The Commerce Ministry is investigating 200 companies suspected of acting as nominees for foreign businesses in a move to curb the so-called "grey" market, with a particular focus on restaurants and tourism-related business in four notorious areas of Bangkok.
According to Keerati Rushchano, the permanent secretary for commerce, the nominee issues have re-emerged and are increasing now that the country's tourism sector has bounced back after the easing of the pandemic and China's reopening of its borders, resulting in a flood of Chinese tourists into Thailand.
The University of the Thai Chamber of Commerce estimates that 5 million Chinese tourists will arrive in the second quarter, tallying 7-8 million for the whole year, bringing the total number of foreign tourist arrivals to 26-27 million in 2023.
Jitakorn Wongkhatekorn, deputy director-general of the Business Development Department, said his department is investigating 200 companies suspected of acting as nominees for foreign businesses, initially in four areas of Bangkok: Huai Khwang, Yaowarat, Samphanthawong, and Ratchadaphisek, where many restaurants, hotels, massage outlets, spas and car rental businesses are located.
Mr Jitakorn said the department has also asked for financial information about the suspected companies and their business registration documents, to see whether they have violated the Foreign Business Act.
Thai citizens who are foreigners' nominees are liable to a jail term of up to three years and/or a fine of 100,000 to 1 million baht.
There is also a daily fine of 10,000-50,000 baht until the violation stops.
Mr Keerati, second from left, said that the nominee issues have re-emerged.
According to Mr Jitakorn, the department has also worked closely with the Department of Special Investigation to follow up on the financial movement of the suspected firms.
Mr Keerati said he has ordered provincial commerce offices nationwide to closely monitor new business registrations by strictly examining information about the companies, especially about the reliability of their business practices and suitable registered capital.
"The focus will not only be about new business registrations in major tourist provinces such as Chiang Mai and Phuket, but also the secondary provinces nationwide that may have illegal nominee practices," said Mr Keerati, adding that restaurants, tourism-related activities such as massage outlets, spas, tour bus rentals, hotels and lodgings are the high-risk groups in terms of nominee practices.
Thailand's Foreign Business Act currently limits foreign shareholdings to 49% of a business, and includes three lists of work for which foreign participation may be prohibited or restricted.
Activities in List 1 are designated as "businesses not permitted for foreigners to operate due to special reasons". Foreign companies are completely restricted from engaging in these activities.
Activities in List 2 are designated as "businesses related to national safety or security, or affecting arts and culture, traditional and folk handicraft, or natural resources and environment". Foreign companies may only engage in these activities with cabinet approval.
Activities in List 3 are designated as "businesses in which Thai nationals are not yet ready to compete with foreigners". Foreign companies must apply for and obtain a foreign business licence before taking part in these activities.
Mr Keerati said that the nominee issues have re-emerged.