Service industry may open up to foreigners

The government is mulling opening some service businesses, particularly those related to the government’s targeted industries, to more foreign investment.

Kulanee Issadisai, director-general of the Business Development Department, said a panel handling the review of the Foreign Business Act (FBA) of 1999 is scheduled to meet on Thursday to consider what types of service businesses on List 3 of the act should be removed.

“The review of List 3 is nothing special, as it is the panel’s duty to review it every year to ensure the act falls in line with the current trade and investment situation,” she said.

The FBA limits foreign shareholding to 49% of a business and includes three lists of work for which foreign participation may be prohibited or restricted.

Activities in List 1 are designated as “businesses not permitted for foreigners to operate due to special reasons”.

Foreign companies are completely restricted from engaging in these activities.

Activities in List 2 are designated as “businesses related to national safety or security, or affecting arts and culture, traditional and folk handicraft or natural resources and environment”.

Foreign companies may only engage in these activities upon cabinet approval.

Activities in List 3 are designated as “businesses in which Thai nationals are not yet ready to compete with foreigners”.

Foreign companies must apply for and obtain a foreign business licence before taking part in these activities.

Mrs Kulanee said the review will largely focus on businesses that have specific laws governing them for which Thai nationals are now ready to compete, as well as businesses related to the targeted S-curve industries now being promoted by the government.

The targeted industries are: next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical services.

Mrs Kulanee said the department already hired the Thailand Development Research Institute to study businesses on List 3 in which Thais are now ready to compete.

A source from the Commerce Ministry said those service businesses that are likely to be removed from List 3 include express mail service and parcel delivery.

Thai companies are becoming more competitive in this sphere, while the government is promoting e-commerce and online shopping, necessitating more providers in the market, she said.

The department said last week that it planned to improve the law, particularly with regard to a new definition of “foreigner” to tackle the nominee problem.

The amendment aims to bring the FBA in line with changing economic conditions and strike a balance between protecting Thai investors and promoting foreign investment.

Mrs Kulanee said that the amendments will also take into account the national interest and security, adding that similar laws in the US, Japan, the EU, Asia and neighbouring countries will have to be studied.