Photo credit: Varuth Hirunyatheb
The Thai cabinet has agreed in principle to modify the Foreign Business Act in order to reduce restrictive regulations and foster a more investor-friendly environment.
The Law Reform Commission urged an update of the 25-year-old legislation, contending that it was excessively protective of local businesses and outdated for the current economic landscape.
Following the approval of this recommendation, the cabinet directed the Ministry of Commerce on Tuesday to draft amendments aimed at eliminating rules and regulations that impede the nation’s economic growth.
This change is particularly crucial for the startup sector, which relies heavily on new technologies and increased foreign investment, as noted by deputy government spokesman Karom Polpornklang.
According to the commission, which operates under the Council of State (the government’s legal authority), any regulations that obstruct the development of future businesses and industries—considered potential key contributors to the country’s GDP—should be revised.
The proposed amendments have already received endorsement from the ministries of Finance, Commerce, Interior, and Labour, as well as the National Economic and Social Development Council and the Board of Investment, Mr. Karom stated.
The Ministry of Finance, in particular, has highlighted the urgent need for revisions concerning the types of businesses permitted for foreign operation in Thailand and the required proportion of shares that must be held by Thai nationals.
Currently, foreigners are limited to a maximum of 49% ownership in a company registered in Thailand, with many business sectors exclusively reserved for Thai citizens.
This 49% cap has resulted in various instances where foreigners enlist Thai nominees to hold shares on their behalf.
As a result, the Ministry of Commerce is now tasked with establishing a more appealing ownership limit.
The new regulations will shift the focus from “protecting” domestic business operators to “supporting” them, enhancing their ability to compete with both Thai and foreign-owned enterprises, as emphasized by Mr. Karom.
