30 June Liberalization planned for 5 businesses under List 3 of FBA
Thailand’s Department of Business Development (DBD) is currently reviewing the possibility of liberalizing five businesses under List 3 of the Foreign Business Act B.E. 2542 (1999) (FBA), which currently restricts foreigners from having ownership of more than 49%.
It has been widely reported in the media on June 17, 2018, that the five businesses to be liberalized are: (1) accounting services; (2) legal services; (3) money lending services; (4) space leasing and facility services; and (5) consultancy services. According to government sources, it should be noted that the to-be-liberalized five businesses may only be provided by an entity to an affiliated company or within the entity’s group of companies. If the entity wishes to provide any of these services to a party that is not an affiliated company or outside the entity’s group of companies, the entity has to apply for a foreign business license from the DBD.
The DBD is collecting opinions from relevant authorities, such as the Board of Investment, the Bank of Thailand, the Federation of Accounting Professions, the Lawyers Council, and the Industrial Estate Authority of Thailand, and the opinions on liberalization of these services will be submitted to the Foreign Business Committee later in July 2018 for consideration. If approved by the Foreign Business Committee, the opinions will be submitted to the Cabinet for endorsement, and if approved by the Cabinet, a new ministerial regulation shall be issued by the Minister of Commerce and become effective thereafter.
Current Restrictions under FBA
Currently, the FBA categorizes restricted businesses into three lists, as follows:
- List 1 covers businesses that are strictly prohibited to foreigners;
- List 2 covers businesses that are prohibited to foreigners, unless they obtain permission from the Minister of Commerce with the approval of the Cabinet; and
- List 3 covers businesses that are prohibited to foreigners, unless permission is granted by the Director-General of the DBD with the approval of the Foreign Business Committee.
At present, List 3 of the FBA includes accounting, legal, consultancy, and any kind of service activities.
Liberalization of List 3 of the FBA
After the FBA was promulgated in 1999, the DBD has liberalized the following businesses under List 3 of the FBA over the years:
- 2013 – Services related to securities business and other businesses under the law on securities and securities exchange, derivatives business, and serving as a trustee under the law of trust for transactions in capital markets.
- 2016 – Commercial bank business, and life and non-life insurance businesses.
- 2017 – Banking and financial institution businesses, businesses which are connected to or necessary for the operation of financial institutions as listed in Ministerial Regulation (No. 3) B.E. 2560 (A.D. 2017), provision of services as a foreign entity’s representative office or regional office, and service businesses that have a government authority or a state enterprise as a party to the contract.
Tilleke & Gibbins will closely monitor this ongoing legal development and provide updates when the new regulations to liberalize five businesses become effective. If you have any queries, please contact Chaiwat Keratisuthisathorn at [email protected] or +66 2056 5507.