For over a millennium, the land now occupied by Thailand (formerly known as “Siam” and still known as “Suvarnabhumi” or the “Golden Land,” and more recently known as the “Land of Smiles”), has welcomed foreign traders and investors to her shores from as far afield as the United States, Europe, Africa, the Middle East, South Asia, China, Taiwan, Japan, and much closer from other parts of Southeast Asia.  Many foreigners liked the country so much that they stayed and founded business communities and dynasties that still exist today.  The Americans have been trading in Thailand for about 200 years. The British, the Dutch and the Japanese have been trading in Thailand for about 400 years each, the Portuguese and the Persians for over 500 years each, and the Chinese and Indians for over a thousand years each.  Despite numerous foreign influxes and influences, Thailand has maintained its unique cultural identity.  Furthermore, it has never fallen under colonial rule from a Western power.  So, while Thailand remains very rooted in and proud of its independence and traditions, it is surprisingly cosmopolitan, open-minded, welcoming towards foreigners, and very confident for a developing country.  It is in this context that we introduce what makes Thailand so attractive for foreign direct investment (FDI), a brief overview of its legal system, and a quick summary of the more important legal issues that arise when investing in Thailand.


Despite the volatility of its political arena over the last decade, Thailand’s economy is characterized by a constancy and resiliency with which few other developing countries can compare.  Some key strengths of Thailand are as follows:

  • Central Location: Thailand enjoys a strategic location within Asia long serving as a buffer zone between China and India, as well as a convenient trading hub between China, India, Japan, Taiwan and other Southeast Asian nations.  Also, economically speaking, it connects emerging economies like Myanmar, Laos and Cambodia with more developed ones like Malaysia and Singapore.
  • Size of Market and Economy, Projected Growth & Trade Balance: For 2017, Thailand’s domestic consumer market will approach 69.095 million people with a nominal Gross Domestic Product per Capita of USD 5,842, and an adjusted GDP per Capita (based on Purchasing Power Parity) of USD 17,731 according to the International Monetary Fund (IMF) World Economic Outlook Database for October 2016.  According to the January 2017 Global Economic Prospects as published by the World Bank, Thailand’s GDP grew about 3.2%, which is very low historically speaking and more on par with developed countries.  According to Trading Economics, Thailand enjoyed an average trade balance, where exports exceeded imports, of USD 1.794 billion in 2016.
  • Membership in ASEAN, AFTA & AEC: Thailand is one of the founding members of ASEAN (the Association of South East Asian Nations), AFTA (the ASEAN Free Trade Area) and its successor, the AEC (the ASEAN Economic Community).  The purpose of the AEC, among other things, is to integrate the economies of Thailand, Malaysia, Singapore, Brunei, Indonesia, Philippines, Cambodia, Laos, Myanmar and Vietnam much like the European Economic Community (EEC) did in Europe before the formation of the European Union (EU).  The AEC consists of over 639 million people, which ranks after China and India in terms of population size but before the EU with about 511 million people and NAFTA (North American Free Trade Agreement) members with about 482 million people total.  Total GDP in 2014 was USD 2.6 trillion, which was the 7th largest in the world and the 3rd largest in East Asia.  In that same year, ASEAN attracted USD 136 billion in FDI, which accounts for 11% of global FDI inflows.  Investing in Thailand therefore gives foreign direct investors a strategic foothold to a large and still rising economic grouping.
  • Ever-Growing, World-Class Infrastructure: A growing highway system connects all 77 provinces in Thailand and neighboring Laos, Cambodia and Myanmar.  Also, Thailand has 7 international airports, dozens of domestic airports, 6 deep sea ports and 2 international river ports including containers, tank farms and liquid jetties.  Suvarnabhumi Airport is one of the world’s busiest ranking in the global top 25 (9th in East Asia) according to 2017 figures as provided by the Airports Council International with over 60 million passengers handled per year.  In terms of railways, Thailand’s current network stretches more than 4,000 kilometers linking up with Malaysia and onward to Singapore.  Bangkok has 2 mass transit train systems.  Upcoming projects include a high-speed rail network to connect all parts of Thailand and with Southern China.  Bangkok will also expand its mass transit system to include the suburbs.  Overall, Thailand is strengthening its air and marine transportation as well.
  • Well-Ranked Globally: Thailand enjoys very respectable international rankings as follows:
  1. Nominal GDP:  20th out of 188 countries according to the IMF World Economic Outlook Database for October 2015
  2. According to latestonline figures from The Economist Pocket World in Figures, Thailand holds the following rankings:
    11th largest agricultural output
    b. 16th largest manufacturing output
    c. 22nd largest economy by purchasing power
    d. 24th biggest exporter
    e. 25th largest trade in goods
    f. 25th largest industrial output
    g. 31st biggest export volume
    h. 31st largest earnings from services
    i. 31st largest economy
    j. 34th largest services output
  3. According to the latest figures from Thailand’s Board of Investment, the country enjoys the following rankings:
    #1 exporter of natural and synthetic rubber
    b. #1 producer of hard disk drives
    c. #1 exporter of rice
    d. #2 exporter of sugar
    e. #5 & #7 largest producer of trucks and motorcycles respectively
  4. Thailand ranked 49th easiest country in the world (2nd among emerging markets in East Asia) in which to do business as determined by the World Bank’s 2016 Ease of Doing Business Report.
  5. Thailand ranked the 8th most attractive host economy in the world as determined by the UNCTAD (United Nations Conference on Trade and Development) World Investment Report 2014-2016.
  6. Thailand ranked 32nd out of 140 countries (ranking 4th in Southeast Asia after Singapore, Malaysia and Brunei, and ahead of many developed countries in Europe) in the Global Competitiveness Index as determined by the World Economic Forum.
  7. Thailand ranked 6th in the world (ranking 3rd in Southeast Asia after Malaysia and Indonesia) according to A.T. Kearney’s 2016 Global Services Location Index.
  8. Thailand is competitively ranked 24th in terms of overall expat experience behind Singapore (#1), Hong Kong (#13), Taiwan (#14) and Vietnam (#19), and ahead of India (#26), Malaysia (#28), China (#34) and the Philippines (#37).  Thailand also ranked 17th in terms of overall quality of life.  Both rankings according to HSBC’s 2016 Expat Experience Report.
  • Competitive Labor Force: Thailand enjoys a 96.7% literacy rate according to the 2016 CIA World Factbook.  The Thais are characterized as being highly creative, adaptive and friendly people.  There is a large, well-educated work force in Thailand.  Furthermore, there are large pools of skilled, semi-skilled and non-skilled laborers from which to choose.  Overall, Thailand enjoys cheaper operating costs than many comparable nations, and yet the quality of work is up to international standards.  In short, Thai labor represents a good value for FDI.
  • Attractive Lifestyle: Thailand is a vibrant place to do business, as well as to live for hundreds of years and continuing to the present.  Bangkok ranked 14th and Chiang Mai 2nd in 2016 by Travel & Leisure Magazine’s Annual World’s Best Cities.  Mercer HR’s 2016 Costs of Living Survey ranked Bangkok as one of the cheapest cities in the region ranking at 74th.  Bangkok is cheaper than Hong Kong (#1), Singapore (#4), Tokyo (#5), Shanghai (#7), Beijing (#10), Shenzhen (#12), Seoul (#15), Guangzhou (#18), Osaka (#22), Yangon (#39), and Taipei (#43).  Bangkok is more expensive than Jakarta (#93) and Hanoi (#106).  Again, Thailand offers good value.
  • World-Class Healthcare: Thailand is an early, global pioneer in world-class medical tourism.  It offers affordable, world-class healthcare from a very hospitable, politically neutral country.
  • Stable Environment for Foreign Investors: The business environment is friendly and remarkably stable and predictable for foreign investors.  Thailand is also remarkably free of violent crimes, as well as ethnic, racial, religious and post-colonial tensions having never been colonized by a Western power.
  • Other Benefits: Tax holidays and numerous other benefits are available for qualified businesses for up to 8 to 15 years.
  • Latest Opportunity for FDI – The Eastern Economic Corridor (EEC): The Thai government plans to attract USD 45 billion of state, public-private partnerships and private foreign direct investment (FDI) funds in the first five years (2017 – 2012) to further develop three industrialized eastern provinces on the Gulf of Thailand – Chonburi, Rayong and Chachoengsao (and any other provinces added later on) –  into a leading manufacturing, services, technological and tourism hub with strong connectivity by sea, air, land and digitally not just within Thailand but within the entire AEC.  More specifically, the government’s immediate focus is on the following projects:
  1. U-Tapao Airport:  The government will transform this airport into a regional aviation hub known as the Eastern Airport City by expanding its operating capacity to 15 million passengers per year in the next 5 years, 35 million passengers in the next 10 years, and 60 million passengers within the next 15 years.  In comparison, Suvarnabhumi International Airport handled about 60 million passengers in 2017.  This expansion will involve the construction of a second runway and passenger terminal as well as developing an international aircraft maintenance, repair and operations (MRO) center.  Other projects include a commercial area and free trade zone within the Eastern Airport City and a high-speed railway connecting it with Suvarnabhumi and Don Muang International Airports in Bangkok.  The government anticipates that it will need at least USD 5.7 billion in investments for this project.
  2. Deep-Water Seaports:  The government will increase the capacity of Laem Chabang Port through improved and expanded infrastructure including container accommodations as well as improve railway connections from the port to industrial areas within the EEC.  Similar plans are underway for Map Ta Phut and Sattahip Commercial Ports.   The government anticipates that it will require about USD 3 billion to improve Laem Chabang and Map Ta Phut Ports.
  3. Increased Transport Infrastructure:  The government will develop high-speed and double-track railways to link various destinations within the EEC to Bangkok and other parts of the country. Expanded highways and motorways are also planned.
  4. Smart Cities:  The government will build new, highly planned cities within the EEC to accommodate the anticipated population surge brought about by the creation of an anticipated 300,000 new jobs.  These cities will be serviced by international quality hospitals and schools.  The government expects it will require at least USD 11.5 billion in investments.
  5. Eastern Economic Corridor of Innovation (EECi):  Together with new and improved infrastructure, the Thai government intends to create the EECi area to promote research and innovation as well as human resource development.
  6. Eastern Economic Corridor Digital Park (EECd):  The government envisions that this zone will update and maintain digital infrastructure within the EEC and serve as a regional ASEAN data hub.
  7. Smart Park: The park will be established in the new Map Ta Phut Industrial Estate.  It will serve a supporting role for industries including aviation and aerospace, logistics, medical hub, research and development, robotics and other digital industries. The proposed project will require an investment of around USD 363 million including about USD 303 million from the private sector. The remainder will be provided by the Industrial Estate Authority of Thailand or IEAT. The IEAT expects about 60 companies will invest in the Smart Park and that the resulting investments will be around USD 1.2 billion.

The Eastern Economic Corridor Office (EECO), the government body that will oversee the EEC, has identified 10 key industries it wishes to promote.  These are:

  1. Next-Generation Automotive Industry: Namely the EECO wishes to promote the production of electric vehicles, as well as increasing the efficiency of catalytic manufacturing processes and the enhancement of electronic accessories and automotive parts production.
  2. Smart Electronics:  The focus will be on the development of subindustries within the increasingly complicated integrated circuits industry, automotive electronic systems industry, and the electronic accessories industries.
  3. Advanced Agriculture and Biotechnology:  The EECO will promote the development and use of advanced agricultural technologies (e.g., sensors, advanced datalytics, and automated systems for the growing of crops), research and development in biotechnology (e.g., plant and animal breeding), the use of advanced technologies in quality assurance, storing, and maintaining produce, and natural rubber production facilities.
  4. Innovative Food Processing:  The EECO seeks to promote industries that increase traceability standards, the production of health and fortified foods, and the production of low fat, low sugar and protein-rich foods.
  5. High-End Medical and Wellness Tourism:  Building on existing tourism and health infrastructure, the EECO will continue issuing policies to enrich the experiences and raise levels of tourism-related value propositions for middle- and high-income tourists and offering support to wellness and rehabilitation tourists.
  6. Aviation and Logistics:  As discussed previously for U-Tapao Airport.  The EECO also intends to build an aviation training center for pilots, cabin crew, aircraft technicians and ground crew.
  7. Digital Industry:   The EECO will promote investments in digital technology allowing Thai business to better identify electronic channels (e.g., providing services in embedded software, enterprise software and digital content) to grow.  The EECO also envisions substantial developments and expansions to the communications and electronics industries to increase the quality of life in the Smart Cities mentioned above.  In terms of a specific industry, the EECO will find ways to substantially enhance the creative media and animation industry so as to attract investments from global animation firms.
  8. Robotics Industry:  The Thai automotive and electronics industries already rely heavily on the use of robots in their production process.  The EECO has made plans to implement a robotics production industry.
  9. Biochemical and Biofuel Industries:  Thailand is rich in the raw materials necessary for biochemical and biofuel industries.  In addition to continued production of first generation biofuels (from food substances), the EECO will promote industries that engage in the production of second and third generation biofuels (i.e., biofuels not produced from food waste and biofuels produced from cultivatable strands of seaweed).
  • Comprehensive Healthcare Industry:  The EECO wishes to see expanding businesses engaged in: 1) offering eHealth and mHealth services, which build off electronic medical records (EMRs) and connective technologies; 2) the medical instruments industry (e.g., namely instruments that allow physicians to engage in diagnostics and remote health monitoring); and 3) by expanding the medical supplies industry (namely aiming for reductions in both production steps and time, as well as new and modern methods for drug testing).

Foreign direct investors interested in the above strengths, infrastructure projects and operating in the key industries within Asia would do well to investigate Thailand and the EEC in more detail.


Thailand is a constitutional monarchy and a civil law country, whose basic laws are enshrined in the constitution and in various civil codes.  The four most basic codes are:  The Civil and Commercial Code, The Civil Procedure Code, The Criminal Code, and The Criminal Procedure Code.  In addition to this framework, there are other laws specifically affecting FDI.  Some of the more relevant ones include:

  • Foreign Business Act, B.E. 2542 (1999), which is commonly abbreviated as the “FBA.”  It came into effect on the 3rd of March 2000.  The FBA greatly limits the number of business activities that foreign investors may pursue unless they obtain the appropriate approval or license, or unless they keep their ownership interest in local companies at less than 50% of the registered capital.
  • Investment Promotion Act, B.E. 2520 (1977) & Investment Promotion Act (No. 4), B.E. 2560 (2017)creates Thailand’s Board of Investment (“BOI”), which provides numerous privileges to qualified FDI including tax holidays and exemptions lasting up to 8 to 13 years. Other notable benefits include reduction and exemption of customs duties on raw materials and machinery that are new and not available in Thailand, one-stop visa and work permit service and the ability to own land.  While the BOI formerly focused on heavy industry and manufacturing, a 2015 Announcement revealed that the BOI would now also give preference to projects that involve research and development, biotechnology, vocational training, engineering and product design, software and cloud services, and the development of special economic zones.  Overall, greater emphasis is being placed on sustainable growth, enhancing the nation’s competitiveness and overcoming the middle-income trap.
  • Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of Americacame into effect in 1966 though it had earlier precedents dating back to 1833.  This Treaty technically expired in 2006 but has been extended every 6 months ever since pending a U.S.-Thailand Free Trade Agreement, which has been placed “on hold” since 2006.  It effectively exempts American businesses and investors from most of the restrictions on foreign investment imposed by the FBA and has been a source of much resentment by non-American companies and individuals, who claim that it violates the Most Favored Nation (MFN) status imposed by the WTO of which Thailand is a signatory.
  • National Competitive Enhancement Act for Targeted Industries, B.E. 2560 (2017): The targeted industries in question include core industries like advanced manufacturing, biotechnology, creative and digital industries, and those companies using new technologies including advanced materials, digital technology and nanotechnology.  Investment incentives include:  1) exemption from corporate income tax for up to 15 years; 2) all existing BOI privileges; and 3) the possibility of subsidies for investment projects involving research and development or innovation or development of specific personnel in the targeted industries provided from the Thai government’s Fund for Enhancement of Competitiveness for Target Industries, which has seed money of about THB 10 billion (about USD 285 million).
  • Bilateral Investment Treaties (“BITs”): These treaties promote and protect FDI between member countries.  Thailand has entered into BITs with over 41 countries around the world including Argentina, Bahrain, Benelux, China, Egypt, Germany, Hong Kong, India, Indonesia, Israel, Myanmar, Peru, Poland, Russia, South Korea, Sweden, Switzerland, Taiwan, Turkey, United Kingdom (U.K.), and Vietnam among others.
  • Free Trade Agreements (“FTAs”) & Economic Partnerships: Thailand has bilateral free trade agreements and economic partnerships with Australia, Chile, China, India, Japan, New Zealand and Peru.  Other pending FTAs include with the EU and Pakistan. By virtue of Thailand’s ASEAN membership, it also has Regional Trade Agreements and Economic Partnerships with ASEAN members, Australia-New Zealand, China, India, Japan, and South Korea. There is also a pending East Asia Free Trade Agreement (covering ASEAN, China, Japan and South Korea).  Thailand also has Economic Cooperation with Bangladesh, Bhutan, India, Myanmar, Nepal and Sri Lanka, and a pending Economic Partnership in East Asia (consisting of ASEAN, China, India, Japan, South Korea, Australia and New Zealand).  Furthermore, Thailand is a member of APEC (the Asia-Pacific Economic Cooperation) with 20 other Pacific Rim countries and so additional free trade and economic cooperation initiatives at the regional level are possible in the future.  Lastly, the country is a member of the WTO (World Trade Organization).  Thailand offers a strategic foothold in the global arena.
  • Exchange Control Act, B.E. 2485 (1942): Thailand has domestic laws dealing with the inward and outward remittances of foreign currency.  The various BITs mentioned above also address exchange control as well albeit for the treaty nations.
  • Customs Act, B.E. 2469 (1926) & Customs Tariff Decrees: Thailand has domestic laws dealing with customs tariffs, though the AEC imposes obligations to reduce tariffs to zero among ASEAN member nations by the end of 2015.
  • Revenue Code: This deals with all forms of taxation in Thailand.
  • Double Tax Treaties: These address double taxation between countries and take precedence over the Revenue Code when there is a conflict.  Thailand currently has 60 such treaties including with Australia, Austria, Bahrain, Belgium, China, Denmark, France, Germany, Hong Kong, India, Indonesia, Israel, Italy, Japan, Kuwait, Malaysia, Mauritius, Myanmar, Philippines, Poland, Russia, Singapore, South Korea, Sweden, Switzerland, U.K., United Arab Emirates (U.A.E.), U.S.A. and Vietnam.
  • Immigration Act, B.E. 2522 (1979): This law governs the entry and exit of foreigners into and from Thailand.  It remains to be seen how the AEC will streamline immigration into Thailand for certain professionals including engineers, architects, landscape architects, planners, dentists, dental technicians, doctors, nurses, and midwives from other ASEAN member nations. Likewise, it remains to be seen how the EEC will streamline immigration to the EEC.
  • Foreign Employment Act, B.E. 2521 (1978) & B.E. 2551 (2008): This law deals with work permits.  Likewise, it is uncertain how the AEC will streamline work permit applications for the professionals mentioned above and how the EEC will do away with work permits altogether.  These professionals may still need to fulfill licensing obligations in Thailand, and it remains to be seen how the respective professional associations will address this matter.
  • Labor Protection Act, B.E. 2541 (1998): This Act prescribes minimum work conditions.  Employment contracts may of course set higher conditions.  In addition, a host of other Thai labor laws also apply.  Thai labor law has evolved into a confusing network of regulations, and expert advice should always be sought.
  • Eastern Economic Corridor Act, B.E. 2561 (2018): The National Legislative Assembly passed the Eastern Economic Corridor Bill into law on 8 February 2018.  This law will loosen existing restrictions on foreign investment and promote ease of doing business within the Eastern Economic Corridor (EEC) as described above.  The law accomplishes this by amending or suspending more than 100 Thai laws and regulations.  For example, this Act allows foreigners to own land outright within Special Economic Promotion Zones (SEPZ) within the EEC.  It also allows for 50-year leases plus a one-time renewal of not more than 49 years.  Other advantages include one-stop visas and doing away with the need for work permits upon receiving substitute documentation from the EEC Secretary-General.  Exemption or reduction of taxes and duties for businesses located in SEPZ as well as exemptions from compliance with part of the Customs Act and freedom to use foreign currencies are also envisioned under the Act. Because it was just passed into law as of the middle of 2018, however, it remains to be seen how much loosening of restrictions occur in actual practice.
  • 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “NY Convention”): Thailand ratified the NY Convention in 1959.  As a result, Thai courts are bound to honor foreign arbitral awards so long as such awards to not violate Thai law or principles of health, safety and welfare.

The above is just a partial list of the legal framework in place.  Other codes exist covering numerous other areas of Thai law.  While Thailand’s civil code has its roots in ancient Thai and Indian sources, its modern laws are based predominantly on the Japanese and German civil codes.  Her commercial laws are influenced by English and U.S. law.

As a general matter, any Act or Code should be read together with any relevant regulations, decrees, and notifications issued by government ministries pursuant to the Act or Code in question to obtain a complete picture of the legal framework affecting any particular area.

As well as legislation, judicial decisions are increasingly becoming a recognized source of law in this civil law country.  Thailand has a mature and developed court system with an independent judiciary.  There are Courts of the First Instance, Courts of Appeal, the Supreme Court and various Administrative Courts.  In Bangkok, there are also several specialized courts including the Central Labor Court, Central Tax Court, Central Intellectual Property and International Trade Court, and the Central Bankruptcy Court.

In Thailand, the prior decisions of earlier courts still do not constitute official, binding precedents (i.e., there is no Stare Decisis in Thailand).  In practice, however, precedents are becoming increasingly persuasive and commonly cited by lawyers.


There are many legal issues that should be kept in mind by foreign direct investors who wish to invest in Thailand.  The following is not intended to be a definitive list:

  • Business Entities in Thailand: Thai law recognizes several different forms of business entities including Limited Companies (requiring a minimum of 3 shareholders), Public Companies (requiring 15 or more shareholders), Publicly Traded Companies (traded on the Stock Exchange of Thailand or SET), Limited Partnerships, General Partnerships, Sole Proprietorships, Branch Offices, Representative Offices and Regional Offices.  In addition to these recognized legal forms, joint ventures, which are created by contract, may also be established.  Investors should exercise care when deciding which structure to use for their business purposes as the legal requirements, such as the ability to engage in business activities and receive income or the amount of registered capital or investment necessary, vary according to the business activity proposed to be undertaken by the investor.
  • Legal Effect of Thailand’s Foreign Business Act: The FBA affects the ability of foreign companies registered under the laws of other countries including branch, representative and regional offices set up in Thailand, and companies formed in Thailand where 50% or more of the shares are held by non-Thais (together known as “Foreign-Held Companies”) to engage in a wide range of business activities without the appropriate approval or license.  The 50% threshold has been expanded to 70% for those companies registered in Thailand with shareholders hailing from other AEC member nations and where the company formed intends to engage in certain services.  It remains to be seen whether the Eastern Economic Corridor Act will further loosen the foreign ownership limits beyond 50 or even 70% at least within the EEC.

The FBA includes 3 lists of business activities that are either completely prohibited to foreigners (i.e., List 1), or that are regulated and require cabinet approval (i.e., List 2), or that require other approval to engage in (i.e., List 3).  List 3 is the broadest and consists of activities for which the Thai government deems Thai nationals are not yet ready to compete with foreigners.  These activities include all service businesses, brokerage or agency businesses, and retailing and wholesaling of all products although an exception applies for foreign companies and stores that meet minimum capital requirements (an exception carved out for hypermarkets and superstores).  Foreign Direct Investors may engage in the business activities mentioned in List 3 if they obtain a Foreign Business License, or are granted permission because of BOI promotion, or are exempt via the Treaty of Amity as discussed above, or pursuant to any other approval. Companies that seek recognition under the Treaty of Amity or BOI Promotion must still obtain a Certificate of Business Operation (as distinguished from a Foreign Business License) from the Director-General of the Department of Business Development with the approval of the FBA Committee.

  • Land Ownership in Thailand: As a general rule, the Thai Land Code does not permit foreigners, including Foreign-Held Companies as discussed above to own land in Thailand.  Foreigners may own land provided they receive approval from the BOI or purchase land in an approved industrial estate (i.e., approved by the IEAT.  Such land may only be used for one’s business and not as a way to build a house.  Foreigners may, however, own outright any buildings and can enjoy 30-year leases over land.  Such leases, which must be registered with the relevant Land Department Office if over 3 years, can be extended for one additional 30-year period.  Longer or additional extensions (e.g., a second extension of time after the first extension of time has expired) are not enforceable under Thai law.  Under the Eastern Economic Corridor Act, however, foreigners may own land outright within Special Economic Promotion Zones (SEPZ) within the EEC.  The Act also allows for 50-year leases plus a one-time renewal of not more than 49 years again within the EEC. While foreigners may not otherwise own land in Thailand, they may enjoy security interests on land as a mortgagee and may even inherit land throughout the country though certain stringent conditions do apply.
  • Condominium Ownership: Foreigners may own condominiums, but the percentage of foreign ownership in a condominium project may not exceed 49% of the total project.
  • Use of Nominee Thai Shareholders: It is illegal for Thai nationals, both individuals and companies, to act as nominee shareholders thereby allowing foreigners including Foreign-Held Companies to get around the FBA or the Land Code or any other Thai laws that restrict the activity of foreign investors.  Penalties include fines and/or imprisonment.  This limitation, however, does not apply to legitimate Thai investors and partners, who actually invest their own funds.
  • Taxes: Thailand currently observes the following tax rates:
  1. The corporate income tax rate for private and public limited companies is currently around 20%.  From our understanding, this will be the lowest corporate tax rate in Southeast Asia right after Singapore.
  2. For personal income tax, the tax rate is currently between 10 – 35% and is a progressive as opposed to a regressive tax system.
  3. Thailand also imposes a Value Added Tax at 7% for each stage of production.

As mentioned earlier, the BOI can grant tax holidays and exemptions of up to 8 to 13 years for qualified investments.  The BOI can also grant reduction or exemption of customs duties for raw materials and qualifying machinery.  The National Competitive Enhancement Act for Targeted Industries offers the possibility of exemption from corporate income tax for up to 15 years.  The Eastern Economic Corridor Act also envisions tax reduction and even exemption for businesses located in the SEPZ within the EEC.

  • Immigration and Work Permits:The right to immigrate and the right to work (including volunteer work) in Thailand are two separate rights.  These are not combined into one document as is the case in the U.S. and many other countries.  To work in Thailand, a foreigner will typically obtain an appropriate “Visa” and “Work Permit” separately.  Such visas start out good for 90 days but can be extended for a year.  Afterwards, they must be renewed each year.  Foreigners may obtain permanent residency after living in Thailand for at least 3 consecutive years and this frees them from having to obtain annual visa renewals, but they still require work permits. Whenever leaving Thailand, expatriates must obtain re-entry permits otherwise they will find on their return that their residency visas and work permits have expired.  The Eastern Economic Corridor Act will do away with the need for expatriates to obtain separate work permits upon receiving substitute documentation from the EEC Secretary-General.  It remains to be seen, however, how more streamline the process will become and what other benefits will exist for those working in the EEC.
  • Copyright Ownership: Unless stated otherwise in an employment contract, Thai law recognizes the employee as the rightful owner of any copyright created during the course of employment.  This is unlike most other countries in the world where the Employer is automatically the owner.
  • Recognition of Foreign Arbitral Awards vs. Foreign Court Judgments: Thailand does not recognize foreign court judgments and will not enforce them.  At most, Thai courts may take judicial notice of such foreign judgments including any findings of fact.  Thailand will, however, enforce foreign arbitral awards per the NY Convention.

Altogether, Thailand is an extremely attractive country with which to invest and settle and has been so for hundreds of years.  At the same time, however, there is a complex network of laws and legal issues that need to be considered even before entering the country.  This paper has introduced readers to a simplified legal framework and an overview of the common legal issues affecting FDI, but it is not intended to be exhaustive nor a substitute for specific legal advice tailored to each client’s situation.  Local guidance is essential and Ployprathip International Law Office, as a full-service law firm, stands ready to assist foreign direct investors wishing to enter the Thai market in an advantageous way.