The Department of Business Development Proposes Draft Ministerial Regulation to Facilitate Foreign Business Operations in Thailand

The Department of Business Development (“DBD”) under the Ministry of Commerce has recently proposed the issuance of Draft Ministerial Regulation Prescribing the Types of Businesses that do not require Permission for Foreign Business Operations (“Draft Ministerial Regulation”)¹. The purpose of the Draft Ministerial Regulation is to promote trade and investment nationwide, generate economic income and stimulate the development of quality capital and labor, as well as to encourage foreign investors to engage in business activities in Thailand.

Under the Draft Ministerial Regulation, the Commission of Foreign Business Administration Division (the “Commission”) has reviewed the types of businesses under List three (11) and (21) of the Foreign Business Act B.E. 2542 (1999) (“FBA”). The Commission proposed exempted businesses under List three (11) to include derivative agents for goods not governed by derivative law and those based on exchange or interest rates, trading outside derivatives exchanges. 

Additionally, the Commission has resolved to remove nine businesses from List three (21), as follows:

1. Telecommunications service business listed in Type 1 telecommunications licenses, specifically for those without their own telecommunications network under the telecommunications business law;
2. Treasury center business under the exchange control law;
3. Software development business;
4. Service businesses in relation to administrative management and human resource management, and information technology management provided to affiliated companies;
5. Service business with respect to the guarantee of domestic loans for affiliated companies;
6. Service business with respect to the lease of space for installing electronic devices used in financial services, or vending machines to provide the service of facilitating the company’s employees;
7. Service business related to petroleum drilling;
8. Other businesses under the securities and exchange law; and
9. Other businesses under the derivatives law.

In such regard, the summary of public hearing on the Draft Ministerial Regulation², gathered through the DBD and Law Portal website, as well as through letters sent to relevant public and private sectors for written comments, indicates that most commentators agree with and support the principles and rationale of the draft. This initiative is expected to positively impact Thailand’s investment landscape, as well as improve the ease of doing business and investment rankings.

Furthermore, some of the businesses outlined in the Draft Ministerial Regulation are already regulated by specific laws, which helps minimize regulatory overlaps and enhances efficiency. This approach is also aimed at attracting more foreign investors to Thailand.

It is crucial to recognize that the public hearing was concluded on 19 March 2024, and the DBD issued the report on the impact analysis of the draft on 24 May 2024. This is still in the preliminary stages. In the following stage, the DBD must propose this Draft Ministerial Regulation and obtain cabinet approval. Upon finalization, the Draft Ministerial Regulation shall come into force upon it being published in the Government Gazette. 

A foreign juristic person incorporated under a foreign law, which is exempted from foreign business license for operating  activity in Thailand, can apply for a juristic person identification number through an electronic platform without paying any fees.³ This will give such juristic person a 13-digit identification number, which is convenient for foreign investors or the public to access information indicating the status of such juristic person quickly and conveniently.

To summarize, the enforcement of this Draft Ministerial Regulation will allow foreign investors to operate the aforementioned types of businesses without being required to request permission under the FBA.  However, the said Draft Ministerial Regulation is not yet finalized and would need to be further reviewed by upper level of organization.

This is intended merely to provide a regulatory overview and not to be comprehensive, nor to provide legal advice. Should you have any questions on this or any other areas of law, please contact:

Nuttaros Tangprasitti
Partner
Junjura Boonsomsuwan
Associate

¹The Draft Ministerial Regulation Prescribing the Types of Businesses that do not require Permission for Foreign Business Operations

²Summary of Public Hearing on the Draft Ministerial Regulation Issued Under the Foreign Business Act B.E. 2542 (1999)

³Report on the Impact Analysis of the Regulation Allowing Foreign Businesses to Operate Without Permission according to the Draft Ministerial Regulation Prescribing the Types of Businesses that do not require Permission for Foreign Business Operations

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