Background

Currently, the Thai government is working on the draft ministerial regulation on prescribing service businesses which do not require a foreign business license No. 5 of ... ("Draft") to exempt three (3) further specific businesses from the ambit of restricted business under the Foreign Business Act of 1999 ("FBA"), i.e.: i) telecommunications services; ii) treasury centers; and iii) software development businesses. The purposes of the exemption are (i) to reduce the redundancy in regulatory requirements between the Department of Business Development ("DBD"), which is the regulator with general oversight in respect of restrictions on foreign-owned businesses, and other regulators exercising specific supervision such businesses, and (ii) to promote an investment-friendly environment for foreign investors in Thailand.

Proposed exemptions

According to the Draft, a foreigner who plans to conduct any of the following three (3) specific businesses will no longer be required to obtain the permission under the FBA:

1.) Telecommunications services under the type 1 telecommunications business license

The type 1 telecommunications business license shall be granted to a telecommunications business operator who does not own a telecommunications network, and where it is deemed appropriate for such business to provide such services without restriction (i.e. there is no impact on competition). Example of type 1 telecommunications businesses are2 :

  • Very small aperture terminal (VSAT) services;
  • Internet services;
  • Audiotext services;
  • Store-and-retrieve value-added services;
  • International calling card services;
  • Internet protocol virtual private network-IP VPNs; and
  • Non-facilities based MVNOs

2) Treasury center

Under the Exchange Control Act of 1942, a treasury center is a company registered under Thai law that is permitted by the Bank of Thailand to manage foreign currency activities for its affiliates both in Thailand and overseas. The scope of treasury centers is3 :

  • Purchasing of obligations or invoices and acting as agents for the payment and receipt of funds;
  • Netting of income or obligations;
  • Purchasing, selling, or exchanging of foreign currencies and management of exchange rate risks; and
  • Management of liquidity.

3) Software development

The scope of software development includes:

  • Development and provision of analysis and data management software services, including big data, data analytics, and predictive analytics software;
  • Development of information security and cyber security software;
  • Development of system software for advanced-technology devices, including business process management; and
  • Development of industrial software used to support manufacturing.

Owing to fact that the Draft is in the initial stages, however, the abovementioned businesses are subject to further amendment, in detail, at the Council of the State level and thereafter the Cabinet. Once the proposed exemption is passed, the relevant foreign persons will no longer be required to obtain the permission under the FBA. However, other permissions relevant to the specific businesses, e.g. telecommunication business, and exchange control, etc., will still be required.

Next steps

The DBD is now proposing the Draft to the Cabinet and the Council of the State to seek further consideration. The Draft is expected to be promulgated in the next three (3) months, on which we will keep you updated.

Footnotes

2.The Notification of the National Telecommunications Commission Re: Prescription of Characteristics and Types of Permitted Telecommunications Business of 2019

3.The Notice of the Competent Officer Re: Rules and Practices regarding Treasury Centers of 2010

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.