The decision to visit Phuket this week by the Lower House's committee on business development is timely as the issue of fierce competition brought on by illegal foreign businesses in tourist towns is grabbing headlines.
The committee decided to launch a fact-finding probe after local residents on this resort island petitioned their elected MP, according to Move Forward Party (MFP) list-MP Sittiphol Viboonthanakul, chair of the Lower House's economic development committee.
Phuket is becoming a flash point after reports emerged of foreigners opening illegal real estate offices, car rental services, spas and hotels -- among other unsanctioned businesses -- to compete with locals.
At the popular Kata beach, police reportedly admitted that 90% of the bars there are owned by foreign investors -- with many owners using Thai nominees or even their spouses. While foreign investment is welcome, some have violated local laws by using Thai nominees or hiring illegal workers.
Many Thais who live in such tourist hot spots fret about the rising cost of living and higher land prices caused by foreigners settling there and opening businesses.
"Without a clear solution, the confrontation between Thai-run and foreign-operated businesses in these economic areas will become more serious," Mr Sittiphol said.
Indeed, the problem poses a dilemma as the country's economic and tourism policy seems solely focused on extracting money from foreigners. At the same time, Thailand lacks proper legal oversight of such affairs and is rife with corruption.
The Foreign Business Act (1999) is not enough in itself to trace the use of nominees. Corruption and a lack of immigration oversight opens the door to letting illegal entrants work here and compete with Thai labourers.
On the ground, Commerce Ministry officials who inspected food businesses in Bangkok's Chinatown last year found that many new owners who had recently relocated to Thailand could barely speak Thai yet happened to have Thai ID cards.
Thai officials and local people have expressed concern that they may be using proxies, as they ask how it is possible for these foreigners to obtain Thai ID cards.
Needless to say, without the help of Thai officials and Thai nominees, it is usually impossible for foreign owners to get their hands on one of these.
Meanwhile, efforts are being made to address the problem.
The Commerce Ministry, the Tourism Authority of Thailand and the Ministry of the Interior have joined hands to keep a closer eye on foreign businesses in tourist areas like Phuket, Chiang Mai and Pattaya. But enforcing the law is another matter.
As such, a multi-pronged solution is required. First, the government needs to look at its own officials. The Interior Ministry must do a better job of overseeing the issuance of land titles at the Department of Land. This area seems to have become riddled with graft, with beach space dished out to private owners who then resell it to local and foreign operators. There are also many cases of local officials issuing Thai IDs to illegal entrants.
The Foreign Business Act 1999 must be revised. The current law caps foreign shares in a Thai company at 49%, but this is easily circumvented, as foreigners can hire Thais as nominees. The law provides no legal mechanism for officials to check or correct this.