Foreign Business License (FBL)
Purpose: The Foreign Business License (FBL) authorizes foreign nationals to conduct business activities otherwise restricted under Thailand’s Foreign Business Act (FBA). Its primary objective is to attract foreign enterprises that contribute significantly to the Thai economy.
Approval Authority: Issued by the Department of Business Development, under the Ministry of Commerce.
Permitted Activities: The FBL may cover:
- Service-based businesses requiring specialized foreign expertise
- Export-oriented manufacturing operations
- Enterprises facilitating technology transfer
Approval Process:
- The process is complex and discretionary; approval is not automatic.
- Each application undergoes a case-by-case evaluation, assessing the business’s potential economic benefits to Thailand.
Ownership Structure: In certain cases, the FBL may permit majority foreign ownership, even in typically restricted sectors.
Foreign Business Certificate (FBC)
Purpose: The Foreign Business Certificate (FBC) serves as official confirmation of a foreign company’s legal right to operate in restricted sectors under specific exemptions, including:
- Companies covered by the US-Thai Treaty of Amity
- Businesses promoted by the Board of Investment (BOI)
- Enterprises operating within Industrial Estate Authority of Thailand (IEAT) zones
Approval Authority: Issued by the Department of Business Development, under the Ministry of Commerce.
Permitted Activities: Unlike the FBL, the FBC does not grant new permissions but certifies compliance with pre-existing exemptions (e.g., Treaty, BOI, or IEAT privileges).
Approval Process:
- More procedural compared to the FBL.
- Required to validate legal status for restricted business operations under applicable exemptions.
Ownership Structure: Depends on the underlying exemption. For example, the US-Thai Treaty of Amity permits majority US ownership in most sectors.
Key Differences Summary
- FBL: A proactive license allowing foreign businesses to enter restricted sectors based on merit and economic benefit.
- FBC: A confirmatory document for businesses already eligible under treaties or investment promotions.
Practical Example
A US-based software development firm seeking to establish operations in Thailand (where software development is FBA-restricted) has two options:
- Apply for an FBL, demonstrating how their business enhances Thailand’s technology sector.
- If ineligible for an FBL, pursue an FBC under the US-Thai Treaty of Amity (if applicable).
Important Considerations
- Terminology Clarification: The terms “FBL” and “FBC” are occasionally used interchangeably, leading to confusion.
- Legal Advisory: Due to the complexity of Thai corporate regulations, foreign investors should seek guidance from qualified legal professionals specializing in Thai business law. Talk to unionspace.co.th team for expert advise on how to obtain a FBL for your business in Thailand.
