The Department of Land Transport (DLT) in Thailand has recently addressed the growing concerns over the influence of Chinese companies within the nation’s transportation sector.
Amidst reports of Chinese firms increasingly taking over Thai transport businesses, the DLT has clarified that transport licenses issued to local businesses cannot be transferred to foreign entities through acquisition.
Key takeaways
- DLT explained that only registered Thai legal entities headquartered in Thailand are eligible to hold licenses.
- Currently, more than 8,400 vehicles produced in China are registered for use in the transport sector in Thailand.
- The Ministry of Commerce and the Ministry of Finance will work together to find stricter regulations for foreign companies in the Thai transportation market.
Most of the concerns from Thai locals come from the expansion of Chinese companies through takeovers of struggling Thai transport businesses.
The DLT explained that licenses granted to one company cannot be transferred to another, even in the case of an acquisition.
The agency added that only registered Thai legal entities headquartered in Thailand are eligible to hold these licenses. Additionally, to operate legally, at least 51% of the company’s shareholders must be Thai.
Next week The Thai Ministry of Commerce and the Thai Ministry of Finance will get together to address concerns that Thai citizens are being paid to hold shares to skip the license rules.
The entities will work together to find strict measures to regulate the current situation of Chinese companies in the Thai transportation market.
Currently, more than 8,400 vehicles produced in China are registered for use in the transport sector in Thailand, many of which were assembled by a Chinese car manufacturer with a production base in Thailand.
In addition to Thai laws, the DLT is committed to following the memorandum of understanding signed by the six countries of the Greater Mekong Subregion (GMS), including Thailand, in 2016 on the Early Implementation of the Cross-Border Transport Facilitation Agreement (CBTA), which has been extended until December 31, 2026. This agreement benefits Thai transport operators.
What are the main challenges for the Thai transportation industry?
In 2024, the transportation industry in Thailand faces a series of significant challenges. The country’s economic recovery has been slow, with tourism, a key pillar of the Thai economy.
This economic context has affected the demand for transport services, both for passengers and cargo. One of the main challenges is the modernization of railway infrastructure. Despite efforts to improve the railway system, Thailand continues to face problems such as frequent accidents and outdated infrastructure.
The need for substantial investments in the modernization and expansion of the railway network is crucial to improving the efficiency and safety of transport.
Additionally, the transportation industry in Thailand is under pressure to reduce its carbon footprint. The country has set national targets to improve energy efficiency in the transport sector but has yet to implement fuel efficiency standards.
Current policies seek to promote the use of public transport and railways, as well as support the electrification of vehicles.
Another major challenge is foreign competition, especially from Chinese companies acquiring struggling Thai transport businesses.
