The Commerce Ministry forwarded a draft bill to amend the 1999 Foreign Business Act for off plan property in Thailand to the cabinet on Jan 9. Approved in principle, the bill is now under review by the Council of State. Once approved, the draft will be resubmitted to the cabinet again before being sent to the National Legislative Assembly for consideration.
The following are abstracts from a white paper drafted by the Commerce Ministry to explain the intentions of the amendments to the business community.What is the Foreign Business Act? The Foreign Business Act (FBA) is the main law that regulates scope of foreign business activities in Thailand. It does that through a simple three-step procedure:

1. Defining who ''foreigners'' are;

2. Listing categories of business that foreigners cannot do without permission;

3. Setting out procedures for foreigners to obtain such permission;

In addition, the FBA contains provisions establishing the authorities that are empowered to grant permission and setting penalties for legal violations.

Why is it necessary to enact the FBA?

Although enacted in 1999, the FBA is not a new law. Its predecessor was called the Alien Business Law, or better known as Por Wor 281. The ABL was promulgated in 1972 in order to limit foreign participation in some business activities either because they were sensitive sectors for Thailand or because the Thai people were not competitive in those sectors.
The ABL was revised twice, in 1978 and 1992, to make it gradually more liberal. But in 1999 a major revision was called for and Parliament passed the current FBA. The rationales behind the FBA are:
Fto make foreign business regime more liberalised in line with Thailand's need for investment and capital inflows;
Fto reclassify businesses that should be reserved for Thais to make the lists better suited for Thailand's competitiveness;
Fto implement international agreements to which Thailand is party.Are all foreign businesses in Thailand subject to this law? No, only businesses that appear in Lists 1, 2 and 3 are subject to the FBA. Most manufacturing activities are not covered by the FBA. Automobile production, for example, is not subject to the FBA which means foreigners can have 100% ownership once they register the company and obtain a tax ID.
Businesses that receive certificates from the Board of Investment's promotion scheme will be exempted from the FBA.Who are considered ''foreigners'' according to the FBA? As a general rule, foreigners or foreign companies can own shares in any company doing any business in Thailand up to 49.99%. Of course, they can own more than that if they engage in business not listed in the FBA.
But foreigners may be allowed to own shares of less than 49.99% in some sectors that are governed by specific laws. Some of these laws set limits on foreign ownership of shares below 49.99%, such as banking and insurance laws.Are foreigners prohibited from operating businesses listed under the FBA? No. foreigners can engage in most of the business listed under the FBA. Only the nine businesses in List 1 are completely prohibited to foreigners.
The FBA contains 3 lists. Foreigners are permitted to engage in business provided for under these lists to a different extent. While they are not allowed to apply for licence to engage in businesses under List 1, they can apply for licences to engage in business and have majority ownership in List 2 or 3 businesses.
Although they cannot have majority ownership in List 1 businesses, they can own up to 49.99% of shares.Why does the FBA have to be amended? Like many laws, the FBA is not without loopholes. There have been two major ways to circumvent the FBA _ using voting rights and having nominees. Through these arrangements, foreigners can engage in businesses that are regulated in the FBA without applying for a licence.