Proposal to Allow Foreigners to Engage in Trading of Agricultural Future Products in a Derivative Trading Center

The Department of Business Development, Ministry of Commerce of the Kingdom of Thailand has initiated a public hearing on the draft Royal Decree Revising List of Businesses attached to the Foreign Business Act, B.E. 2542 (1999) (“Royal Decree”), from February 21st to March 15th, 2567 (2024). The public hearing aims to gather input and feedback on the proposed amendments to the list of businesses regulated by the Foreign Business Act, B.E. 2542 (1999) (“FBA”).

This Royal Decree, mandated by Section 175 of the Thai Constitution and Section 9, Paragraph One of the FBA, is focused on amending the businesses in List Three of the FBA. List Three contains types of businesses that prohibit any foreigner from engaging in Thailand without permission, due to the perception that Thai nationals are incapable of competing with foreigners in these sectors. However, the Foreign Business Committee now considers that Thai nationals are ready to compete with foreign entrepreneurs in some prohibited businesses. Then, the Draft Royal Decree has been proposed.

The draft Royal Decree exclusively targets item (13) listed in List Three of the FBA by repealing the existing wording and replacing it with the proposed text. The proposed amendment states that “Internal trade related to traditional agricultural products or produce not yet prohibited by law except for the pre-sale of agricultural products in the Thailand Futures Exchange, in which said products shall be delivered or received at the warehouse designated by the Thailand Futures Exchange.”

In other words, foreigners will be permitted to engage in the pre-sale of agricultural products business without obtaining a Foreign Business License. However, these pre-sale activities must be conducted through the Thailand Futures Exchange, and the delivery and receipt of said agricultural products must occur and issue at the warehouse designated by the Thailand Futures Exchange.

In conclusion, the recent public hearing on the draft Royal Decree marks a significant step towards updating regulations to reflect the evolving business landscape in Thailand. By targeting specific sectors in List Three of the FBA, particularly item (13), the proposed amendments aim to create more opportunities for foreign entrepreneurs while ensuring fair competition in the market. The recognition by the Foreign Business Committee of the readiness of Thai nationals to compete in these sectors underscores the importance of adapting regulations to foster economic growth and innovation.

Author: Panisa Suwanmatajarn, Managing Partner.

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