Thailand to Ease Foreign Business Ownership Rules

Thailand is moving to reform its restrictive foreign investment laws. On April 22, 2025, the Cabinet approved urgent revisions to the Foreign Business Act B.E. 2542 (1999), tasking the Ministry of Commerce with drafting amendments. The decision marks a strategic shift toward a more open and competitive investment landscape, in line with Thailand’s broader economic goals.

What’s changing?

Thailand’s Foreign Business Act was enacted in 1999 to replace the Alien Business Act of 1972. The Act outlines sectors where foreign ownership is restricted, such as media, agriculture, retail, services, and natural resources. Under the current law, foreigners are generally capped at 49 percent equity in these industries unless they secure a Foreign Business License, a process often criticized for its vagueness and bureaucracy.

The law also criminalizes nominee arrangements, where Thai nationals hold shares on behalf of foreigners, with penalties of up to three years’ imprisonment and fines up to 1 million baht. Despite this, many foreign firms have used legal workarounds, such as dual-share classes or board control, to retain operational influence while appearing compliant.

These outdated provisions form the core of what the Thai government now aims to revise. Backed by key ministries, including Finance, Commerce, Interior, Labor, as well as the NESDC and the BOI, the proposed reforms are expected to include:

Relaxation of foreign equity caps in select sectors

Simplified licensing procedures to replace subjective approval criteria

Clearer legal frameworks to reduce reliance on nominee shareholding structures

By reducing regulatory friction and encouraging transparency, the amendments seek to attract high-quality foreign investment and better align Thailand with international standards

Crackdown on nominee practices

The reform push aligns with Thailand’s broader crackdown on illegal nominee arrangements. Authorities have intensified investigations, particularly in sectors like real estate and tourism. A notable case in Rayong province revealed a 2-billion-baht luxury condo project managed by Chinese nationals using Thai nominees, an arrangement the government aims to eliminate. Such enforcement reflects the government’s desire to create a cleaner and more compliant investment landscape.

Relaxation of Foreign Equity Caps

One of the most anticipated changes is the potential increase in the allowable foreign equity threshold, which is currently limited to 49 percent in many restricted sectors. The Ministry of Commerce is now reviewing the list of sectors and exploring adjustments to the ownership structure rules.

If adopted, the change would allow foreign investors to hold a greater stake—or even majority control—in previously restricted industries. This reform is designed to reduce the reliance on nominee arrangements and create a more transparent legal environment. By allowing higher equity participation, Thailand hopes to attract more long-term investment and improve the country’s appeal as a destination for innovation-driven businesses.

Simplification of licensing procedures

Another key reform area is the streamlining of the Foreign Business License (FBL) process, which foreign investors currently need to navigate to operate in restricted sectors. The current system has long been criticized for being overly bureaucratic, opaque, and dependent on vague approval criteria, such as unspecified “economic and social benefit” contributions.

The proposed amendments aim to simplify and clarify this process. This includes reducing administrative delays, defining clear evaluation criteria, and making the procedure more predictable and efficient. These improvements are expected to lower the entry barriers for foreign businesses and signal a more open, rules-based investment environment.

Why reform now?

The Thai Cabinet sees the FBA as out of step with today’s global economy. Its restrictive ownership rules hinder access to capital, discourage innovation, and reduce competitiveness across high-growth sectors. Core issues include:

Obstacles to foreign partnerships in emerging industries

Continued use of informal structures that undermine legal certainty

Missed opportunities for economic expansion, job creation, and tax revenue

As Thailand positions itself within global supply chains and the regional tech ecosystem, outdated investment rules risk slowing down progress.

Economic pressures amplify urgency

Adding to the urgency are mounting economic challenges. The Thai Finance Ministry recently cut its 2025 GDP growth forecast to 2.1 percent, down from 3 percent, citing a weakening global economy and external trade pressures. The Bank of Thailand followed with a key interest rate cut to 1.75 percent, warning growth could drop to as low as 1.3% if global demand continues to slide.

Compounding the situation are the newly announced “Liberation Day” tariffs by the United States, which include a 36 percent duty on a broad range of Thai exports. While the tariffs are currently under a 90-day implementation pause, their looming enforcement has already unsettled markets, disrupted trade planning, and amplified calls within Thailand for regulatory reform to restore investor confidence and long-term competitiveness.

Implications for foreign investors

If passed, the FBA amendments could significantly improve the business climate. By easing foreign ownership limits, foreign investors would gain greater control and stronger incentives for long-term engagement. Service industries and digital sectors, previously off-limits or heavily restricted, may open, unlocking new investment opportunities.

Clearer regulations would reduce legal ambiguity and operational risks, while also curbing reliance on nominee structures. This would improve corporate governance and enhance legal protection for foreign stakeholders, making Thailand a more predictable and transparent place to do business.

Source: Asean Briefing