Introduction of Foreign Business License (FBL) and How to Apply

What is Foreign Business License (FBL)

A Foreign Business License (FBL) in Thailand can be awarded to a foreign company (majority of the company’s shares are owned by non-Thais) or foreign investors that wish to operate a business that is normally restricted to foreign nationals under Thai Law. If a Foreign company would like to apply for a foreign business license, they must first check the “Foreign Business Act” to verify if the business type that they wish to operate is permitted by Thai Law.

Some business types are wholly reserved for Thai Nationals. However, under the Thailand/United States Treaty of Amity and Economic Relations, American citizens and businesses incorporated in the United States or in Thailand, are allowed to engage in business just as would someone of Thai nationality. In other words, under this treaty, American foreign nationals are allowed to maintain the majority of their company’s shares.

Foreign investors, foreign shareholders, and foreign-owned businesses can apply for a Foreign Business License at the Foreign Licensing Department of the Ministry of Commerce in Thailand. The total minimum capital requirement for the formation of such a company in Thailand is 2 million Thai Baht (It could be higher than 3 million Thai Baht in some industries, depends on the requirements of the authority). An interesting to note is that the process of obtaining a Foreign Business License (FBL) is often expedited if a Thai BOI approval is obtained.

Restrictions from Foreign Business Act Thailand

There are 3 types of business activities provided for under the Foreign Business Act:

List 1: Business Not Permitted to Foreigners

The following businesses are not permissible to foreigners, in its strict sense, by special reason:

1. The press, radio broadcasting station or radio and television station business;
2. Rice farming, plantation or crop growing;
3. Livestock farming;
4. Forestry and timber processing from a natural forest;
5. Fishery, only in respect of the catchment of aquatic animals in Thai waters and specific economic zones of Thailand;
6. Extraction of Thai medicinal herbs;
7. Trading and auction sale objects or objects of the historical value of Thailand;
8. Making or casting Buddha images and monk alms-bowls; and
9. Land trading.

List 2: Business Permitted to Foreigners under Conditions

Business activities fall under List Two are those businesses related to national safety or security or having an impact on arts, culture, traditions, customs and folklore handicrafts or natural resources and the environment.

Chapter 1: Businesses related to National Safety or Security

1. Production, distribution, and maintenance of:
   1. firearms, ammunition, gun powders and explosives;
   2. components of firearms, ammunition and explosives;
   3. armaments, ships, aircraft or vehicles for military use;
   4. equipment or components of all types of war materials
2. Domestic transportation by land, water, or air, including domestic aviation

Chapter 2: Businesses Having Impacts on Arts, Culture, Traditions, Customs and Folklore Handicrafts

1. Trading of antiques or artistic objects that are artistic works or handicrafts of Thailand
2. Production of wood carvings
3. Silkworm raising, production of Thai silk yarn, weaving of Thai silk or printing of Thai silk patterns
4. Production of Thai musical instruments
5. Production of goldware, silverware, nielloware, bronzeware or lacquerware
6. Production of crockery or porcelains representing Thai arts and culture

Chapter 3: Businesses Having Impacts on Natural Resources or the Environment

1. Production of sugar from sugar cane
2. Salt farming, including non‐sea salt farming
3. Production of rock salt
4. Mining, including rock blasting or rock crushing
5. Timber processing for production of furniture and utensils

List 3: Businesses in Respect of Which Thai Nationals Are Not Yet Ready to Compete with Foreigners

Activities stated in List 3 are designated as businesses in which Thai nationals are not yet ready to compete with foreigners. In order for foreigners to engage in activities stated in List 3, the foreign company must apply for and obtain a Foreign Business License prior to commencing the activity. The following business activities are listed as follows:

1. Rice milling and production of flour from rice and economic plants;
2. Fishery only in respect of the hatching and raising of aquatic animals;
3. Forestry from a grown forest;
4. Production of plywood, veneer wood, chipboards or hardboards;
5. Production of lime;
6. Provision of accounting services;
7. Provision of legal services;
8. Provision of architectural services;
9. Provision of engineering services;
10. Construction, with some exceptions;
11. Brokerage or agency businesses, with some exceptions;
12. Sale by auction, with some exceptions;
13. Internal trade related to traditional agricultural products or produce not yet prohibited by law;
14. Retail sale of goods of all types with the total minimum capital in the amount lower than one hundred million Baht or with the minimum capital of each store in the amount lower than twenty million baht;
15. Wholesale of all types with the minimum capital of each store in the amount lower than one hundred million baht;
16. Advertising business;
17. Hotel business, with the exception of the hotel management service;
18. Guided touring;
19. Sale of food and beverages;
20. Cultivation, propagation or development of plant varieties;
21. Other service businesses, with the exception of service businesses as prescribed in the Ministerial Regulation.

A foreign entity seeking to engage in any of these business activities must first obtain a Foreign Business License (FBL) from the Foreign Business Committee and the Director-General of the Department of Business Development (DBD). There are also cases for exemptions or special permissions from the Board of Investment or Industrial Estate Authority of Thailand, as well as through free-trade agreements and treaties between Thailand and certain nations.

What are Qualifications for Foreign Business License Application?

Under Section 16 of the Foreign Business Act:

A foreigner intending to apply for a foreign business license must have the qualifications and must not be under prohibitions as follows: 

(1) being of not less than twenty years of age;

(2) having a residence in the Kingdom or having been permitted to enter the Kingdom temporarily under the law on immigration;

(3) not being an incompetent or a quasi‐incompetent person;

(4) not being a bankrupt;

(5) not having been punished by a court judgment or ordered to pay a fine in settlement of any offence under this Act or under the Notification of the National Executive Council No. 281, dated 24th November B.E. 2515 (1972), unless having been discharged for a period of not less than five years prior to the date of the application for the license;

(6) not having been imprisoned by a court judgment for offences of cheating, cheating creditors, misappropriation or offences related to trade under the Penal Code or the offences related to loans fraudulent to the public or the offences under the law on immigration, unless having been discharged for a period of not less than five years prior to the date of the application for the license;

(7) not having had a license issued under this Act or under the Notification of the National Executive Council No. 281, dated 24th November B.E. 2515 (1972) revoked within the period of five years prior to the date of the application for the license. 

How to obtain an FBL?

Generally, the application process for a Thai Foreign Business License could be long and complex. It may take a minimum of 4 months to receive a decision on the application. Therefore, we sincerely suggest you or your company inquire us before you apply the license. We have years of experience of assisting clients from different countries on company registration, protection of shareholder, application of BOI, and application of FBL, etc. We will arrange professional lawyers to service you with high efficiency and quality.