E-commerce is a hot topic in Thailand right now. The percentage of growth in the e-commerce business is significantly increase than it was last year. As a result, this is an excellent opportunity for any investor interested in investing in Thailand. According to Threenuch Bunruangthaworn, Executive Partner at ZICO Law Thailand,
“one thing that I would like to highlight is that there are some regulations or registrations that you will need to be careful and aware of, such as for a foreign investor, there will be some regulatory on the foreign restrictions like capital requirement and also the e-commerce registrations or direct market registrations with the consumer protection authority.”
Governing legislation/ framework
The laws that would apply are as follows:
- The Commercial Registration Act B.E. 2499 (1956)
- The Notification of the Ministry of Commerce Re: Requiring Business Operators to Register Businesses (No.11) B.E. 2553 (2010) dated 10 November 2010
- Direct Sale and Direct Marketing Act B.E. 2545 (2002), as amended, (“DSA”).
E-commerce generally comes under the purview of the Department of Business Development (“DBD”, the Ministry of Commerce) and the Office of the Consumer Protection Board (“OCPB”).
Licensing & market entry requirements
- E-Commerce Registration: Pursuant to the Business Registration Act B.E. 2499 (1956) and the Notification of the Ministry of Commerce Re: Requiring Business Operators to Register Businesses (No. 11) B.E. 2553 (2010) dated 10 November 2010, a business operator of certain businesses is required to register its business as an E-commerce to the DBD, the Ministry of Commerce, including:
- selling goods or services by an electronic means via the internet;
- providing internet services (ISP);
- letting on hire space on computer servers (Web Hosting) ;and
- operating as an electronic marketplace portal for sale of goods and services via the internet (e-marketplace).
E-commerce registration is required to operate E-commerce business in Thailand.
- Direct Market License: The DSA defines direct marketing as all types of marketing and sales of goods or services by communicating directly to customers at a distance to have customers purchase goods or services. An entity conducting such a business must register with the OCPB. Applicants are required to provide a guarantee to the registrar (the OCPB) in the amount prescribed by the Ministerial Regulation and must not have had their direct marketing registration revoked within a period of five years prior to the application submission date.
There are certain exemptions for the registration requirement including a small or medium enterprise being registered under the Small and Medium Enterprises Promotion Act B.E. 2543 (2000).
Foreign equity restrictions
- According to Foreign Business Act B.E. 2542 (1999), as amended (“FBA”), a foreigner means:
- a natural person who is not a Thai national;
- a juristic person not registered in Thailand;
- a juristic person registered in Thailand, with at least 50% of its share capital (or at least 50% of the capital invested in it) held by the person(s) set out above;
- a limited partnership or a registered ordinary partnership, the managing partner or manager of which is not a Thai national; or
- a juristic person registered in Thailand, with at least 50% of its share capital (or at least 50% of the capital invested in it) held by any one or more of the natural persons and/or entities set out above.
- The FBA limits foreigners in certain businesses whereby foreigners who operate in the restricted business activity under the FBA is required to obtain the Foreign Business License (“FBL”) or the Foreign Business Certificate (“FBC”), as the case may be, before commencement of business operation.
- For the E-commerce business as a provision of a platform where the merchants and users sell and purchase products and services, it is likely be considered as “service business” under List 3 (21) of the FBA which the foreigner may be required to obtain FBL from the DBD. According to List 3 (21) of the FBA, service business under the FBA has been interpreted by the official as an “all catching” provision for any business activity which is not the manufacture of goods or another activity listed in the FBA. However, the matching platform/e-marketplace may be eligible to obtain some privileges from the Board of Investment so the E-commerce business may apply for the promotion and later obtain FBC from the DBD for the e-marketplace business.
- If the foreign business operator conducts wholesale or retail business having or offering the products for sale according to List 3 (14) or (15), the foreigner is also required to obtain FBL or FBC from the DBD prior to conducting business in Thailand. Exemptions for the FBL or FBC may apply if the minimum registered capital of the foreign business operator reaches THB 100 million for retail or wholesale activities (non-aggregate).
Payment solutions, foreign exchange administration and merchant acquiring services
- Payment solutions: Payment solutions are widely allowed in Thailand. Business operators can apply any type of payment solutions in their businesses i.e. bank transfer, digital wallet, e-wallets, cash on demand, and cards. The Thai Government has also launched “PromptPay” scheme which allows registered users to transfer money between consumers and businesses using their mobile phone number or citizen ID.
- Foreign exchange administration: The Bank of Thailand (“BOT”) is the main regulator controlling any outward remittance of Thai baht money. Thai baht money is allowed to be remitted to a non-resident outside of Thailand. However, certain transactions are restricted by its characteristics or the amount of transactions and an approval or lodgement of report is required to the BOT prior to the remittance the THB money.
- Merchant acquiring services: The Payment System Act B.E. 2560 (2017) (“PSA”) and its sub-regulation defines an “acquiring services” as “a service of receiving payment via electronic card by sending or receiving an electronic card payment transaction to a payment card network which will subsequently switch and forward it to the electronic card issuer”. The acquiring business provider will make the payment of goods or services to a merchant, a service provider, or another payment facilitator, who has a mutual service agreement regarding electronic card payment as agreed upon conditions”. As such, approval of BOT is required for any person who engages in an acquiring service in Thailand prior to commencing their business.
The Consumer Protection Act B.E. 2522 (1979) (“CPA”) is the main legislation regulating all goods and services including electronics, food and medicine provided in Thailand. Generally, sale, advertisement, and label of electronics, food and medicine must be complied with the requirements and prohibition provided under the CPA. Furthermore, each of products as stated above is also regulated by its specific laws including:
- Industrial Product Standards Act, B.E. 2511 (1968), as amended, is the legislation regulating any industrial product including electronics products provided that the manufacturing or importation of industrial product must meet the standards provided under this act prior to sell in Thailand.
- Drug Act B.E. 2510 (1967), as amended, also provides any requirements and restrictions on the sale, labels, or advertisement of drugs in Thailand.
- Food Act B.E. 2522 (1979), as amended provides the requirements and restriction on the place that used for cooking for sale. However, this Act is still silent on the sale of food via electronic means.
Furthermore, in case the electronics, food or medicine cause damage to customers, the business operator who manufacture, import, or sell such product will also be subject to the Product Liability Act B.E. 2551 (2008) and /or the CPA.
- The Personal Data Protection Act B.E. 2562 (2019) (“PDPA”) would apply to the processing (collection, use, disclosure) of personal data collected by merchants or the E-commerce platform. The merchant, who has the power to make decisions regarding collection, use or disclosure of Personal Data is regarded as the “Data Controller”.
- The PDPA seeks to ensure that the collection, usage and disclosure of the Personal data via E-commerce website has a legal basis. For E-commerce business, the processing of personal data is done on three legal basis which are:
- contractual basis,
- legitimate interest basis; and
- consent basis.
- In case the personal data is processed for marketing or advertising purposes, the consent from the data subject is required.
- Please note that certain personal data such as racial, ethnic origin, political opinions, cult, religious or philosophical beliefs, sexual behaviour, criminal records, health data, disability, trade union information, genetic data, biometric data, or of any data which may affect the data subject in the same manner is regarded as sensitive personal data. The data subject must provide consent for processing the sensitive personal data which must be explicit and distinguishable from a consent request for processing other personal data.
- Only necessary personal data shall be collected, and the data subject must be informed of the following:
- how personal data is to be collected;
- the legal basis and purpose for which the personal data is collected, used or disclosed;
- the persons or entities whom the personal data may be disclosed or transferred to;
- the retention period of personal data;
- the contact details of the merchant or merchant’s representative or Data Protection Officer; and
- the rights of the data subject, which include the right to withdraw consent, right of access, right to data portability, right to object , right to erasure, right to restriction of processing, right to rectification, and right to complain.
- There are three main legislations which generally govern E-commerce related and consumer protection issues which are:
- The CPA;
- DSA; and
- Prices of Goods and Services Act B.E. 2542 (1999) as amended.
- The Central Committee on Prices of Goods and Services under the Ministry of Commerce also issued Notification No. 70 B.E. 2563 RE: Displaying of Price and Details of Goods and Services Sold via E-Commerce System or Online, as the secondary legislation issued under the Prices of Goods and Services Act B.E. 2542 (1999), requiring business operators selling products or services via E-commerce or online to display price, service fee, type, kind, characteristics, size, weight and details of the products or services sold in a clear, complete, expressive and easy to read manner. The price and the service fee can be shown per unit in any language, but Arabic numerals (e.g., 0, 1, 2) are required and the description or any other details to be shown along with the price or the service fee must be in Thai.
- The CPA provides that the purchaser (the consumer) has the right to receive correct and sufficient information and description as to the quality of goods or services and the advertisement of the goods or services may not contain a statement which is unfair to consumers, that is, notwithstanding such statement concerns with the origin, condition, quality or description of goods or services as well as the delivery, procurement or use of goods or services.
- An advertisement under the CPA covers everything that is made for trading purposes and the online product listings are considered as a form of advertisement. According to the CPA, an advertisement conducted in Thailand, regardless of nationality of consumers receiving an advertisement, shall not contain any statement which is unfair to consumers or any statement which may produce adverse effects on society at large, be it a statement as to origins, conditions, qualities or characteristics of goods or services as well as the delivery, procurement or use of goods or services.
The CPA specifies that the statements which are unfair to consumers or any statement which may produce adverse effects on society at large are as follows:-
- a false or exaggerative statement;
- a statement causing fundamental misunderstanding as to the goods or services, whether it is made through the use or reference to technical reports, statistics or anything which is false or exaggerative or not;
- a statement directly or indirectly supporting violation of law or morals or conducive to cultural depreciation of the nation;
- a statement causing disunity or prejudicial to unity of the people; and
- other statements as prescribed in the Ministerial Regulation.
- Failure to comply with these requirements is punishable as a criminal offence.
- Other product or service specific laws may also be applicable depending on the products or services sold.
For more information about e-commerce across ASEAN, download the comparative guide, ASEAN Insiders: Electronic Commerce in ASEAN.