A Joint Study Investigating the Benefits of a Closer Economic Partnership (CEP) Agreement between Thailand and New Zealand - April 2004

Annexes

• Annex I: Thailand’s Foreign Business Act, Limitations on Foreign Entry
• Annex II: Summary of the Overseas Investment Policies of New Zealand

Annex I: Thailand’s Foreign Business Act, Limitations on Foreign Entry

This annex contains a summary of Thailand’s Foreign Business Act. A full description is available at: www.boi.go.th [external link]

A “Foreigner” means:

1. Natural person not of Thai nationality
   
2. Juridical person not registered in Thailand
   
3. Juridical person registered in Thailand having the following characteristics:
   
   Having half or more of the juridical person’s capital shares held by persons under (1) or (2) or juridical person having the persons under (1) or (2) investing with a value of half or more of the total capital of the juridical person.
   
   Limited partnership or registered ordinary partnership having the person under (1) as the managing partner or manager.
   
4. Juridical person registered in Thailand having half or more of its capital shares held by the person under (1), (2) or (3) or a juridical person having the persons under (1), (2) or (3) investing with the value of half or more of its total capital.
   
   The minimum capital used at the commencement of the business operation shall not be less than that prescribed by ministerial regulations and shall in no case be less than 2 million Baht. In cases where the business requires the licenses under the List One, Two, or Three, the minimum capital to be prescribed in the ministerial regulations for each of the business shall in no case be less than 3 million Baht.

List One: These business are not permitted for aliens to operate in due to special reasons:

1. Newspaper business, radio broadcasting or television station business;
2. Rice farming, farming or gardening;
3. Animal farming;
4. Forestry and wood fabrication from natural forest;
5. Fishery for marine animals in Thai waters and within Thailand special economic zones;
6. Extracting of Thai herbs;
7. Trading and auctioning Thai antiques or national historical objects;
8. Making or casting Buddha images and monk alms bowls;
9. Land trading.

Foreigners may operate the business under List Two only if Thai nationals or juridical persons that are not foreigners hold shares valued at not less than 40% of the capital of those foreign juridical persons. Unless there is a reasonable cause, the Minister of Commerce with the approval of the Cabinet may reduce the proportion requirement but it shall not be less than 25% and the number of Thai directors shall not be less than 40% of the total number of directors.

List Two: The business related to the national safety or security or affecting arts and culture, tradition, folk handicraft or natural resource and environment:

Group One: The business related to the national safety or security

1. Production, selling, repairing and maintenance of
   
   1. firearms, ammunition, gun powder, explosives;
   2. accessories of firearms, ammunition, and explosives;
   3. armaments, ships, aircrafts or military vehicles;
   4. equipment or components, all categories of war materials;
2. Domestic land, waterway or air transportation, including domestic airline business.

Group Two: The business affecting arts and culture, traditional and folk handicraft:

1. Traditional antiques or art objects being Thai arts and handicraft;
2. Production of carved works;
3. Silkworm faming, production of Thai silk yarn, weaving Thai silk or Thai silk pattern printing;
4. Production of Thai musical instruments;
5. Production of gold ware, silverware, nielloware, bronze ware or lacquer ware;
6. Production of crockery of Thai arts and culture.

Group Three: The business affecting natural resources or environment:

1. Manufacturing sugar from sugarcane;
2. Salt farming, including underground salt;
3. Rock salt mining;
4. Mining, including rock blasting or crushing;
5. Wood fabrication for furniture and utensil production;

Foreigners shall not operate the business under List Three unless permitted by the Direct General of Department of Business Development with the approval of the Foreign Business Committee.

List Three: The business which Thai nationals are not yet ready to complete with foreigners:

1. Rice milling and flour production from rice and farm produce;
2. Fishery, specifically marine animal culture;
3. Forestry from forestation;
4. Production of plywood, veneer board, chipboard or hardboard;
5. Production of lime;
6. Accounting service business;
7. Legal service business;
8. Architecture service business;
9. Engineering service business;
10. Construction, except for
    1. construction rendering basic services to the public in public utilities or transport requiring special tools, machinery, technology or construction expertise having the foreigner’s minimum capital of 500 million Baht or more
    2. other categories of construction as prescribed by the ministerial regulations.
11. Broker or agent business, except
    1. being broker or agent for underwriting securities or services connected with future trading of commodities of financing instruments or securities;
    2. being broker or agent for trading or procuring goods or services necessary for production or rendering services amongst affiliated enterprises.
    3. being broker or agent for trading, purchasing or distributing or seeking both domestic and foreign markets for selling domestically manufactured or imported goods in the manner of international business operations having the foreigners’ minimum capital 100 million Baht or more.
    4. being broker or agent of other category as prescribed by the ministerial regulations
12. Auction, except:
    1. auction in the manner of international bidding not being the auction of antiques, historical artifacts or art objects which are Thai works of arts, handicraft or antiques or having the historical value;
    2. other categories of auction
13. Internal trade connected with native products or produce not yet prohibited by law;
14. Retailing all categories of goods having the total minimum capital less than 100 million Baht or having the minimum capital of each shop less than 20 million Baht;
15. Wholesaling all categories of goods having minimum capital of each shop less than 100 million Baht;
16. Advertising business;
17. Hotel business, except for hotel management service;
18. Guided tour;
19. Selling food or beverages;
20. Plant cultivation and propagation business;
21. Other categories of service business except that prescribed in the ministerial regulations

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Annex II: Summary of the Overseas Investment Policies of New Zealand

New Zealand welcomes and encourages overseas investment from all countries. This is reflected by the facilitative nature of the Government's overseas investment policies. However, a minimal level of controls over "significant" overseas investment are maintained:

1. to ensure investment inconsistent with government criteria is discouraged, particularly in relation to certain land; and
2. for statistical purposes.

The Overseas Investment Commission [external link] (the Commission) administers the Overseas Investment Regulations 1995 (the Regulations). Under the Regulations an "overseas person" must obtain consent to acquire or take "control" of 25% or more of New Zealand:

1. businesses or property worth more than $50 million;
2. land over 5 hectares and/or worth more than $10 million;
3. land on most off-shore islands; and
4. land over 0.4 hectares that includes or adjoins "sensitive" land over 0.4 hectares (e.g. on specified islands, containing or next to reserves, historic or heritage areas, or lakes); and
5. land over 0.2 hectares that includes or adjoins the foreshore.
   

While 100% overseas ownership can be approved in all industry sectors some New Zealand based companies have restrictions relating to foreign ownership.

The Commission also administers sections 56 and 57 of the Fisheries Act 1996. An "overseas person" must obtain either an exemption under section 56 or permission under section 57 to acquire or continue holding quota, an interest in quota, annual catch entitlement or provisional catch history.

The Minister of Finance is responsible for policy relating to controls over overseas investment in New Zealand. This responsibility is shared with the Minister for Land Information in respect of certain land and with the Minister of Fisheries in respect of fishing quota applications.

Further details of assets subject to the approval process and the criteria they are required to meet can be obtained from the OIC website [external link] or the New Zealand Embassy in Bangkok.

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