Restrictions on Aliens Doing Business in Thailand

Alien Business Law
The most important law governing majority alien-owned businesses in Thailand is the Alien Business Law, which controls three broad categories of businesses. Generally, businesses in category A are closed to aliens, while businesses in categories B and C are open to aliens under some conditions. There remain a number of businesses, including most manufacturing businesses, which do not fall within any of the three categories and are open for investment by aliens.

The 1996 Treaty of Amity and Economic Relations between Thailand and the USA provides an exemption from the restrictions of the Alien Business Law for US nationals and corporations for most (but not all) controlled businesses.

"Alien” means a natural person and juristic person without Thai nationality, including a company with half or more than half of its shares held by aliens, or a company with half or more than half of its shareholders being aliens.

The new Act prescribes 42 restricted businesses in 3 categories as follows:

• Category A: 9 businesses prohibited for special reasons.

• Category B: 13 businesses related to national safety or security or affecting arts, culture, traditional customs, folk handicrafts, natural resources and the environment.
  
  Licenses may be issued by the Ministry of Commerce with the approval of the Cabinet.

• Category C: 21 businesses in which Thai people are not yet ready to compete with foreigners. Licenses may be issued by the Director General with the consent of the Alien Business Operation Committee.

There is a limited 'grandfather provision' with respect to existing businesses. There is also the possibility of exemption under certain treaties to which Thailand is a party, as well as for businesses promoted by the BoI.

In case of a restricted business carried out by an alien, a minimum capital of 3,000,000 Baht or greater is prescribed, to be specified in a ministerial regulation. In the case of businesses under Category B, at least 2/5 of the directors must be Thai and a minimum of 40 percent of the shares must be owned by Thai persons (which may be reduced to 25 percent with Cabinet approval). Businesses under Category B and C may have conditions attached to alien licenses such as: minimum debt/equity ratio, number of alien directors resident in Thailand, amount and period of investment, technology and assets, etc.

There are additional provisions of importance in the Act, including, for example, a minimum capital of 2,000,000 Baht applicable to all alien businesses (not only restricted businesses), and a requirement for existing restricted businesses to obtain a certificate.

Alien Work Permit
The Alien Occupation Law requires that every aliens working in Thailand obtains a work permit with certain exceptions. At the present time, 39 occupations are closed to aliens, including architecture, civil engineering, accounting and law. Generally, aliens may start working only after a work permit is issued. In practice, little difficulty is experienced in obtaining work permits for qualified aliens for positions for which qualified Thai nationals are not available.

Immigration Law
The Immigration Law prescribes a number of visa categories. Aliens wishing to reside and work in Thailand need a non-immigrant visa, which is initially valid for 90 days or 1 year and is renewable. The procedures to acquire a non-immigrant visa valid for 1 year are usually complicated and are linked to procedures of the Labor Department governing work permits. Aliens of most nationalities may enter Thailand for periods up to 15 - 30 days without a visa.

Land Code
Under the Land Code aliens may own land in Thailand only pursuant to treaties in force between Thailand and other countries. At present there are no such treaty provisions in force. However, the Act Amending Land Code (Land Ownership by Foreigners, No. 8, 1999) provides, that an alien investor, who invests a minimum of 40,000,000 Baht, will be permitted to own up to 1 rai (1,600 sq.m.) of land for residential purposes with the approval of the Minister of Interior.

Condominium Act (No.3), 1999
This amendment to the Condominium Act provides two main changes:

• The maximum foreign ownership of a registered apartment building (condominium) was increased from 40 to 49 percent; and

• The 49 percent ceiling may be exceeded if the condominium is located in metropolitan Bangkok, municipalities or other local administrative areas as prescribed in ministerial regulations, and the land area of the condominium does not exceed 5 rai (8,000 sq.m.).

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