As part of Thailand 4.0 initiative, the Ministry of Commerce (MOC) conducted a review of businesses listed in Schedule Three under the Foreign Business Act B.E. 2542 (1999) (FBA). Under Schedule Three of the FBA, foreigners are permitted to engage in businesses listed in the Schedule if they have obtained a license from the Director-General of the Department of Business Development, the MOC, through the approval of the Foreign Business Committee.
The aim of the review is to exclude certain services provided to affiliated/group companies from the ambit of the FBA. This is because these services are not directly related to the professions and, given their limited scope, would not directly compete with Thai business operators. These activities also have the potential to facilitate and attract foreign investment into Thailand.
The Foreign Business Committee has recently approved the exclusion of three service activities provided to affiliated/group companies as follows:
- lending money to affiliated/group companies in Thailand;
- renting out office space including public utilities to affiliated/group companies; and
- providing consultation and recommendation to affiliated/group companies in the following fields:
- human resources; and
- information technology
As lending money to affiliated/group companies located outside of Thailand and provision of guarantee are not specifically mentioned among the excluded activities, foreign majority-owned companies wishing to operate the said two businesses will still need to obtain a foreign business license according to the FBA.
The amendment to Schedule Three under the FBA will be enacted as a ministerial regulation. The legislative process includes the approval of the draft ministerial regulation by the Commerce Minister and the Cabinet. Subsequently, when the MOC issues the ministerial regulation to this effect, a foreign business license to operate the aforementioned back office activities will no longer be required.
We are closely monitoring the progress and will keep you informed of any updates.