The Foreign Business Act is the thai answer to a specific issue : how -and until what point- to restrain foreign influences over the domestic economy ?

All the countries in the world feel that they have to protect some domains of their economy from foreign influences.

Usually, it’s linked to sensitives fields, like National Defense, medias, telecommunications.

Thailand has decided to have a very broad system, at least on paper : the Foreign Business Act.

The core of this law is to determine first what is the nationality of a company : thai or foreign ?

And then, if the company is found to be “foreign”, the FBA sets a framework and other provisions. And then sets what the company can do or not. It’s the famous list principle.

FBA has 3 lists.

The thai approach is clever. Some businesses are totally forbidden. But actually all the other are forbidden too !… “unless” the “foreign” company ask for a special authorization or licence

Therefore, in order to operate, the FBA must classify a company as “foreign” or “thai”.

With FBA 1 it was easy : number of the shares. With FBA 2 there is a big change : voting rights too. For more details about the provisions of FBA 2, please read this article.

Back to FBA 1. And its lists.

Totally forbidden to “foreign” companies : medias, TV, rice culture, Buddha images, trading and auctioning Thai antiques, land trading etc.

The businesses related to the national safety or security or affecting arts and culture, tradition, folk handicraft or natural resource and environment.
Forbidden “unless permitted by the Minister with the approval of the Cabinet.” (Section 8 of FBA)

The business which Thai nationals are not yet ready to compete with foreigners.”
Basically, all services businesses.
Forbidden, “unless permitted by the Director-General with the approval of the Committee.(Section 8 of FBA)

A “foreign” company can ask for a “licence” to operate a business within this list 3. The criterias are of course unknown.

This list has 20 entries : from accounting service business, to retailing, wholesaling, hotel business, to guided tour, restaurants and bars, plant cultivation, etc.

We are likely to laugh. Thais are not ready to compete in ALL thoses fields ? If it’s true, then it should be a national shame…

Then, you’ll laugh even more by reading the entry number 21 : “Other categories of service business except that prescribed in the ministerial regulations.”

Convenient ! With this entry 21, basically, the thai government can cover all types (past, present and future) of services businesses. In which, of course, the thai people are not -yet- ready to compete…

Furthermore, section 9 of FBA says : “The Committee shall review the business categories under the Lists attached hereto at least once every one-year period from the date this Act comes into force and shall submit its opinion to the Cabinet.

It’s enough to say that since march 2000, thoses Lists (1, 2 and 3) were never… updated…

To read the FBA 1 law and the 3 lists, click here.


1 Response to “What is FBA ?”

  1. 1 sanamjun_guy 21 January 2008 at 2:14 pm

    Can you imagine if the Thai entrepreneurs being produced in all the Thai universities could actually compete on their own turf with foreign investor/operators in the service or other sectors? This law is also a shame for the Thai higher education system.

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.

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