Thai Export Company

Thai Export Company

Introduction

Thailand has traditionally been one of the largest export hubs in Southeast Asia. Its favorable geographic location, developed logistics, and access to seaports make the country attractive to foreign companies that want to use it as a base for international trade.
However, foreign activities are regulated by a special law — the Foreign Business Act B.E. 2542 (1999) (hereinafter — FBA). This law determines in which areas foreign companies can operate freely and in which only with permission from the Ministry of Commerce.
The question most often raised by entrepreneurs: can a foreign company engage in the export of goods from Thailand without restrictions?
Answer: yes, it can. But only export. The domestic market is under control.

Key Definitions

• Foreign company — a legal entity registered in Thailand in which foreigners own more than 50% of the shares or exercise actual control (Sec. 4 FBA).
• Foreign Business License (FBL) — a license of the Ministry of Commerce of Thailand issued under the procedure established in Section 17 of the FBA. Without it, foreigners cannot engage in activities from List 2 and 3.
• Export — the shipment of goods outside Thailand, including their sale to foreign buyers (not included in the prohibited lists of the FBA).
• Domestic trade — wholesale and retail sales of goods within Thailand (Annex 3 FBA).

Structure of the Foreign Business Act

The FBA consists of three lists (Annexes) specifying the types of activities restricted for foreigners:
• Annex 1 — completely prohibited activities (e.g., activities related to culture, religion, media).
• Annex 2 — areas where foreigners can operate only with Cabinet approval (e.g., exploitation of natural resources, transportation).
• Annex 3 — types of business where foreign competition “may harm” local companies. This includes trade and services. To operate, an FBL issued by the Department of Business Development (DBD) is required.
➡️ Export is absent from all three lists. This means foreigners can establish companies with 100% foreign capital for export without restrictions.

Practical Implications

1. Export (allowed without restrictions)
   Example: a foreign company opens an office in Bangkok, purchases agricultural products from Thai producers, and ships them to Europe.
   ✅ Such activity is legal, and no FBL is required.
2. Domestic market (restricted)
   Example: the same company decides to sell part of its goods on the local market (to wholesale or retail buyers in Thailand).
   ❌ Such activity falls under Annex 3 of the FBA and requires an FBL. Without a license, this is a violation of the law.
3. Manufacturer and trader have equal rights in export
   The FBA regulates not the company’s status but the type of activity itself.
   • A manufacturer exporting its products is not breaking the law.
   • A trading company buying goods and selling them only abroad is also acting legally.

➡️ In both cases, the key criterion is the absence of sales in the domestic market.

Risks of Violation

Violation of the FBA entails serious consequences:
• criminal liability (fines up to 1 million baht, imprisonment for executives);
• revocation of registration and company liquidation;
• inclusion in the DBD “blacklist.”

Final Conclusion

• An export company with 100% foreign capital in Thailand is legal and does not require a Foreign Business License.
• Domestic trade (wholesale and retail) is regulated under Annex 3 of the FBA and is possible only with a license.
• The law makes no distinction between a manufacturer and a trader: both may engage in export.
👉 The main principle: foreigners may export freely but cannot trade domestically without a license.

Frequently Asked Questions (FAQ)

Q: Can I set up a trading company in Thailand for export?
A: Yes, export activities are not restricted by the FBA.

Q: Can I sell goods both in Thailand and for export?
A: No. For domestic trade, a foreign company must obtain a Foreign Business License.

Q: Is it difficult to obtain an FBL?
A: Yes, the procedure is complex, and licenses are issued sparingly, especially for trading.