Striking the perfect balance between Thai’s domestic trade and foreign investment could have been tough and that’s for sure; if the government wouldn’t have handled well. It’s amazing how the power play has been distributed evenly, ensuring none of them feels neglected. While a few business activities have been reserved particularly for the majority Thai ownership, restrictions have been imposed on them too.
You might have heard about the tax benefits offered by the Thai Board of Investment to the foreigners. In fact, one can expect complete exemption of CIT plus reduction of excise duty on the imported machinery and raw materials and much more. A BOI promoted company is also allowed many non-tax benefits like freehold land.
On the other hand, the Foreign Business Act of 1999 prevents foreign participation in a few types of businesses and applies to a person or a company, falling within the definition of ‘foreigner’ specified in the Act, whereby allowing the domestic business to take over. However, the restrictions on foreign businesses are determined on the basis of the total number of shares and not based on the voting rights. Here are three business sectors, wherein foreign participation is restricted;
List One
Business in this category includes activities that are related to;
- Publishing and broadcasting
- Forestry
- Fishing and trading in real property
- Agriculture
List Two
Business-related to;
- National security
- Art and culture
- Natural resources
A foreign entity can only operate a business in the List Two after it has received permission from the Minister of Commerce plus approval from the Cabinet.
List Three
- Foreigners are restricted from engaging in businesses in areas, where it is considered that the Thai nationals are not yet ready for any type of competition with the foreigners unless the permission is derived from the Director-General of the Business Development Department. Such businesses include;
- Fishery, particularly marine animal culture
- Architecture service business
- Engineering service business
- Forestry from forestation
- Production of lime
- Production of veneer board, hardboard or chipboard
- Broker or agent business, except;
- a) Being a broker for guaranteeing financial securities or services connected with financing instruments or securities.
- b) Being a broker for trading, distributing or seeking domestic and foreign for selling.
- Construction, except for;
- a) Other categories of construction by Ministerial Regulations
- b) Construction providing basic services to the public, machinery and transport requiring special tools.
