While Thailand obviously welcomes foreign investment, there have long been tight restrictions surrounding a number of business types which various government’s have felt needed protection from potential foreign business competition. This was largely due to a belief that the Thai-run businesses in certain sectors were not sufficiently robust enough to withstand foreign-controlled competition.
The government places business sectors and types into categories from what they term List 1 down to List 3, and the Commerce Ministry recently announced plans to possibly remove five business categories currently in List 3 from protection against foreign competition.
While no firm decision on these changes had been made at the time of this publication going to press, it is expected that the director-general of the Business Development Department division of the Commerce Ministry will announce that foreign businesses will be allowed to enter the Thai marketplace to compete with local firms in accounting, legal, space rental, lending, and consulting services. The plan is to open these five areas up to encourage further trade and investment in Thailand.
In order to allow these five sectors to be opened up, the Foreign Business Act (FBA) will need to be officially amended to remove the five from List 3.
The Commerce Ministry invited submissions from the Board of Investment (BoI), the Bank of Thailand, the Industrial Estate Authority of Thailand, the Federation of Accounting Professions and the Lawyers Council, as well as relevant government agencies, in an effort to assess the long-term viability of making the changes to List 3.
According to reports, the majority of those canvassed were in favour of making the changes. This will mean the proposed changes will be put before the Cabinet and the Commerce Ministry expects the final results of their proposals will be known around September. If the measures are passed it will mean foreigners will be able to invest in these services without requiring a licence from the Ministry of Commerce.
List 1 in the FBA are officially designated as ‘businesses not permitted for foreigners to operate due to special reasons.’ List 2 activities are ‘businesses related to national safety or security, or affecting arts and culture, traditional and folk handicraft, or natural resources and environment.’ Foreign business entities can only engage in these areas via approval from the Cabinet.
List 3 states, ‘businesses in which Thai nationals are not yet ready to compete with foreigners.’ Foreign companies must apply for and obtain a foreign business licence in order to engage in these sectors.
The FBA limits foreign shareholding to 49 percent of a business, and this restriction will remain in force.