The U.S.-Thailand Treaty of Amity is a Hidden Edge for U.S. Investors in the Region

The U.S.-Thailand Treaty of Amity and Economic Relations (AER) lets qualified U.S. citizens and U.S.-owned companies own 100 percent of a Thai company and receive national treatment in most sectors. It is an unusual carve-out in Southeast Asia, created by a 1966 treaty that replaced a 1937 FCN agreement and has remained in force since 1968.

In practice, Amity status exempts a U.S. investor from most restrictions in Thailand’s Foreign Business Act (FBA), but not from a short list of reserved activities. Investors still follow Thai corporate, tax, visa, and licensing rules as the treaty changes foreign-ownership limits and market access, not day-to-day compliance.

Demonstrating the burgeoning ties between the two nations, King Bhumibol and Queen Sirikit made a state visit to the United States in 1960. The trip included a tour of Disneyland in California with Walt Disney himself and culminated in an official state dinner at the White House hosted by President Eisenhower.

History and Peculiarities of the Treaty

The United States signed its first Asian treaty with Siam in 1833 (Treaty of Amity and Commerce). The current AER treaty was signed May 29, 1966, entered into force June 8, 1968, and replaced the 1937 friendship, commerce, and navigation treaty. It grants national treatment to U.S. nationals and companies with stated reservations.

What makes this arrangement remarkable is its persistence and exclusivity. Thailand has since signed a number of bilateral and regional trade agreements, such as TAFTA with Australia, JTEPA with Japan, and ASEAN-wide pacts. None of these grant the same standing, nationality-based exemption. Only the U.S. enjoys the right to majority or even 100 percent foreign ownership as a matter of treaty. All other nationalities must rely on restrictive channels such as licenses under the Foreign Business Act (FBA) or incentives from the Board of Investment (BOI).

The unusual nature of the treaty stems from its Cold War context. By the mid-1960s, the U.S. was escalating its involvement in Vietnam and Thailand was seen as an indispensable regional ally. American aircraft were flying combat missions from Thai bases, U.S. troops were stationed in the country, and Bangkok had aligned itself firmly with Washington in the struggle against communism in Indochina. For Thai leaders, the concern was not only ideological. They feared that a victorious North Vietnam would dominate Laos and Cambodia and eventually project influence toward Thailand’s own borders.

Against this backdrop, Thailand sought to deepen the alliance by granting U.S. investors special privileges that would bind American economic interests more closely to the country’s future. For Washington, the treaty was not only about commerce but also about securing long-term strategic influence in a volatile region. Economic integration was viewed as another layer of security cooperation, ensuring the U.S. remained anchored in Southeast Asia beyond its military presence.

Endured Amid Scrutiny

Over the years, the treaty has faced periodic calls for reform. Thai policymakers have occasionally argued that the carveout distorts competition and undermines the principle of equal treatment under the Foreign Business Act. Concerns have also been raised about “treaty shopping,” where U.S. nationals establish shell companies to act as fronts for third-country investors. These issues have led to debates in Bangkok about narrowing or even terminating the treaty.

Yet the treaty has endured. The U.S. is Thailand’s second-largest trading partner, and American companies employ tens of thousands of Thai workers across industries from manufacturing to services. Successive governments have concluded that removing treaty rights would risk disrupting investment flows and damaging the broader U.S.-Thai relationship. Instead of repeal, reforms have generally taken the form of stricter scrutiny when companies apply for Amity certification, ensuring that ownership and control truly rest with U.S. nationals.

How U.S. Investors Qualify and Operate

Qualifying under the Amity Treaty is a relatively straightforward process. A U.S. investor establishes a Thai limited company with American majority to full ownership, and ensures that half or more of the board are U.S. citizens. This ownership and control test applies through any parent or holding structure, meaning the U.S. character of the company must be clear throughout the chain.

Step-by-Step Process

Once the company is formed, the first step is to obtain a certification letter from the U.S. Commercial Service at the Embassy in Bangkok. This usually takes about one to two weeks, provided the ownership and board documents are in order. The certification confirms that the company meets treaty requirements and serves as the foundation for treaty protection.

With this letter, the investor applies to the Department of Business Development at the Ministry of Commerce for a Foreign Business Certificate. The review and approval process typically requires four to six weeks, though in some cases it can extend longer depending on the complexity of the application.

In total, most U.S. treaty companies can expect to be fully registered and operating within six to eight weeks. By comparison, the standard route for foreign investors applying for a Foreign Business License under the Foreign Business Act often takes three to six months and involves additional layers of scrutiny and approvals. This difference in timelines is one of the practical advantages that makes the treaty path so attractive. Costs to incorporate under the treaty typically rand from $3,000 - $5,000 in legal and filing fees, two to three times less expensive than traditional foreign company setup costs when extended timelines, government fees, and heavier legal work are factored in.

Limits and Operating Reality

In practice, treaty status allows U.S. firms to own up to 100 percent of their enterprise and receive national treatment in most areas of commerce. They can hire staff and contract on the same terms as Thai firms, making market entry faster and less burdensome than the paths other foreign investors must take.

Certain sensitive sectors remain closed as per the Treaty, including communications, transport, banking with deposit-taking, fiduciary services, exploitation of natural resources, and domestic trade in Thai agricultural products. Land ownership is not granted by the treaty, and sector-specific laws such as those governing telecoms, finance, or insurance still apply in full. U.S. control must be maintained at all times. If majority ownership or board composition slips below the required thresholds, treaty protection is lost.

Regional Context

The Amity Treaty is most valuable for U.S. firms that need to serve Thai clients. In consulting, software, distribution, and medical technology, the ability to operate a wholly owned Thai entity simplifies contracts, invoicing, and staffing. Without Amity, foreign investors often face diluted control through Thai partners, nominee structures, or lengthy licensing routes.

Comparison with Singapore and Hong Kong

Singapore permits 100 percent foreign ownership in nearly all sectors and offers a stable, tax-efficient base for ASEAN operations. However, a Singapore entity cannot bypass Thai restrictions when entering the Thai market. In this respect, Amity provides a local market access edge that even Singapore’s open regime does not replicate. Hong Kong historically played a similar role as a regional hub, but its orientation has shifted toward China rather than Southeast Asia, making Bangkok and Singapore the more relevant comparators for U.S. firms today.

In short, Amity does not make Thailand a Singapore-style free market, but it does put U.S. firms on equal footing with Thai competitors in most sectors. Singapore may remain the preferred base for regional reach, but for companies reliant on Thai clients, pairing a Singapore hub with an Amity-certified Thai entity offers what is often the best of both worlds.

Other ASEAN Hubs and Their Limits

Elsewhere in ASEAN, foreign ownership remains restricted. Vietnam requires joint ventures in strategic industries. Indonesia still enforces limits in many sectors through its Negative Investment List. Malaysia retains caps in services and retail, and the Philippines maintains a constitutional 60-40 rule, with only partial reforms under debate. All of these markets present opportunities, but U.S. investors face more barriers to control and ease of doing business than in Thailand under Amity.