On 1 August 2026 Thailand’s Department of Business Development began examining the financial trails behind Thai shareholders in companies that have foreign involvement. It is the most recent step in a campaign that has been building since late 2024, and for foreigners who hold a villa in Phuket or on Koh Samui through a Thai company, it is the step that has turned a background worry into an urgent one.
This is worth understanding from Indonesia. The reason Thailand has a nominee problem in the first place is a specific feature of Thai land law, and Indonesian land law does not work the same way.
Why foreigners in Thailand ended up using nominees
A foreigner can register a Thai limited company and hold 100 percent of the shares. That part is widely misunderstood. The difficulty is what the company is then allowed to do, and what it is allowed to own.
Most service businesses are reserved under the Foreign Business Act, so a foreign-majority company needs a licence from the Ministry of Commerce that is granted at the Ministry’s discretion rather than as of right. The two routes around that, a Board of Investment promotion or the Treaty of Amity for United States nationals, are narrow enough in practice that they do not reach the ordinary villa, restaurant or tour business. Land is restricted separately, and Section 86 of the Land Code defines a foreigner to include a company in which foreigners hold the majority of the shares, so incorporating in Bangkok does not help, because the law reads through the company to the people behind it.
What is left over is thin. A condominium unit can be bought freehold, within a cap of 49 percent of the sellable area in the building. Land can be leased, with registration giving a maximum term of 30 years. Neither of those gives someone a business on land they control, so the practical answer for most small foreign operations has been a Thai company in which Thai nationals hold at least 51 percent and are relied upon not to behave like owners. That is the nominee structure, and it exists because it is the only arrangement that answers both restrictions at the same time.
The lease route narrowed considerably in March 2025, when the Supreme Court held in Judgment No. 4655/2566 that the familiar 30 plus 30 plus 30 arrangement is void beyond the first 30 years. The court treated pre-agreed renewals as personal promises between the parties, which means they do not attach to the land and do not bind a subsequent owner, and it made no difference that the later terms had been signed and paid for in advance. Anything marketed in Thailand as 60 or 90 years is unenforceable past year 30.
What the crackdown involves
The Department of Business Development has been working on this from several directions at once. Since 1 October 2025 it has run a system called IBAS, which cross-references the corporate registry against other government databases and flags companies showing the signatures of nominee ownership. Order No. 2/2568 took effect on 1 January 2026 and requires Thai shareholders to produce bank statements showing genuine financial capacity and a traceable source of funds, in companies where foreigners hold less than half the shares or where a foreign national is an authorised signatory despite an entirely Thai shareholder list. The department reported that this requirement alone reduced attempted nominee registrations by around 65 percent. From 1 April 2026, any company amendment involving foreign participation has required shareholders to appear in person.
Enforcement on the ground has followed. A three-day operation in Pattaya in March 2026 turned up dozens of companies registered at a single address, and individual Thai shareholders who appeared on the registers of more than a hundred companies. In May the department launched a wider campaign reaching Phuket, Koh Samui, Koh Phangan, Krabi, Phang Nga, Hua Hin and Pai, and an inspection of pool villas and hotel businesses on Koh Phangan led to the freezing of assets worth more than 200 million baht, around USD 6.1 million. Between September 2024 and May 2025, Thai authorities investigated 861 cases with estimated economic damage of 15.3 billion baht, about USD 470 million.
Exposure under Section 36 of the Foreign Business Act runs to imprisonment of up to three years and a fine of between 100,000 and one million baht, roughly USD 3,100 to USD 31,000, and it applies to the Thai nominee and to the foreigner alike. The court can order the shareholding unwound, impose a further daily fine while that order goes unmet, and dissolve the company.
An Indonesian company is an Indonesian company
Hak Guna Bangunan, the right to build and hold buildings on a plot of land, is granted to Indonesian citizens and to legal entities established under Indonesian law and domiciled in Indonesia. A PT PMA is established under Indonesian law and domiciled in Indonesia. It is an Indonesian legal entity, and the land rules do not go behind that to examine who holds its shares.
This is the difference that matters for anyone comparing the two countries. A PT PMA whose shares are held entirely by foreign investors holds HGB in its own name, on the same footing as any other Indonesian company. There is no threshold at which foreign shareholding reclassifies the company as foreign for land purposes, because Indonesian land law does not contain the look-through that Section 86 contains. The structure that Thailand is currently prosecuting is a workaround for a restriction that Indonesia does not impose.
The activity side works differently too. Full foreign shareholding is available across a wide range of sectors under the Positive Investment List in Perpres 10/2021 as amended by Perpres 49/2021, and openness is stated in advance against the business classification rather than granted case by case at a ministry’s discretion. The minimum paid-up capital for a PT PMA is IDR 2.5 billion, about USD 141,000, reduced from its previous level by Perka BKPM 5/2025 in October 2025. Depending on the business classification the company registers under, a higher figure can be required, which is worth establishing before the structure is set rather than after. Which business classification the company sits under matters to both of those questions, and the classification codes themselves changed in 2025, which we covered in our note on the KBLI 2025 changes.
| Thailand | Indonesia | |
|---|---|---|
| Can a foreign individual own land | No, under Section 86 of the Land Code | No |
| Is a locally registered company treated as foreign | Yes, once foreign shareholding exceeds 49 percent | No, a PT PMA is an Indonesian legal entity whatever its shareholding |
| What the company may do | Most service activities are reserved, needing a licence granted at the Ministry’s discretion | Sector openness is set in advance by the Positive Investment List, with most sectors open to full foreign shareholding |
| What the company may hold | Land only while it stays majority Thai owned, or within BOI limits | HGB in its own name, with full foreign shareholding |
| Long lease | Registered maximum of 30 years, pre-agreed renewals unenforceable since 2025 | Leasehold available alongside the company route |
| Titled right for an individual foreigner | Condominium units within the 49 percent building quota | Hak Pakai for a qualifying resident foreigner |
HGB is not freehold, and it should not be described as owning land. It is a titled right with a defined term, granted for 30 years and capable of extension and renewal under PP 18/2021, and the mechanics differ depending on whether it sits over state land or over land held by an Indonesian individual under Hak Milik. That distinction does a lot of work in practice, and we have given it a separate article.
The company still has to be a company
This route works because the PT PMA is an operating company carrying the obligations that come with one, including capital that is actually paid in, quarterly LKPM reporting, tax registration and filing, and whichever licences its business classification requires. None of that is difficult and none of it is unusual. It is worth saying plainly, though, that a company which exists only as a name on a certificate and files nothing has rather more in common with the arrangements Thailand is currently prosecuting.
What Bali changed in February, and what it did not
Indonesia has its own enforcement story, and it arrived in the same window. On 4 February 2026 the President signed Perpres 4/2026 on the control of rice field conversion, replacing the 2019 regulation and rebuilding the machinery for mapping protected rice fields across the provinces. Twenty days later the Governor of Bali signed Perda 4/2026, on the control of productive land conversion and the prohibition of nominee land ownership transfer.
This has been reported almost everywhere as the moment Bali banned nominee ownership, and that is not what happened. The distinction matters a great deal to anyone deciding what to do about an arrangement they already have. Holding Indonesian land through a borrowed name has been void since 1960. Article 26(2) of the Basic Agrarian Law makes any act intended to transfer ownership rights to a foreign national, whether directly or indirectly, null and void, with the land falling to the state and payments made under it unrecoverable. Article 33 of Law 25/2007 on investment does the same for shares held for and on behalf of another person. The courts have applied both consistently and for years, treating the arrangement as a circumvention of the law rather than as a private matter between the parties, and the Denpasar High Court has done so in Bali itself.
What the Perda adds is provincial machinery around a prohibition that was already there. Pasal 1 angka 11 defines a nominee arrangement as an agreement appointing someone to hold or manage land rights while a foreign national is the beneficial owner. Pasal 14 prohibits any person from acting as an intermediary or a facilitator who enables a foreign national to control land that way, which aims the rule at the people who arrange these transactions rather than only at the buyer. Its sanctions are administrative: written warning, temporary suspension of activity, closure of the location, revocation of permits and administrative fines, with demolition and restoration of the land at the far end, enforced by the spatial planning forum together with Satpol PP.
It is worth being precise about the criminal side, because a figure of five years and one billion rupiah, about USD 57,000, has been repeated widely as though the Perda created it. The Perda refers criminal liability out to the prevailing legislation rather than creating it, and a regional regulation in Indonesia cannot carry a penalty of that size in any event. The exposure comes from national law, and it has done for decades.
Enforcement is not theoretical either, and 48 structures were demolished at Bingin Beach in July 2025. The practical position for a foreign investor is that nothing became illegal in February which was legal in January. What changed is that the province now has its own machinery for acting on it, and that the people who arrange these transactions are named in the rule. The arrangement being enforced against was always a way around a route that has been open the whole time, which is the part of the comparison with Thailand that seems least understood.
Correct at the date of publication. Currency conversions are approximate, at August 2026 rates. Sector openness and capital thresholds are classification-specific. Read the companion piece on what a PT PMA actually holds under HGB, or know more about company setup.