Tag: Investment

on by

Thailand Modernizes Foreign Business Licensing: New E-Foreign System and Legislative Updates

Thailand’s Department of Business Development (DBD) is taking significant steps to modernize the process for foreign businesses operating in the country. In line with the government’s policy to leverage technology for improved public services, the DBD has introduced the e-foreign system for issuing Foreign Business Licenses (FBL) and Foreign Business Certificates (FBC). This digital transformation necessitates updates to the existing regulatory framework, prompting the proposal of four draft subordinate laws under the Foreign Business Act of 1999 (Act).

The primary objective of these legislative updates is to streamline the application and issuance procedures for FBLs and FBCs, aligning them with the new electronic system. To ensure transparency and gather stakeholder input, these draft regulations have been opened for public hearings until June 25, 2024. The proposed changes encompass:

  1. Revised application forms and formats for FBLs and FBCs
  2. Updated procedures for issuing license and certificate substitutes
  3. Enhanced online filing options for certain categories of foreign businesses
group of people photo

Key aspects of the proposed changes include:

  1. Simplification of Forms: The new forms (Tor. 2, Tor. 3, Tor. 6, and Tor. 7) remove redundant information, such as taxpayer identification numbers, to facilitate easier online data entry.
  2. Standardization of Substitute Documents: The formats for substitute licenses and certificates will now mirror their original counterparts, with the addition of a “substitute” designation.
  3. Expanded Online Procedures: Particularly for FBCs under Section 12 of the Act, the draft regulations aim to elevate online applications to the same status as in-person submissions.

While these changes may seem subtle, they represent a significant step towards a more efficient and digitally oriented business environment for foreign entities in Thailand. The DBD’s initiative not only modernizes the licensing process but also aligns with broader government efforts to enhance Thailand’s appeal as a destination for foreign investment.

As these amendments will have far-reaching implications for the foreign business community in Thailand, stakeholders are encouraged to participate in the public hearing process. The final implementation of these measures, pending approval, promises to create a more streamlined and user-friendly system for foreign businesses seeking to establish or maintain their presence in the Thai market.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Streamlining Thailand’s Industrial Operations: Amending the IEAT Act

Thailand’s industrial sector, a key driver of economic growth and investment, is poised for a significant overhaul with the proposed amendments to the Industrial Estate Authority of Thailand Act, B.E. 2522 (1979) (“Act”). On May 7, 2024, the Industrial Estate Authority of Thailand (IEAT) initiated a public hearing process on the draft of the new Industrial Estate Authority of Thailand Act, B.E. …. (“Draft Act”). This legislative effort aims to address longstanding challenges and obstacles encountered during the enforcement of the original Act, aligning its provisions with contemporary conditions and future developments in industry and commerce.

At the heart of the Draft Act lies a redefinition of IEAT’s mission and objectives. The current Act lacks an explicit delineation of IEAT’s role, leaving its focus somewhat ambiguous. The amendments seek to clarify and expand IEAT’s powers and objectives. This clarity is crucial in determining whether IEAT’s primary emphasis should be on promoting investment in industrial estates with a focus on profitability, fostering a conducive investment environment, or striking a balance between these aims while considering environmental impacts and ensuring harmonious coexistence between the industrial sector and society.

A significant aspect of the Draft Act revolves around the amendment of the permit system. Recognizing the potential impact of various activities conducted within industrial estates, such as pollution or resource utilization, on surrounding communities and environmental quality, the Draft Act proposes the establishment of pollution control standards and waste emission regulations. To effectively control and oversee activities that significantly affect life, rights, freedoms, society, or public interests, the Draft Act introduces measures prohibiting such activities or businesses until the necessary permissions are granted.

aerial view of white buildings

Furthermore, the Draft Act seeks to enhance the committee system by granting broader authority to issue regulations, rules, criteria, and policies to support the operations and activities of IEAT, industrial operators, and commercial operators. This expanded power encompasses the committee’s ability to issue regulations or rules concerning engineering specifications, environmental standards, and safety standards for activities and operations within industrial estates, as well as sale prices, rental rates, hire-purchase rates, and the duration of leases and hire-purchase agreements for real and personal property, as well as maintenance fees for facilities and service rates within industrial estates.

Recognizing the potential risks of accidents or damages affecting public order, the Draft Act grants enhanced authority to officials to prevent and maintain public order, address urgent situations requiring immediate resolution, and manage obstacles that may hinder their efforts to prevent and maintain order. Officials will be empowered to apply the principles of the Disaster Prevention and Mitigation Act, B.E. 2550 (2007) in such circumstances.

Additionally, the Draft Act proposes adjustments to various penalty provisions. While some criminal penalties will be replaced with disciplinary fines to provide appropriate punishment for offenders and avoid criminal records, certain criminal penalties will remain in place for specific offenses to prevent misconduct and effectively regulate industrial and commercial activities.

The public hearing process for the Draft Act is currently underway and will continue until June 15, 2024. The proposed revisions to the IEAT Act reflect a proactive response to the evolving challenges of the industrial sector, tailored to modern demands and focused on promoting sustainable development while reinforcing Thailand’s industrial prowess for future competitiveness and growth.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

BOI Launches New Measures to Boost Affordable Housing Investment

BOI Launches New Measures to Boost Affordable Housing Investment

The Board of Investment (BOI) has unveiled special new measures aimed at stimulating investment in residential housing projects priced at 1.5 million baht or less. This initiative is part of a collaborative effort with the Government Housing Bank to expand homeownership opportunities for low-income Thai families.

Under the new promotion, property developers can apply for BOI investment incentives to construct housing projects capped at 1.5 million baht per unit. The Government Housing Bank will evaluate and certify qualifying developers, who can then submit applications for BOI promotion by the end of 2025.

“Affordable housing is a national priority to ensure all Thai citizens can realize the dream of home ownership,” said BOI Secretary General. “These new measures provide tax incentives to developers to increase the supply of moderately priced housing stock.”

low angle photography of white and purple concrete building

To be eligible, residential projects must meet specific criteria set by the Government Housing Bank:

  • For condominiums, a usable area must be at least 24 sq.m. per unit
  • For townhouses/detached homes, the usable area must be at least 70 sq.m.
  • Projects must include amenities like parking, security, cleaning services, and common areas

Developers must first obtain construction permits and Government Housing Bank certification before applying to the BOI for promotion privileges.

Once approved, developers will receive corporate income tax exemption for 3 years capped at their total investment amount. Only construction costs for utilities, roads, and public amenities within the project qualify for the tax break.

aerial view of buildigns

“The high costs of land and construction make it very difficult for developers to profitably build housing below 1.5 million baht,” noted BOI Secretary General. “This incentive helps make those moderately-priced projects financially viable.”

The Government Housing Bank has already opened an online application portal at www.ghbank.co.th for developers seeking certification to apply for BOI promotion.

Both the BOI and Government Housing Bank see this joint investment promotion as critically enhancing residential options for lower-income Thai families striving for home ownership.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

NCSA Tackles Cloud Security with New Measures

The National Cyber Security Agency (NCSA) has recognized the growing reliance on cloud services by both government agencies and private sectors, along with the increasing number of cyberattacks targeting users. In response, the agency has drafted the Notification on Cloud System Cyber Security Standard (“Notification“), aiming to establish a robust standard of security measures for cloud systems.

Applicable Entities and Scope: The draft Notification is applicable to government agencies, supervising or regulating organizations, and organizations of critical information infrastructure (as defined under the Cybersecurity Act B.E. 2562 (2019)) that utilize cloud services and have official contracts with Cloud Service Providers (CSPs). These entities are collectively referred to as Cloud Service Customers (CSCs).

Risk Assessment and Categorization: According to the draft Notification, the risks associated with cloud system usage can originate from either the CSC or the CSP. Despite the fact that the draft Notification’s applicability is extended to only the CSCs, the CSPs are to be bound by its service agreement with CSCs to comply with the requirements of the draft Notification as well. CSCs and CSPs are mandated to assess the level of risk in accordance with the security objectives prescribed by another NCSA’s notification. The risk levels are categorized as low, moderate, and high, each with different minimum requirements for security standards, CSC and CSP assessments, and certifications.

green and white line illustration

Minimum Requirements: The minimum requirements for cloud security depend on the assessed risk level and the related security objectives. These requirements may encompass various aspects, including:

  1. Cloud security governance, encompassing information security policies, organization of information security, supplier relationships, and compliance with rules and regulations.
  2. Cloud infrastructure security and operations, covering human resources security, asset management, access control, cryptography, physical and environmental security, operations security, communication security, system acquisition, development and maintenance, supplier relationships, and information security incident management.

Assessment and Certification: Depending on the risk level and the related security objectives, CSCs or CSPs may be required to conduct compliance assessments as follows:

  1. Self-assessment, conducted in accordance with NCSA’s prescribed requirements.
  2. Assessment by a regulator or regulatory agency (attestation).
  3. Assessment by an advanced certified body.

The frequency of assessments and certifications will also depend on the assessed risk level.

The draft Notification provides greater details, and CSPs and CSCs subject to its provisions are required to carefully assess their associated risks and obligations.

Conclusion: The NCSA’s draft Notification aims to establish a comprehensive framework for ensuring the security of cloud systems used by government agencies, regulatory bodies, and critical infrastructure organizations. By introducing risk-based minimum requirements, assessments, and certifications, the agency seeks to address the growing cybersecurity threats and enhance the overall resilience of cloud services within the country.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Understanding the Foreign Business Act in Thailand

The Foreign Business Act, B.E. 2542 (1999) (“FBA”), in Thailand furnishes the government with mechanisms to oversee and manage the operations of foreign enterprises within the country, ensuring alignment with national developmental goals and regulatory benchmarks.  This legislation is geared towards safeguarding Thailand’s economic integrity, national security, and cultural heritage by imposing regulatory measures on the involvement of foreign entities in designated sectors.

The FBA delineates precise restrictions on businesses to uphold national objectives and regulate foreign investment activities. Specifically, it set regulatory provisions on sectors such as real estate development and live entertainment organizing, ensuring control over foreign participation in these areas.

The FBA specifies both restrictions and benefits by categorizing businesses into 3 lists. List 1 comprises businesses strictly prohibited for foreign operations. Conversely, businesses listed in Lists 2 and 3 necessitate a Foreign Business License/Certificate for operation, reflecting concerns regarding national security or impacting on arts, culture, traditions, customs, folklore handcrafts, or natural resources and the environment (List 2) and unprepared competitiveness by Thai nationals (List 3). In the light of live entertainment organizer and real estate development businesses, both are categorized as businesses listed in List 3 (21) which are specified as service businesses that require a Foreign Business License/Certificate prior to operating.

To emphasize the difference between a Foreign Business License/Certificate, they both are official written evidence of the permission to operate the businesses. For a Foreign Business License, it is issued for granting permit for operating of the businesses listed in List 2 as permitted by the Minister of the Ministry of Commerce with approval of the Council of Ministers and List 3 as permitted by the Director-General of the Department of Business Development with approval of the Foreign Business Commission of the FBA. On the other hand, entrepreneurs who operate businesses listed in Lists 2 or 3 by virtue of a treaty to which Thailand becomes a party or by which Thailand is bound in consequence of obligations or which they have been promoted by Thailand’s Board of Investment (BOI) shall apply for a Foreign Business Certificate.

people inside strucure

Additionally, considering the minimum capital requirement for foreign business operation in Thailand in accordance with the FBA, it stipulates that a foreigner shall inject no less than 2 million THB as capital for the commencement of the operation of any business except for businesses prescribed in Lists 2 and 3 of the FBA which required minimum capital of no less than 3 million THB.

The said minimum capital shall reflect the estimated expenditure which refers to the amount of money the foreigner intends to spend in Thailand to conduct such a business which must be submitted to the Department of Business Development along with the application for a Foreign Business License/Certificate. The aforementioned requirement determines that the minimum capital must be imported into Thailand from overseas within a timeframe of three years, commencing from either the date of business commencement or the date of permission granted.

The FBA enhances the attractiveness of Thailand as an investment destination for foreigners, promoting economic growth and fostering international collaboration together with the protection of Thailand’s national interests and at the same time safeguarding the country’s economic, security, and cultural interests.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

BOI’s Tax Relief Sparks Housing Accessibility

The Office of the Board of Investment (BOI) has declared tax incentives for property developers engaged in the construction of residential properties, including houses and condominiums, aimed at catering to low-income individuals. These incentives are applicable to properties priced at 1.5 million THB or below.

The privileges were approved by the Board of Investment on March 15th, 2024, in accordance with the third phase of the Government Housing Bank (GHB)’s initiative to extend loans to low-income individuals for the acquisition of houses and condominium units and consistent with the government’s economic stimulus measure through the real estate sector.

person pointing on the screen of a laptop

Projects meeting the eligibility criteria, which include a minimum requirement of 70 square meters of space for housing projects and at least 24 square meters of condominium space floor, will qualify for a three-year exemption from corporate income tax. This exemption applies to and shall not exceed the investment costs associated with infrastructure development such as roads, public facilities, and amenities for public use within the projects.

By extending tax privileges to developers constructing residential properties priced at 1.5 million THB or below, the BOI aims to stimulate the supply of affordable housing options and enhance accessibility for low-income segments of the population. Importantly, this initiative promotes social welfare of low-income populations and stimulate inclusive economic development in the real estate sector.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Leveraging the Treaty of Amity: A Gateway for American Real Estate and Entertainment Businesses in Thailand

In the ever-evolving landscape of international business, the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America (Treaty of Amity), signed in 1966, stands as a testament to the enduring partnership between the two nations. This groundbreaking agreement grants significant benefits to American citizens and companies with American ownership, particularly those operating in the realms of real estate development and live entertainment organization, offering a streamlined pathway to navigate the complexities of doing business in Thailand.

The Treaty of Amity provides a comprehensive framework that ensures a level playing field for American enterprises in Thailand. At its core, the treaty grants national treatment to American citizens and businesses, entitling them to the same rights and privileges as Thai nationals in various economic activities, such as establishing businesses and engaging in professions.

Furthermore, the treaty offers robust protection for American investments in Thailand, ensuring fair and equitable treatment, safeguards against expropriation without prompt and effective compensation, and the right to transfer funds related to investments. This provision instills confidence in American investors, fostering an environment conducive to long-term growth and stability.

Significantly, the Treaty of Amity facilitates American companies’ access to the Thai market by allowing them to operate businesses in Thailand on a non-discriminatory basis. This provision opens up a wealth of opportunities for American businesses to expand their operations and tap into the vibrant Thai market, leveraging their expertise and resources to cater to the evolving demands of Thai consumers.

people sitting on gang chairs

To initiate the process of benefiting from the Treaty of Amity, businesses must submit an application to the United States Embassy in Thailand for verification, followed by a submission to the Department of Business Development (DBD) to obtain a Foreign Business Certificate (FBC). This certificate serves as a gateway, enabling American businesses to engage in various economic activities, including real estate development and live entertainment organization, provided they meet the requisite criteria.

Notably, to benefit from the Treaty of Amity, businesses must demonstrate American ownership and adhere to specific eligibility criteria. Companies must have at least 51% American shareholding, and a majority of their directors must be either American citizens or Thai nationals with specific authority. This stringent requirement ensures compliance with Thai regulations while supporting the expansion of American ventures in Thailand.

Upon obtaining the FBC, businesses gain access to a range of benefits that facilitate their operations in Thailand. In the realm of real estate development, the Treaty of Amity enables smoother acquisitions and development projects, fostering growth in this critical sector. Simultaneously, live entertainment organizers can navigate licensing and regulatory hurdles more efficiently, tapping into Thailand’s rich cultural tapestry and thriving entertainment industry.

In conclusion, leveraging the Treaty of Amity presents a strategic advantage for American businesses operating at the intersection of real estate development and live entertainment organizations in Thailand. By adhering to the prescribed process and procedures, companies can unlock a host of benefits that enhance their operational capabilities and market presence. As global markets continue to evolve, harnessing such bilateral agreements is crucial for sustainable growth and expansion strategies. The Treaty of Amity stands as a testament to the enduring commitment of both nations to promote trade, investment, and economic cooperation, fostering mutual prosperity and strengthening bilateral ties.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Thailand’s BOI Incentives: Driving Business Competitiveness

Thailand’s Board of Investment (BOI) has introduced targeted incentives aimed at boosting the competitiveness of eligible businesses across various sectors in the local market. Here is a breakdown of the key programs and their benefits:

  • Upgrading Automotive Industry (BOI’s Notification No. 2/2566)

Existing BOI-promoted automotive projects can reapply for a 3-year corporate tax exemption if their previous benefits have expired. They must invest at least 1 million THB in automation and robotics manufacturers (excluding land and working capital). The new investment project must support the domestic industry by 30% of the total automation system and robotics value to qualify for a 3-year corporate income tax exemption.

  • Community and Social Development (BOI’s Notification No. 1/2567)

Active projects and new investment projects must have a minimum capital investment of 5 million THB (excluding land and working capital costs). Additionally, they must invest a minimum of 500,000 THB in supporting local organizations, such as social enterprises and unions, to qualify for a 3-year corporate income tax exemption.

  • Retention and Expansion Program (BOI’s Notification No. 2/2567)

Businesses with a long-standing presence of not less than 15 years and a significant investment history of not less than 10,000 million THB from at least 3 projects can get benefit from this program. Expansion projects with an investment value of at least 500 million THB (excluding land and working capital costs), will receive corporate income tax exemptions of 3 up to 13 years depending on the business’s category. The range of tax exemptions varies depending on the businesses categorized by the BOI office.

person in welding mask while welding a metal bar
  • Comprehensive Relocation Program  (BOI’s Notification No. 3/2567)

To encourage foreign investors in relocating integrated businesses, including manufacturing facilities, regional headquarters, and research and development centers, new investments that are eligible to receive BOI incentives of 3 up to 8 years of corporate income tax exemption under this promotion must submit manufacturing projects applications for investment promotion of the International Business Center (IBC) and an applicant must undertake the substantial functions of regional headquarters and/or R&D centers as indicated.

  • Economic Recovery  (BOI’s Notification No. 4/2567)

The activities categorized in group A such as businesses related to public utilities or the automotive industry are entitled to receive corporate income tax exemption not exceeding 8 years with the additional rights and benefits of 50% reduction from the standard corporate income tax rate applies to net profits derived from the investment for a duration of 5 years after the expiration of the corporate income tax exemption.  

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

BOI’s Vision: Thailand as a World-Class Events Hub and Electronics Powerhouse

Thailand Board of Investment (“BOI”) is committed to positioning Thailand as a hub for organizing events and electronics powerhouse under significant measures in place which are: 1) promoting investment in events such as music festivals, sports, and international festivals, and 2) promoting investment in Printed Circuit Board (“PCB”) businesses.

  1. Promoting investment in events such as music festivals, sports, and international festivals

To recover the country’s tourism and entertainment sectors from the COVID-19 crisis, BOI grants incentives to attract world-class events by offering benefits to organizers of large international concerts, sporting events, and festivals with investments or expenses not less than THB 100 million (approximately USD 2.8 million). These benefits include exemptions from import duties on equipment to be used in such an event and easing the process of obtaining a visa and work permit for the foreign staffs.

  • Promoting investment in businesses related to Printed Circuit Board (“PCB”) businesses

Thailand Board of Investment has endorsed incentives to boost foreign investment for three supply chain sectors related to PCB businesses as follows:

  • Businesses involved in supporting PCB production processes such as lamination, drilling, plating, and routing;
    • Key manufacturers for PCB production, including flexible CCL (FCCL), copper-clad laminate (CCL), and prepreg; and
    • Producers of essential materials and supplies for PCB manufacturing businesses such as dry film, transfer film, and backup boards.

These supply chain sectors for PCB businesses will be eligible for exemptions on import duties for raw materials and machinery used in product exportation. Additionally, they may qualify for corporate tax exemptions for up to 8 years, based significantly on the materials, technology, and investment scale.

These measures cover a wide range of PCB-related businesses, including producers of PCB components and manufacturers of raw materials, and aim to enhance Thailand’s competitiveness in the electronics manufacturing sectors, the entertainment sectors, and the event industry sectors which in correspond with the Cabinet’s vision – Ignite Thailand – to elevate Thailand into a global hub for major events, aiming to attract the tourists from around the world. These incentives have been granted to those events and PCB related businesses by the BOI since 28 March 2024, enabling the BOI to promote the aforementioned businesses in Thailand.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles

on by

Thailand’s e-Workforce Ecosystem Platform: Empowering the Digital Workforce for Industry 4.0

Thailand’s e-Workforce Ecosystem Platform: Empowering the Digital Workforce for Industry 4.0

As Thailand embarks on its ambitious journey towards becoming an innovation-driven economy under the Thailand 4.0 policy, the development of a skilled digital workforce has emerged as a critical priority. To address this challenge, the Ministry of Digital Economy and Society (MDES) has spearheaded the establishment of the e-Workforce Ecosystem Platform (EWE Platform), a comprehensive initiative aimed at building and strengthening the country’s digital talent pool.

The EWE Platform serves as a central hub for skill development, job matching, upskilling, and reskilling programs, catering to the evolving needs of the digital age. Its primary objectives include equipping Thai workers with the necessary digital competencies, facilitating the efficient allocation of skilled talents, and fostering a collaborative ecosystem among various stakeholders.

At the core of the platform lies a robust training infrastructure that offers a wide range of online courses, workshops, and resources focused on high-demand digital skills. These include areas such as data analytics, cybersecurity, cloud computing, and programming, enabling workers to acquire the knowledge and expertise required to thrive in the Industry 4.0 era. Furthermore, the EWE Platform serves as a job-matching marketplace, connecting skilled workers with employers seeking digital talents. This function not only assists companies in fulfilling their talent requirements but also provides opportunities for skilled individuals to find suitable employment opportunities aligned with their expertise. Recognizing the rapidly changing job market landscape, the platform also offers upskilling and reskilling programs, empowering existing workers to adapt and acquire new skills in response to evolving industry demands. This proactive approach ensures that Thailand’s workforce remains agile and competitive in the face of technological disruptions.

Underpinning the EWE Platform is a collaborative ecosystem that brings together various stakeholders, including educational institutions, training providers, government agencies, and private companies. This synergistic approach fosters knowledge sharing, resource optimization, and the development of comprehensive talent development strategies. Moreover, the platform facilitates talent mobility, enabling skilled workers to move across different industries and regions within Thailand and ensuring efficient distribution and utilization of digital talents throughout the country.

To expand the EWE Platform’s reach and impact, The MDES has appointed the Thailand Professional Qualification Institute (TPQI) to oversee national reform activities affecting the country’s integrated workforce management system. The reform plan for culture, sports, labor, and human resource development suggests linking government agencies’ online and offline training curriculums and workforce information to the platform system, allowing officers from all agencies to register on the platform.

monochrome photo of triangle shape digital wallpaper

Target individuals, students, job seekers, freelancers, retired seniors, vulnerable citizens, employers, and government agencies can now benefit from the EWE Platform through the official website of TPQI, which connects workforce data from each agency into big data and creates six key features: a digital competency credit bank to gather knowledge and work experiences; career guidance and skill check to assess users’ skills; an e-coupon to support those in need of upskilling, reskilling, or creating new skills through digital wallet (Paotang); an e-portfolio to record experiences; job matching to connect employers and skilled workers; and labor market data for planning workforce policy for future national improvement.

As the driving force behind this ambitious initiative, the MDES has undertaken a multifaceted role, encompassing policy formulation, funding allocation, stakeholder collaboration, promotion, and performance monitoring. The ministry’s unwavering commitment to developing a future-ready workforce underscores the critical importance of human capital in realizing Thailand’s aspirations of becoming an innovation-driven economy.

The EWE Platform represents a significant step toward preparing Thailand’s workforce for the challenges and opportunities of the digital age. By fostering a skilled and adaptable digital talent pool, this initiative not only supports the adoption of Industry 4.0 technologies but also positions Thailand as a competitive player in the global digital economy.

Author: Panisa Suwanmatajarn, Managing Partner.

Other Articles