Rules eased on foreign ownership for 19 types of businesses
In a development that should please foreign investors, Thailand’s government amended the country’s Foreign Business Act last week to ease restrictions on 19 types of businesses to allow foreign majority ownership. The relaxing of restrictions is intended to encourage foreign firms to participate in infrastructure projects as part of the Kingdom’s massive infrastructure upgrade.
“The move allows foreign companies to join joint bids on infrastructure projects, but also for other government projects such as rail, the skytrain, airports, power plants and petroleum exploration businesses,” Minister of Commerce Apiradi Tantraporn said.
Thailand has a decades-long track record of welcoming foreign investment. However, some professions have been reserved for Thai nationals, were placed off limits to foreigners, or required majority Thai ownership by law under the Foreign Business Act. Foreign Chambers of Commerce have long advocated that the list of reserved professions be revised or eliminated entirely and ownership restrictions relaxed. Doing so would further increase the ease of doing business in the Kingdom, something the government has publicly promised to do.
This“eliminates complicated paperwork asking for permission from Thai government agencies and creates more flexibility in doing business here, which hopefully will attract investment,” Apiradi said.
The World Bank has ranked Thailand up three places from last year as far as ease of doing business in 2017. One of the areas the World Bank recommended that Thailand improve upon is in getting permissions to do construction projects.
The professions that were adjusted by the new amendments were on List 3 of the Foreign Business Act, meaning foreigners could work in those fields or own a minority share in a business in those fields, but had to apply for permission from the Busi ness Development Department at the Ministry of Commerce to enter those fields. Many applicants regarded the process as cumbersome and time consuming.
Apiradi said that process would now be sped up, and that foreigners could apply for and receive permission from the ministry or government agency that directly oversees that sector or profession, saving time by eliminating the step of applying at the Business Development Department.
The 19 businesses on which restrictions have been eased are mainly in the financial sector, regional agencies of foreign businesses, and infrastructure, especially infrastructure projects that bid for government projects.
Allowing foreign businesses to bid and construct infrastructure projects launched by the Thai government, and eliminating some of the complicated paperwork required, would encourage more foreign bidders, Apiradi said. This should also boost foreign participation in projects that will push forward the building of the Eastern Economic Corridor advanced development zone, she added.
Permitting foreign financial service operators to do business in Thailand would improve the competitiveness of Thai banks and financial institutions, she said.