In the ever-evolving landscape of international business, bilateral agreements play a critical role in shaping opportunities and reducing barriers for foreign investors. One such pivotal agreement is the U.S.-Thai Treaty of Amity and Economic Relations, commonly known as the Treaty of Amity. Signed in 1966, this treaty grants significant benefits to American companies operating in Thailand, offering them a competitive edge that businesses from other countries often lack.
This article explores the importance of the U.S.-Thai Treaty of Amity, including its historical context, the key advantages it offers, eligibility requirements, and why it remains highly relevant in today’s globalized business environment.
The U.S.-Thai Treaty of Amity was signed on May 29, 1966, to strengthen the longstanding diplomatic and economic ties between the United States and Thailand. The treaty was designed to promote mutual economic interests by allowing American individuals and companies to receive “national treatment” in Thailand, and vice versa.
Under the treaty, the Thai government grants U.S. citizens and U.S.-incorporated businesses significant rights not typically available to other foreign investors. This agreement reflects the strong historical alliance between the two nations, dating back to the 19th century, when Thailand (then Siam) was one of the first Asian countries to establish formal relations with the U.S.
One of the most significant advantages of the Treaty of Amity is that American citizens or U.S.-owned companies can hold a majority share or even 100% ownership of a business in Thailand. This is a substantial deviation from Thailand’s Foreign Business Act (FBA), which generally restricts foreign ownership to no more than 49% in many business sectors.
This ownership flexibility gives American investors greater control over operations, decision-making, and profit distribution, all without the need for a Thai partner.
Treaty-registered U.S. companies are exempt from many restrictions imposed by the FBA. This means they can engage in a wide range of business activities that would otherwise require a Foreign Business License (FBL) or be entirely prohibited to other foreign nationals.
Permitted activities include:
Consulting and advisory services
Wholesale and retail trading
Service industries
Manufacturing
However, there are still some restricted sectors such as land ownership, communications, transportation, and natural resources, where Treaty of Amity privileges do not apply.
American companies operating under the treaty are granted “national treatment,” which means they are treated the same as Thai companies in terms of regulations, protections, and obligations. This includes:
Equal access to Thai courts
Legal protections under Thai law
Rights to lease land for business use
Eligibility for government procurement and contracts
This principle of equal treatment reduces legal and bureaucratic friction and creates a more predictable business environment for American investors.
To qualify for the benefits of the Treaty of Amity, the business must meet specific requirements:
The company must be incorporated in the U.S. or Thailand.
At least 50% of the company’s shares must be owned by U.S. citizens.
A majority of the directors and authorized signatories must be American.
The business must not operate in prohibited sectors (e.g., land trading, agriculture, mining).
Additionally, U.S. companies operating in Thailand must register under the treaty through a specific process involving both the U.S. Commercial Service and the Thai Department of Business Development (DBD).
The registration process involves several steps:
Company Incorporation: Establish a Thai company with the appropriate shareholding and director structure to meet U.S. ownership requirements.
Certification from the U.S. Embassy: Submit an application to the U.S. Commercial Service at the U.S. Embassy in Bangkok, providing evidence of majority U.S. ownership and control.
Ministry of Commerce Approval: Once certified, the documents are submitted to the Thai Ministry of Commerce to obtain formal registration under the treaty.
Ongoing Compliance: The company must continue to meet U.S. ownership and director requirements to retain treaty privileges.
The Treaty of Amity offers more than just regulatory benefits—it provides a strategic competitive advantage for American companies looking to establish a regional presence in Southeast Asia. Thailand is a key logistics hub with well-developed infrastructure, a growing consumer market, and access to ASEAN's broader economic bloc.
Through the treaty, U.S. businesses can:
Establish and operate subsidiaries or branches with full ownership
Avoid complex joint venture arrangements
Retain full control over intellectual property, branding, and management
Navigate the Thai legal system with greater confidence
For service-based industries like technology, consulting, and finance, where control and agility are critical, the treaty allows for seamless market entry.
While the treaty offers substantial benefits, there are limitations to consider:
Land Ownership: Treaty-registered companies still cannot own land in Thailand, though long-term leases are permitted.
Restricted Sectors: Certain sectors remain off-limits, including transportation, natural resources, agriculture, and media.
Compliance Risk: If U.S. shareholding falls below 50% or the board structure changes, treaty protections can be revoked.
Visa and Work Permit Requirements: Treaty benefits do not exempt the company from Thai immigration rules.
The U.S.-Thai Treaty of Amity is a powerful tool for American businesses looking to establish or expand operations in Thailand. It allows for full ownership, exemption from certain foreign investment laws, and equal treatment under Thai regulations—advantages that few other foreign investors enjoy.
As Thailand continues to attract foreign investment, the treaty serves as a strategic gateway for U.S. firms to tap into Southeast Asia’s dynamic markets with minimal regulatory barriers. However, success under the treaty depends on careful planning, strict compliance, and a clear understanding of Thai legal and business norms.