

4

If the applicant's application is not approved, the applicant has the right to file an appeal with the Minister of Commerce within 30 days, and the Minister of Commerce shall deliberate and issue a decision on the appeal within 30 days.

III. FBA's Three Lists of Restricted Businesses

List 1: Businesses Absolutely Prohibited to Foreigners Due to Special Reasons such as National Security, Arts and Culture, and Conservation of Natural Resources

Publishing or newspaper businesses, radio broadcasting stations, or radio and television station businesses

Rice growing, farming or gardening

Animal husbandry

Forestry and timber processing from natural forests

Fisheries (specifically, the catching or collection of aquatic animals in Thai waters and the exclusive economic zone)

Extraction of Thai herbal medicines

Trading and auctioning of Thai antiques or objects of historical value to the nation

Casting or making of Buddhist images and monk's bowls

Land trading

List 2: Businesses Relating to National Security or Public Order, or Affecting Arts, Culture, Traditions, Customs, Folk Handicrafts, or Natural Resources or the Environment

Businesses Relating to National Security

Production, distribution, and maintenance of the following items:

  • Firearms, ammunition, gunpowder, or explosives

  • Firearm and ammunition components

  • Weapons or military equipment, military aircraft, and vehicles

  • All types of military warfare equipment and components thereof

Domestic transport services (including land, water, and air transport, and domestic aviation operations)

Businesses Affecting Thai Arts, Culture and Traditions

Trading of Thai antiques and works of art (referring to Thai traditional handicrafts)

Production of wood-carved products

Thai silk-related industries: silkworm farming, Thai silk yarn production, Thai silk weaving, Thai silk printing

Production of Thai traditional musical instruments

Production of gold and silverware, lacquerware, nielloware, bronze ware, and lacquer ware

Production of Thai cultural clay products

Businesses Affecting Natural Resources and the Environment

Sugarcane sugar production

Salt production (including sea salt and rock salt production)

Rock salt mining

Mining (including blasting and rock-crushing operations)

Timber processing for furniture and utensils manufacturing

List 3: Businesses in Which Thai Nationals Are Not Yet Able to Compete with Foreigners

Rice milling and flour milling from from rice and economic plants

Fishery only in respect of the hatching and raising of aquatic animals

Plantation forestry

Manufactured wood products (including plywood, veneer wood, chipboard, and hardboard)

Production of ime

Accounting services

Legal services

Architectural services

Engineering services

Construction (except for: construction works involving public infrastructure that require specialized machinery/equipment/technology, with a minimum registered capital of THB 100 million; and other permitted types prescribed by Ministerial Regulations)

Brokerage or agency services (except for: securities brokerage services; procurement agency services between affiliated companies; international trade intermediary services with foreign capital of THB 100 million or more; and other permitted types under Ministerial Regulations)

Auction services (except for: international bidding not involving Thai antiques; and other permitted types of auctions under Ministerial Regulations)

Domestic trading of agricultural products and processed agricultural products (except futures trading)

Retail trade (where any of the following conditions apply): total registered capital less than THB 100 million; and per-shop capital less than THB 20 million

Wholesale trade (per-shop capital less than THB 100 million)

Advertising

Hotel business (except hotel management services)

Tourism business

Sale of food and beverages

Cultivation, propagation or development of plant varieties

Other service businesses, with the exception of service businesses as prescribed in the Ministerial Regulation