Potential Upcoming Exemption of New Service Businesses from Application of Foreign Business Act

The conduct of business in Thailand by a foreign person, foreign juristic person or Thai registered company with half or more than half of the share capital owned by foreigners is regulated by the provisions of the Foreign Business Act B.E. 2542 (1999) ("FBA"), which came into effect on 4 March 2000. The FBA is administered by the Ministry of Commerce ("MOC"), more specifically, the Department of Business Development ("DBD").

Schedule Three of the FBA lists the businesses which foreigners are prohibited from conducting unless with the approval of the Director General of DBD of MOC. Clause 21 of Schedule Three includes "the provision of services other than those specified by the Ministerial Regulations".  Clause 21 operates as a catch-all provision which encompasses most "consulting" and service-oriented businesses.  Certain service businesses have already been excluded from the FBA by way of Ministerial Regulations. 

From 21 February 2024 to 15 March 2024, DBD held a public hearing to consider a draft ministerial regulation excluding nine other service businesses from this list:

1. Telecommunications service businesses under the first type of telecommunications business license according to the Telecommunications Business Operations Act;
2. Treasury Center Services Businesses under laws regarding exchange control;
3. Software development businesses;
4. Service business for administrative, human resources, and technological management for affiliated companies;
5. Debt guarantee service businesses, only within Thailand, for affiliated companies;
6. Partial space rental businesses for installing electronic devices used in financial services, vending machines, or automatic services to facilitate a company that has already received a foreign business license;
7. Petroleum exploration service businesses;
8. Various forms of lending businesses with securities under the Securities and Exchange laws, as well as the derivatives laws; and
9. Service businesses that act as brokers, dealers, advisors, or fund managers for derivatives contracts where such goods and variables are not subject to the Derivatives Act B.E. 2546 (2003).

It is important to note that, in addition to the FBA restrictions, specific legislation may also set limits on the level of foreign share ownership in areas such as commercial banking, telecommunications, insurance, commercial transportation, aviation, commercial fishing, mining and commodity exporting.