Thailand Foreign Business Restricted Lists Explained: List One, Two & Three

1. Where the three Lists come from (Section 8)

Section 8 is the backbone of the whole foreign-access regime. Its opening words state that the regime is “subject to sections 6, 7, 10 and 12”, meaning that other related provisions of the Act must be applied together with it (the details should be confirmed separately). On that basis, the law lists the restricted businesses across three annexed Lists for three different reasons:

• List One – businesses that are, by special reason, “stricto sensu not permissible” to foreigners (Section 8(1)).
• List Two – businesses related to national safety or security, or having impacts on arts, culture, traditions, customs and folklore handicrafts, or on natural resources and the environment, which may be operated only upon permission from the Minister with the approval of the Council of Ministers (Section 8(2)).
• List Three – businesses in respect of which Thai nationals are not yet ready to compete with foreigners, which require permission from the Director-General of the Department of Business Development with the approval of the Commission (Section 8(3)).

Separately, Section 6 provides that two categories of foreign “persons” may not operate any business in Thailand at all: those who have been deported or whose deportation is pending, and those staying in the Kingdom without lawful permission to enter and reside; Section 7 deals with persons of special status, such as those born in the Kingdom without Thai nationality, who may operate only upon a licence from the Director-General, and only such businesses and in such localities as the Minister’s Notification prescribes. This article complements our “49% foreign shareholding” overview and focuses on what each List contains and how to operate lawfully.

2. List One: the nine businesses closed outright (Section 8(1) / List One)

The following nine categories are, by special reason, entirely closed to foreigners, with no licensing route (List One):

• The press, radio broadcasting station, or radio and television station business;
• Rice farming, plantation or crop growing;
• Livestock farming;
• Forestry, and timber processing from a natural forest;
• Fishery – only the catching of aquatic animals in Thai waters and Thailand’s specific economic zones;
• Extraction of Thai medicinal herbs;
• Trading and auction sale of Thai antiques, or objects of historical value to the country;
• Making or casting of Buddha images and monk alms-bowls;
• Land trading.

3. List Two: businesses requiring Cabinet approval (Section 8(2), Section 15)

List Two is divided into three chapters, all of which may be operated only upon permission from the Minister with the approval of the Council of Ministers:

• Chapter 1 – National safety or security: (1) production, distribution and maintenance of firearms, ammunition, gun powders and explosives, their components, ships/aircraft/vehicles for military use, and equipment or components of all types of war materials; (2) domestic transport by land, water or air, including domestic aviation.
• Chapter 2 – Arts, culture, traditions and folklore handicrafts: trading of Thai antiques or artistic objects that are artistic works or handicrafts; production of wood carvings; silkworm raising, production of Thai silk yarn, weaving of Thai silk or printing of Thai silk patterns; production of Thai musical instruments; production of goldware, silverware, nielloware, bronzeware or lacquerware; production of crockery or porcelain representing Thai arts and culture.
• Chapter 3 – Impact on natural resources or the environment: production of sugar from sugar cane; salt farming, including non-sea salt farming; production of rock salt; mining, including rock blasting or rock crushing; timber processing for the production of furniture and utensils.

Mandatory conditions for a juristic person operating List Two: a foreigner that is a juristic person may operate a List Two business only where not less than 40% of its shares are held by Thai nationals or by juristic persons that are not foreigners; where there is reasonable cause, the Minister may, with the approval of the Council of Ministers, reduce that proportion, but it must not fall below 25%, and not less than two-fifths of the total number of its directors must be Thai nationals (Section 15).

4. List Three: businesses requiring the Director-General’s licence (Section 8(3), Section 17)

List Three covers businesses in respect of which “Thai nationals are not yet ready to compete with foreigners”; they require a licence from the Director-General of the Department of Business Development. There are 21 items, covering a wide range of service businesses:

• Rice milling, and production of flour from rice and economic plants;
• Fishery – only the hatching and raising of aquatic animals;
• Forestry from a grown (planted) forest;
• Production of plywood, veneer wood, chipboards or hardboards;
• Production of lime;
• Accounting services; legal services; architectural services; engineering services;
• Construction (with exceptions for certain major works, such as statutory infrastructure projects);
• Brokerage or agency businesses (with exceptions for securities/futures, procurement among affiliated enterprises, international-trade types, and others);
• Auction sale (with exceptions such as international-bidding types);
• Internal trade related to traditional agricultural products;
• Retail sale of all types of goods – included where the total registered capital is below 100 million Baht, or the registered capital per store is below 20 million Baht (businesses meeting the capital threshold are not covered);
• Wholesale of all types – included where the registered capital per store is below 100 million Baht;
• Advertising business;
• Hotel business (except hotel management services);
• Guided touring; sale of food and beverages;
• Cultivation, propagation or development of plant varieties;
• Other service businesses (except those prescribed in the Ministerial Regulation).

Time limits: the foreigner files an application with the Minister or the Director-General in accordance with the Ministerial Regulation; the Council of Ministers (for List Two) or the Director-General (for List Three) must complete its consideration within sixty days of the filing date (the Council of Ministers may extend this for an unavoidable cause, but by no more than a further sixty days); once approved, the licence must be issued within fifteen days of the date of approval. If refused, the Minister (for List Two) must give written reasons within thirty days, and the Director-General (for List Three) within fifteen days (Section 17).

5. Minimum capital for lawful operation (Section 14)

Section 14 provides that the minimum capital a foreigner uses to commence a business in Thailand must not be less than the amount prescribed in the Ministerial Regulation; the law also sets two floors – not less than two million Baht for an ordinary business, and not less than three million Baht for each business on the Lists that requires permission. The exact amounts and the remittance deadlines are prescribed item by item in the Ministerial Regulation and are subject to the official rules (we can help confirm). (This section does not apply where the foreigner reinvests revenue derived from a business already operating in Thailand.)

6. Consequences of operating in breach (Section 37)

A foreigner who operates a business in violation of sections 6, 7 or 8 is liable to imprisonment for a term not exceeding three years, or a fine of one hundred thousand to one million Baht, or both; and the Court shall order the business to cease operating, cease the undertaking, or cease the shareholding or partnership. If the Court’s order is then defied, a fine of ten thousand to fifty thousand Baht per day applies throughout the period of the violation (Section 37).

FAQ

My company wants to do retail or wholesale – which List does it fall under, and what do we need to do?

Retail and wholesale of all types are in List Three and require a foreign business licence from the Director-General of the Department of Business Development (Section 8(3), Section 17). List Three draws the line for retail and wholesale by registered capital: retail is included where the total registered capital is below 100 million Baht or the capital per store is below 20 million Baht, and wholesale where the capital per store is below 100 million Baht; businesses that meet the capital threshold are not covered, and the exact boundary is subject to the List and the official rules.

What is the fundamental difference between List Two and List Three approval?

List Two requires permission from the Minister with the approval of the Council of Ministers, and a foreigner that is a juristic person must also have not less than 40% of its shares held by the Thai side and at least two-fifths of its directors being Thai nationals (Section 8(2), Section 15); List Three only requires permission from the Director-General of the Department of Business Development with the approval of the Commission, and the Act imposes no mandatory Thai-shareholding requirement for List Three (Section 8(3), Section 17).

What is the minimum registered capital for a foreigner to operate a restricted business?

Section 14 provides that the minimum capital must not be less than the amount prescribed in the Ministerial Regulation, and sets the floors: not less than two million Baht for an ordinary business, and not less than three million Baht for each business on the Lists that requires permission. The exact amounts and remittance deadlines are subject to the Ministerial Regulation, and we can help confirm them.

What penalties apply if a foreigner operates a List business unlawfully?

Under Section 37, a foreigner who breaches sections 6, 7 or 8 is liable to imprisonment for up to three years, or a fine of one hundred thousand to one million Baht, or both, and the Court may order the business to cease; if the Court’s order is then defied, a fine of ten thousand to fifty thousand Baht per day applies throughout the period of the violation.