On November 2, 2020, it was widely reported by Thai media that Thailand’s Department of Business Development (DBD) has drafted ministerial regulations that would remove telecommunications, treasury center activities, and software development businesses from List 3 of the Foreign Business Act (FBA). If enacted, these regulations would effectively mean that foreign entities (such as a foreign-majority-owned company) would no longer need to obtain permission from the DBD’s director-general and the Foreign Business Commission before engaging in these activities.
The three eligible business types under the draft ministerial regulations are defined as follows:
“Telecommunications” is limited to telecommunications operators that operate without their own network (i.e., Type 1 telecommunication businesses as defined under the Telecommunication Business Act B.E. 2544 (2001));
“Treasury center activities” relate to the management or exchange of foreign currencies between affiliated companies or within a conglomerate, and are regulated under the Exchange Control Law; and
“Software development business” is the development of software, (by a juristic person incorporated in Thailand), for data management or data analytics (including predictive analytics), for information technology and cybersecurity, or for use in controlling or enabling the operation of advanced technological equipment (in addition to business process management software), or in support of industrial manufacturing activities.
If these ministerial regulations are approved by the cabinet, they would continue the easing of restrictions on FBA List 3 businesses that are regulated under other laws or regulations. This has been undertaken in recent years to reduce duplication of government oversight of certain business activities (such as some intra-company services, which were the subject of the most recent such liberalization, in 2019), businesses that support Thailand’s economic development policies, and businesses that increase efficiency and liquidity for foreign investment activity.
Tilleke & Gibbins will continue to monitor these ongoing legal developments, and will provide updates when the new regulations come into effect. For more information on these developments, or on any aspect of doing business in Thailand, please contact Chaiwat Keratisuthisathorn at [email protected] or +66 2056 5507.