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Authorities to Review Relaxation of Foreign Business Act in Thailand

Transcript of the above video:

As the title to this video suggests, we are going to be discussing the Foreign Business Act here in the Kingdom. For those who are unfamiliar with the Foreign Business Act, there are other videos on this channel where we discuss the Foreign Business Act in more detail and the restrictions associated therewith.

This video specifically is going to discuss some recent information that has come to light that authorities in Thailand may be looking to go ahead and possibly relax certain aspects of the Foreign Business Act. In an article from the Bangkok Post, June 18th, 2018, article is titled “Five Services to Lose Protection”. Quoting directly, "The Commerce Ministry Plans to remove five services on List 3 of the Foreign Business Act, opening them up to free competition to facilitate trade and investment in Thailand. The five are: Accounting, Legal Services given to subsidiaries; I will come back to that, Space and Facility Rental, Lending to Subsidiaries and Consulting Services. The Foreign Business Subcommittee will consider reviewing the business list annex under the FBA in July to reflect changing economic conditions and the government initiatives as the country shifts towards Thailand 4.0. The measure will let foreigners freely invest in these services without needing a license from the Commerce Ministry." Quoting further, "The resolution of List 3 of the review will be submitted to the Cabinet for approval soon and the Department expects an effective date of around September.” 

A couple of things. Let's be clear; this is simply a review. The Cabinet has yet to finalize approval or disapproval or amend or table or do anything.  As of the time of this filming, I am unaware that they have taken further steps with regard to this matter. A couple of things that are clearly caveated. Lending functions have always been quite restricted to foreign entities and foreign nationals here in the Kingdom. As noted, they make specific point of noting, "lending to subsidiaries", so a parent company lending to a, for lack of a better term, "child " company here in the Kingdom; that activity may be permitted, or moreover if one company here in Thailand owns another company here in Thailand and is foreign-owned and wishes to lend money to that other company, it may be possible under this relaxation to allow that to happen. Another thing is legal services, again given to subsidiaries so where you have, I don't even know how that is going to operate.  I quite frankly I am going to be interested to see how this changes, if at all. I can kind of see a set of circumstances where you might have a foreign company that is permitted to operate in the Kingdom that has a Legal Division being able to not simply advise internally, but advise a subsidiary; I guess that makes some degree of sense. Again accounting and legal, as I discussed in another video on this channel, I think it remains to be seen just exactly how this is going to be deregulated because the context is going to be relatively narrow and beyond even that, those are pretty restricted undertakings here in the Kingdom and they have their own licensing bodies etc. so while it may be permitted for a foreigner to operate, licensure may then become the problem for foreign nationals, a foreign entity, to come into  the Kingdom and operate within the jurisdiction. But it is interesting.

In my opinion, I think the one area that probably it wouldn't be a bad idea to relax the Foreign Business Act regulations, and I think it is probably fairly likely of all of these things mentioned that will ultimately get through the cabinet is Consulting; as they mentioned in there, Consulting Services. That is one area, especially with Thailand 4.0 coming on the horizon, Consulting is something that I can see being much more necessary as Thailand technologically builds itself up pursuant to the 4.0 initiative; the Thailand 4.0 initiative, again Legal and Accounting Services I don't really see that that factors into that paradigm, to that movement and frankly Lending I don't really see where that factors in but that being said there may be larger things at play here that I am not particularly seeing. But of everything I think that ultimately might get approved and enacted in the coming months and years is I think Consulting is one that is probably a better bet than any.