Integrity Legal

Issues surrounding the decline in tourism have been of increasing concern in Thailand over the past months. Many factors seem to be at play when discussing the issue of the tourism downturn in Thailand. For instance, fallout from the US-China Trade War may be playing an integral role in the declining number of tourists coming to Thailand since the slowing of the Chinese economy has knock-on effects regionally. Specifically, the decreased purchasing power of Chinese consumers is causing a decrease in demand for travel packages to Thailand.

The China-specific issues notwithstanding, many have pointed to the increasing strength of the Thai baht as a cause of concern. Budget conscious travelers to Thailand are being put off by the relative increase in cost to travel to the Kingdom as a result of the appreciating local currency.

Finally, some of the decreasing tourist numbers could be attributed to the increasingly stringent immigration policies being placed upon ostensible tourists. In the past, there were a number of individuals who opted to live in Thailand utilizing tourist visas or 30 day stamps. These individuals who have been tabulated as “tourists” in the immigration records, but the reality was that these people were using such visas to live in the Kingdom. New enforcement measures have been put in place and new policies promulgated which are designed to discourage such behavior. For example, where once overstay in Thailand was considered a rather trivial offense which resulted in a relatively nominal fine, especially for those who overstayed their visa for a prolonged period. Now overstay can result in deportation and a prolonged registration on the Thailand Blacklist. Meanwhile, Immigration officers at border checkpoints have been turning away prospective entrants to Thailand if they are using multiple 30 day stamps in one year or are attempting to remain for a prolonged period of time in the Kingdom on single entry or multiple entry tourist visas.

Notwithstanding the above issues, Thailand remains one of the best jurisdictions in Southeast Asia to do business. Proof of the increased interest in Thailand is the fact that Foreign Direct Investment in Thailand has increased by over 200% in 2018. This increase in FDI may be attributed to the fact that the benefits which can be accorded to companies looking to do business in Thailand under the Board of Investment (BOI) are substantial and can even include prolonged tax holidays. Meanwhile, Thailand boasts the best infrastructure in the region and Bangkok has seen tremendous real estate growth as well as infrastructural improvement including, but not limited to, the expansion of the rail system within the city. High speed rail systems are likely to be brought online in coming years as well. Clearly, although Thailand is seeing some decline in terms of tourism it is increasingly apparent that business travelers and investors are choosing the Kingdom to conduct business.

It should be noted that along with all of the above developments, Thailand remains arguably the best jurisdiction for Americans doing business in the region as Americans can enjoy the benefits of the US-Thai Treaty of Amity. This agreement allows Americans citizens and American companies “national treatment” when doing business in the Kingdom thereby permitting 100% ownership of American enterprises operating in Thailand. This coupled with Thailand’s infrastructure and business environment makes Thailand an especially welcoming destination for American investment.

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Recently, the Foreign Minister of the Kingdom of Thailand visited the United States of America and was welcomed by the American Secretary of State. Some of the remarks made in a press conference may be notable to those interested in American foreign policy and the relationship between the United States and Thailand. To quote directly from remarks made by Secretary of State John Kerry in a recent State Department press release:

I want to thank our friends in Thailand, who represent the longest security relationship, the longest partner that we have in Asia – 180 years of a treaty relationship with Thailand. They are our partner in the largest multinational field exercise that takes place in the region.

The Treaty noted above is the Treaty of Amity and Economic Relations Between the Kingdom of Thailand and the United States of America (sometimes colloquially referred to as the US-Thai Treaty of Amity). This Treaty could be viewed as an update of previous Treaty agreements made prior to the Amity Treaty’s ratification in 1966. The Treaty of Amity represents one of the best sources of legal protection for American Citizens and American Companies conducting business in Thailand as it provides “National Treatment” to American companies in Thailand. So long as American companies (or American owned Thai Companies) receive certification from the Thai Ministry of Commerce, they arre permitted to legally operate in Thailand notwithstanding the provisions of the Thai Foreign Business Act. There are some restrictions on the business activities which an Amity Company may undertake, but overall the Treaty is a significant boon to American businesses operating in Thailand.

The Treaty not only symbolizes strong Thai-American relations in the commercial sphere, it also is seen as a symbol of America’s long standing diplomatic and security relationship with the Kingdom of Thailand, as Secretary Kerry noted in the aforementioned quote. Thai Foreign Minister Dr. Surapong Tovichakchaikul also commented upon the close relationship between Thailand and the United States, citing a relatively recent visit to the Kingdom of Thailand by President Obama:

Last November, President Obama visited Thailand as his first stop in Southeast Asia after his reelection. His visit served to strengthen our strong partnership. My meeting with Secretary Kerry today will be a good chance to continue dialogue on our future partnership, especially as we mark 180 years of Thai-U.S. diplomatic relations this year.

Those wishing to read this press release in detail are encouraged to click HERE.

As the prospect of an integrated ASEAN Economic Community draws near, it stands to reason that the United States and Thailand will continue to maintain their close relations as Thailand will likely prove to be a significant participant in the pan-ASEAN economic bloc. This important role for Thailand within the ASEAN framework could also prove beneficial to American business in Thailand. Only time will tell.

Tags: AEC, Amity Company, Amity Treaty, ASEAN, ASEAN Economic Community, National Treatment, Secretary of State John Kerry, Thai Foreign Business Act, Thai Foreign Minister Dr. Surapong Tovichakchaikul, Thai Ministry of Commerce, Thai-U.S. diplomatic relations, Thailand company, Treaty of Amity, US-Thai Treaty of Amity
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