The Commerce Ministry is advancing its efforts to conduct thorough inspections of businesses suspected of employing Thai nominees to hide foreign ownership, particularly in the tourism, real estate, and logistics sectors.
Auramon Supthaweethum, the director-general of the Department of Business Development, stated that according to the Foreign Business Act of 1999, foreign companies must obtain permission as outlined in specific lists before beginning operations. A Thai limited company typically restricts foreign ownership to a maximum of 49%.
Operating a business without proper authorization or disguising foreign ownership through a nominee who holds over 51% of shares is subject to legal penalties.
The department has reviewed 26,019 nominee cases across four business sectors: tourism and related enterprises, real estate, hotels and resorts, and logistics.
These investigations took place in six major tourist provinces: Chiang Mai, Chon Buri, Surat Thani, Phuket, Bangkok, and Prachuap Khiri Khan.
“After conducting comprehensive investigations, including financial assessments in 498 cases, 165 cases required further examination of additional evidence,” said Mrs. Auramon.
Following a meeting led by Caretaker Commerce Minister Phumtham Wechayachai with executives from 28 agencies on August 28 to address the influx of cheap, low-quality imported goods, the department expanded its inspections to four additional sectors: wholesale and retail, warehouses, construction and engineering, and metal trading.
“Entrepreneurs who identify companies at risk of being involved in nominee-related business practices are encouraged to report them to the department for investigation and action by relevant agencies, such as the Department of Special Investigation,” added Mrs. Auramon.
In response to Chinese online retailer Temu’s entry into the Thai market, the Commerce Ministry is collaborating with the Chinese Embassy to facilitate the establishment of an office in Thailand, allowing authorities to verify legal compliance and taxation.
The Ministry has tasked the Digital Economy and Society Ministry with monitoring this situation.
Mrs. Auramon reported that new business registrations in the first seven months of 2024 increased by 0.16% to 54,220, with total registered capital amounting to 169 billion baht, a decrease of 62.1% year-on-year.
The department anticipates that this year’s new business registrations will reach between 90,000 and 98,000, reflecting a growth of 5-15%.
She attributed this increase to government initiatives, including the allocation of the fiscal 2024 budget, approval of the digital wallet handout, measures aimed at attracting foreign investment such as the long-term resident visa program and corporate income tax exemptions for foreign companies operating in Thailand, as well as the crop harvest season.
However, consumers remain concerned about slow economic recovery, high household debt levels, political stability, and ongoing geopolitical conflicts, according to the department.
