Business areas
restricted to foreigners
may be opened up
in Thailand
By Jon Fernquest 
Thailand's
longstanding
Foreign
Business Act (FBA)
may be about to change or at least the Thai government is now talking
about changing the law. Several businesses on the government's List 3 of businesses restricted to foreigners may be opened up soon:
1.
Engineering services
2. Construction
3. Brokerage or agency businesses
4. Retailing and wholesaling
5. Advertising
6. Hotels
7. Food and beverage retailing
8. Computer services
9. Logistics and domestic transport
10. Business consulting and management services
11. Schools
12. Entertainment or cinemas
13. Auctions
14. Plant cultivation and propagation
2. Construction
3. Brokerage or agency businesses
4. Retailing and wholesaling
5. Advertising
6. Hotels
7. Food and beverage retailing
8. Computer services
9. Logistics and domestic transport
10. Business consulting and management services
11. Schools
12. Entertainment or cinemas
13. Auctions
14. Plant cultivation and propagation
Some of these restricted business activities in Thailand such as real estate brokerages already have foreigners openly operating small businesses, knowingly violating the law and generally being ignored by local law enforcement authorities.
Making the business activities legal would probably atttract higher quality foreign expertise.
Read a recent insightful critique of the Foreign Business Act in the Bangkok Post (Read article).
Also check out the archive of past articles on this topic to get some historical perspective (See archive).
Foreign Business Act (FBA) -
Thailand's current law that regulates how foreign businesses can
conduct business in Thailand( See Foreign
Investment in Thailand: Review of the Current Legislative Regime (2002)
List 3 - businesses from which foreign companies are excluded because "Thai nationals are not yet ready to compete with foreigners." Service businesses including banking, insurance, hotels, tours, selling food and beverages, wholesale, small scale retail, and most construction. Professional services are also included such as such as accounting and legal services, advertising, architecture, and auctions. Agricultural industries include rice milling, flour production, fisheries, forestry and the production of various kinds of wood, and plant cultivation. Lime production is also included.(See Foreign Investment in Thailand: Review of the Current Legislative Regime, page 16)
longstanding - existing for a long time, been that way for a long time
opened up - have restrictions ended on an activity
brokerage - a business that sells things for other people or businesses (See Wikipedia)
real estate brokerage - a business that sells real estate for other people or businesses (See Wikipedia)
retailing - the sale of goods from a fixed location, such as a department store or convenience store, in small amounts for direct consumption by the buyer (See Wikipedia)
wholesaling - the buying and selling of goods in large quantities to businesses, not small customers as in retailing (See Wikipedia)
logistics - the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers, the integration of information, transportation, inventory, warehousing, material-handling, and packaging, military logistics, moving goods for warfare was the original kind of logistics (See Wikipedia and previous article)
domestic transport - moving goods and passengers around inside the country
consulting - giving expert advice on a subject (for example: how to run a business or how to build a building)
cinemas - buildings where people watch movies
auction - selling things by competitive bids, selling to the person who offers that best price (See Wikipedia)
plant cultivation - preparing land and then growing crops on the land
plant propagation - grow more plants from an original plant
openly - doing in way that everyone can see, not hiding
ignored - pay no attention to someone or some activity, pretend it does not exist
law enforcement authorities - the police and other government organisations like the police that check if people are following the law
restricted business activities - ways of making money that are limited by laws
expertise - special knowledge and know-how
insightful - shows a good understanding of people and situations and helps other people understand them better
critique - looking closely at someones' work and saying what you think about it (especially any negative observations that may lead to improvement in the future)
perspective - a way of thinking things (influenced by experience and beliefs)
historical perspective - a way of thinking about things influenced by events of the past (history)
List 3 - businesses from which foreign companies are excluded because "Thai nationals are not yet ready to compete with foreigners." Service businesses including banking, insurance, hotels, tours, selling food and beverages, wholesale, small scale retail, and most construction. Professional services are also included such as such as accounting and legal services, advertising, architecture, and auctions. Agricultural industries include rice milling, flour production, fisheries, forestry and the production of various kinds of wood, and plant cultivation. Lime production is also included.(See Foreign Investment in Thailand: Review of the Current Legislative Regime, page 16)
longstanding - existing for a long time, been that way for a long time
opened up - have restrictions ended on an activity
brokerage - a business that sells things for other people or businesses (See Wikipedia)
real estate brokerage - a business that sells real estate for other people or businesses (See Wikipedia)
retailing - the sale of goods from a fixed location, such as a department store or convenience store, in small amounts for direct consumption by the buyer (See Wikipedia)
wholesaling - the buying and selling of goods in large quantities to businesses, not small customers as in retailing (See Wikipedia)
logistics - the management of the flow of goods, information and other resources, including energy and people, between the point of origin and the point of consumption in order to meet the requirements of consumers, the integration of information, transportation, inventory, warehousing, material-handling, and packaging, military logistics, moving goods for warfare was the original kind of logistics (See Wikipedia and previous article)
domestic transport - moving goods and passengers around inside the country
consulting - giving expert advice on a subject (for example: how to run a business or how to build a building)
cinemas - buildings where people watch movies
auction - selling things by competitive bids, selling to the person who offers that best price (See Wikipedia)
plant cultivation - preparing land and then growing crops on the land
plant propagation - grow more plants from an original plant
openly - doing in way that everyone can see, not hiding
ignored - pay no attention to someone or some activity, pretend it does not exist
law enforcement authorities - the police and other government organisations like the police that check if people are following the law
restricted business activities - ways of making money that are limited by laws
expertise - special knowledge and know-how
insightful - shows a good understanding of people and situations and helps other people understand them better
critique - looking closely at someones' work and saying what you think about it (especially any negative observations that may lead to improvement in the future)
perspective - a way of thinking things (influenced by experience and beliefs)
historical perspective - a way of thinking about things influenced by events of the past (history)
Economics
FOREIGN INVESTMENT
FBA liberalisation to be considered
14/01/2010Phusadee Arunmas
The government will consider liberalising the Foreign Business Act to make the country more open to foreign investment and to comply with free trade agreements to which it has committed, says Deputy Commerce Minister Alongkorn Ponlaboot.
Facilitating investment in the country is the key to its economic growth. Making Thailand more attractive to foreign firms is a key part of this strategy, the deputy minister said.
liberalisation - reducing rules
and restrictions on an activity
comply with - follow rules and laws
comply with free trade agreements - follow and do what the free trade agreements say
facilitating investment - helping people invest in the economy
comply with - follow rules and laws
comply with free trade agreements - follow and do what the free trade agreements say
facilitating investment - helping people invest in the economy
"The government sees improving the Foreign Business Act as essential to allowing wider foreign investment in Thailand," he said. "Particularly when it comes to making [Thailand] compatible with free trade area agreements such as Asean Free Trade Area and agreements made under other Asean co-operative frameworks."
Asean Free Trade Area
(AFTA) - a trade
agreement by the countries in ASEAN to reduce and end tariffs within
ASEAN (See
Wikipedia)
cooperative - working together to achieve a goal
frameworks - a structure and system for doing some activity
cooperative - working together to achieve a goal
frameworks - a structure and system for doing some activity
But the government needed to weigh the competitiveness and strength of local businesses before opening up any service industries to greater foreign participation, he said.
The latest study by the Fiscal Policy Office, a Finance Ministry agency, prepared last year proposed that 13 business sectors on List 3 of the FBA, which excludes foreign participation, should be liberalised over the next three years.
The sectors include engineering services, construction, brokerage or agency businesses, retailing and wholesaling, advertising, hotels, food and beverage retailing, computer services, logistics and domestic transport, business consulting and management services, schools, and entertainment or cinemas.
Auctions and plant cultivation and propagation businesses are among those that the office recommends are opened up to foreign competition over the next four to six years.
The FPO also proposed that foreign firms should be allowed greater, if not unlimited, participation in internal trade connected to the farming sector over the next seven years.
Fiscal Policy Office
- the Thai government agency that researches policy related to Thai
government spending and financing debt to cover spending deficits (when
tax receipts are not enough to cover spending)
excludes foreign participation - businesses with owners outside the country cannot do the business inside the country
liberalised - rules and restrictions on an activitywere reduced
internal trade - the trade of goods and services between people and companies inside the country
excludes foreign participation - businesses with owners outside the country cannot do the business inside the country
liberalised - rules and restrictions on an activitywere reduced
internal trade - the trade of goods and services between people and companies inside the country
The study's recommendations were based on commitments Thailand has made under free trade agreements with its trading partners, and their possible impact and benefit to local operators and the wider economy.
List 3 of the FBA covers sectors in which Thai businesses are considered not ready to compete with foreign firms.
Mr Alongkorn said that to facilitate business development, the government plans to team up with local educational institutions to set up an academy to build the capacity of Thai businesses in several sectors such as retail, logistics and franchises.
commitments -
promises to do things in the future
team up with Y - join with Y in some activity
logistics - transportation and storage of goods, moving them from the factory to the customer (See Wikipedia)
franchising - buying the rights to a proven system of doing business (See Wikipedia)
a franchise - the rights to set up a proven kind of business in an area
team up with Y - join with Y in some activity
logistics - transportation and storage of goods, moving them from the factory to the customer (See Wikipedia)
franchising - buying the rights to a proven system of doing business (See Wikipedia)
a franchise - the rights to set up a proven kind of business in an area
(Source: FOREIGN INVESTMENT, FBA liberalisation to be considered, 14/01/2010, link)
