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ResourcesCorporate and Tax AdvisoryThailand Corporate LawThailand May Be Relaxing Foreign Business Restrictions in 3 Areas

Thailand May Be Relaxing Foreign Business Restrictions in 3 Areas

Transcript of the above video:

As the title of this video suggests, we are discussing the Foreign Business Act specifically the restrictions on certain types of corporate activity that may be undertaken by foreign businesses here in the Kingdom of Thailand and in a recent article, a relatively recent article, from the Bangkok Post from September 24th, 2018, the title of the article is: Three Service Deals to Open for Foreign Firms. Quoting directly, "The government looks set to remove 3 service businesses from list 3 under the Foreign Business Act to facilitate foreign investment in Thailand with the move to take effect next year." So to stop quoting very quickly and provide some background on this, list 3 is the list of Foreign Business Act that restricts foreign business undertakings in the Kingdom based on the notion that Thai companies are not yet ready to compete against certain foreign companies that are operating in the activities or the areas pursuant to list 3. Quoting further, "the three areas are lending services to affiliated domestic firms, office building rental services to local affiliate firms and consulting services to affiliate firms for 4 activities; management, marketing, human resources and technological consulting." So let's go back through those real quick. Certain lending activities to affiliated firms, office building rental service to local affiliate firms and Consulting Services in the area of management, marketing, human resources and technological consulting; again to affiliate firms. Quoting further: “The move will not have adverse impact on Thai companies because the removal is limited to affiliated companies”. That final quotation was noted by an Officer from the Commerce Ministry.

And I got to thinking, well what does this mean?

I mean that basically they are relaxing these rules but they are specifically noting that it has to do with Affiliated Companies so I went ahead and took the liberty of looking up Affiliated Companies. I went to investopedia.com and basically found “Affiliated Companies”. What are affiliated companies? Affiliated companies are in general companies in which the parent company owns less than 50% interest, in other words a parent company is a minority shareholder. More loosely the term Affiliated Company is sometimes used to refer to companies that are related to each other in some way.  For example Bank of America has numerous affiliated companies including Bank of America, US Trust, Land Safe, Balboa and Merrill Lynch.

So what does this really mean as a practical matter? Well I think at first it should be noted that whatever restrictions are being lifted, the lift is rather tempered so whether or not you take the meaning that it is Affiliate Companies in the sense of some sort of minority share held company here in the Kingdom or just a more loosely Affiliated Corporation here in the Kingdom that is affiliated presumably with another larger Corporation. This is not going to be a lift of restrictions that is sort of broad it is going to be a list of restrictions that to me is only going to occur in rather narrow context.

As of yet I have yet to see the exact wording of the rules that are lifting these restrictions so as and when that becomes available, we will go ahead and try to do some kind of translation and provide further insight into this topic when and if those restrictions, the lift  thereof have been promulgated.