Thailand is experiencing a significant increase in investments made by the corporate venture capital (CVC) arms of leading Thai companies. These companies operate in various sectors including financial institutions, telecommunications, real estate and petrochemicals. Many are large conglomerates.

The dominance of CVCs does not mean that there are no pure venture capital (VC) firms in Thailand. The Thai Venture Capital Association was established in 1994 to support the development of the VC ecosystem in Thailand. Currently, there are a handful of VC firms that are very active in the markets and their investments play an important role in growing Thailand’s VC industry. Aside from investment opportunities and market awareness that drive the growth of the sector, legal and regulatory development (or the lack of it) is also a key deal driver.

Current environment

The Thai government currently provides various tax benefits to promote the VC industry and startup businesses. In order to fully enjoy these benefits a VC firm has to be either a limited company or an investment trust registered in Thailand.

VC firms in Thailand are generally subject to the tax regime that is applicable to their corresponding type of business vehicle. However, the government has introduced a temporary tax scheme until the end of 2018, that aims to support and promote VC investment in certain technology-based businesses. Key requisites include being a limited company, having a minimum registered capital, investing in companies that are engaged in certain prescribed businesses, and registering as a VC firm with Thailand’s Office of the Securities and Exchange Commission (Thai SEC).

Under the temporary scheme, notwithstanding the type of business vehicle used by the VC firm, tax benefits in the form of income tax exemption are enjoyed by both the VC firm (dividends from the qualifying portfolio company and capital gains) and the investors in the VC firm (dividends, capital gains and proceeds from the dissolution of the VC entity), provided that conditions set out in the regulation are fully satisfied throughout the term of the investment. These benefits will be  lost if the portfolio company  is listed on an exchange.

The future of VC

The government’s policies have so far been aimed at creating an investor-friendly environment. Initiatives have included the development by the Bank of Thailand and the Thai SEC of regulatory sandboxes for fintech and regtech. The Stock Exchange of Thailand is also contemplating a new platform for startups to raise funds and for investors (which may include VC firms) to trade securities. This should increase opportunities to list startups and other small cap companies and may make investments more attractive for VC firms due to improved liquidity.

Although there have been several positive legal and regulatory developments in the VC space, many legal hurdles still need to be overcome for Thailand to improve competitiveness at the international level. For example, Thailand’s corporate law still provides that rights of preferred shares in a private company (a common legal entity for target companies) cannot be altered. As a result, once preferred shares are issued they cannot be converted into ordinary shares or preferred shares with different rights and benefits. The procedures to resolve this issue can be complex and time consuming as they involve convening a shareholders’ meeting to cancel existing shares and to issue new shares. A private company is also prohibited from issuing convertible notes or bonds. This in effect eliminates the key investment structure that VC firms use in their investments. While tax incentives are important for the development of VC investments in startups, there also needs to be clear guidance from authorities on the tax implications, particularly for those startups that provide services comprised primarily of electronic transactions or that are based on blockchain platforms.


VC is the main source of seed capital for startups. They also incubate and accelerate the growth of the business. While the VC industry in Thailand is benefiting from recent development whether it is able to continue this trend depends largely on having the appropriate legal and regulatory framework. Lawmakers and regulators are on the right track in rolling out regulations to enhance the industry, but more can be done. Practicality is key for VC businesses, so if the government continues on the same path with forward-thinking, investor-friendly policies then this should provide increased opportunities for the private sector to help shape the economy.


Dr. Primyadar Duangrat is a partner and a member of the Firm's Financial Services practice in Bangkok. She focuses on domestic and international capital markets and securitization, domestic and international mergers and acquisitions, corporate restructuring, corporate governance, securities, and other corporate and commercial related laws.


Somika Phagapasvivat is a member of Baker McKenzie's Financial Services Practice Group in Bangkok. She joined the Firm in 2002 and became a partner in 2015. Her practice focuses on real estate, acquisition and corporate financing.