In this post-Covid era, Foreign Direct Investment (FDI) into Thailand has been on the rise, with FDI inflows and applications for investment promotions increasing 36% from the previous year (approximately 13 billion USD). Accordingly, Thailand’s gross domestic product (GDP) is expected to increase from 2.6% in 2022, to a projected high of 3.7% in 2023.
According to the Thai Government, the top sources of foreign investment into Thailand last year were from Japan, Singapore, US, Taiwan, HK and China. The Board of Investment recorded that the electronics, EV and automobile, and digital sectors had the highest growth rates in 2022.
There are many factors that make Thailand an attractive place for foreign investment, including its geographical location in South East Asia, a skilled labour force, Board of Investment incentives, and the introduction of Long-term Resident visas for foreigners. In November 2022, the BOI introduced more incentives to promote investments, such as tax exemptions, new industry categories and special investment zones.
Based on such positive financial trends and government encouragement, things are looking upwards for foreign investors and investments into Thailand. However, where there is further investment, there is further risk and potential for problems and disputes. This article provides an overview of the top legal and practical problems frequently encountered by foreign investors in Thailand, and how to minimise or avoid such risks.
Legal Problem 1: Licensing, Corporate Structure, and Contractual Issues
Under Thai law, foreign businesses wishing to invest in Thailand must comply with the Foreign Business Act B.E. 2542 (1999) (FBA) which identifies three categories of businesses that are restricted for foreign investors. The following table provides a brief explanation of the three categories and examples of businesses from each category:
Therefore, in order to conduct business in Thailand, foreign investors must obtain one