Koh Phangan crackdown continues as Thai authorities raid luxury villa projects, seizing records, questioning foreign investors, detaining illegal workers and sending a clear message that small foreign tourism ventures are not welcome despite ‘subdued’ levels of Foreign Direct Investment (FDI).
On Friday, Thai authorities raided another foreign tourism real estate venture on Koh Phangan. Ukrainian promoters saw their plan to build 20 high-end villas for wealthy foreign tourists, worth ฿1.18 billion, plunged into chaos. Police inspected the site, questioned workers and interviewed the Ukrainian Managing Director. The promoters were not arrested, but an illegal Myanmar worker was taken into custody. Authorities also seized business records and company documents to verify Thai ownership. Further legal action, including arrests, is possible.
Thai authorities, including police and local officials, are investigating a luxury villa development on Koh Phangan over possible illegal foreign ownership. Ukrainian investors are suspected of using Thai nominees to hold shares in two companies connected to the project. The combined registered capital of these companies exceeds ฿100 million ($3 million).
The investigation follows the November 4 arrest of an Azerbaijani man working illegally as an electrician. Subsequently, authorities discovered links between the man and two limited companies. Therefore, concerns arose over possible nominee arrangements and the circumvention of ownership laws.
Notably, this is part of a nationwide crackdown into the use of nominee shareholders in Thai firms. On Monday, Mr. Poonpong Naiyanapakorn of the Department of Business Development (DBD) announced new measures. Basically, the government will more tightly screen the registrations of new firms.
New measures aim to tighten screening and oversight of nominee shareholders in new firms
In particular, it will require more detailed information on shareholders and directors. Additionally, all firms at addresses where more than five companies are registered will be scrutinised carefully. In short, the aim is to wipe out foreign control of small Thai firms using nominee Thai shareholders to circumvent Thailand’s strict ownership laws.
The present campaign is especially focused on foreign tourism activities and on the southern islands. Certainly, Koh Phangan has been targeted for a crackdown, which has been underway for at least two months with no signs of let-up.
Police on the island have strictly applied foreign ownership and employment laws. For instance, on November 10, an Italian expat on the island was arrested for woodworking activity at home. He had been asked to make a wooden picture frame for ฿3,000. He was handcuffed, placed in custody and faces deportation from Thailand.
Authorities enforce foreign ownership and employment laws targeting tourism projects on Koh Phangan
On Friday, November 21, police and officials inspected the villa construction site near Koh Koma in Moo 8. Pol. Maj. Gen. Suwat Suksri, Commander of Surat Thani Provincial Police, ordered the operation.
Agencies involved included Immigration Police, Tourist Police, and Koh Phangan District Administration. The operation aimed to identify foreign nationals working illegally and to examine the project’s ownership structure.
During the inspection, authorities uncovered evidence of a network of foreign investors using Thai nominees as proxy shareholders. Specifically, Thai nationals held shares on behalf of the foreign investors.
Additionally, the companies’ combined registered capital totals over ฿30,870. Police say the findings indicate potential breaches of the Foreign Business Act.
Inspection finds foreign investors using Thai nominees to hold shares in a luxury island villa project
Investigators also found a Myanmar national working illegally at the construction site. He had entered Thailand without authorisation. Authorities immediately initiated legal action for violations of immigration law. Similarly, the Azerbaijani man arrested earlier faces charges for illegal employment.
Pol. Col. Apichat Chansomret, Superintendent of Koh Phangan Police Station, said the main concern is the project’s management structure. While the managing director is Ukrainian, Thai nominees hold controlling shares. Consequently, authorities are gathering evidence for legal proceedings against all involved parties.
The development is marketing villas at up to ฿59 million ($1,821,270) each. Currently, over 20 units are under construction. Authorities are examining both illegal employment practices and potential breaches of the Foreign Business Act.
Furthermore, the investigation forms part of a wider government effort to enforce foreign investment regulations. Authorities continue to monitor projects suspected of using nominees to bypass legal restrictions. Officials stressed that foreign control in certain sectors remains closely regulated.
Investigation shows strict monitoring of high-value foreign investment project on Koh Phangan
The case also highlights the growing presence of high-value foreign-backed property projects on Koh Phangan. Villas in the development are marketed as luxury beachfront units, attracting attention from investors and authorities alike. Meanwhile, officials emphasised that the investigation remains active and ongoing.
Police are reviewing corporate records, employment contracts, and construction documents. In addition, interviews are being conducted with staff and investors. Authorities noted that further inspections may be scheduled if additional evidence arises.
Police officers found multiple foreign workers on-site whose legal status remains under review. The Azerbaijani and Myanmar nationals are confirmed to have worked without proper authorisation. Therefore, additional legal actions are possible against other undocumented workers.
Local and national agencies coordinated closely to enforce the Foreign Business Act, labour laws, and immigration regulations. According to Pol. Maj. Gen. Suksri, the operation reflects the government’s commitment to enforce legal standards in foreign-invested projects.
Authorities continue reviewing records and workers as probe into nominee arrangements deepen
Investigators are documenting the full extent of the nominee arrangements. They are assessing whether Thai nationals acted knowingly or unknowingly as proxies. In addition, authorities are examining whether the foreign investors directly managed operations despite ownership restrictions.
Police confirmed that the evidence collected will support prosecution under multiple legal provisions. These include violations for illegal employment, unauthorised business management, and immigration breaches.
The Koh Phangan villa project has become a focal point in monitoring foreign investment in real estate. Officials stated the case could set a precedent for similar projects nationwide. Consequently, authorities continue to scrutinise other high-value developments in the region.
They continue to review financial records and company documentation. Furthermore, interviews with investors, staff, and nominees are ongoing. Police stated that findings will later be submitted to prosecutors for potential charges.
Officials stress legal action for foreign investors violating Thai law as they review Koh Phangan project
Officials emphasised that any foreign investors found violating Thai law will face legal action. They also noted that the investigation remains fact-based and procedural, focusing solely on documented legal breaches.
Meanwhile, officials continue to assess the broader implications of foreign-backed luxury projects on Koh Phangan. Villas marketed to high-value investors are under increasing scrutiny. In addition, authorities are reviewing construction practices and legal compliance across the island.
The inspection of November 21 revealed a complex network of foreign investors, Thai proxies, and undocumented workers. Authorities indicated that the case remains under active investigation. This is just the latest of raids which have seen dozens of business concerns and investments on the beautiful island plunged into legal chaos.
At the same point, and perhaps this is the mission, the message will filter through to small- to medium-sized foreign investors that Thailand is not interested in such ventures. The message is that foreign tourism developments must be reserved for Thai nationals.
Message sent to small to medium foreign investors about restriction of tourism development projects
Meanwhile, in Bangkok on Monday, the Department of Business Development (DBD) revealed 869 approved foreign investment ventures. These projects involved investments of ฿276.736 billion. By this threshold, this is an 11% increase on the last year, led by Japan, the United States, Singapore, China, and Hong Kong.
However, net or real Foreign Direct Investment (FDI) in Thailand, according to the World Bank, is presently “subdued.” It is important to note that the latest figures quoted are commitments, or in effect, projections.
No respite for Koh Phangan foreign business owners with new raids on Tuesday targeting high end villas
Crackdown on expats working illegally deepens. Italian on Koh Phangan is arrested for woodwork
Moreover, the World Bank in February 2025 noted a decline in manufacturing FDI in Thailand, particularly in car manufacturing. It also reported that there was a significant net outflow of FDI in the second quarter of 2024, equivalent to 1% of GDP. This came despite repeated “record” inbound commitments announced by government agencies for that period.
In short, the Thai government wants large FDI projects led by major international firms. At the same time, it is failing to translate this into reality. It certainly does not want investment at a lower level that may compete with potential Thai entrepreneurs.
This in turn has led to the Foreign Business Act becoming a key issue in recent trade discussions, notably with the United Kingdom, United States and European Union. In the meantime, Thailand’s GDP growth is the lowest in Southeast Asia for over a decade now, aside from war-torn Myanmar.
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Further reading:
Crackdown to wipe out foreign business abuses and ownership on Koh Phangan & Koh Samui intensifies
Arrogant Lebanese man held on Koh Phangan for illegal bike rental racket after being deported before
