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

August 21, 2017

Foreign Business Act: Relaxation of Restrictions on Representative Offices and Regional Offices in Thailand

Subscribe to Updates
Informed Counsel

In 2016, Thailand was listed as the 46th most favorable country in which to do business by the World Bank in its Ease of Doing Business  report. Thailand’s ranking—an improvement of three spots over its 2015 position—places the country third in Southeast Asia, indicating that Thailand has a strong competitive position vis-à-vis its neighbors.

Despite the strong ranking, the Thai government has publicly expressed its intention to do more to improve a variety of business mechanisms and legislation in a bid to further boost the Kingdom’s attractiveness to potential investors, as well as to stimulate both domestic and inbound investments.

Restrictions on Investment

The first barriers usually faced by potential foreign investors are the restrictions imposed under the Foreign Business Act B.E. 2542 (FBA). Enacted in 1999, the FBA plays a significant role in influencing inbound movements of foreign funds into Thailand, as it determines which activities are permissible for foreigners or majority foreign-owned companies that are registered in Thailand, whereby half, or more than half, of the shares are held by foreigners.

List 3 of the FBA identifies a number of businesses restricted to foreigners, including wholesale, retail, and engineering services, etc. List 3 (21) concludes with a broad catchall provision that restricts “other service businesses” as being an area in which Thai businesses are not yet ready to compete with foreign investors whether in terms of finance or technology.

Since the enactment of the FBA, the services undertaken by a representative office (REP) or a regional office (RO) have long been categorized as a “service business” under the catchall provision of List 3 (21). Along with other service businesses that are foreign or foreign majority-owned companies registered in Thailand, REPs and ROs were required to apply for and obtain a Foreign Business License (FBL) or a Foreign Business Certificate (FBC) prior to commencing any restricted activity under List 3 of the FBA.

Foreign investors have long questioned the reasoning behind these FBA requirements for REPs and ROs. Foreign investors often ask why the non-income-generating activities undertaken by REPs and ROs require a license application and compliance with certain license conditions (e.g., the requirement to bring minimum capital and transfer technology into Thailand). This requirement would seem to run counter to the very limited scope of activities undertaken by REPs and ROs, investors have argued.

Ministerial Regulations Lifting Restrictions

In recent years, the Thai government has taken steps to further liberalize the investment environment set out under the FBA. This has been accomplished through the issuance of Ministerial Regulations (MR) that exclude certain service businesses from List 3 (21) of the FBA, thus exempting them from the list’s restrictions.

A first wave of regulations, enacted in 2013, excluded businesses under Thailand’s securities and exchange law from the FBA list. In 2016, MR No. 2 excluded businesses under the financial institution business law, as well as life insurance and casualty insurance businesses, from the list.

Most recently, in June 2017, MR No. 3 amended MR No. 1 and No. 2 by removing REPs and ROs, as well as service businesses that have a government agency or a state enterprise as a counterparty under the budgetary law, from List 3 (21), exempting these businesses from foreign business licensing requirements. This addresses the long-held concern among foreign investors about why REPs and ROs were being included in the restricted business under List 3 (21).

As part of MR No. 3, the table below lists the scope of REP and RO activities that are exempt from FBL:

 

Activities Exempt from Foreign Business Act Requirements

 

Representative Office

Regional Office
  • Finding sources for the purchase of goods or services in Thailand for the head office and/or affiliates/subsidiaries of the head office.
  • Checking and controlling the quality and quantity of goods purchased or ordered to be manufactured in Thailand by the head office and/or affiliates/subsidiaries of the head office.
  • Providing advice and assistance related to goods of the head office and/or affiliates/subsidiaries of the head office which are sold to agents or consumers in Thailand.
  • Disseminating information concerning new goods or services of the head office and/or affiliates/subsidiaries of the head office.
  • Reporting on movements of businesses in Thailand to the head office and/or affiliates/subsidiaries of the head office.
  • Coordinating and supervising the operations of branches, and/or subsidiary companies in the same region, on behalf of the  head office.
  • Providing services to the head office’s branches and subsidiary companies, with such services including:
    • Consultation and management services;
    • Personnel training and development;
    • Financial management;
    • Control of marketing and sales promotion planning;
    • Product development; and
    • Research and development services.

 

It should be noted, however, that although REPs and ROS are no longer subject to an FBL, they must still prepare and maintain their books and accounts, and file audited financial statements with competent authorities within the prescribed period set by laws. REPs and ROs must also notify the Department of Business Development (DBD), Ministry of Commerce, to obtain a registration number for a juristic person before they commence activities in Thailand. This process is not complicated, and it takes only a few business days to obtain a certified document from the DBD. 

This relief for REPs and ROs could further encourage foreign investment in Thailand, because the proceedings required to be undertaken by foreign companies will become more streamlined and convenient. Despite these promising changes, however, foreign investors must still be aware of their continued obligation to obtain other required licenses from specific authorities before they are permitted to operate a service business in Thailand.

Download Full Article
Related Professionals

Practices

Corporate/M&A

Location

RELATED INSIGHTS​ 

September 15, 2026
The Myanmar Investment Commission (MIC) has issued a notification that gives investors with projects in Myanmar clearer guidance for securing approval and for changing, expanding, or exiting an approved project. Issued on August 19, 2026, MIC Notification No. 5/2026 replaces MIC Notification No. 26/2021 and sets procedures for state or regional investment committees to review, approve, and supervise investment projects, including project amendments, investment increases, land-use rights applications, compliance inspections, and suspension or termination of approved businesses. Endorsement Application Timeline and Deemed Acceptance In Myanmar, prospective investors seeking approval under the Myanmar Investment Law generally do so through an MIC permit or an MIC endorsement, depending on the nature of the investment. While certain large-scale investment projects require an MIC permit, projects that are not required to obtain an MIC permit may instead apply for an MIC endorsement. Investors seeking MIC endorsement for their planned projects typically submit their applications to the relevant state or regional investment committee. These committees are established under the Myanmar Investment Law and are authorized to approve investments of less than USD 5 million, subject to the project’s nature and location. MIC Notification No. 5/2026 specifies that upon receiving an endorsement application, the relevant investment committee office will check it for completeness and determine whether it can be considered at the state or regional level or must be referred to the MIC; if it must be forwarded to the MIC, this will be done within 10 working days. If an application is within its purview, the committee may reject the endorsement application within 15 working days of receipt; otherwise, the application is deemed accepted. If approved, the endorsement certificate will be issued within 10 working days of the approval decision, subject to applicable procedures. Endorsement Certificate Amendment The notification clarifies which amendments a state
Read More
September 9, 2026
Certain securities, derivatives, and treasury activities in Thailand were opened to foreign investors when Thailand’s Ministry of Commerce published two new ministerial regulations in the Government Gazette on August 28, 2026. The regulations significantly broaden the service activities that foreign-owned businesses may conduct without a license or certificate under the Foreign Business Act B.E. 2542, as amended (FBA). Securities and Derivatives Business Exemptions Prior to the issuance of these ministerial regulations, the exemptions covered (1) securities brokerage and derivatives brokerage with their only underlying assets being agricultural commodities, financial instruments, and securities; and (2) dealers, advisers, and fund managers conducting derivatives business under Thailand’s derivatives laws. The ministerial regulations provide broader exemptions. In addition to derivatives under the laws on derivatives as before, the following two major categories are provided: Derivatives whose underlying assets or variables fall outside the scope of Thailand’s laws on derivatives. This addresses a gap in the previous framework, which did not comprehensively exempt derivatives tied to nonregulated underlying assets or variables, such as certain commodities. Foreign brokers, advisors, and fund managers can now facilitate a broader range of hedging and risk management instruments without triggering FBA licensing requirements. Derivatives traded outside a derivatives exchange, or over the counter (OTC), whose payments are calculated by reference to foreign exchange rates or interest rates. This removes an FBA licensing barrier for foreign providers of widely used OTC hedging products, broadening the solutions available to importers and exporters managing currency exposure and to borrowers seeking greater certainty over financing costs. The ministerial regulations also exempt brokers and agents handling transactions involving either of these two derivatives categories. For securities businesses, the ministerial regulations add exemptions for margin loans used to purchase securities and for securities repurchase transactions. These additions clarify whether such activities qualify as exempt brokerage
Read More
September 4, 2026
Foreign business restrictions on telecommunications, treasury center businesses, and intragroup support services were eased when Thailand published the Ministerial Regulation Prescribing Service Businesses Not Requiring Permission for Foreign Business Operations (No. 5) B.E. 2569 (2026) in the Government Gazette on August 28, 2026. The ministerial regulation expands the categories of service businesses that foreign investors may operate without a foreign business license (FBL) under the Foreign Business Act B.E. 2542 (1999) (FBA). Of particular relevance to the telecommunications, fintech, and technology sectors, the ministerial regulation exempts: Type 1 telecommunications licensees, which do not have their own networks; Treasury center businesses operated in accordance with Thailand’s exchange control regulations; and Certain intragroup administrative, human resources, and information technology management services. Telecommunications Services Foreign-owned businesses providing telecommunications services under a type 1 telecommunications license may now operate without obtaining an FBL. This may streamline market entry for qualifying telecommunications and digital infrastructure businesses. The exemption applies only to the FBA licensing requirement. Operators must continue to comply with applicable requirements under the Telecommunications Business Act and the regulations of the National Broadcasting and Telecommunications Commission, and the change does not affect foreign ownership restrictions applicable to type 2 or type 3 telecommunications businesses. Treasury Center Businesses The ministerial regulation also exempts qualifying treasury center businesses from the FBL requirement. This may facilitate centralized treasury functions in Thailand, including liquidity management, foreign exchange management, and intragroup funding arrangements. Treasury center operations remain subject to applicable requirements of the Bank of Thailand and other competent authorities. Intragroup Administrative, HR, and IT Services Certain administrative, human resources, and information technology management services provided between affiliated entities are also exempt, provided the relevant entities satisfy prescribed ownership or management criteria. The exemption is available where the service provider and recipient are related through specified ownership
Read More
September 1, 2026
Thailand has taken another step toward liberalizing its foreign business framework, exempting additional service activities and derivatives brokerage or agency businesses from the licensing requirements of the Foreign Business Act (FBA). Since the FBA came into effect, Thailand has taken a measured approach to opening its economy to foreign investment. While the FBA regulates foreign participation in businesses that may affect domestic interests, the framework has also evolved to allow foreign participation in certain business activities where sector-specific laws and regulatory frameworks already provide sufficient oversight, making additional FBA restrictions unnecessary. This is particularly true where Thai businesses are sufficiently capable of competing in certain service sectors, or where liberalization is intended to facilitate the provision of services among companies within the same corporate group. Against this backdrop, two new ministerial regulations have been issued pursuant to the FBA. Service Businesses Under the FBA Under the FBA, certain categories of business are restricted for foreign operators. List 3 of the FBA sets out businesses that foreigners may operate only if they obtain a foreign business license (FBL) or a foreign business certificate (FBC), or unless a specific exemption applies. List 3 (21) covers “other service businesses,” which is a catch-all provision that captures a wide range of service businesses not specifically enumerated elsewhere in the FBA. In practice, this means that most service activities carried on by foreigners in Thailand require an FBL or FBC unless otherwise exempted. Notwithstanding the foregoing, the FBA provides a mechanism to address this breadth by empowering the Minister of Commerce to issue ministerial regulations excluding specific types of service businesses from List Three (21). Once a service business is so excluded, foreigners may operate it without obtaining an FBL or FBC. Prior to the new regulations, four ministerial regulations had been issued to
Read More