Thailand offers significant opportunities for investment in water-based and marine businesses due to its extensive coastline, islands, rivers, and numerous water-based tourist destinations. Businesses in this sector include yacht and boat charter services, marine tourism, diving and snorkeling activities, water sports, recreational fishing, water equipment rental, as well as marina and pier businesses.
However, foreign investors seeking to operate these businesses in Thailand should carefully consider foreign ownership restrictions and the specific licensing requirements applicable to each type of water-based activity. A single business may be subject to regulations administered by several different government authorities.
Our law firm in Bangkok, Herrera and Partners H&P, with a team of dedicated lawyers to advice on corporate structuring and foreign investment in Thailand, have prepared a summary of the key aspects of marine businesses and water-based businesses in Thailand.
Foreign Ownership and the Foreign Business Act
The first key issue for foreign investors is whether the proposed business activities are subject to restrictions under the Foreign Business Act B.E. 2542 (1999) (FBA).
Generally, a company is considered a “foreigner” under the FBA where 50% or more of its capital is held by foreign individuals or foreign legal entities. If such a company conducts a business listed in the restricted activities under the FBA, it may be required to obtain a Foreign Business License (FBL) before commencing operations, unless an exemption or other legal basis applies.
For water-based businesses, the applicable restrictions depend on the actual activities carried out by the company. For example, tourism services, transportation, boat or equipment rental, and recreational services may be subject to different requirements.
Accordingly, investors should clearly define the scope of their business and revenue-generating activities before establishing the company in order to determine whether an FBL or other business license is required.
Tourism and Water-Based Activities
Many water-based businesses are directly connected with tourism, including island tours, yacht charters, diving, snorkeling, fishing trips, kayaking, and other water sports.
Where a company arranges and sells tour programs directly to tourists, it may be necessary to consider the requirements under the Tourism Business and Guide Act and determine whether a tourism business license is required.
By contrast, where a company only provides boats, equipment, or supporting services to a properly licensed tour operator, the applicable requirements may be different.
This distinction is important because combining several activities within one company may result in multiple licensing requirements. Investors should therefore clearly identify each service provided and determine which licenses or approvals may be required.
Marine Department Regulations
Businesses involving the use of vessels, passenger transportation, marine tourism, piers, or marinas may be subject to regulation by the Marine Department.
Relevant requirements may include vessel-related licenses or registrations, safety standards, required equipment, qualifications of captains and crew, as well as approvals relating to piers or other water-related facilities.
The location of the business is also an important consideration, as requirements may differ depending on whether activities are conducted at sea, on rivers, canals, ports, marinas, or other waterways.
Investors should therefore consult with the Marine Department and other relevant authorities before commencing operations to ensure that all required licences and approvals are in place.
Marinas, Piers and Waterfront Facilities
Foreign investors planning to develop a marina, pier, waterfront facility, or other infrastructure located along the coast or a river should conduct a comprehensive regulatory review before commencing development.
In addition to corporate and foreign ownership considerations, such projects may involve land-use restrictions, construction permits, local authority approvals, environmental regulations, and approvals from the Marine Department.
Where a project is located in a coastal area, conservation area, or environmentally sensitive location, additional requirements may apply. Investors should therefore conduct due diligence on the legal status of the land and applicable restrictions before entering into a lease or making a significant investment.
Boat Charter and Rental Businesses
Boat and yacht charter businesses are increasingly popular in Thailand’s major tourist destinations. However, the legal requirements may depend on the specific business model.
For example, there may be different requirements for:
- renting a boat without a crew;
- providing a boat together with a captain and crew;
- providing passenger transportation services;
- providing private yacht charter services; or
- selling complete tour packages to tourists.
Each business model may be subject to different licensing and regulatory requirements.
Foreign investors should therefore clearly define the proposed operating model from the outset and identify all required licenses before commencing operations.
Employment of Foreign Personnel
Where a business employs foreign directors, managers, or other foreign personnel working in Thailand, investors must consider applicable immigration and work permit requirements, as well as any specific qualifications required for positions connected with marine activities.
Proper workforce planning from the beginning will help the company determine which positions should be filled by Thai nationals and which positions may be held by foreign personnel in compliance with Thai law.
BOI Investment Promotion
For projects of an appropriate scale and nature, foreign investors may also consider applying for investment promotion from the Thailand Board of Investment (BOI).
Certain activities relating to tourism, transportation, infrastructure, or services may qualify for investment promotion, subject to the applicable conditions for each promoted activity.
BOI promotion may provide eligible investors with certain tax and non-tax incentives, including, where applicable, benefits relating to foreign ownership.
However, BOI eligibility should be assessed before finalizing the corporate structure, as the type of activity, investment amount, and specific project conditions may affect eligibility for investment promotion.
Structuring a Water-Based Business in Thailand
Before commencing an investment, foreign investors should assess at least the following key issues:
- the nature and scope of the proposed business activities;
- foreign ownership restrictions;
- whether an FBL or other business licence is required;
- whether a tourism business licence is required;
- licences and requirements administered by the Marine Department;
- approvals relating to piers, marinas, and waterfront facilities;
- land-use and environmental regulations;
- employment and work permit requirements; and
- the potential eligibility for BOI investment promotion.
Proper legal structuring from the outset can help reduce licensing and regulatory risks while enabling investors to plan their investment and operations more efficiently.
Conclusion
Water-based and marine businesses in Thailand offer significant opportunities for foreign investors, particularly in marine tourism, yacht and boat charter services, water sports, diving activities, marinas, and other water-based recreational services.
However, these businesses are regulated by multiple laws and government authorities. Foreign investors should therefore consider not only the company’s foreign ownership structure but also the actual business model, applicable licences, location, use of assets, employment arrangements, and potential investment incentives.
Conducting a legal and regulatory assessment before commencing operations can help investors minimize regulatory risks and establish a compliant and efficient business structure in Thailand.
Herrera and Partners advises foreign investors on the establishment and structuring of water-based and marine businesses in Thailand, including foreign ownership analysis under the Foreign Business Act, company establishment, relevant licensing requirements, Marine Department regulations, tourism business licenses, employment and immigration matters, and potential eligibility for BOI investment promotion.
If you are looking for a legal consultation with our corporate lawyers in Thailand, please send us an email at info@herrera-partners.com
