US investors into Thailand leverage two incentives

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Foreign investment and business participation in Thailand is often heavily regulated. The Foreign Business Act 1999 effectively closes the Thai market for services and certain other sectors to outside competition. That Act does provide that exceptions may be made with government approval or under the foreign business licensing regime, but neither route is simple or quick.

However, there are two effective, alternative approaches.

1.  Leverage US -Thai Treaty of Amity and Economic Relations

The US -Thai Treaty of Amity and Economic Relations means that American investors can promptly obtain the equivalent of a foreign business license and participate in the Thai market.

While Thailand has entered into limited bilateral free trade agreements with certain other countries, the broad opportunity presented by the Treaty is entirely unique and available to no other nationality of investor. Only US investors may enjoy this massive advantage.

  • These are the key points to know about obtaining the benefits of the Treaty:
  • The business entity formed in Thailand must be majority or wholly American owned.
  • The management of the entity must be American or Thai; in the case of a limited company, a majority of the directors must be US or Thai nationals.
  • Only American or Thai nationals may be authorized to sign alone to bind the Thai entity.
  • Investment of at least Baht 3 million (US$100,000, at current rates) is required for each category of business that will be conducted.
  • The following categories of business are excluded from the Treaty: communications; inland transportation; fiduciary functions; banking involving depository functions; domestic trade in indigenous agricultural products; exploiting land or other natural resources.

2.   Obtain benefits through Thailand’s Board of Investment

  • The Board of Investment is the principal agency of the Thai government to encourage investment in numerous targeted industries. It can:
  • grant attractive tax exemption and tax reduction packages
  • permit 100 percent foreign ownership of investor entities in Thailand
  • permit land ownership for business use (land ownership is otherwise generally prohibited to foreign investors)
  • facilitate and expedite the provision of visas and work permits for expatriates.