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Foreign Business Licences No Longer Required in Four Banking and Insurance Sectors

Overseas investors in four business sectors - commercial banking, representative offices of foreign banks, life insurance, and non-life insurance – are no longer required to obtain foreign business licences prior to beginning operation in Thailand. Instead, such operations will be deemed to be subject to the existing banking laws and regulations of the Bank of Thailand (BOT) and the Office of Insurance Commission (OIC).

The change was outlined in a recent regulation issued by the Ministry of Commerce. It came into effect as of 19 February, 2016.

It is important to note that other licensing and shareholding limitations established by the BOT and OIC for foreign business owners may still apply. Furthermore, business operations that are similar to banking and insurance, such as leasing, in-house lending, and consulting services, are not included in this exemption, and will still require prior approval from the Foreign Business Committee (FBC).

The change effectively excludes the designated business sectors from Annex 3 of the Foreign Business Act (FBA). The intention is to reduce the number of redundant laws and to attract more foreign investors by streamlining regulations and making it easier for foreign business operations in Thailand.

The FBA lists a number of businesses and commercial activities that foreigners are not allowed to engage in unless they obtain a relevant licence or an exception applies.[1]  Annex 3 of the FBA specifies particular regulations for certain business categories in order to protect domestic investors from foreign competition. In line with these regulations, foreign investors with a higher than 50% stake in any such company are required to secure a foreign business license from the FBC.

Under the recent changes to the FBA, however, foreign investors will now be able to bypass FBC approval and apply for an operating licence directly from the BOT or OIC.

This move has been designed ease overseas investment regulations for commercial banking, representative offices of foreign banks, life insurance, and non-life insurance business. It forms part of a larger government strategy to promote Thailand as a key Southeast Asia financial centre. By the end of 2015, eleven foreign banks – representing a total investment capital of US$3.05 billion (Bt 109.8 billion) – as well as nine foreign bank representative offices, two foreign life-insurance firms, and six non-life insurance companies had all obtained approval from the FBA. The recent legislative changes are seen a likely to result in a dramatic rise in this number.

Unconfirmed reports suggest that the Ministry of Commerce is now considering removing three further service-related businesses from the FBA, though no official announcement has been made and the three business sector have yet to be formally identified.[2]  With further efforts being made by the Thai government to promote inward FDI, it is expected that additional businesses in the banking and agricultural products trading sectors will be considered for removal from FBA oversight.


[1]  Thailand Board of Investment official website
[2]  The Nation, 7 March 2016

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