The Thailand Marine Department has launched a coordinated enforcement sweep across Phuket targeting jet ski operators running illegal businesses, marking the latest phase in a broader campaign to eliminate foreign nominee structures from the island's tourism sector. Recent inspections have flagged jet ski rental businesses for operating without proper licenses while allegedly concealing foreign ownership behind Thai proxies—a violation that carries prison terms of up to 3 years and fines reaching ฿1M.
The crackdown underscores an ongoing struggle to level the competitive landscape in Phuket's tourism economy, where unlicensed operators routinely undercut legitimate businesses by avoiding registration costs, insurance mandates, and tax obligations. For residents and legal entrepreneurs, the enforcement signals a recalibration: authorities are expanding the definition of "nominee abuse" beyond real estate into service sectors like watercraft rentals, tour operations, and beach concessions.
Why This Matters
• Legal operators face unfair competition: Unlicensed service providers operate throughout Phuket, undercutting properly registered tourism businesses.
• Nominee prosecutions are intensifying: Thai nationals acting as proxies for foreign owners now face criminal liability, including asset seizure and jail time.
• Insurance gaps threaten tourists: Unlicensed jet skis often lack mandatory third-party coverage, leaving riders exposed in accidents.
• Tax revenue losses: Illegal operators avoid VAT and income tax, draining provincial budgets meant for infrastructure and safety improvements.
The Scope of Phuket's Jet Ski Problem
The Thailand Marine Department's Phuket branch office, in coordination with the Royal Thai Police Marine Division, has conducted enforcement sweeps across multiple beaches. Officials have identified violations ranging from failure to display vessel registration numbers to complete absence of operating permits under the Navigation in Thai Waters Act (1913, as amended). The law imposes on-the-spot fines of up to ฿10,000 per vessel, with repeat offenders facing license revocations and equipment seizures.
Investigators are examining the corporate ownership structures of flagged businesses to determine whether Thai shareholders are authentic investors or merely "nominees"—stand-ins used to circumvent the Foreign Business Act (1999), which restricts non-Thais from owning watercraft rental operations outright. Under the nominee provisions, both the foreign beneficial owner and the Thai proxy face prosecution. Court cases involving nominee structures in real estate have resulted in asset confiscations and corporate dissolutions, setting a precedent that the Department of Special Investigation (DSI) is now applying to tourism services.
The enforcement follows directives from the Deputy Minister of Transport, who ordered the Marine Department to systematically audit jet ski operations across Phuket. The ministry's order specifically cited the need to "restore fair competition" and "protect national economic interests"—language that reflects rising pressure to curb foreign dominance in sectors reserved for Thai nationals under law.
Impact on Residents and Legal Businesses
For Phuket residents and lawful tourism operators, the crackdown represents both relief and disruption. Legal jet ski rental businesses—those that invest in proper registration, insurance coverage, and safety equipment—have long complained about price-dumping by unlicensed competitors. A registered operator typically incurs:
• Annual insurance and registration fees per vessel
• VAT and income tax on gross receipts
• Compliance costs for safety equipment and training
Unlicensed operators skip these costs entirely, enabling them to offer rental rates significantly below legal market prices. The enforcement campaign aims to eliminate this arbitrage by removing illegal players from the market.
For Thai nominees: The legal risk has escalated sharply. Prosecutors are pursuing knowing proxies under the Foreign Business Act, which carries penalties including fines and imprisonment. Courts have also begun ordering asset forfeitures, meaning nominees can lose personal property used to facilitate the nominee arrangement, including bank accounts and real estate.
For foreign business owners: The crackdown does not mean watercraft rentals are off-limits to non-Thais. Legitimate pathways exist, including joint ventures with Thai partners (where the Thai side holds genuine equity and operational control) and applications for Board of Investment (BOI) promotion in tourism infrastructure. What authorities are targeting is shell arrangements where Thais hold shares on paper but exercise no real control or investment.
Broader Context: Phuket's War on Nominee Structures
The jet ski sweep is part of a multi-year effort to dismantle nominee networks across Phuket's tourism and real estate sectors. The island has become a focal point for enforcement because of its scale: foreign investment—both legal and illegal—dominates the local economy, and nominee arrangements have proliferated in hotels, restaurants, dive shops, tour agencies, and property management firms.
Authorities are also expanding enforcement to accommodation providers, as unlicensed guesthouses and vacation rentals compete against legally registered hotels. The Department of Business Development (DBD) has pledged to investigate nominee structures in hospitality, with the Phuket Provincial Government coordinating inspections of ownership records and business licenses.
Enforcement Mechanics: How Authorities Identify Nominees
The crackdown relies on a multi-agency task force that cross-references several data sources:
Marine Department vessel registries: Officials flag vessels operating without current licenses or insurance.
Corporate shareholder records: The DBD reviews shareholding structures to identify inconsistencies in ownership claims.
Financial forensics: Investigators examine bank transfers, loan agreements, and tax filings to determine control of operations.
Investigation procedures: Authorities conduct interviews and document reviews to establish operational control.
The process can take time, which is why inspections focus on immediate licensing violations—vessel registration and operating permits—while flagging businesses for deeper investigation. Prosecutors then decide whether to file criminal charges under the Foreign Business Act or pursue administrative penalties through the Marine Department.
What Legal Operators Should Do Now
For licensed jet ski businesses: The enforcement campaign is an opportunity to strengthen compliance. Operators should:
• Ensure all vessels display current registration numbers and carry valid insurance certificates on board.
• Train staff to explain safety procedures in multiple languages, as required under Marine Department guidelines.
• Retain records of all Thai shareholder investments to demonstrate compliance if questioned during an audit.
• Stay informed about regulatory updates affecting the sector.
For Thai nationals acting as shareholders in foreign-owned businesses: The legal landscape has shifted. If you hold shares in a jet ski, tour, or accommodation business but did not invest your own funds and do not participate in management, you are now at serious criminal risk. Consult a lawyer immediately to either:
• Restructure the ownership so that your role reflects genuine investment and control, or
• Exit the arrangement before prosecutors file charges.
For foreign investors: If you own or plan to invest in a jet ski or tour operation, engage a Thai law firm to structure the business properly. Legitimate options include:
• Joint ventures where the Thai partner contributes capital and shares decision-making.
• Management contracts where you provide services to a Thai-owned business without holding equity.
• BOI-promoted projects if your investment meets tourism development criteria.
Regional Context: Jet Ski Enforcement in Thailand
Phuket's enforcement is part of a broader regulatory trend across Thai beach destinations. Other resort provinces have also tightened controls on watercraft operations, with varying levels of intensity. The Marine Department has issued guidance requiring third-party insurance for rental operations and proper vessel registration standards across the country. Enforcement varies by location, with Phuket representing the most comprehensive approach to date.
Phuket's intensity reflects both its scale—as a major tourism destination—and the economic significance of proper regulatory oversight. The island's tourism sector is critical to Thailand's national economy, making regulatory compliance a matter of national concern.
The Economic Stakes: Why Fair Competition Matters
The crackdown addresses a structural imbalance that distorts Phuket's economy:
• Tax evasion: Unlicensed operators pay no VAT or income tax, depriving the provincial government of funds for essential services.
• Safety gaps: Uninsured jet skis leave tourists without recourse after accidents, damaging Thailand's reputation as a safe destination.
• Business competition: Legal Thai operators cannot compete with unlicensed competitors, affecting local business viability.
• Labor standards: Illegal operations often pay staff at below-market rates, undermining labor standards.
By removing illegal competitors, authorities aim to create a market where pricing reflects true operating costs, insurance, and taxes—prioritizing sustainable, regulated tourism services.
Looking Ahead: What Comes Next
The Thailand Marine Department has indicated that Phuket inspections will continue as part of ongoing enforcement efforts. The DSI is expected to pursue criminal cases involving nominee structures identified through these investigations, with legal proceedings to follow standard court procedures.
For residents, the enforcement signals a broader shift in how Thai authorities approach foreign investment in restricted sectors. The nominee prosecutions that began in real estate are now expanding into services, hospitality, and retail—any sector where Thai ownership is legally required. The message is clear: nominee arrangements are increasingly being challenged, and both foreign owners and Thai proxies face legal consequences.
For tourists, the crackdown should eventually translate into safer, more transparent services—with licensed operators, visible pricing, and enforceable insurance coverage.
The enforcement reflects a fundamental tension in Thai tourism policy: welcoming foreign capital and expertise while preserving economic opportunities for Thai nationals. Phuket's jet ski crackdown shows that when those goals collide, authorities are increasingly willing to prioritize regulatory compliance and fair competition—even at the cost of short-term market adjustments.
