New Alien Business Act B.E. 2542 (1999)

The Act intends to provide Thailand with a modern legal framework and also to extend foreign investment to a bigger number of businesses in Thailand. Under the Act, Alien means a natural person or juristic entity without Thai nationality, including a company with half or more than half if its shares held by aliens, or company with half or more than half of its shareholders being aliens.

The Act classifies businesses into 3 categories, details of which may be summarized as follows:

• Category A
  Businesses under this category is strictly prohibited to foreign individuals or juristic entities for special reasons. Such restricted businesses include:
  
  - Newspaper publication, radio or television station business
  - Rice, filed crops or horticultural farming
  - Livestock farming
  - Forestry and wood processing from natural forests
  - Fishery and wood processing from natural forests
  - Extraction of Thai herbs
  - Trade and auction of Thai antiques or objects of national historical value
  - Manufacture or casting of Buddha images and manufacture of alms bowls
  - Trading in land

• Category B
  Businesses under this category is also prohibited to foreigners, but may be permitted if the business entity concerned receives the approval of the Cabinet. Such businesses are as follows:
  
  - Chapter 1: Businesses involving national safety or security.
  
  1.) Manufacture, sale and maintenance of firearms, ammunition, gunpowder and explosives, components of firearms, ammunition and explosives, armaments, military ships, aircraft or vehicles, accessories or components of war equipment of all kinds
  2.) Domestic land, water or air transport, including domestic aviation business
  
  - Chapter 2: Businesses affecting arts, culture, traditional customs and folk handicrafts.
  
  1.) Trade in antiques or objects of art, being Thai works of art or handicrafts
  2.) Manufacture of wood carvings
  3.) Silkworm raising, manufacture of Thai Silk threads, Thai Silk weaving or Thai Silk pattern printing
  4.) Manufacturing of Thai musical instruments
  5.) Manufacture of products from gold, silver, niello, bronze or lacquerware
  6.) Manufacture of crockery or earthenware which are Thai cultural arts
  
  - Chapter 3: Businesses affecting natural resources or the environment
  
  1.) Manufacture of sugar from sugar cane
  2.) Salt farming, including efflorescent salt production
  3.) Rock salt mining
  4.) Mining, including stone blasting or crushing
  5.) Wood proceeding to make furniture and utensils

• Category C
  Businesses under this category are open to foreigners but are subject to receipt of approval from the Committee. Such businesses are as follows:
  
  - Rice farming and flour production
  - Fishery business matters
  - Forestry business matters
  - Production of plywood, veneer board, chipboard or hardboard
  - Production of lime
  - Accounting service business
  - Legal service business
  - Architecture service business
  - Engineering service business
  
  - Construction, except for:
  1.) Construction services for the public utilities
  2.) Other construction as prescribed by the ministerial regulations
  
  - Broker and agent business, except for:
  1.) Being broker or agent for underwriting securities matters
  2.) Being broker or agent for trading or procuring goods or services for the business’s production
  3.) Being broker or agent for trading, purchasing goods or distributing the business for seeking foreign markets (in this case the business has to have a registered capital of at least 100,000,000 Baht)
  4.) Being broker or agent as prescribed by the Ministerial Regulations
  
  - Auction
  - Native product trading as well as producing which is not yet forbidden by law
  - Retailing goods (in this case the business must have a registered capital of at least 100,000,000 Baht)
  - Wholesaling goods (in this case the business must have a registered capital of at least 100,000,000 Baht)
  - Advertising business
  - Hotel business
  - Guide and tour business
  - Selling food and beverage business
  - Plant cultivation business
  - Other service business under the ministerial regulations

Other businesses not mentioned in these three categories are opened to aliens but must have a minimum capital of 2,000,000 Baht.

In addition the Treaty of Amity and Economic Relations between Thailand and the USA provides an exemption from the restrictions in the Alien Business Act for US nationals and corporations for most controlled businesses. There is also the possibility of exemption under treaties to which Thailand is a party, as well as for businesses promoted by the BoI.

In the case of doing business carried on by an alien, a minimum capital is 3,000,000 Baht. In the case of businesses under Category B, at least 2/5 of the directors must be Thai nationals and a minimum of 40 percent of the shares must be held by Thai persons, which minimum may be reduced to 25 percent by Cabinet approval. Businesses under Categories B or C may be subject to conditions such as minimum debt/equity ratio, number of alien directors resident in Thailand, period of investment, technology and assets, etc.

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