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.