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The police investigation has reached an advanced stage, and it is believed these firms, whose names have been withheld, have hired locals to acquire more than 1,000 rai of farmland on their behalf in several rice-growing provinces in the North and Central Plains.

The FBA stipulates rice farming is reserved for Thais, and foreigners can hold no more than 49 per cent of firms engaged in rice farming.

DSI said it could not name names at this stage because it could affect the investigation.

Previously, the Commerce Ministry conducted a survey of suspected cases in the rice-growing provinces of Suphan Buri, Pathum Thani and Ayutthaya.

Deputy Commerce Minister Alongkorn Ponlaboot yesterday said the DSI was working to identify the real investors behind these suspected firms. In their memorandum registered with the Business Development Department, these firms have clearly stated they intend to grow rice.

"They have explicitly said they will be doing rice farming," Alongkorn said, adding that these firms' financial statements and balance sheets were being examined.

If these companies are caught using nominees, the ministry will file a police complaint and seek legal action.

"Even though we cannot say all of them are nominees, their share-holding strategy suggests there could be some illegal practices," he said.

The ministry and the Board of Investment (BoI) have jointly declared the government is not discriminating against foreign investors.

However, under the Foreign Business Act of 1999, farming and livestock are protected industries, and foreign investors can hold only a 49-per-cent stake in any enterprise engaging in such activities.

"The farm-sector protection is causing confusion among foreign investors, making them believe Thailand has a discriminatory policy," he said, adding that investigation had shown that so far, foreigners had purchased more than 10,000 rai of land in Thailand.

Foreigners can also purchase land and establish companies by marrying Thai women and control a business via a nominee.