BANGKOK — While Thai authorities are currently investigating nominal structures involving foreign nationals, notably in the case of a State Audit Office building that collapsed after an earthquake, using the Foreign Business Act 1999 as a legal basis, the cabinet has now approved a proposal to amend the same law to reduce what it considers excessive protectionism of domestic companies.
Cabinet Approval
The Cabinet meeting on April 22, 2025, approved in principle a proposal by the Department of Trade to urgently amend the Foreign Business Act 1999. The aim is to remove barriers to employment, promote economic development, strengthen trade and investment and improve national competitiveness, as proposed by the State Council Office.
The Ministry of Finance, the Ministry of Commerce, the Ministry of Home Affairs, the Ministry of Labor, the National Economic and Social Development Council (NESDC) and the Board of Investment (BOI) have reviewed the proposal and expressed either support or no objection.
Outdated Protectionism
The Law Reform Committee found that the current law which has been in force for almost 25 years emphasizes the protection of domestic companies to an extent that is no longer in line with current economic conditions and technological developments. The amendment aims to strengthen the competitiveness of Thai entrepreneurs, promote economic growth and reduce bureaucratic obstacles.
The government also argues that excessive protection hinders the growth of future industries, especially innovative and technology-oriented sectors, which could contribute significantly to GDP growth, employment and tax revenue.
Startup Challenge
One important example is start-ups, which often focus on high-tech innovations and are financed by both Thai and foreign investors. As funding increases, the proportion of Thai ownership often decreases, so the startups run the risk of being classified as foreign under current regulations, leading to legal restrictions.
The current law sets caps on foreign ownership and specifies restricted business categories for foreigners, conditions that are seen as barriers to the expansion of startups and the country’s overall economic progress.
The Ministry of Finance emphasized that any change should take into account the nature of the business, the investment ratio and the maturity of each sector to ensure compliance with relevant laws and regulations, especially those relating to foreign operations.
Labor Law Violations
Meanwhile, as part of the ongoing nomination investigation led by the Department of Special Investigation (DSI), Chinese nationals allegedly linked to China Railway have been arrested. Questions have been raised about the legitimacy of engineers who were supervising construction sites in Thailand on student visas.
Somchai Morakotsriwan, director-general of the Department of Employment at the Ministry of Labor, said that such actions, if proven true, would violate Thai labor law, not immigration law, since the foreign students had valid visas, but laws regulating the employment of foreigners.
“There are still such cases in Thailand,” Somchai said. “Our department has teams actively investigating and responding to public reports of illegal foreign labor. We will take legal action against anyone who is working illegally.”
Student Visa Abuse Concerns
Meanwhile, Supamas Israphakdi, Minister of Higher Education, Science, Research and Innovation (MHESI), has assigned Ms. Suchada Sang Thansap, Secretary to the Minister of MHESI, to represent the ministry in discussions with Immigration Bureau officials on April 23 regarding concerns that foreign students are using student visas as a channel to enter Thailand for illegal work.
They discussed to integrate information between the MHESI and the Immigration Bureau to systematically monitor the status and behavior of foreign students. If any educational institution is found to be complicit or negligent in allowing the misuse of student status, strict legal action will be taken according to relevant laws and regulations to prevent Thailand from being used as a channel for illegal work entry.
The MHESI will expedite the creation of a central database of foreign students in Thailand to facilitate verification with relevant agencies, and is preparing to review policies and measures for accepting foreign students to make them more stringent in the future.
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