Foreign Firms Urged To Comply With New Rules

[Sumitr Man]

Didn't see George post this in the News forum, so thought I might do so here.

LAW / FOREIGN BUSINESS ACT

Foreign firms urged to comply with new rules

WORANUJ MANEERUNGSEE

The Commerce Ministry has strongly urged foreign firms operating businesses under the 1999 Foreign Business Act to strictly comply with regulations on licence applications.

Kessiri Siripakorn, the deputy director-general of the Business Development Department, said many foreign firms had not complied with the new rules on licence application including the preparation of budget expenditure and plans for technology transfer.

Some companies remained ignorant of their responsibilities under the law, such as rules governing the remittance of minimum capital, submissions of financial statements and business operation reports.

The requirements are necessary because the companies are businesses generally reserved for local operators, Ms Kessiri said at a seminar on the act yesterday.

According to the 1999 Foreign Business Act, which was improved significantly from the Alien Business Law, foreigners are prohibited from operating certain businesses while some can be operated only by obtaining licences or certificates.

For example, foreigners are not allowed to operate businesses related to national security, cultures and natural resources such as the trading in antiques and firearms while they may be allowed to run such businesses as accounting, legal services and fishery farms.

As for a new rule on technology transfer plans which took effect last May, Kiat Sittheeamorn, a member of the Foreign Business Board responsible for issuing the licences, said the definition of technology transfer had been broadened, with employee training now considered a form of technology transfer.

The requirement was imposed as the government seeks to improve the competencies of the Thai workforce and increase the country's competitiveness.

``The more you train Thai employees, the more efficiency you gain,'' he said.

Mrs Kessiri admitted while there was a lot of information to be filled in the application form, it was not complicated.

He viewed that most multinational firms had the capaibilities to comply with the regulations but some small foreign firms may fail to do so. In some cases, the small foreign operators got wrong information from their legal advisers about the act or confused it with other laws.

Since the 1999 Foreign Business Act took effect, the department has approved 1,145 licences for foreign business operators. Of the number, 486 licences were for various businesses including maintenance services and project advisers, 449 were for representative offices and other categories such as construction, engineering as well as retail and wholesale business. Only 159 applications were rejected.

Japanese were the biggest applicants, followed by investors from Singapore, Germany and Hong Kong. American companies, meanwhile, are not required to obtain licences under the Thai-US Treaty of Amity.

source: www.bangkokpost.com

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On a personal note, I rather liked this quote:

``The more you train Thai employees, the more efficiency you gain,'' he said.

which I think I'll vote my Quote of the Day.

[Indo-Siam]

As someone whose business deals with the Department of Foreign Business on a weekly basis, I can say from a well-informed standpoint that anyone starting a business in Thailand should do ANYTHING THEY CAN to avoid having to deal with that office.

It is very unwise to attemot to operate as a Thai Private Co. Ltd. with majority of shares held by non-Thais - or to establish a Thai Representative Office or Thai Regional Office. All of these are allowed - but the regulations that apply to creation of these entities are absurd.

If you form a TPCL with majority of share held by Thais, it is a painless and straight-forward process. The government asks nothing about your plans. If you go over 50% shareholdings by foreigners, you now have to lay out everything about your business plans for the next three years - in painful detail.

Cheerrs!

Steve

Indo-Siam