Thailand has expansive and byzantine restrictions on foreign ownership of businesses – far out of line with current international standards. Thailand has also suffered tremendous economic damage from the recent flooding. And Thailand is highly dependent on foreign investment to fuel its economy. Will the severe damage to Thailand’s economy caused by the recent flooding cause it to ease restrictions on foreign ownership of businesses in Thailand?
The most prominent restriction on Thai foreign investment is the Foreign Business Act, B.E. 2542 (FBA), which was enacted in 1999. It contains a little known provision providing for annual review of the business categories subject to restriction under the FBA. Clause 9 of the FBA provides that the committee responsible for administration of the FBA “shall review the business categories [subject to restriction] at least once a year…and submits its opinions [on liberalization] to the Cabinet”. Will such a review finally occur now?
Facing not only considerable damage from the floods but also increasingly strong competition from neighboring countries such as Vietnam, some are now pressing that the reviews required by Clause 9 of the FBA commence and that Thailand start to ease restrictions on foreign ownership of businesses. Will such reform actually occur? We won’t know until the immediate focus shifts from preventing further flood damage to repairing the considerable damage to Thailand’s economy.