Crackdown on foreign nominees, changes to the Foreign Business Act

[webfact]

Amendments to the Foreign Business Act to be proposed to Cabinet
PETCHANET PRATRUANGKRAI
THE NATION

BANGKOK: -- THE COMMERCE MINISTRY'S Business Development Department will propose to the Cabinet that it update the Foreign Business Act (FBA) and prepare the country for the Asean seamless market.

Pongpun Gearaviriyapun, director-general of the department, said the FBA should be more flexible but also more effective.

Several past governments have planned to amend this law, which has been in force since 1999, to prevent nominees getting around the restrictions on foreign ownership of Thai businesses while also facilitating more investment in Thailand. However, there has been little progress on such amendments, partly because of the frequent change of governments. Pongpun said her department had set up a working committee to consider proposed amendments to the FBA.

"The amendments will focus on compromise, to ensure fair competition for Thai and foreign investors, facilitate more business growth, and prevent nominee problems," she said.

Friendlier for foreign investors

She added that the amended law should make the environment friendlier for foreign investors and streamline business regulations. Moreover, Thailand should be able to compete under the coming regional integration, which will allow other Asean countries to hold up to 70 per cent of some service businesses.

One proposal is to remove some industries from the FBA's Annex III, which lists industries that are off-limits to non-Thais. Annex III businesses that might be opened up include those involved in banking and insurance, as they have already have their own specific laws.

In addition, the department has found that seven firms involved in tourism and hospitality businesses controlled by the FBA have likely breached the law by having a nominee, through which foreign owners employ a Thai to hold a majority share in the firm.

The department is preparing to file the case with the Department of Special Investigation. The seven firms suspected of breaching the FBA are in tourism, restaurants, tour agencies, and property management. Most are in tourist-destination provinces, including Chon Buri, Chiang Mai, Trat and Phuket.

Meanwhile, the number of newly registered companies in Thailand dropped by 18 per cent in the first eight months year on year, partly because of controls on the retail prices for the government lottery.

In August alone, number of new firms dropped by 18 per cent to 5,204. Last month, 11 new lottery firms registered, compared with 317 in August last year.

However, the department foresees stronger business expansion in the remaining months, averaging about 5,000 new companies per month.

As a result, Thailand should end the year with about 60,000 to 65,000 new company registrations. In the first eight months, the number of business shutdowns rose 7 per cent year on year to 8,563. Last month, 1,236 firms closed down.

Source: http://www.nationmultimedia.com/business/Amendments-to-the-Foreign-Business-Act-to-be-propo-30242650.html


-- The Nation 2014-09-09

Related topic:
A law firm requires a nominee shareholders of the exchange
http://www.thaivisa.com/forum/topic/755543-a-law-firm-requires-a-nominee-shareholders-of-the-exchange/

[halloween]

Won't it be fun when they get around to the companies that own land and rent it to their farang minority shareholders?

[Thai at Heart]

Annex III businesses that might be opened up include those involved in banking and insurance,

Last time anyone be messed with this law, the Yellows marched with the Bangkok bank daughter marching right next to Sondhi.

All in the name of saving the country from Thaksin of course.

[tomacht8]

Friendlier for foreign investors

She added that the amended law should make the environment friendlier for foreign investors and streamline business regulations. Moreover, Thailand should be able to compete under the coming regional integration, which will allow other Asean countries to hold up to 70 per cent of some service businesses.

For non-Asean foreigners it is better then to open a company with 100% share in Malaysia, Philippines or Cambodia and then become active as Asean LTD in Thailand.

Edited September 9, 2014 by tomacht8

[DrLom]

It's about time this country woke up to permtting farang (caucasians in particular) to buy land and property outright. Westerners tend to their land, gardens and properties - we even plant flowers and paint our properties regularly.... and grow GRASS (in it's truest sense of meaning) when given the rights. Sod ASEAN as the main agenda - it has to be worldwide interaction and permissions. In that way, Thailand would become a lot cleaner and less polluted in the long run.

The whole point is missed by the continued xenphobia of others infiltrating this land. If that's the fear, open it up to Westerners too, or ASEAN is going to break this place, and the influx from neighbouring countries will for sure take away opportunities for Thais themselves.

[tomacht8]

Foreign Business Act from 1999

Annex 3

Businesses in which Thais are not yet prepared for competition with Foreigners.
So after 15 years the Thai companies are still not become competitive.

What are the reasons probably?
Easy.
No competition, no progress

[animatic]

Nothing in the proposed regulations above seems easier or friendlier. It appears they don't really grasp what ASEAN expansion and liberalization of rules really means. Sounds like another retread of the same old protectionist bull poop.

[bazmlb]

For non-Asean foreigners it is better then to open a company with 100% share in Malaysia, Philippines or Cambodia and then become active as Asean LTD in Thailand.

To do this you would have to pass a test they are implementing called SBO, it tests to see if the foriegn business is substantive, things like how many years in operation, who owns it, profits etc would be looked into before granting the 70% shareholding allowance

[Lunchbob]

The owners of companies like banks and insurance companies are the lovely people responsible for many of the larger problems the coup solved.

[Dag Ekeberg]

Could you ThaIvisa people PLEASE stop changing the Nation headlines. The headlines go as far as the article allows. Professional journalists and editors usually know what they are doing, don't second-guess them. I'm sure you'll survive a few days without using the word Crackdown. The very real risk you Thaivisa people run, is that nobody will take you seriously when something REALLY is afoot. Remember Cry Wolf?

Edited September 9, 2014 by Dag Ekeberg

[kingstonkid]

Well to take them at their literal word they are going to make it easier for foreigners the problem for most of us is we are not from the countries they are gearing this to.

[ldiablo]

I wish all these posts would discontinue the use of the word crackdown. They use it as if it has any real meaning in this country. Why not use the phrase "for a few weeks" instead.

[technologybytes]

"The seven firms suspected of breaching the FBA are in tourism, restaurants, tour agencies, and property management. Most are in tourist-destination provinces, including Chon Buri, Chiang Mai, Trat and Phuket"

It's about time Trat was recognized as a tourist-destination province !!

[ericthai]

Friendlier for foreign investors

She added that the amended law should make the environment friendlier for foreign investors and streamline business regulations. Moreover, Thailand should be able to compete under the coming regional integration, which will allow other Asean countries to hold up to 70 per cent of some service businesses.

For non-Asean foreigners it is better then to open a company with 100% share in Malaysia, Philippines or Cambodia and then become active as Asean LTD in Thailand.

I believe Cambodia still doesn't allow 100% ownership in a company. They only in 2010 started to allow foreigners to own condo and apartments but not the 1st floor.

[jbaldwin]

"The seven firms suspected of breaching the FBA are in tourism, restaurants, tour agencies, and property management. Most are in tourist-destination provinces, including Chon Buri, Chiang Mai, Trat and Phuket"

It's about time Trat was recognized as a tourist-destination province !!

Of course Ko Chang in Trat province in becoming a major tourist destination, which is why Bangkok Airways built the airport in Trat.

[lucjoker]

Look around , the major business is .....house building .

In every little town you can find building -shops (Home Pro,Home Market ......but also smaller shops on every corner )

If they stop farangs from owning a house via company ,those shops will have a hard time .

And a lot of Thai-landowners will cry ,because their land will be worth what is was before the farang came.(a few 1000 a rai)

All this land farangs control now ,will go automatically to Thai people ,so why the fear ?

Their fear in the future is that it will be difficult to control those rich widows with their smart kids ?

Or they just hate us that much ? Why not cancel all the visa's and allow only 30 day visa?

But we can only obey ,and find another smart solution .

[Time Traveller]

Could you ThaIvisa people PLEASE stop changing the Nation headlines. The headlines go as far as the article allows. Professional journalists and editors usually know what they are doing, don't second-guess them. I'm sure you'll survive a few days without using the word Crackdown. The very real risk you Thaivisa people run, is that nobody will take you seriously when something REALLY is afoot. Remember Cry Wolf?

Without the word "Crackdown" in the headline how will they be able to instill fear into their readers and get them to click on a link for an otherwise boring nothing story.

To keep me coming back here I need to see at least 2 "Crackdown" headline stories everyday. 3 would be better, but not as good as 2 Crackdowns and 1 "Thailand: Hub of.." story. But close enough.

Edited September 9, 2014 by Time Traveller

[X pat]

Foreign Business Act from 1999

Annex 3

Businesses in which Thais are not yet prepared for competition with Foreigners.

So after 15 years the Thai companies are still not become competitive.

What are the reasons probably?

Easy.

No competition, no progress

Which brings TOT,and True Vision to mind.

[NativeSon360]

Paragraph 5 - "Moreover, Thailand should be able to compete under the coming regional integration, which will allow other Asean countries to hold up to 70 per cent of some service businesses."

My take: businesses from other ASEAN member nations, should be allowed to hold up to 100%, if the Thais fail to provide a par "quality" level of public service. The current "umbrella" of protectionism in Thailand, is what has created the complacent & high level of Thai incompetency, to begin with. Thais tend to upgrade themselves, only when they are compelled (not having access to a "protectionism" umbrella) to do so. Hallelujah

Edited September 9, 2014 by NativeSon360

[EnglishJohn]

One thing I have noticed in Thailand is that when you see the head of some successful enterprise which is outside the scope of traditional Thai businesses, he invariably has white skin. Getting rid of the mafia types and the cheaters is fine - but I fear the government are confusing national pride with misplaced arrogance. I can see the same story as immigration happening all over again : crack down on the farang, then when they're gone realise you really need them back. Then do a U-turn and start changing the rules again (while the world sniggers at the pantomime).

The trouble is they will destroy the confidence of farang who will go elsewhere. I sense the country is on a slippery slope.

[rayw]

Won't it be fun when they get around to the companies that own land and rent it to their farang minority shareholders?

Never understood the mentality of not allowing some groups of foreigners (like say retirees) to own a limited amount of land, say a maximum of 1 Rai or even only 100 Wah would suffice. This would obviously be only for personal residence with tax penalties if sold within say 3 or 5 years to discourage property speculators misusing such a system. This would avoid a lot of these problems with Thai nominee shareholders being used and be good for Thailand by encouraging more genuine falang retirees to move here and bring in of course regular foreign currency.

Maybe as we now at last have an intelligent open minded and progressive Government (shows us all how sometimes democracy does not actually work as well), they may well read our TVF threads here on this issue and consider all the implications of making such a sensible move and actually bring in such legislation to allow a restricted and limited foreign land ownership for those who would qualify.

Edited September 9, 2014 by rayw

[ChrisY1]

IMO, the Thai Commerce ministry is a long way from understanding the entire Asean effects.

Integration of the members of Asean.............these guys are going to go mental when it takes effect!

[ironbark]

Assuming it is true that the current law restricting foreign ownership is flouted more often than observed, especially in tourism and property development, yet it is also clear that these sectors are among the strongest in the economy.

It is therefore a reasonable conclusion that unrestricted investment, a truly free market, is not only not harmful but necessary. So why would you want to enforce protectionist policies. It doesnt make sense.

[gemini81]

On second thought, maybe England, France or the US should have colonized!

[JCauto]

Friendlier for foreign investors

She added that the amended law should make the environment friendlier for foreign investors and streamline business regulations. Moreover, Thailand should be able to compete under the coming regional integration, which will allow other Asean countries to hold up to 70 per cent of some service businesses.

For non-Asean foreigners it is better then to open a company with 100% share in Malaysia, Philippines or Cambodia and then become active as Asean LTD in Thailand.

I believe Cambodia still doesn't allow 100% ownership in a company. They only in 2010 started to allow foreigners to own condo and apartments but not the 1st floor.

Cambodia absolutely allows 100% foreign ownership in a company. However, said company would not be allowed to own the property their office sits on since there are similar land ownership laws to Thailand in that regard.

[NativeSon360]

Nothing in the proposed regulations above seems easier or friendlier. It appears they don't really grasp what ASEAN expansion and liberalization of rules really means. Sounds like another retread of the same old protectionist bull poop.

Exactamento!

[mzThai]

One of the main obstacles for foreign businesses in Thailand was the prohibition of all service businesses under List Three of the Foreign Business Act. Last year however, the Ministry of Commerce added several exceptions to the category of “service businesses” thereby allowing foreigners to now own and operate certain businesses within that category.

The types of businesses listed in Thailand's 2013 Foreign Business Act Amendment included securities, trading, investment advising, and other financial services.

Unfortunately, this latest announcement of even further amendments to the Thailand Foreign Business Act do not clarify what additional service businesses on List Three of the FBA will no longer be protected and will be allowed to foreigners if the newly proposed amendments are ratified.

[BigBadGeordie]

Amendments to the Foreign Business Act to be proposed to Cabinet

PETCHANET PRATRUANGKRAI

Meanwhile, the number of newly registered companies in Thailand dropped by 18 per cent in the first eight months year on year, partly because of controls on the retail prices for the government lottery.

Source: http://www.nationmultimedia.com/business/Amendments-to-the-Foreign-Business-Act-to-be-propo-30242650.html

-- The Nation 2014-09-09

Related topic:

A law firm requires a nominee shareholders of the exchange

http://www.thaivisa.com/forum/topic/755543-a-law-firm-requires-a-nominee-shareholders-of-the-exchange/

I must be a bit thick, can someone explain the relationship between these 2 issues, because for the life of me I cannot.

[BestBitterPhuket]

Then I can probably use my Singapore or Malaysian incorporated company to gain a majority share in certain businesses in Thailand. It will remain to be seen wether they will honor this or it will be same same.

[chainarong]

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Won't it be fun when they get around to the companies that own land and rent it to their farang minority shareholders?

Never understood the mentality of not allowing some groups of foreigners (like say retirees) to own a limited amount of land, say a maximum of 1 Rai or even only 100 Wah would suffice. This would obviously be only for personal residence with tax penalties if sold within say 3 or 5 years to discourage property speculators misusing such a system. This would avoid a lot of these problems with Thai nominee shareholders being used and be good for Thailand by encouraging more genuine falang retirees to move here and bring in of course regular foreign currency.

Maybe as we now at last have an intelligent open minded and progressive Government (shows us all how sometimes democracy does not actually work as well), they may well read our TVF threads here on this issue and consider all the implications of making such a sensible move and actually bring in such legislation to allow a restricted and limited foreign land ownership for those who would qualify.

There is still a lot of head in the sand mentality around, even in the new out fit , don't expect miracles , just a-few twitches on the rudder controls , which could turn Thailand on course, one I hope that will be a positive one.