MSC Insight
Doing Business in Thailand Guide
With a Specific Example of Healthcare Business
Introduction
Thailand actively encourages foreign investments; however, foreign investors must comply with the regulatory framework designed to safeguard national interests. This guideline provides an overview of the principle legal considerations for foreigners seeking to establish or operate a business in Thailand. It addresses restrictions and exemptions under the Foreign Business Act, capital requirements, forms of business organizations, land ownership rules, work permits, and the regulatory framework specific to healthcare sector.
The Foreign Business Act is not intended as a barrier to foreign investments. Rather, it provides a regulatory structure that governs how foreign investors may participate in the Thai market while preserving national interests.
The law functions as a protective measure to ensure that critical areas of the economy remain under Thai influence, while also promoting fair competition and preventing market monopolization. By understanding legal requirements, foreign investors can better position themselves to take advantage of Thailand’s business opportunities while mitigating regulatory risks and ensuring compliance.
Foreign Business Act
The Foreign Business Act, B.E. 2542 (1999) (“FBA”) is the cornerstone of Thailand’s regulatory regime for foreign investors. The FBA regulates specific business activities in Thailand that foreigners may compete with Thai entrepreneurs. These business activities are divided into three lists; each subject to different restrictions for foreigners—unless the foreign investor is granted a Foreign Business License (“FBL”) or a Foreign Business Certificate (“FBC”).
Who is a “Foreigner” under the FBA
The FBA defines “foreigners” as individuals who do not possess Thai nationality. Juristic entities are considered “foreign” if at least half of the share capital is owned by foreign individuals or juristic entities.[1]
Nominee Arrangements
Under the FBA, the use of nominee arrangements is strictly prohibited, where Thai nationals hold shares on behalf of foreigners in a way that enables them to control and operate restricted businesses reserved for Thai nationals. Foreign investors and Thai individuals acting as nominees may be subjected to severe penalties for noncompliance, including imprisonment for a term not exceeding three years, a fine of THB 100,000 up to THB 1,000,000, or both. In addition, a Thai court may order the violator to cease its operations, and continued noncompliance with such order may result in a daily fine of THB 10,000 and THB 50,000.[2]
Restricted Businesses under the FBA
The FBA restricts the rights of foreigners to engage in certain business activities in Thailand by dividing restricted business into three lists in the annex of the FBA. Business activities in List 1 are strictly prohibited to foreigners and cannot be permitted under any circumstance. For business activities under List 2, foreigners must obtain permission from the Ministry of Commerce with the approval of the Cabinet. For business activities under List 3, permission is required from the Director-General of the Department of Business Development, the Ministry of Commerce,
with the approval of the Foreign Business Committee.
Author
Articles by Nattaya T.
Articles by Nattaya T.
