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The Foreign Business Act
and restricted occupations
There are two sets of regulations that place
work restrictions on foreigners in Thailand
A
Royal Decree which list occupations
closed to foreigners, and a Law which closes
certain
activities to
foreigners.
Restricted occupations
A
Royal Decree in 1973 listed 39 occupations
that were then closed to aliens. This list
has
been
amended on several occasions by subsequent
Royal Decrees, the latest one in 1979.
Prohibited occupations are:
Labour
Work in agriculture, animal breeding,
forestry, fishery or general farm
supervision
Masonry, carpentry, or other
construction work
Wood carving
Driving motor vehicles or no motorised
carriers, except for piloting
international aircraft
Shop attendant
Auctioning
Supervising, auditing or giving
services in accounting, except
occasional international auditing
Gem cutting and polishing
Hair cutting, hair dressing and
beautician work
Hand weaving
Mat weaving or making of wares from
reed, rattan, straw or bamboo
pulp
Manufacture of manual fibrous paper
Manufacture of lacquer ware
Thai musical instrument production
Goldsmith, silversmith and other
precious metal work
Manufacture of bronze ware
Thai doll making
Manufacture of mattresses and padded
blankets
Alms bowl making
Manual silk product making
Buddha image making
Manufacture of knives
Paper and cloth umbrella fabrication
Shoemaking
Hat making
Brokerage or agency work, except in
international business
Dressmaking
Pottery or ceramics
Manual cigarette rolling
Legal or litigation service
Clerical or secretarial work
Manual silk reeling and weaving
Thai character type-setting
Hawking business
Tourist guide or tour organising
agency
Architectural work
Civil engineering work
The Foreign Business Act
The
Foreign Business Act (the Act) was approved
on 15 October 1999 by the Senate and on
20
October 1999 by the House of
Representatives, and it was published in the
Government
Gazette on December 4, and it will be
enforced from March 4, 2000.
The
Act repeals and replaces the 1972 National
Executive Council Announcement No. 281
(or
Alien Business Law, ABL).
As
with the Alien Business Law, the businesses
attached to the Act are still divided into
three
categories List 1, List 2, and List 3. The
ABL divided businesses into Annex A, Annex B
and
Annex C.
However, the business categories in the Act
have been substantially changed from those
of
the
ABL.
Ministerial Regulations.
List
1 activities are strictly prohibited to
aliens. List 2 is prohibited to aliens
unless
permission is granted by the Commerce
Minister by and with an appropriate Cabinet
resolution. Alien juristic entities allowed
to engage in the businesses in List 2 must
meet the
following two conditions:
(1)
At least 40 percent of all of the shares are
held by Thai persons or non-alien juristic
entities.
(2)
Two-fifths of the members of the Board of
Directors are Thai.
List
3 is prohibited to aliens unless permission
is granted by the Director-General of the
Department of Commercial Registration,
Ministry of Commerce, by and with approval
of the
Foreign Business Board.
An
alien can engage in businesses in List 2
and/or List 3 if he is a promoted investor
in
accordance with either the Investment
Promotion Act, Industrial Estate Authority
of Thailand
Act,
or other laws. They must then notify the
Commerce Minister.
Major features of the Foreign Business Act
compared with the Alien Business Law
Definition of Alien
Alien Business Law
1. A
natural person or a juristic person who is
not of Thai nationality;
2 A
juristic entity of which foreigners hold
one-half or more of either the number of
the
shares or the value of the shares;
3 A
juristic entity of which foreigners account
for one-half or more of the
shareholders;
4 A
limited partnership or a registered ordinary
partnership with a foreign managing
partner or a foreign manager.
Bearer (no name) certificate shares of a
limited company shall be considered shares
owned by aliens, unless otherwise prescribed
by Ministerial Regulation.
Foreign Business Act
1 A
natural person who is not of Thai
nationality;
2 A
juristic entity which is not registered in
Thailand;
3 A
juristic entity incorporated in Thailand
with foreign shareholding accounting for
one-half or more of the total number or
value of shares;
4 A
limited partnership or registered ordinary
partnership whose managing partner or
manager is a foreigner.
Bearer (no-name) certificate shares of a
limited company shall be considered shares
owned by aliens, unless otherwise prescribed
by Ministerial Regulation.
Shareholding limit in other business
Alien Business Law
An
alien as a permit holder or shareholder or
partner of a juristic entity under the
alien definition, shall not become a partner
or shareholder in any other partnership or
company with more than one-third of the
total shares of the company or with more
than
one-third of the total capital of the
partnership, or buy out such businesses,
unless permission has been granted by the
Director-General, who may prescribe
certain conditions.
Foreign Business Act
None
Minimum capital
Alien Business Law
None
Foreign Business Act
The
minimum capital is three million baht for
businesses listed in the Act, and two
million baht for businesses not listed in
the Act. However, the minimum capital
requirement shall not been imposed in cases
of re-investment.
List of prohibited and restricted businesses
Alien Business Law
Businesses subject to the Act are classified
into three categories Annex A, Annex
B,
and Annex C.
Any
businesses specified in Annex A are strictly
prohibited to aliens.
An
alien cannot engage in any businesses in
Annex B and/or Annex C unless he is
granted investment promotion by the Board of
Investment.
An
alien cannot engage in any businesses in
Annex C unless he is granted permission
by
the Director-General.
Foreign Business Act
Businesses subject to the Act are classified
into three categories List 1, 2 and List
3.
List
1 consists of businesses strictly prohibited
to aliens.
List
2 is prohibited to aliens unless permission
is granted by the Commerce Minister
by
and with an appropriate Cabinet resolution.
Alien juristic entities allowed to
engage in the businesses in List 2 must meet
the following two conditions:
(1)
At least 40 percent of all the shares are
held by Thai persons or non-alien juristic
entities.
(The
minimum threshold may be lowered to 25
percent given reasonable grounds.)
(2)
Two-fifths of the members of the Board of
Directors are Thai.
List
3 is prohibited to aliens unless permission
is granted by the Director-General of
the
Department of Commercial Registration,
Ministry of Commerce, by and with
approval of the Foreign Business Board
An
alien can engage in businesses in List 2
and/or List 3 if he is a promoted investor
in
accordance with either the Investment
Promotion Act, Industrial Estate Authority
of
Thailand Act, or other laws.
Changes in business categories attached
Alien Business Law
Wholesales of all kinds of products (Annex
C) except those specified in Annex A,
and
retailing of all products (Annex B and Annex
C), require an investment
promotion by the Board of Investment, or a
permission by the Director-General of the
Department of Commercial Registration,
Ministry of Commerce.
Broker or agent business (Annex A) is
prohibited to aliens.
All
kinds of Businesses in services are
specified in Annex A, Annex B, and Annex C.
Those are under the Law. Particularly,
accounting, legal, and architectural
services
are
under Annex A, while engineering service is
under Annex C.
Building construction business is under
Annex A, and other construction businesses
are
under Annex C.
The
business of Internal trade concerning local
agricultural products and advertising
is
under Annex A.
Foreign Business Act
The
businesses of wholesale and retail of all
kinds of goods still require licensing
under List 3 except a wholesale business
which the minimum capital of each store is
100
million baht or more, and a retail business
which the total minimum capital is
100
million baht or more, or the minimum capital
of each store is 20 million baht or
more.
The
business of broker or agent is under List 3
and may be engaged in by aliens if
such
aliens obtain a Foreign Business License.
However, the business as the
following is exempt from the Act:
Trading in securities or services concerning
futures trading in agricultural
commodities, financial instruments or
securities;
Trading in or the procurement of goods and
services needed for production by, or
providing the services of, an enterprise in
the same group;
Trading, purchasing (for other) or
distributing or finding domestic or overseas
markets for selling goods made domestically
or imports as an international trading
business, with a minimum capital of the
alien of at least 100 million baht; and
Other lines of business stipulated in
Ministerial Regulations.
While all types of service business (except
for those to be prescribed in Ministerial
Regulations) are under List 3 and can be
licensed, a major change has been to allow
for
accounting, legal, and architectural
services (previously not capable of
licensing),
and
engineering service to be licensed.
The
business of construction is capable of
licensing under List 3; however, it is
exempt from the Act in case of its business
relates to:
Construction of things that provide basic
services to the public with respect to
public
utilities or communications and which
require the use of special instruments,
machinery, technology, or expertise in
construction and a minimum capital of the
alien of at least 500 million baht;
Other categories of construction as
stipulated in Ministerial Regulations.
Domestic trade concerning indigenous
agricultural produce or products not
prohibited by any other law, and advertising
are in List 3 and may be engaged in by
aliens if such aliens obtain a Foreign
Business License.
Revision of prohibited and restricted
businesses
Alien Business Law
An
alien can engage in any businesses listed in
Annex A or Annex B if permitted by
a
Royal Decree. An amendment of Annex C can
only be made by a Royal Decree.
Foreign Business Act
An
amendment of List 1 and Chapter 1 of List 2
can only be made by an Act. Other
amendments will require a Royal Decree. The
Foreign Business Board is required to
review and revise the business listed at
least once a year and to present an opinion
as
to
any changes to the Commerce Minister.
Penalties
Alien Business Law
A
fine of 30,000-500,000 baht
Foreign Business Act
A
fine of 100,000-1,000,000 baht and
imprisonment of no more than three years
List of business activities
List 1
Business that aliens are not permitted to do
for special reasons:
(1)
Newspaper undertakings and radio and
television station undertakings
(2)
Lowland farming/upland farming, or
horticulture
(3)
Raising animals
(4)
Forestry and timber conversions from natural
forests
(5)
Fishing for aquatic animals in Thai waters
and Thailands exclusive economic zones
(6)
Extraction of Thai medical herbs
(7)
Trade in and auctioneering of Thai ancient
objects or ancient objects of national
historical value
(8)
Making or casting Buddha images and making
monks bowls
(9)
Dealing in land.
List 2
Businesses concerning national security or
safety with an adverse effect on art and
culture,
customs or native manufacture/handicrafts,
or with an impact on natural resources and
the
environment.
Chapter 1: Businesses concerning national
security or safety
(1)
Production, disposal (sale) and overhaul of:
(a)
Fire arms, ammunition gunpowder and
explosives
(b)
Components of fire arms, gunpowder and
explosives
(c)
Armaments, and military vessels, aircraft or
conveyances
(d)
All kinds of war equipment or their
components.
(2)
Domestic transport by land, water or air
inclusive of the undertaking of domestic
aviation.
Chapter 2: Businesses with an adverse effect
on art and culture, customs or native
manufacture/handicrafts
(1)
Dealing in antiques or objects of art and
works of art, and Thai handicrafts
(2)
Production of wood carvings
(3)
Raising silkworms, producing Thai silk
thread and weaving or printing patterns on
Thai
silk textiles
(4)
Production of Thai musical instruments
(5)
Production of articles of gold or silver,
nielloware, nickel-bronze ware or laqurware
(6)
Production of crockery and terra cotta ware
that is Thai art or culture.
Chapter 3: Businesses concerning natural
resources and the environment.
(1)
Production of sugar from sugarcane
(2)
Salt farming, inclusive of making salt from
salty earth
(3)
Making rock salt
(4)
Mining, inclusive of stone blasting or
crushing
(5)
Timber conversions to make furniture and
articles of wood.
List 3
Businesses which Thais are not ready to
compete in undertakings with aliens
(1)
Rice milling and production of flour from
rice and farm crops
(2)
Fishery, limited to propagation of aquatic
animals
(3)
Forestry from replanted forests
(4)
Production of plywood, wood veneer,
chipboard or hardboard
(5)
Production of natural lime
(6)
Accounting service undertakings
(7)
Legal service undertakings
(8)
Architectural service undertakings
(9)
Engineering service undertakings
(10)
Construction except:
(a)
Construction of things that provide basic
services to the public with respect
to
public utilities or communications and which
require the use of special
instruments, machinery, technology or
expertise in construction and a
minimum capital of the alien of at least 500
million baht
(b)
Other categories of construction as
stipulated in ministerial regulations
(11)
Brokerage or agency undertakings except:
(a)
Trading in securities or services concerning
futures trading in agricultural
commodities, financial instruments or
securities
(b)
Trading in or the procurement of goods or
services needed for production by
or
providing the services of and enterprise in
the same group
(c)
Trading, purchasing (for others) or
distributing or finding domestic or
overseas markets for selling goods made
domestically or imports as an
international trading business, with a
minimum capital of the alien of at least
100
million baht
(d)
Other lines of business stipulated in
ministerial regulations
(12)
Auctioning, except:
(a)
International bidding that is not bidding in
antiques, ancient objects or
objects of art that are Thai works of art,
handicraft or ancient objects, or of
historical value
(b)
Other types of auction as stipulated in
ministerial regulations
(13)
Domestic trade concerning indigenous
agricultural produce or products not
prohibited by any present law
(14)
Retail trade in all kinds of goods where the
total minimum capital is 100 million baht
or
more, or the minimum capital of each store
is 20 million baht or more.
(15)
Wholesale trade in all kinds of goods with a
minimum capital for each store of more
than
100 million baht
(16)
Advertising undertakings
(17)
Hotel undertakings, except for hotel
management services
(18)
Sale of food or beverages
(19)
Plant breeding and propagating, or plant
improvement undertakings
(20)
Doing other service businesses except for
service businesses prescribed in ministerial
regulations.
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