Recent Legal Changes Affecting Business Government May Liberalize Some Service Sector Businesses to Foreigners
Thailand’s Foreign Business Act ( FBA) lists 21 categories of businesses in Annex 3 where foreign majority ownership of such businesses is restricted because the government contends Thais are “not yet ready to compete with foreigners.” This list includes “other service business, unless specifically exempted by Ministry of Commerce regulations,” and the Ministry of Commerce ( MOC) has interpreted the term “services” very broadly.
Annex 3 is supposed to be reviewed at least once annually for purposes of determining if businesses listed on that annex can be opened up to foreign competition, and on July 12, the Thai Cabinet approved draft MOC regulations opening six categories of service businesses to foreign competition: Businesses relating to or necessary for the operation of commercial banks ( with 12 sub- categories); Asset management businesses under the Assets Management Companies Act; Representative offices; Regional offices; Provision of services to state agencies; and Provision of services to state enterprises. The draft is being sent to the Council of State for further review. Once the MOC regulations are finalized and published in the Royal Gazette, foreign majority owned businesses will no longer need to obtain an FBA license to engage in these business operations ( although the FBA’S minimum capitalization requirement of two million Baht will continue to apply for each such business operated by a foreigner).
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The Thai government recently promulgated new regulations for financial institutions on accepting deposits or receiving money from the public. The regulations aim to enhance the security and stability of these processes, and therefore improve the credibility of commercial banking business.
Under Bank of Thailand Notification Sornorsor 7/ 2559, financial institutions must set up mechanisms to ensure effective and accurate identification and verification of their customers, commonly referred to as “Know Your Customer” ( KYC). The regulations impose strict requirements and restrictions on accepting deposits of money or receiving money from the public via electronic means.
The standard of the identification and verification process must be the same as services rendered to customers who are physically present at banks. If customers are not available in person, financial institutions must use electronic devices, such as video conferencing equipment, to enable bank officers to interview and observe a customer’s behavior on a realtime basis.
If financial institutions accept deposits of money or receive money from the public through a virtual teller machine, kiosk, computer, or other electronic device, they must examine the information and identification documents of their customers by using a smart card reader. They may use the government’s identification and verification system or its fingerprint verification system, together with their smart card reader, to be more accurate.
Financial institutions have until the end of this year to improve their internal systems, standards, and risk management.
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