Veeranuch Thammavaranucupt of Weerawong Chinnavat & Peangpanor in Bangkok looks at the current business climate in Thailand

Overview of inbound M&A

When companies are considering inbound acquisitions in Thailand, the principal considerations investors need to be aware of are the restrictions on the business activities that can be undertaken by foreign entities.

The legislation relating to foreign investment and M&A transactions in Thailand is the Foreign Business Act 1999 (FBA). The operation of certain businesses in Thailand by foreign nationals is restricted by the FBA under the administration of the Ministry of Commerce (MOC). For the purpose of the FBA restrictions, a ‘foreigner’ is classified as a foreign individual, a company incorporated outside Thailand, or a company incorporated in Thailand that is majority-owned by foreign individuals or foreign companies.

The FBA sets out three lists of business categories in which the participation of foreign nationals is either prohibited or restricted. Foreign nationals are prohibited from participating in the businesses specified in List 1, which includes antiques trading, broadcasting, farming and forestry. Foreign nationals are restricted from participating in businesses specified in List 2 unless they obtain a foreign business license (FBL) from the Thai Cabinet. List 2 includes activities related to national safety, agriculture, arts and culture, natural resources and the environment.

Finally, foreign nationals are restricted from participating in the businesses specified in List 3 unless they obtain an FBL from the Director-General of the Department of Business Development with the approval of the Foreign Business Committee. List 3 comprises a total of 21 categories of restricted businesses in which Thais are not yet ready to compete with foreigners, including accountancy, engineering, construction (with certain exceptions), retailing and wholesaling (with certain exceptions), advertising, hotel operation (excluding hotel management), tour guiding, sale of food and beverages, and the catch-all category ‘other services’. Certain service businesses are exempt from the FBA by virtue of Ministerial Regulation Nos. 1 and 2, such as: commercial banking; bank representative offices; life insurance; non-life insurance business; securities business and other businesses under the law on securities.

A foreigner engaging in a restricted business under the FBA can obtain a foreign business certificate (as opposed to an FBL). Generally, the administrative process for obtaining a foreign business certificate is less onerous than for an FBL.

To obtain a foreign business certificate, a foreigner is required to obtain an investment promotion certificate from the Thailand Board of Investment (BOI), or be eligible under a treaty to which Thailand is a party, such as the Treaty of Amity between the United States and Thailand, the ASEAN Framework Agreement on Services or the ASEAN Comprehensive Investment Agreement.

An entity wishing to enjoy protection under a treaty must be incorporated in Thailand and have no less than 50% of its share capital held by US or ASEAN nationals or a company incorporated under the laws of a US or ASEAN country. More than half of the directors of the juristic person and the authorized directors must also be US or ASEAN nationals.

Key trends and industries

The Thai government instituted several schemes to promote Thailand as a regional hub for trading, financial services and investment, such as the tax schemes for International Headquarters (IHQ) and International Trading Centers (ITC). IHQ and ITC activities have been included in the new investment promotion strategies.

An IHQ is a company established in Thailand to carry on managerial services, technical or supporting services or financial management of its associated enterprises in Thailand or in overseas countries. An ITC is a company established in Thailand to engage in the business of buying and selling goods, raw materials and parts, as well as providing services related to international trade to foreign juristic entities.

In May 2015, the Revenue Department announced Royal Decree Nos. 586 and 587 to provide tax incentives for IHQ and ITC businesses, respectively. IHQs and ITCs must meet a number of requirements to receive incentives. For example, the company must have paid-up capital of more than Bt10 million and annual operating expenses of at least Bt15 million; provide services to affiliates incorporated under foreign law; and obtain approval from the Director-General of the Revenue Department.

IHQ and ITCs are now replacing regional operating headquarters and international procurement offices that are no longer listed as BOI eligible activities. Since IHQs and ITCs are eligible for relaxed criteria (for example no minimum number of service recipients in foreign countries is required) without reducing tax privileges, IHQs and ITCs have recently become attractive to investors.


The main legislation relating to arbitration is the Arbitration Act 2002 (the Act). The Act enshrines the freedom of parties to contract as they may decide on the place of arbitration, the language to be used in the arbitral proceedings, the procedures regarding the appointment of the arbitrators and other practical matters. The provisions relating to such matters in the act serve as default rules applicable only when the parties fail to agree.

Courts may dismiss an application for the enforcement of an arbitral award if it finds that the award involves a dispute ‘not capable of settlement by arbitration under the law’. Disputes relating to administrative contracts between a government agency and a private enterprise are explicitly recognised as arbitrable. Criminal disputes or civil disputes concerning public policy such as disputes between employers and employees relating to employee rights according to the labour law, disputes relating to trade competition law and disputes relating to mandatory corporate law are not arbitrable.

The Act governs not only arbitration in Thailand but also the enforcement of arbitral awards from other countries. Thai courts are required to enforce an arbitral award made in a foreign country that is a member of an international convention treaty or agreement to which Thailand is also a party, namely the Convention on the Execution of Foreign Arbitral Awards 1927 (the Geneva Convention 1927) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention 1958). Exceptions are in the cases that, among other things, the arbitral award is beyond the scope of the arbitration agreement, the arbitral award relates to a dispute that cannot be legally resolved by the arbitration, or the enforcement of the arbitral award would be contrary to the public order or good morals of the people of Thailand.


Veeranuch Thammavaranucupt
Senior partner
Weerawong Chinnavat & Peangpanor

About the author

Veeranuch Thammavaranucupt is senior partner and co-head of the firm's capital markets and corporate governance practice group at Weerawong C&P. Veeranuch has considerable experience in capital markets and mergers and acquisitions, particularly innovative transaction structures and telecommunications in both domestic and cross-border transactions. Prior to joining Weerawong C&P, Veeranuch was a partner at an international law firm and general counsel at a Thai telecommunications company.