Thailand cracking down on foreign-controlled firms using locals as nominees

The Commerce Ministry’s Business Development Department will this year expand its investigation into the use of Thai nationals as nominees for foreign-controlled companies in nine provinces where it suspects the illegal practice is widespread.

This year, three additional provinces will be monitored – Krabi, Trat (Koh Chang), and Chiang Rai. Last year, six provinces were focused on – Bangkok, Chon Buri, Surat Thani, Prachuap Khiri Khan, Chiang Mai, and Phuket – and 13 firms were suspected of breaching the Foreign Business Act (FBA) through the use of Thai nominees.

Pongpun Gearaviriyapun, director-general of the department, said it would tackle this practice vigorously this year through stringent law enforcement in a bid to prevent problems occurring under the FBA.

She said the department would extend its investigation of nominee cases to 10 business sectors – food and beverages, tourism, property rental, the property trade, car rentals, spas, handicraft and souvenir retail, Internet retailing, direct sales, and education consultants.

She said those sectors would be targeted because it was believed that a high proportion of their businesses were foreign controlled through the use of Thai nominees.

She said the department would stringently investigate those businesses in an effort to prevent enterprises and consumers being affected negatively as some foreign-owned businesses were engaged in unscrupulous activities to lure consumers.

The inspections will focus on a business’ share structure, investment capital, and technology transfer.

Last year, the department investigated six sectors – food and beverages, tourism, car rentals, property rental, property sales, and spas.

Meanwhile, to facilitate foreign enterprises doing business in the country, the department is considering relaxing its regulations under the FBA. This would involve them not having to get the FBA board’s permission to operate under the act.

Businesses that would benefit from the move include representative offices, companies that are state-owned contractors, and subsidiary firms.

In addition, the department will focus on supporting the starting up of new enterprises and strengthening local business growth under the ASEAN seamless market.

The department will also develop its electronic services, such as e-registration, e-filing, and e-service applications, to help enterprises register, submit account balances, and update information online so they can save costs and time.