Thailand, the second largest economy in Association of Southeast Asian Nations (ASEAN) after Indonesia, is an upper middle-income country with pro-investment policies and well-developed infrastructure. The interim military coup government held elections on March 24, 2019 and 2014 coup leader General Prayut Chan-o-cha was elected by Parliament as Prime Minister on June 5. Thailand celebrated the coronation of King Maha Vajiralongkorn May 4-6, 2019, further stabilizing the country. Despite some political uncertainty, Thailand continues to encourage foreign direct investment as a means of promoting economic development, employment, and technology transfer. In recent decades, Thailand has been a major destination for foreign direct investment, and hundreds of U.S. companies have invested in Thailand successfully. Thailand continues to encourage investment from all countries and seeks to avoid dependence on any one country as a source of investment.
The Foreign Business Act (FBA) governs most investment activity by non-Thai nationals. Many U.S. businesses also enjoy investment benefits through the U.S.-Thai Treaty of Amity and Economic Relations, signed in 1833 and updated in 1966. The Treaty allows U.S. citizens and U.S. majority-owned businesses incorporated in the United States or Thailand to engage in business on the same basis as Thai companies (national treatment) and exempts them from most FBA restrictions on foreign investment, although the Treaty excludes some types of business. Notwithstanding their Treaty rights, many U.S. investors choose to form joint ventures with Thai partners who hold a majority stake in the company, leveraging their partner’s knowledge of the Thai economy and local regulations.
The Thai government maintains a regulatory framework that broadly encourages investment, though the process of rule-making and interpretation is not always transparent or predictable. Government policies generally do not restrict the free flow of financial resources to support product and factor markets, and credit is generally allocated on market terms rather than by directed lending.
The Board of Investment (BOI) is Thailand’s principal investment promotion authority. The BOI offers business support and investment incentives uniformly to qualified domestic and foreign investors through clearly articulated application procedures. Investment incentives include both tax and non-tax privileges.
The government launched the Eastern Economic Corridor (EEC) development plan in 2017. The EEC is a part of the “Thailand 4.0” economic development strategy introduced in 2016. Many planned infrastructural projects, such as high-speed trains, U-Tapao Airport commercialization, and Laem Chabang Port expansion, could provide opportunities for investments, and good and services support. Thailand 4.0 offers to incentives for investments in ten “new” targeted industries, namely advanced robotics, digital technology, integrated aviation, medical, biofuels/biochemical, defense manufacturing, and human resource development.
Table 1: Key Metrics and Rankings
|TI Corruption Perceptions Index
|World Bank’s Doing Business Report
|27 of 190
|Global Innovation Index
|44 of 126
|U.S. FDI in partner country ($M USD, stock positions)
|World Bank GNI per capita
1. Openness To, and Restrictions Upon, Foreign Investment
List 1. This contains activities non-nationals are prohibited from engaging in, including: newspaper and radio broadcasting stations and businesses; rice and livestock farming; forestry and timber processing from a natural forest; fishery in Thai territorial waters and specific economic zones; extraction of Thai medicinal herbs; trading and auctioning of antique objects or objects of historical value from Thailand; making or casting of Buddha images and monk alms bowls; and land trading.
List 2. This contains activities related to national safety or security, arts and culture, traditional industries, folk handicrafts, natural resources, and the environment. Restrictions apply to the production, sale and maintenance of firearms and armaments; domestic transportation by land, water, and air; trading of Thai antiques or art objects; mining, including rock blasting and rock crushing; and timber processing for production of furniture and utensils. A foreign majority-owned company can engage in List 2 activities if Thai nationals or legal persons hold not less than 40 percent of the total shares and the number of Thai directors is not less than two-fifths of the total number of directors.
List 3. Restricted businesses in this list include: accounting, legal, architectural, and engineering services; retail and wholesale; advertising businesses; hotels; guided touring; selling food and beverages; and other service-sector businesses. A foreign company can engage in List 3 activities if a majority of the limited company’s shares are held by Thai nationals. Any company with a majority of foreign shareholders (more than 50 percent) cannot engage in List 3 activities unless it receives an exception from the Ministry of Commerce under its Foreign Business License (FBL) application.
Thailand does not maintain an investment screening mechanism, but investors can receive additional incentives/privileges if they invest in priority areas, such as high-technology industries. Investors should contact the Board of Investment [https://www.boi.go.th/index.php?page=index] for the latest information on specific investment incentives.
The U.S. Commercial Service, U.S. Embassy Bangkok, is responsible for issuing a certification letter to confirm that a U.S. company is qualified to apply for benefits under the Treaty of Amity. The applicant must first obtain documents verifying that the company has been registered in compliance with Thai law. Upon receipt of the required documents, the U.S. Commercial Service office will then certify to the Foreign Administration Division, Department of Business Development, Ministry of Commerce (MOC) that the applicant is seeking to register an American-owned and managed company or that the applicant is an American citizen and is therefore entitled to national treatment under the provisions of the Treaty. For more information on how to apply for benefits under the Treaty of Amity, please e-mail: firstname.lastname@example.org.
Other Investment Policy Reviews
The World Trade Organization conducted a Trade Policy Review of Thailand in November 2015. https://www.wto.org/english/tratop_e/tpr_e/tp426_e.htm. The next review is scheduled for October 2020.
The MOC’s Department of Business Development (DBD) is generally responsible for business registration, which can be performed online or manually. A legal requirement that documentation must be submitted in Thai language has caused foreign entities to spend three to six months to complete the process, as they typically have to hire a law firm or consulting firm to handle their applications. Firms engaging in production activities also must register with the Ministry of Industry and the Ministry of Labor and Social Development.
To operate restricted businesses as defined by the FBA’s List 2 and 3, non-Thai entities must obtain a foreign business license, approved by the Council of Ministers (Cabinet) and/or Director-General of the MOC’s Department of Business Development, depending on the business category.
Effective June 9, 2017, the MOC removed certain business categories from FBA’s Annex 3 list. Businesses no longer subject to restrictions include regional office services and contractual services provided to government bodies and state-owned enterprises.
American investors who wish to take majority shares or wholly own businesses under FBA’s Annex 3 list may apply for protection under the U.S.-Thai Treaty of Amity. https://2016.export.gov/thailand/treaty/index.asp#P5_233
Americans planning to invest in Thailand are advised to obtain qualified legal advice, especially considering Thai business regulations are governed predominantly by criminal, not civil, law. Foreigners are rarely jailed for improper business activities, but violations of business regulations can carry heavy criminal penalties. Thailand has an independent judiciary and government authorities are generally not permitted to interfere in the court system once a case is in process.
In March 2019, the MOC’s Department of Business Development completed an annual report on suggestions for FBA changes, particularly the possible removal of certain service businesses from FBA’s List 3. The report is pending the Cabinet’s review, which is expected to take place after a new government assumes office.
A company is required to have registered capital of two million Thai baht per foreign employee in order to obtain work permits. Foreign employees must enter the country on a non-immigrant visa and then submit work permit applications directly to the Department of Labor. Application processing takes approximately one week. For more information on Thailand visas, please refer to http://www.mfa.go.th/main/en/services/4908/15388-Non-Immigrant-Visa- percent22B percent22-for-Business-and.html.
In February 2018, the Thai government launched a Smart Visa program for foreigners with expertise in specialized technologies in ten targeted industries. Under this program, foreigners can be granted a maximum four-year visa to work in Thailand without having to obtain a work permit and can enjoy relaxed immigration rules for their spouses and children. More information is available at https://www.boi.go.th/index.php?page=detail_smart_visa&language=en.
Thai companies are expanding and investing overseas, especially in neighboring ASEAN countries to take advantage of lower production costs, but also in the United States, Europe and Asia. A stronger domestic currency, rising cash holdings, and subdued domestic growth are helping to drive outward investment. Food, agro-industry, and chemical sectors account for the main share of outward flows. Thai corporate laws allow outbound investments in the form of an independent affiliate (foreign company), as a branch of a Thai legal entity, or by a financial investment abroad from a Thai company. BOI and the MOC’s Department of International Trade Promotion (DITP) share responsibility for promoting outward investment, with BOI focused on outward investment in leading economies and DITP covering smaller markets.
2. Bilateral Investment Agreements and Taxation Treaties
3. Legal Regime
Consistent and predictable enforcement of government regulations remains problematic for investment in Thailand. In 2017, the Thai government initiated a policy to cut down on red tape, licenses, and permits in order to encourage economic growth. The policy focused on reducing and amending certain outdated regulations in order to improve Thailand’s ranking on the World Bank “Ease of Doing Business” report. The policy reviewed national license and permit requirements, with the aim of eliminating redundant licenses and streamlining complex procedures for starting new businesses.
Gratuity payments to civil servants responsible for regulatory oversight and enforcement remain a common practice. Firms that refuse to make such payments can be placed at a competitive disadvantage when compared to other firms in the same field that do engage in such practices.
The Royal Thai Government Gazette (www.ratchakitcha.soc.go.th) is Thailand’s public journal of the country’s centralized online location of laws, as well as regulation notifications.
International Regulatory Considerations
While Thailand is a member of the World Trade Organization (WTO) and notifies most draft technical regulations to the Technical Barriers to Trade (TBT) Committee and the Sanitary and Phytosantitary Measures Committee, the country does not always follow WTO or other international standard-setting norms or guidance, preferring to set its own standards in many cases. In October 2015, the country ratified the WTO Trade Facilitation Agreement, which came into effect in February 2017. On March 7, 2018, the Thai Ambassador to the WTO was elected unanimously by 164 WTO members to serve as Chair of the WTO Dispute Settlement Body.
Legal System and Judicial Independence
Thailand has a civil code, commercial code, and a bankruptcy law. Monetary judgments are calculated at the market exchange rate. Decisions of foreign courts are not accepted or enforceable in Thai courts. Disputes such as the enforcement of property or contract rights have generally been resolved in Thai courts. Thailand has an independent judiciary that is generally effective in enforcing property and contractual rights. The legal process is slow in practice, and litigants or third parties sometimes influence judgments through extra-legal means.
There are three levels to the judicial system in Thailand: the Court of First Instance, which handles most matters at inception; the Court of Appeals; and the Supreme Court. There are also specialized courts, such as the Labor Court, Family Court, Tax Court, the Central Intellectual Property and International Trade Court, and the Bankruptcy Court.
The Specialized Appeal Courts handles appeals from specialized courts. The Supreme Court has discretion whether to take a case that has been decided by the Specialized Appeal Court. If the Supreme Court decides not to take up a case, the Specialized Appeal Court decision stands.
Laws and Regulations on Foreign Direct Investment
The Foreign Business Act (FBA) governs most investment activity by non-Thai nationals. Foreign investment in most service sectors is limited to 49 percent ownership. Other key laws governing foreign investment are the Alien Employment Act (1978) and the Investment Promotion Act (1977). Many U.S. businesses enjoy investment benefits through the U.S.-Thailand Treaty of Amity and Economic Relations.
The 2007 Financial Institutions Business Act unified the legal framework and strengthened the Bank of Thailand’s (the country’s central bank) supervisory and enforcement powers. The Act allows the Bank of Thailand to raise foreign ownership limits for existing local banks from 25 percent to 49 percent on a case-by-case basis. The Minister of Finance can authorize foreign ownership exceeding 49 percent if recommended by the central bank. Details are available at: https://www.bot.or.th/English/AboutBOT/LawsAndRegulations/
Apart from acquiring shares of existing local banks, foreign banks can enter the Thai banking system by obtaining new licenses, issued by the central bank and the Ministry of Finance. The 2008 Life Insurance Act and the 2008 Non-Life Insurance Act apply a 25 percent cap on foreign ownership of insurance companies and on foreign boards of directors. However, in January 2016 the Office of the Insurance Commission (OIC), the primary insurance industry regulator, notified that any Thai life or non-life insurance company wishing to have one or more foreigners hold more than 25 percent (but no more than 49 percent) of its total voting shares, or to have foreigners comprise more than a quarter (but less than half) of its total directors, may apply to the OIC for approval. Any foreign national wishing to hold more than 10 percent of the voting shares in an insurance company must seek OIC approval. With approval, a foreign national can acquire up to 49 percent of the voting shares.
Any foreign shareholder holding more than ten percent of the voting shares prior to the effective date of the notification is grandfathered in and may maintain the current shareholding, but must obtain OIC approval to increase it. Finally, the Finance Minister, with OIC’s positive recommendation, has discretion to permit greater than 49 percent foreign ownership and/or a majority of foreign directors, when the operation of the insurance company may cause loss to insured parties or to the public.
For information on Thailand’s “One Start One Stop” investment center, please visit: http://osos.boi.go.th. Investors in Thailand can visit the physical office, located on the 18th floor of Chamchuri Square on Rama 4/Phayathai Road in Bangkok.
Competition and Anti-Trust Laws
Thailand enacted an updated version of the Trade Competition Act on October 5, 2017. The updated Act covers all business activities, except: state-owned enterprises exempted by law; government policies related to national security, public benefit, common interest and public utility; cooperatives, agricultural and cooperative groups, government agencies, and other enterprises exempted by the law.
The Office of Trade Competition Commission (OTCC) is an independent agency and the main enforcer of the Trade Competition Act. The OTCC, comprised of seven members nominated by a selection committee and endorsed by the Cabinet, advises the government on issuance of relevant regulations, ensures fair and free trade practices, investigates cases and complaints of unfair trade, and pursues criminal and disciplinary actions against those found guilty of unfair trade practices stipulated in the law. The law focuses on unlawful exercise of market dominance; mergers or collusion that could lead to monopoly, unfair competition and restricting competition; and unfair trade practices. Merger control thresholds and additional details will be provided in notifications and regulations to be issued at a later date.
The Act broadens the definition of a business operator to include affiliates and group companies, and broadens the liability of directors and management, subjecting them to criminal and administrative sanctions if their actions (or omissions) resulted in violations. The Act also provides more details about penalties in cases involving administrative court or criminal court actions. The amended Act has been noted as an improvement over the prior legislation and a step towards Thailand’s adoption of international standards in this area.
The government has authority to control the price of specific products under the Price of Goods and Services Act. The MOC’s Department of Internal Trade administers the law and interacts with affected companies, though the Committee on Prices of Goods and Services makes final decisions on products to add or remove from price controls. As of January 2019, the MOC increased the number of controlled commodities and services to 54 from 53 the previous year. Aside from these controlled commodities, raising prices of consumer products is prohibited without first notifying the Committee. The government uses its controlling stakes in major suppliers of products and services, such as Thai Airways and PTT Public Company Limited, to influence prices in the market. Thailand has extensive environmental-protection legislation, including the National Environmental Quality Act, the Hazardous Substances Act, and the Factories Act. Food purity and drug efficacy are controlled and regulated by the Thai Food and Drug Administration (with authority similar to its U.S. counterpart). The Ministry of Labor sets and administers labor and employment standards.
Expropriation and Compensation
Private property can be expropriated for public purposes in accordance with Thai law, which provides for due process and compensation. This process is seldom invoked and has been principally confined to real estate owned by Thai nationals and required for public works projects. In the past year, U.S. firms have not reported problems with property appropriation in Thailand.
ICSID Convention and New York Convention
Thailand is a signatory to the New York Convention and enacted its own rules governing conciliation and arbitration procedures in the Arbitration Act of 2002. Thailand signed the Convention on the Settlement of Investment Disputes in 1985, but has not yet ratified it.
Investor-State Dispute Settlement
There have been several notable cases of investor-state disputes in the last fifteen years, but none involved U.S. companies. Currently, Thailand is engaged in a dispute with Australian firm Kingsgate Consolidated Limited over the government’s invocation of special powers to shut down a gold mine in early 2017 because of environmental damage and conflicts with the local population. Kingsgate, a major shareholder of the operator of the disputed mine, claimed the Thai government violated the Australia-Thailand Free Trade Agreement and commenced international arbitration proceedings against the country to recover losses incurred from the closure. The process is still continuing as of May 2019.
International Commercial Arbitration and Foreign Courts
Thailand’s Arbitration Act of 2002, modeled in part after the UNCITRAL Model Law, governs domestic and international arbitration proceedings. The Act states that “in cases where an arbitral award was made in a foreign country, the award shall be enforced by the competent court only if it is subject to an international convention, treaty, or agreement to which Thailand is a party.” The Thai Arbitration Institute (TAI) of the Alternative Dispute Resolution Office, Office of the Judiciary, and the Office of the Arbitration Tribunal of the Board of Trade of Thailand provide arbitration services for proceedings held in Thailand. In 2017, TAI adopted new rules aimed at addressing weaknesses in Thailand’s arbitration process. The new rules: empower TAI to appoint arbitrators when any of the parties in dispute fails to do so; establish a 180-day duration for arbitration procedures; and mandate issuance of a final award within 30 days of the closure of pleadings.
An amendment to the Arbitration Act, which aims to allow foreign arbitrators to take part in cases involving foreign parties, was approved by the National Legislative Assembly in January 2019. As of May 2019, the new version of this Act is awaiting royal endorsement, after which it will be published in the Royal Gazette; both steps must occur before it enters into force. In addition, the semi-public Thailand Arbitration Center offers mediation and arbitration for civil and commercial disputes. Under very limited circumstances, a court can set aside an arbitration award. Thailand does not have a bilateral investment treaty or a free trade agreement with the United States.
Thailand’s bankruptcy law allows for corporate restructuring similar to U.S. Chapter 11 and does not criminalize bankruptcy. While bankruptcy is under consideration, creditors can request the following ex parte applications from the Bankruptcy Court: an examination by the receiver of all the debtor’s assets and/or that the debtor attend questioning on the existence of assets; a requirement that the debtor provide satisfactory security to the court; and immediate seizure of the debtor’s assets and/or evidence in order to prevent the loss or destruction of such items.
The law stipulates that all applications for repayment must be made within one month after the Bankruptcy Court publishes the appointment of an official receiver. If a creditor eligible for repayment does not apply within this period, he forfeits his right to receive payment or the court may cancel the order to reorganize the business. If any person opposes a filing, the receiver shall investigate the matter and approve, partially approve, or dismiss the application. Any objections to the orders issued by the receiver may be filed with the court within 14 days after learning of the issued order.
The National Credit Bureau of Thailand (NCB) provides the financial services industry with information on consumers and businesses. In May 2018, the World Bank’s Doing Business Report ranked Thailand 24th out of 190 countries on resolving insolvency.
4. Industrial Policies
- Tax privileges, such as corporate income tax exemptions, and tariff reductions or exemptions on the import of machinery and/or imported raw materials used in the investment.
- Nontax privileges, such as permission to own land, permission to bring foreign experts to work on the promoted projects, exemptions on foreign ownership limitations of companies, and exemptions from work permit and visa rules.
Thailand’s flagship investment zone, the “Eastern Economic Corridor (EEC),” spans the provinces of Chachoengsao, Chonburi, and Rayong with a combined area of 5,129 square miles. The EEC leverages the adjacent Eastern Seaboard industrial area that has been an investment destination for more than 30 years. The Thai government aims to establish the EEC as a primary investment and infrastructure hub in ASEAN, serving as a central gateway to east and south Asia. Among the EEC development projects are: smart cities; an innovation district (EECi); a digital park (EECd); an aerotropolis (EEC-A); and other state-of-the-art facilities to help promote EEC’s following targeted industries:
- Next-generation automotives
- Intelligent electronics
- Advanced agriculture and biotechnology
- Food processing
- Advance robotics and automation
- Integrated aviation industry
- Medical hub and total healthcare services
- Biofuels and biochemicals
- Digital technology
- Defense industry
- Human resource development
The EEC Act provides investment incentives and privileges. Investors will be able to obtain long-term land leases of 99 years (with an initial lease of up to 50 years and a renewal of up to 49 years). The public-private partnership approval process is shortened to approximately nine months. The BOI will offer corporate income tax exemptions of up to 13 years for strategic projects in the EEC area. Foreign experts who work in the EEC will be subject to a maximum personal income tax rate of 17 percent; a 15 percent personal income tax rate will apply to executives whose companies have International Business Centers in the EEC. Investment projects with a significant R&D, innovation, or human resource development component may be eligible for additional grants and incentives. Moreover, grants will be provided to support targeted technology development under the Competitive Enhancement Act. There will be a one-stop service to expedite multiple business processes for investors.
On March 26, 2019, the Thai Cabinet approved Royal Decrees cancelling grandfathered tax incentives under former incentive regimes for foreign investors who establish: regional operating headquarters; international headquarters (including a treasury center); and international trading centers. The repeal will become effective June 1, 2019 for corporate income tax incentives and effective January 1, 2020 for individual income tax incentives. The Ministry of Finance (MOF) asserts this measure is in response to a 2017 OECD report (2017 Progress Report on Preferential Regimes (Inclusive Framework on Base Erosion and Profit Shifting (BEPS) 2: Action 5); the report labelled Thailand’s regional/international headquarters and trading and treasury hub regimes as harmful tax practices. MOF also indicated its actions will ensure Thailand will not be classified as ”Potentially Harmful” or ”Actually Harmful” by the Forum on Harmful Tax Practices (FHTP) and BEPS. The Thai government has announced current beneficiaries of the suspended regimes will be able to transition into a new scheme, the “International Business Center” (IBC) investment incentive program, provided the applicant meets the IBC regime’s to-be-announced conditions.
For additional information, contact the Thai Board of Investment, 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900. Tel: 0-2553-8111. Website: www.boi.go.th.
Foreign Trade Zones/Free Ports/Trade Facilitation
The Industrial Estate Authority of Thailand (IEAT), a state-enterprise under the Ministry of Industry, has established a network of industrial estates in Thailand, including Laem Chabang Industrial Estate in Chonburi Province (eastern) and Map Ta Phut Industrial Estate in Rayong Province (eastern). Foreign-owned firms generally have the same investment opportunities in the industrial zones as Thai entities, but the IEAT Act requires that in the case of foreign-owned firms, the IEAT Committee must consider and approve the amount of space/land that such firms plan to buy or lease in industrial estates. In practice, there is no record of disapproval for requested land. Private developers are heavily involved in the development of these estates. The IEAT currently operates 9 estates, plus 41 more in conjunction with the private sector, in 15 provinces nationwide. Private-sector developers operate over 50 industrial estates, most of which have received promotion privileges from the Board of Investment.
The IEAT has established 12 special IEAT Free Zones reserved for industries manufacturing for export only. Businesses may import raw materials into and export finished products from these zones free of duty (including value added tax). These zones are located within industrial estates and many have customs facilities to speed processing. The free trade zones are located in Chonburi, Lampun, Pichit, Songkhla, Samut Prakarn, Bangkok (at Lad Krabang), Ayuddhya, and Chachoengsao. In addition to these zones, factory owners may apply for permission to establish a bonded warehouse within their premises to which raw materials, used exclusively in the production of products for export, may be imported duty free.
Thailand is focusing on improving trade and investment with neighboring countries. It is therefore establishing Special Economic Zones (SEZs) in ten provinces bordering neighboring countries e.g., Tak, Nong Khai, Mukdahan, Sa Kaeo, Trad, Narathiwat, Chiang Rai, Nakhon Phanom, and Kanchanaburi. Business sectors and industries that might benefit from tax and non-tax incentives offered in the SEZs include logistics, warehouses near border areas, distribution, services, tourism, labor-intensive factories, and manufacturers using raw materials from neighboring countries.
Performance and Data Localization Requirements
In 2018, Thailand enacted a Royal Decree on Foreign Worker Management (no.2), which replaced the Foreign Employment Act and the Royal Decree on the Management of Migrant Employment, to manage the employment of foreigners, regardless of industry, in a more systematic fashion. The new decree eliminates mandatory prison time for undocumented workers. It also narrows the range of penalties from a minimum of USD 157 to a maximum of USD 1,571 (THB 5,000-50,000) (compared to USD 63 to USD 3,142 (THB 2,000-100,000) under the prior law). The new decree also bans sub-contract employers from hiring migrant workers and requires employers to provide to migrant workers a copy of their employment contracts.
The decree prohibits employers and employment agencies from charging workers fees other than “personal expenses,” defined as passport fees, medical checks, and work permit fees. Employers may only deduct the actual cost of these personal expenses, and these deductions may not exceed 10 percent of any worker’s monthly salary. The law makes retention of worker documents illegal and prescribes mandatory penalties of between USD 12,517 to USD 25,142 (THB 400,000 to THB 800,000) and/or imprisonment of up to six months to employers who violate these rules. The decree also increases the grace period for migrant workers to change employers from 15 to 30 days. Employers and employment agencies are required by law to bear the cost of repatriating migrant workers back to their home country when workers resign or when their employment contract ends.
Thai law requires foreign workers to have a work permit issued by the Ministry of Labor in order to work legally in Thailand. The Ministry of Labor considers the following factors when deciding whether to issue a work permit:
- whether a Thai employee could perform the job;
- whether the foreigner is qualified for the job; and
- whether the job fits the present economic needs of the Kingdom.
Thai law also reserves 39 occupations for Thai workers; the Ministry of Labor will not grant work permits for foreigners to engage in these occupations, which include lawyers, architects, and civil engineers. Generally, employers must hire four Thai nationals for every one foreign employee.
Different requirements apply to companies promoted by the BOI, which typically result in greater flexibility and ease in obtaining work permits for foreign nationals. Such schemes apply equally to senior management and boards of directors. According to the Foreign Business Act, if a foreigner is the firm’s managing partner or the manager, the company is subject to the restrictions applicable to foreign businesses and the Foreign Business License application.
While the employment of foreigners in some sectors is subject to the foreign equity restrictions of the Foreign Business Act, exceptions can be granted as promotional privileges by BOI or IEAT, or, as a temporary measure, in the form of government approval issued by the Thai government. Exceptions can also be provided based on international treaties to which Thailand is a party. Under the Treaty of Amity and Economic Relations between Thailand and the United States, U.S. companies or nationals can be eligible for national treatment, allowing them, with some exceptions, to obtain the same treatment in their business dealings as Thai nationals.
The Thai government does not currently have any specific law governing “forced localization” policy, under which foreign investors must use domestic content in goods or technology, but it has encouraged such an approach through domestic preferences in procurement. While there are currently no requirements for foreign IT providers to turn over source code and/or provide access to surveillance, the Thai government in February 2019 passed new laws and regulations on cybersecurity and personal data protection that raise concerns over Thai authorities’ broad power to demand confidential and sensitive information without sufficient legal protections or a company’s ability to appeal or limit such access. IT providers have expressed concern that the new laws might place unreasonable burdens on them and have introduced new uncertainties in the technology sector. Thailand has implemented a requirement that all debit transactions processed by a domestic debit card network must use a proprietary chip. Regarding Thailand’s import permitting process for several agricultural products, such as soybean and milk, the government imposes separate domestic absorption rate requirements to purchase local products at fixed prices.
5. Protection of Property Rights
Thailand’s patent regime generally provides protection for most inventions. The examination of patent applications through issuance of patents takes on an average of six to eight years. Patent issuance may take longer in certain technology sectors. In order to address the backlog problem, DIP hired 88 additional patent and trademark examiners over the last few years. Additional examiners helped decrease the patent application backlog by 20 percent in 2018. As of September 2018, approximately 16,000 patent applications were pending for examination, according to DIP. With regard to trademarks, DIP takes on average 10-14 months for trademark approvals.
The Thai government is in the process of adopting an amendment to the Patent Act that would streamline the patent registration process and implement its international obligations under the Amendment of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) related to patent and public health, which Thailand ratified in January 2016. The draft amendment is pending the legislature’s approval.
Starting in September 2017, rights owners can file for sound trademark registration, a development enabled by a July 2016 amendment of Thailand’s Trademark Act. Thailand acceded to the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) in August 2017, and the agreement entered into effect in November 2017. The Thai government is also working on an amendment to the Patent Act to prepare Thailand for accession to the Hague Agreement Concerning the International Registration of Industrial Designs.
Thailand’s amended Copyright Act came into effect on March 11, 2019. Thailand is a member of the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled. Thailand deposited the instrument of accession to the Marrakesh Treaty with the World Intellectual Property Organization (WIPO) on January 28, 2019.
In addition, Thailand is in the process of a two-phase amendment of the Copyright Act. The first phase would enhance mechanisms to protect copyrights in the digital environment and prepare Thailand for accession to the WIPO Copyright Treaty; the second phase would prepare Thailand for accession to the WIPO Performances and Phonograms Treaty. The first-phase draft is under review by the Council of State, while the second phase amendment is in the drafting process.
The Thai government amended the Computer Crime Act in 2017 to add IPR infringement as a predicate offense under Section 20, enabling IP right holders to file requests to either DIP or the Ministry of Digital Economy and Society for removal of IPR-infringing content from online computer systems or disabling of access to it. Online video providers and human rights advocates continue to voice serious concerns regarding use of the Computer Crimes Act to limit free speech and to compel internet service providers (ISP) to comply with Thai government requests to remove content or else face penalties.
Thailand’s Geographical Indications (GI) Act has been in force since April 2004. Thailand protects GIs, which identify goods by their specific geographical origins. The geographical origins identified by a GI must attribute to the reputation, qualities, or characteristics of the good. In Thailand, a registered trademark does not prevent a similar geographical name to be registered as a GI.
Thailand has provided ex-officio authority for border enforcement officials with respect to in-transit goods; set enforcement benchmarks; began monthly publishing of enforcement statistics online; and stepped up efforts to investigate IP cases. Thailand has a Court of Appeal for Specialized Cases, which hears appeals from the Central Intellectual Property and International Trade Court, including administrative appeals from DIP that already received a first instance decision from the Central Intellectual Property and International Trade Court.
In late 2017, Thailand was upgraded from the USTR Special 301 Priority Watch List, where it had been placed since 2007, to the Watch List. Currently, there are no Thai markets listed in the USTR Notorious Markets Report.
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
6. Financial Sector
Thailand’s banking sector, with 14 domestic commercial banks, is sound and well-capitalized. As of December 2018, non-performing loan rates were low (around 2.93 percent) and the ratio of capital funds/risk assets (capital adequacy) was high (17.6 percent). Thailand’s largest commercial bank is Bangkok Bank, with assets totaling USD 96.5 billion as of December 2018. The combined assets of the five largest commercial banks totaled USD 413 billion, or 77 percent of the total assets of the Thai banking system, at the end of 2018.
Thailand’s central bank is the Bank of Thailand (BOT), which is headed by a Governor appointed for a five-year term. The BOT prints and issues banknotes and other security documents, promotes monetary stability and formulates monetary policies, manages the BOT’s assets, provides banking facilities to the government, acts as the registrar of government bonds, and provides banking facilities for financial institutions.
There are currently 11 registered foreign bank branches and four foreign bank subsidiaries operating in Thailand, including Citibank, Bank of America, and JP Morgan Chase. Foreign commercial banks can set up a branch in Thailand, once the applicant obtains a recommendation from the Bank of Thailand and a license from the Ministry of Finance. Foreign commercial bank branches are limited to three branches/ATMs and foreign commercial bank subsidiaries are limited to 20 branches and 20 off-premise ATMs per subsidiary. Foreign banks must maintain minimum capital funds of 125 million baht (USD 3.86 million at end of 2018 exchange rates) invested in government or state enterprise securities, or directly deposited in the Bank of Thailand. The number of expatriate management personnel is limited to six people at full branches, although Thai authorities frequently grant exceptions on the basis of need. There are no records of losses among banks in the past three years.
Non-residents can open and maintain foreign currency accounts without deposit and withdrawal ceilings. Any deposits in Thai Baht currency must be derived from one of the following sources: conversion of foreign currencies; payment of goods and services; or capital transfers. Withdrawals are freely permitted, except the withdrawal of funds for credit to another non-resident person or purchase of foreign currency involving an overdraft.
Since mid-2017, the BOT has approved Thai domestic banks’ requests to develop financial innovations based on blockchain technology, but the system is being closely monitored under the BOT’s “Regulatory Sandbox guidelines.”
Thailand’s alternative financial services include cooperatives, micro-saving groups, the state village funds, and informal money lenders, who provide basic but expensive financial services to households, mostly in rural areas. These alternative financial services, with the exception of informal money lenders, are regulated by the government.
Foreign Exchange and Remittances
There are no limitations placed on foreign investors for converting, transferring, or repatriating funds associated with an investment; however, supporting documentation is required. Any person who brings Thai Baht currency or foreign currency in or out of Thailand with aggregate amount exceeding USD 15,000 or the equivalent must declare the currency at a Customs checkpoint. Investment funds are allowed to be freely converted into any currency.
The exchange rate is generally determined by market fundamentals but is carefully scrutinized by the BOT under a managed float system. During periods of excessive capital inflows/outflows (i.e., exchange rate speculation), the central bank has stepped in to prevent extreme movements in the currency and to reduce the duration and extent of the exchange rate’s deviation from a targeted equilibrium.
Thailand imposes no limitations on the inflow or outflow of funds for remittances of profits or revenue for direct and portfolio investments. There are no time limitations on remittances.
Sovereign Wealth Funds
Thailand does not have a sovereign wealth fund and the Bank of Thailand is not pursuing the creation of such a fund. However, the International Monetary Fund has urged Thailand to create a sovereign wealth fund due to its large accumulated foreign exchange reserves (USD 205.6 billion as of December 2018.
7. State-Owned Enterprises
The 1999 State Enterprise Corporatization Act provides a framework for conversion of SOEs into stock companies, and corporatization is viewed as an intermediate step toward eventual privatization. (Note: “corporatization” describes the process by which an SOE adjusts its internal structure to resemble a publicly-traded enterprise; “privatization” denotes that a majority of the SOE’s shares is sold to the public; and “partial privatization” refers to a situation in which less than half of a company’s shares are sold to the public.) Foreign investors are allowed to participate in privatizations, but restrictions are applied in certain sectors, as regulated by the FBA and the Act on Standards Qualifications for Directors and Employees of State Enterprises of 1975, as amended. However, privatizations have been on hold since 2006 largely due to strong opposition from labor unions.
A 15-member State Enterprises Policy Commission, or “superboard,” oversees reform of the country’s 56 SOEs. In March 2015, the superboard approved, in principle, the establishment of a holding firm to supervise 12 SOEs, which have been partially equitized and listed on the Stock Exchange of Thailand. The reform plan calls for SEPO to retain supervisory authority over SOEs that have been established by specific laws, including the Electricity Generating Authority of Thailand, the Metropolitan Electricity Authority, and the Provincial Electricity Authority. As of the end of 2018, the superboard is still in the process of advancing a new law that would reform SOEs and ensure transparent management decisions; however, privatization is not part of this process.
8. Responsible Business Conduct
Thailand is a party to the UN Anti-Corruption Convention, but not the OECD Anti-Bribery Convention.
Thailand’s Witness Protection Act offers protection (to include police protection) to witnesses, including NGO employees, who are eligible for special protection measures in anti-corruption cases.
Transparency International’s Corruption Perceptions Index ranked Thailand 99th out of 180 countries in 2018. According to some studies, a cultural propensity to forgive bribes as a normal part of doing business and to equate cash payments with finders’ fees or consultants’ charges, coupled with the low salaries of civil servants, encourages officials to accept illegal inducements. U.S. executives with experience in Thailand often advise new-to market companies that it is far easier to avoid corrupt transactions from the beginning than to stop such practices once a company has been identified as willing to operate in this fashion. American firms that comply with the strict guidelines of the Foreign Corrupt Practices Act (FCPA) are able to compete successfully in Thailand. U.S. businessmen say that publicly affirming the need to comply with the FCPA helps to shield their companies from pressure to pay bribes.
Resources to Report Corruption
Contact at government agency or agencies responsible for combating corruption:
International Affairs Strategy Specialist
Office of the National Anti-Corruption Commission
361 Nonthaburi Road, Thasaai District, Amphur Muang Nonthaburi 11000, Thailand
Contact at “watchdog” organization:
Dr. Mana Nimitmongkol
Anti-Corruption Organization of Thailand
44 Srijulsup Tower, 16th floor, Phatumwan, Bangkok 10330
10. Political and Security Environment
11. Labor Policies and Practices
12. OPIC and Other Investment Insurance Programs
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Host Country Statistical Source
|USG or International Statistical Source
|USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
|Host Country Gross Domestic Product (GDP) ($M USD)
|Foreign Direct Investment
|Host Country Statistical Source
|USG or International Statistical Source
|USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
|U.S. FDI in partner country ($M USD, stock positions)
|BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
|Host country’s FDI in the United States ($M USD, stock positions)
|BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
|Total inbound stock of FDI as % host GDP
Table 3: Sources and Destination of FDI
|Direct Investment from/in Counterpart Economy Data
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
|Inward Direct Investment
|Outward Direct Investment
|China, P.R.: Hong Kong
|China, P.R.: Hong Kong
|“0” reflects amounts rounded to +/- USD 500,000.
Table 4: Sources of Portfolio Investment: https://www.bot.or.th/English/Statistics/EconomicAndFinancial/
|Portfolio Investment Assets
|Top Five Partners (Millions, US Dollars)
|Total Debt Securities
|China, P.R. Mainland
|China, P.R.: Hong Kong
|China, P.R.: Hong Kong
|China, P.R.: Hong Kong
14. Contact for More Information