The Foreign Business Act and Other Foreign Business Restrictions

1.1. Background

The rights of aliens in Thailand are derived primarily from Thai domestic law, although international law and bilateral treaties impose on Thailand certain obligations toward resident aliens. Generally, aliens have the same basic rights as Thai nationals, unless a right is explicitly reserved for nationals or denied to or restricted to aliens.

Restrictions on the percentage of alien ownership for commercial banks, commercial fishing, aircraft, commercial transportation, commodity export, mining and other enterprises exist under various laws.

1.2. The Alien Business Law

The most important law governing alien-controlled businesses in Thailand is the Alien Business Law (National Executive Council Announcement No. 281) of 1972. Before the introduction of the Alien Business Law in 1972, foreigners were generally permitted to do business in Thailand with few restrictions. The Foreign Business Act divided various types of business into three main categories and subjected each category to different limitations with respect to foreign ownership. Other laws control the foreign ownership of land and specialized activities such as banking, insurance, finance and shipping.

In 1999, a new Act was passed which replaces the earlier Alien Business Law. The new Act is entitled The Foreign Business Act, B.E. 2542 (1999). In some areas, the new Act has liberalized the areas in which a foreigner may to do business in Thailand. However, the Act also appears to be more restrictive in other regards.

Categories The Foreign Business Act divides businesses into three Categories. Generally, those businesses listed in Category One are absolutely prohibited to foreigners unless there is an exception contained in a special law or treaty. 

Category Two refers to businesses owned by aliens that were in existence and actually operating prior to the enactment of the Foreign Business law. These businesses were permitted to apply for a special Alien Business License and to continue operating. Foreigners, however, are not permitted to start new businesses listed in this category unless they obtain special permission from the Minister with the approval of the Cabinet.

 

Part 2