Thai Cabinet Agrees to Ease Foreign Business Ownership Restrictions

A common talking point among non-Thai entrepreneurs is that setting up a business in Thailand as a foreigner is restrictive, but that may be changing in 2025. The Thai cabinet has proposed lowering restrictions imposed on foreign-owned businesses by the Foreign Business Act (FBA). This was in response to feedback from the Law Reform Commission, which cited the current regulations as being outdated, too protective of domestic businesses, and doing little to improve Thailand’s economy. 

Karom Polpornklang, a deputy government spokesman, announced that various government agencies, such as the Thailand Board of Investment (BOI), have approved the cabinet’s proposal. Although there is no confirmation when these changes will be rolled out, the cabinet has already requested the Ministry of Commerce to revoke certain rules that may negatively impact Thailand’s economic development.

What Are the Current Foreign Business Restrictions?

Foreigners can start and operate their own business in Thailand, but they face restrictions that don’t apply to local business owners. The hope is that local entrepreneurs would not be forced out of the market by better-funded and equipped foreign businesses, but many believe these restrictions are doing more harm than good.

The following guidelines were established by the FBA to protect the economic interests of domestic businesses:

• Only 49% of a company’s shares can be owned by foreigners. The rest must comprise Thai nationals.
• Foreigners are not allowed to set up a business in certain sectors, particularly those with an impact on national security, Thai tradition, and resources. This includes industries such as forestry, land trading, mining, arts and culture, and more.
• Foreigners must seek approval before they are permitted to operate in industries where local businesses are ill-equipped to compete with international companies, such as legal services.

Failure to obey these regulations can result in consequences for business owners and their companies, including dissolution and possible deportation for the foreigners involved. There are some ways to legally bypass most of these restrictions, such as:

• Apply for BOI Thailand promotion
• Obtain a Foreign Business License (FBL)
• Register the company with the Treaty of Amity (applicable to US nationals).

However, these are difficult undertakings for foreigners just starting out, and success is not guaranteed.

Why Are Foreign Business Ownership Restrictions in Thailand Being Reduced?

Many voices both in and outside of the government claim that revising and lessening FBA restrictions would make Thailand more investor-friendly. The current guidelines were more focused on protecting local business owners from foreign competition, but this limited investment opportunities and the types of businesses foreigners could operate, leaving Thailand out of these sectors. As explained by Mr. Karom Polpornklang, this impacted startups the most due to their reliance on investment from foreign sources.

The plan now, in its early state, is to have the FBA focus instead on supporting Thai business owners and improving their ability to compete with domestic and international companies. This will allow local businesses to stay competitive without hindering Thailand’s economic development. In addition, reducing these restrictions should result in more foreign-owned businesses, driving up foreign investment and GDP levels in Thailand.

How Will Rules on Foreign Business Ownership Be Changed Under This New Plan?

One such rule that urgently needs revising, according to the business community, is the 49% foreign ownership cap. This highly restricts foreign business owners, and has led many entrepreneurs to find ways around it by less-than-legal means, such as by appointing Thai nominees in their place. Mr. Karom stated that the Ministry of Commerce is looking to raise the limit to attract more foreign investors while eliminating the need for illegal activity and enforcement.

One of the most important issues for Thailand’s Ministry of Finance is the restrictions on the types of businesses foreigners can operate in the country. Its advisors recommended a revision of the rules to allow more kinds of businesses to be opened and operated by foreign citizens. In theory, this should lead to more businesses being opened in certain sectors of Thailand’s economy that are languishing without more investment.

While these ideas have been agreed upon at the highest levels of the Thai government, specific details have yet to be confirmed. Multiple ministries are now discussing what the new foreign ownership cap on company shares should be, as well as which sectors should be opened to foreign-owned businesses.

Reach Out to Siam Legal for Professional Business Support

With the plan for easing foreign business restrictions moving forward, this is the best year to put your company registration plans into motion. For professional assistance in establishing a foreign-owned business that follows Thai law, partner with Siam Legal’s corporate law team. 

We are a full-service law firm with over 20 years of experience in helping foreigners satisfy their legal and immigration needs, including legal issues surrounding private businesses. Our corporate lawyers have the skills and experience to guide you through the process of setting up your company from start to finish. To ensure you can launch a profitable business swiftly and seamlessly, we offer the following services:

• Evaluating your business plans to ensure they comply with local regulations.
• Providing useful guidance on how to avoid possible legal problems that your business could face with the government. 
• Gathering and reviewing all documentation required for setting up a company, making sure there are no errors or mistakes before submission. 
• Handling the registration of your business with the relevant authorities on your behalf.
• Helping you open a corporate bank account for your business and advising on tax matters.
• And more.

Contact Siam Legal today and book a consultation to start your journey to a lucrative business venture in Thailand without the risk of legal issues.

Category: Business in Thailand, Company Law