You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 6, 2012

Critical Considerations for Foreign Investors Doing Business in Thailand

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Increasingly investors are expanding their businesses to developing countries with a view to reducing costs and selling products in new markets. Thailand is among the most attractive destinations for them. However, before a commitment is made to a foreign country, the investor needs to study not only the economic and political stability of the country but, more importantly, the local laws and regulations applicable to foreign investors.

The Thai government has announced many incentives to encourage foreign investors to choose Thailand. Investors should consult counsel well versed in local regulations so that they properly establish themselves in the country.

There are various types of business structures available to the foreign investor. This article will focus on for-profit subsidiaries.

Foreigners may set up a wholly owned subsidiary to conduct business in Thailand if the business activity is not reserved for Thais under the Foreign Business Act (FBA) or other local laws. From time to time, we find foreign companies incorporated in Thailand that have unknowingly or unintentionally violated foreign ownership restrictions by engaging in businesses reserved under the FBA.

Under the Act, a company is considered foreign if half, or more than half, of its shares are held by a non-Thai natural or juristic persons.

If you operate a foreign company, you must carefully consider whether the business activities in which your company engages are reserved under the FBA. You need to be aware that this applies to both core and non-core business activities.

Businesses reserved for Thais under the FBA are divided into three lists. Foreigners are strictly prohibited from engaging in business activities on List 1 of the FBA, while foreigners wishing to engage in activities on List 2 of the FBA must obtain a Foreign Business License (FBL), which requires cabinet approval. Foreigners that wish to engage in activities on List 3 of the FBA must obtain an FBL from the Foreign Business Committee.

Manufacturing activities are mostly liberalized and foreigners are allowed to make and sell products in Thailand. Foreigners, however, are not allowed to buy products from other suppliers and retail or wholesale the products domestically. Nevertheless, they are allowed to export those products.

There is a catch-all under List 3. All service businesses are reserved, and installation, repair, maintenance, after-sale services, leasing, and lending are all considered service businesses. Foreigners are strictly prohibited from engaging in these activities.

Even the provision of a loan to a subsidiary or to an affiliated company is deemed to be a service business and is restricted under the FBA.

We have found that many foreign companies mistakenly believe that if they register a Memorandum of Association with broad business objectives with the Ministry of Commerce that they are legally permitted to engage in any business without an FBL or a Foreign Business Certificate. This is a common misconception.

The ministry allows companies, both Thai and foreign, to register objectives that are as broad as they wish. Companies need not conduct all business objectives registered with the ministry; they can conduct only one or a few.

However, companies are not allowed to engage in objectives not registered in their Memorandum of Association. If a company wishes to conduct business not listed in its objectives, it must amend its memorandum—this is generally the reason companies register broad objectives.

If you plan to operate a foreign-owned company, carefully review your proposed activities. A foreigner who operates a business reserved under the FBA, without the required FBL, with or without intent, will be charged with a violation of the FBA. The punishment is imprisonment for a term not exceeding three years, a fine of 100,000 to 1 million baht, or both. The court will also order the termination or dissolution of the business.

We encourage foreigners to comply with Thai laws and apply for an FBL if they wish to engage in businesses reserved under the FBA, or to seek approval from other competent authorities, such as the Board of Investment of Thailand or the Industrial Estate Authority of Thailand. Both are empowered to grant fiscal and non-fiscal benefits to qualified projects.

Download Full Article
Related Professionals
Piyanuj (Lui) Ratprasatporn
Partner and Director, Corporate & Commercial
Thailand
+66 2056 5555
Email

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

January 20, 2026
Thailand’s Board of Investment (BOI) has imposed new restrictions on foreign-majority shareholding and land ownership for companies in certain promoted activities. The changes took effect on September 1, 2025, but were not published in the Government Gazette until December 30, 2025, under Notification of the Board of Investment No. Sor. 7/2568 on the Amendment to List of Activities Eligible for Investment Promotion under Notification of the Board of Investment No. 9/2565, dated July 22, 2025. Foreign Land Ownership Restrictions Generally, foreign land ownership is one of the privileges granted to BOI-promoted companies, allowing them to own land to engage in the promoted activities. However, with these new restrictions, the BOI will no longer grant land-ownership privileges to foreign-majority-owned companies that conduct business activities in the following categories: Rolling, drawing, casting, or forging of nonferrous metals (category 5.4.9) Manufacturing of ferrous metal products or ferrous metal parts (category 5.4.11.2) Manufacturing of nonferrous metal products and/or nonferrous metal parts for industrial use (category 5.4.11.4) Manufacturing of other metal products, including other metal parts for industrial use (category 5.4.11.5) Manufacture of chemical products for industry (category 6.2) Manufacture of plastic products for industrial goods and parts (category 6.4.1) These restrictions do not apply to existing BOI-promoted companies that have at least three projects granted promotion under the same juristic person during the past 15 years (2011–2025) with total investment of at least THB 5 billion, excluding the cost of land and working capital. Foreign Shareholding Restrictions For companies to be eligible for BOI promotion in three other categories of business activities, at least 51% of the company’s registered capital must be held by Thai individual shareholders, unless the BOI-promoted activity is located within a special border economic zone as designated by the BOI. These three categories are: Manufacture of bags made of
Read More
January 6, 2026
Thailand is developing new legislation on responsible business conduct that would impose statutory obligations on large enterprises to manage human rights and environmental risks throughout their operations and supply chains. The Draft Act on the Promotion of Responsible Business Conduct, commonly referred to as the Human Rights and Environmental Due Diligence (HRDD) Bill, has been developed through extensive consultation involving a wide range of stakeholders, with the Ministry of Justice playing a leading role. If enacted, the HRDD bill would reshape how certain large businesses operate and manage their supply chains, reflecting a recognition of international standards and global concerns regarding human rights and environmental protection. By introducing legally binding due diligence obligations, the draft aims to ensure that businesses operating in Thailand are held accountable for adverse impacts throughout their operations and supply chains, in line with emerging global legal frameworks. Who Will Have to Comply? The HRDD bill primarily targets large enterprises based on their annual revenue thresholds: Manufacturing businesses with annual revenue exceeding THB 500 million Wholesale, retail, or service businesses with annual revenue exceeding THB 300 million The draft would also cover state-owned enterprises and foreign businesses operating in Thailand if their operations meet the applicable revenue thresholds. What Does Human Rights and Environmental Due Diligence Involve? Under the HRDD bill, due diligence is not a one-time checklist but an ongoing process with several key requirements: Adopt and publicly disclose a sustainability policy. Businesses must commit publicly to respecting human rights and protecting the environment, and must integrate this policy into corporate governance and risk management systems. Identify and assess risks. Companies must identify and assess risks of human rights violations and environmental harm across their operations and value chains. Prevent or reduce risks. Businesses must implement effective and proportionate measures to prevent or mitigate
Read More
December 30, 2025
On December 17, 2025, Laos’ Ministry of Industry and Commerce (MOIC) issued a notice introducing a new digital system that allows e-commerce businesses to obtain required certificates and licenses through an online, application-based platform. Notice No. 3988, which will take effect on February 1, 2026, introduces the E-Trust platform, a downloadable application that allows e-commerce businesses to remotely obtain acknowledgement certificates and business operating licenses. New Digital Registration Options Under the previous framework established by the Decree on E-commerce (2021), businesses were required to complete registration exclusively through paper-based submissions. The new system now offers businesses two registration options: Traditional paper-based process at the Division of E-commerce Management within the MOIC; or Electronic registration and renewal through the E-Trust platform. This change is expected to streamline procedures, reduce administrative burdens, and enhance accessibility for businesses operating outside Vientiane. The E-Trust platform facilitates compliance for both individuals and legal entities required to submit applications and renewals for required certificates and licenses. The development is particularly beneficial for businesses located in remote provinces, as it eliminates the need for physical travel and significantly accelerates processing times. Compliance Requirements and Penalties Businesses must obtain or renew the required certificates and licenses to avoid sanctions under the Decision on Fines and Other Measures for Violation of the Decree and Regulations on E-commerce (No. 2828/MOIC, dated November 11, 2025). Penalties for noncompliance may include monetary fines and other enforcement measures.
Read More
December 19, 2025
Prior to the dissolution of the House of Representatives, Thailand’s cabinet approved a draft amendment to the Administrative Procedure Act, following review by the Council of State. If enacted, this reform will fundamentally change how state agencies process business applications and appeals by imposing enforceable timelines and legal consequences for inaction. The draft directly targets a longstanding commercial frustration: applications and appeals that vanish into administrative silence, stalling investment and foreclosing judicial review across sectors ranging from real estate and manufacturing to healthcare and finance. The “Silence Means Yes” Rule for Applications At the core of the reform is a new automatic “approval by implication” for applications subject to statutory processing deadlines. If an official fails to notify an applicant of a decision within the legally prescribed period, the application will be deemed approved as a matter of law. This presumption shifts the costs of delay from businesses to the bureaucracy and gives applicants a definitive legal position once time expires. The mechanism applies to routine licensing and registration matters governed by explicit consideration periods in existing statutes or ministerial regulations. Officials may extend the decision period by up to thirty days, but only if they notify the applicant before the original deadline and substantiate that the delay arises from genuinely exceptional circumstances beyond their control. Certain sensitive applications are expressly excluded from automatic approval, including those that may significantly affect national security or defense, public safety and health, the environment or natural resources, or national cultural heritage. Once the deadline passes without a decision, businesses can proceed with deployment of capital and operations—construction, hiring, procurement, and market entry—without waiting for formal permission that may never arrive. For time-sensitive projects, this materially reduces regulatory timing risk. The “Deemed Rejection” Rule for Appeals The draft introduces a parallel “deemed rejection”
Read More