Thailand’s DBD Launches Public Hearing to Evaluate the Effectiveness of the Foreign Business Act B.E. 2542 (1999)

The Department of Business Development (“DBD”), under the Ministry of Commerce of Thailand, is currently conducting a nationwide public hearing from 30 March to 30 April 2026 (the “Public Hearing”) to evaluate the effectiveness and practical implications of the Foreign Business Act B.E. 2542 (1999) (the “FBA”) in the current economic context. The FBA, which serves as the cornerstone of Thailand’s legal framework governing foreign participation in business activities, seeks to balance the protection of Thai business operators with the promotion of foreign investment. It not only regulates market access but also ensures that foreign participation contributes to the Thai economy through job creation, technology and knowledge transfer, and an expanded range of goods and services.

The Public Hearing aims to assess whether key aspects of the current legal framework — including the definition of “foreigner,” business classifications, licensing requirements, and enforcement mechanisms — remain appropriate in today’s evolving economic environment. It also reflects the government’s commitment to keeping the law aligned with changing business practices and international obligations. Feedback gathered through this process will inform targeted amendments intended to improve legal clarity, close existing loopholes, strengthen enforcement, and streamline regulatory procedures, ultimately establishing a more balanced and effective framework that protects Thai interests while remaining conducive to foreign investment.

Scope of the Public Hearing to Assess and Revise the FBA

The Public Hearing conducted by the DBD is designed to gather stakeholder feedback on key provisions of the FBA in order to assess their effectiveness and practical suitability. The feedback collected will assist the DBD in determining whether the FBA and its subsidiary regulations function as intended, and in identifying areas where adjustments may be required to enhance clarity, compliance, and enforcement. The matters under consideration include the following:

1. Definition of “Foreigner” (Section 4): Whether the current definition provides sufficient clarity and consistency, particularly in the context of complex shareholding structures.

2. Business Classification (Section 8): The continued categorisation of business activities into three lists:

• List 1: Business activities strictly prohibited to foreigners, covering sensitive sectors that affect Thai livelihoods.
• List 2: Business activities affecting national security, cultural heritage, or natural resources, which require Cabinet approval.
• List 3: Business activities in sectors where Thai operators are not yet sufficiently competitive, which require DBD approval.

3. Regulatory Framework for the Foreign Business Certificate (“FBC”) (Sections 10–12): Whether the procedures for obtaining an FBC are practical and consistent with Thai law, international treaties, and special circumstances such as those applicable to foreign-born individuals residing in Thailand.

4. Approval Criteria: Whether the requirements imposed on applicants — including legal status, absence of prohibitions, and financial standing — effectively serve the objectives of national security, economic development, and public order.

5. Compliance Requirements: Whether obligations relating to the display of licenses, reporting of material changes, and applications for replacement licenses are clear and operationally feasible for businesses.

6. Minimum Capital and Capital Injection: Whether current thresholds and timelines for capital investment remain appropriate for business operations across the different classification categories.

7. Enforcement and Penalties: The effectiveness of administrative fines and court-based penalties, including measures to address unauthorized operations and nominee arrangements.

Authorizations under the Current FBA

According to DBD data updated as of March 2026, the majority of approvals under the FBA are concentrated in Foreign Business Licenses (“FBL”) for service businesses classified under List 3. This category accounts for the highest number of approved FBLs, with figures approximately double those of the next most common category — representative offices, which was also used to classified under List 3 of the FBA (currently the representative offices category is exempted from obtaining the FBL).

By contrast, the highest number of Foreign Business Certificates (FBCs) are issued to legal and accounting service firms. These certificates are primarily obtained under the Treaty of Amity between Thailand and the United States, which grants American companies national treatment in Thailand and exempts them from many of the restrictions otherwise imposed by the FBA.

Summary and Outlook

The ongoing Public Hearing presents an important opportunity for Thailand to review and modernize the FBA. Through this process, the DBD has identified several key areas for reform, including clarifying the definition of “foreigner,” updating enforcement and penalty provisions, standardizing licensing, and registration procedures, and addressing mechanisms to prevent legal circumvention. These reforms are aimed at closing existing legal gaps and improving regulatory clarity, thereby creating a framework that effectively protects Thai business interests while remaining supportive of foreign investment.

Under the FBA, violations may result in imprisonment, fines, or both, depending on the severity of the offence and judicial discretion. To reduce the burden on the courts, Section 42 of the FBA empowers the DBD’s Director-General to impose settlement fines for certain categories of offences, enabling cases to be resolved administratively upon payment of the applicable penalties under the Criminal Code. This approach underscores the need to strengthen enforcement mechanisms while maintaining the efficiency of administrative processes.

Author: Panisa Suwanmatajarn, Managing Partner.

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