In 2026, foreign investors are considering setting up companies and businesses without the restrictions of the Foreign Business Act. Our Bangkok corporate lawyers team at Herrera and Partners H&P in Thailand understand than when establishing a company in Thailand with foreign shareholders, many of our clients and investors may be familiar with the Treaty of Amity and Economic Relations between Thailand and the United States (Thailand–US Treaty of Amity), which may allow qualifying US nationals and companies to hold a high level of foreign ownership, including up to 100% in certain eligible businesses, subject to the conditions and exclusions under the Treaty.
However, the United States is not the only country with which Thailand has an international agreement relating to trade, investment, and services.
Thailand has entered into various agreements with its trading partners. This article focuses on two agreements that may be particularly relevant to foreign investors:
- Thailand–Australia Free Trade Agreement (TAFTA)
- Japan–Thailand Economic Partnership Agreement (JTEPA)
Both agreements contain commitments concerning market access for services and investment in certain sectors. Depending on the business activity and applicable conditions, investors from Australia or Japan may be permitted to hold a higher percentage of shares in certain businesses than would otherwise be permitted under Thailand’s general foreign ownership restrictions.
However, these benefits do not mean that Australian or Japanese investors can automatically hold 100% of the shares in every type of business. The applicable rights must be assessed on a business-by-business basis and in accordance with the specific conditions under the relevant agreement and applicable Thai laws.
- Thailand–Australia Free Trade Agreement (TAFTA)
The Thailand–Australia Free Trade Agreement (TAFTA) entered into force on 1 January 2005. The agreement covers trade in goods, trade in services, and investment between Thailand and Australia.
In relation to investment and services, Thailand has made market-access commitments in certain sectors for Australian investors and service providers. The level of foreign ownership permitted varies depending on the particular business activity.
Distribution of Products Manufactured in Thailand
Under TAFTA, Australian companies that manufacture products in Thailand may, subject to the applicable conditions, engage in the distribution of their own products without a limitation on Australian equity participation for the relevant activity. This may allow Australian ownership of up to 100% for such activities where the relevant requirements are satisfied.
Other Examples of Businesses Covered by TAFTA
TAFTA provides different levels of market access depending on the relevant sector. Examples include:
- Management consulting services for Regional Operating Headquarters (ROH) — Australian investors may be permitted to hold up to 100% of the shares, subject to the applicable conditions.
- Certain mining activities — Australian investors may be permitted to hold up to 60%.
- Certain large-scale hotel and restaurant businesses — Australian investors may be permitted to hold up to 60%.
- Certain higher education institutions specialising in science and technology — Australian investors may be permitted to hold up to 60%.
- Certain maritime freight transportation services — Australian investors may be permitted to hold up to 60%.
These examples demonstrate that TAFTA does not provide a single foreign ownership percentage applicable to all businesses. Instead, the level of market access varies according to the specific business activity and the conditions applicable to that activity.
- Japan–Thailand Economic Partnership Agreement (JTEPA)
Another important agreement is the Japan–Thailand Economic Partnership Agreement (JTEPA). The agreement was signed on 3 April 2007 and entered into force on 1 November 2007.
JTEPA covers trade in goods, trade in services, investment, and the movement of natural persons. It also contains specific commitments relating to investment and services.
For Japanese investors, one particularly relevant aspect is that JTEPA provides market access for certain services connected with Japanese manufacturing businesses, subject to specific conditions.
Wholesale and Retail Distribution of Own Products
One example concerns wholesale and retail distribution services relating to products manufactured in Thailand.
Where the applicable conditions are satisfied, a Japanese manufacturer or a company within the manufacturer’s group may be permitted to hold up to 75% of the shares for activities falling within the relevant commitment.
Example:
A Japanese company establishes a manufacturing facility in Thailand to produce machinery or industrial products and wishes to distribute the products it manufactures in Thailand.
If the proposed activities satisfy the applicable JTEPA conditions, the company may be able to rely on the relevant market-access commitment for wholesale or retail distribution and maintain a higher level of Japanese ownership than would otherwise be available under the general foreign ownership restrictions.
Repair and Maintenance Services
JTEPA also contains commitments relating to certain repair and maintenance services connected with manufacturing activities. In certain circumstances, Japanese investors may be permitted to hold up to 60% of the shares.
Example:
A Japanese company manufactures machinery in Thailand and wishes to provide after-sales services through a company within its group, such as:
- Machinery repair;
- Maintenance services; and
- Technical support relating to its products.
If these activities fall within the scope of the relevant JTEPA commitments and satisfy the applicable conditions, the Japanese investor may be able to benefit from the permitted foreign ownership percentage.
However, JTEPA sets out the specific scope and conditions applicable to each activity. Therefore, Japanese nationality alone does not automatically allow a company to conduct every type of service business with more than 50% Japanese ownership.
What Should Foreign Investors Check?
Before relying on TAFTA or JTEPA, investors should carefully assess the following:
- Does the investor qualify for the relevant rights under the applicable agreement?
The investor’s nationality, corporate structure, and other applicable qualifications should be reviewed.
- Is the proposed business activity included within Thailand’s market-access commitments?
The actual business activities must be compared with the specific sectors and descriptions covered by the relevant agreement.
- What is the maximum foreign ownership percentage permitted?
The permitted percentage may differ significantly between business activities, such as 60%, 75%, or 100%.
- Are there conditions relating to the company, products, or relationship with the parent company?
Certain commitments may apply only where specific conditions concerning manufacturing, products, corporate relationships, or business operations are satisfied.
- Is the business subject to other specific Thai laws or licensing requirements?
An international agreement may address foreign ownership or market access, but it does not necessarily remove separate licensing requirements applicable to the business.
How our Thai Law firm Herrera and Partners Can Assist
For investors from the United States, Australia, Japan, and other countries with relevant international agreements with Thailand, reviewing treaty or agreement-based rights at the early stage of business structuring can be important.
Herrera & Partners can assist with matters including:
- Reviewing the investor’s nationality and eligibility;
- Analyzing the proposed business activities and Foreign Business Act (FBA) classification;
- Assessing potential rights under the Thailand–US Treaty of Amity, TAFTA, or JTEPA;
- Advising on the appropriate foreign ownership structure;
- Assessing whether a Foreign Business License (FBL) or other approval may be required;
- Advising on company establishment and relevant regulatory procedures with Thai authorities.
Important Note
Rights under international agreements do not replace all requirements under Thai law and do not automatically exempt investors from all licensing or regulatory requirements.
Each investment should therefore be assessed on a case-by-case basis, taking into consideration the nature of the proposed business, the specific commitments and conditions under the relevant agreement, and all applicable Thai laws and regulations.
If you are interested in applying for any business license or would like to learn more about how your business can benefit, please contact our law firm in Thailand by sending us an email to info@herrera-partners.com
