With the aim of encouraging foreign investment into the country, the Ministry of Commerce is in the process of submitting a proposal to the cabinet to remove telecommunications, finance, and software development from the Foreign Business Act’s (FBA) List 3 of restricted activities for foreign nationals or companies. According to the Director General of the Department of Business Development Thosapone Dansuputra, the draft proposal has already been completed and more studies are being conducted to assess removing more activities from the list of restrictions.
Assuming that the proposal is approved by the cabinet, foreign players will be able to engage in the three above-mentioned activities. This means non-Thai companies will be permitted to provide several services related to Big Data, business process management, Internet of Things, artificial intelligence, and cyber security as well as peer-to-peer lending, domestic lending, and fintech. This proposal also coincides with the growth of 5G networks and other telecommunication infrastructure which will no longer be restricted to Thai providers.
Currently, the three activities are included as part of the Foreign Business Act’s List 3 of restricted activities which consist of those that the Thai government wishes to limit given the lack of local expertise that are sufficient to compete with foreign players. On the other hand, the other two lists, List 1 and List 2, cover activities that are restricted due to “special reasons” or are integral to national security, cultural arts, and natural resources, respectively.
The proposal’s approval will mean that foreign companies seeking to invest in the three sectors will no longer be subject to acquiring special approval from the Foreign Business Commission to conduct these business activities. This means that foreign investors would find it easier to form a company or apply for BOI promotion without the need to obtain licenses such as Foreign Business Licenses (FBLs) or Foreign Business Certificates (FBCs) as is currently required for foreign companies participating in List 3 activities. However, they may still be required to adhere to other regulatory and licensing requirements imposed on foreign companies in Thailand such as telecommunication licenses and those required for financial services.
Mr. Dansuputra further states that removing these activities from List 3 is “imperative” given that these sectors are already governed by specific laws and agencies.
“If foreign businesses want to do business in Thailand, they can just ask for permission directly from the supervisory bodies of those sectors,” he said.
“This reduces redundancy and is in line with the goal to create an investment-friendly environment.”
This proposed move by the Ministry of Commerce is significant as it signals the maturity of Thai firms in these sectors and their ability to compete against foreigners. This is also noteworthy as it demonstrates that the Thai government is moving to reduce protectionist measures and provide a more inviting investment climate for foreign entities. Silk Legal will continue to monitor the developments surrounding this proposal.
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