Tag: Treaty of Amity

US-Thai Treaty of Amity

The United States and Thailand have long-standing diplomatic, commercial, military, and people-to-people ties. The Treaty of Amity provides for national treatment for American companies and individuals that own majority shares or wholly own businesses engaging in commercial activities in the other party’s territory.

To qualify for Amity Treaty privileges, entities must be registered in Thailand and obtain certification from the US Embassy.

Business Environment

The US-Thai Treaty of Amity creates important rights for American nationals operating businesses in Thailand. Companies with a Treaty Certificate are eligible to receive “National Treatment,” meaning that they will be treated the same as Thai companies under Thai law.

Similarly, the Overseas Private Investment Corporation (OPIC) can provide debt financing and political risk insurance for business investments by American nationals. OPIC supports projects in a wide range of sectors, including tourism, transportation, manufacturing, franchising, power and infrastructure.

While corruption is widespread in Thailand, U.S. firms that follow strict anti-bribery guidelines are able to compete successfully. Companies that have a significant presence in the country should familiarize themselves with the Foreign Corrupt Practices Act and should make sure that their employees are aware of these obligations. The government recently signed a integrity pact, based on a model promoted by Transparency International, that will require public-sector agencies to disclose bidding information and the names of their contractors.

Investment Opportunities

Thailand promotes FDI through clearly articulated incentives, based on the type of investment. The Board of Investment is the central agency responsible for implementing these policies, including granting national company privileges for eligible projects.

The 1966 reiteration of the Treaty of Amity guarantees American citizens and businesses that are majority-owned by American citizens “national treatment,” exempting them from most of the restrictions imposed on foreign investors under the Alien Business Act. The Treaty also provides a one year period during which companies engaged in activities that would become restricted under the Act will enjoy a “grandfather” status, similar to previous foreign business acts.

In addition to the Treaty of Amity, Thailand has bilateral investment agreements with Argentina, Bangladesh, Belgium-Luxembourg Economic Union, Brazil, Canada, China, Croatia, Czech Republic, Denmark, Egypt, Finland, Germany, Hungary, India, Indonesia, Japan, Korea, Laos, Latvia, Malaysia, New Zealand, Peru, Slovakia, Russia, Sweden, Switzerland, Taiwan, and Turkey. The country is also a member of the World Trade Organization, which requires it to treat investment from every WTO member nation equally.

Human Rights

The US-Thai Treaty of Amity guarantees specific rights and privileges to American companies operating in Thailand. Most notably, an Amity Treaty company that has been vested or certified by the Ministry of Commerce will be granted national treatment under Thai law. This means that a company incorporated under the Amity Treaty will be exempt from restrictions on foreign investment (including those imposed by the Foreign Business Act) and will have access to special government incentives, such as the Board of Investment’s BOI.

To qualify for Amity Treaty status, a natural person or company must be a citizen of the United States and must own more than 50% of the shares or have at least 50% of the directors be American citizens. The applicant must also compile and submit the appropriate documents to the Ministry of Commerce for a business operation certificate.

In addition, the Amity process is considerably quicker than obtaining a Foreign Business License. GPS Legal has extensive experience in assisting clients with both the Amity and FBL processes.

Migrant Workers

The US-Thai Treaty of Amity guarantees the rights of American citizens to own and operate businesses in Thailand. However, the country’s current laws still place some restrictions on foreign ownership and operation of businesses in Thailand.

The Thai Foreign Business Act (“FBA”) requires that companies seeking a foreign business license (“FBL”) or foreign business certificate (“FBC”) must have at least 2 million baht in registered capital. This requirement is a significant deterrent to many potential investors, particularly for service companies that need to hire workers.

Treaty of Amity companies can avoid this restriction, if they meet the requirements. The first step in this process is getting a certification from the US Commercial Service (CS). Once completed, this letter can be submitted to the Ministry of Commerce’s Department of Commercial Registration in Thailand to receive a FBL or FBC. Once approved, the company will be granted “national treatment” under Thai law and will be treated as if it were 100% Thai-owned.