From Today's D . Telegraph .

Ikea shelves entry into uncertain Thai climate

By Mark Kleinman Asia Business Editor

Last Updated: 11:44pm BST 28/09/2007

Ikea, the Swedish retailer known around the world for its flatpack furniture, has put plans to expand into Thailand firmly on the shelf amid an increasingly uncertain environment for multinational investors.

Blog: Notes from the Far East

Swedish retailer has postponed Thai move

The Daily Telegraph can reveal that the lingering after-effects of last year's military coup and a series of tougher laws on foreign ownership have prompted Ikea to postpone a move into one of South-East Asia's most important economies.

The delay reflects growing nervousness among overseas investors following draconian revisions to Thailand's Foreign Business Act and the publication of draft legislation covering the retail sector, which may have a serious impact on Tesco and Carrefour, the French supermarkets group.

Since the ousting of Thaksin Shinawatra, the former prime minister and the man who now owns Manchester City Football Club, a year ago, the Thai government has proposed changes to the definition of a "foreign" company to mean one which is not controlled or majority-owned by Thais.

It has also vowed to stamp out the use of nominee shareholders for the subsidiaries of multinationals operating there, a move which has alarmed many overseas firms which have largely relied on the use of such structures.

advertisement"The foreign business ownership laws have always been complicated, but there has always been a measure of understanding," said Alastair Henderson, managing partner of Herbert Smith, the law firm, in Bangkok.

"The latest proposals have meant great uncertainty for companies about the regulatory climate they are going to face and whether they will be able to retain control of their investments."

According to a spokesman for Ikea, the Thai market "is still under evaluation" by Inter Ikea Systems, the organisation which owns the home improvement retailer's concept and trademark. An unnamed franchisee has been selected to partner Ikea, she added.

"This partner will further investigate the market for final approval by the franchisor. At this point in time, it is premature to confirm if and when an Ikea store will open in Thailand."

A continued toughening of foreign ownership laws could affect a string of Britain's biggest companies, including British American Tobacco, Alliance Boots and HSBC.

The country's interim government, which has said it is likely to hold democratic elections in December, has held numerous rounds of talks with officials from the European Commission and overseas chambers of commerce stationed in Bangkok.

One senior official said the Thai government's actions were evidence of "a clear protectionist backlash" and warned that its stance could lead to Thailand being "cut out of the global economy".

Among the foreign investors with most at stake is Tesco, which operates 400 stores and employs more than 28,000 people in Thailand.

"We continue to invest in the country, opening new stores," said a spokesman for Britain's biggest retailer. "However, we are concerned that the current uncertainty in Thailand may deter new foreign investors from entering the country." blogs

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What "they" should really be worried about is Japanese foreign investment which accounts for more than half of recent foreign investment.

A recent article I read indicates the Japanese are becoming very un-easy about the FBA.

Read story here.

Soundman.

What "they" should really be worried about is Japanese foreign investment which accounts for more than half of recent foreign investment.

A recent article I read indicates the Japanese are becoming very un-easy about the FBA.

Read story here.

Soundman.

Don't understand why the Japanese wouldn't want the Thais to own the majority of their companies,control management,and the votes.Don't make sense.

What "they" should really be worried about is Japanese foreign investment which accounts for more than half of recent foreign investment.

A recent article I read indicates the Japanese are becoming very un-easy about the FBA.

Read story here.

Soundman.

Don't understand why the Japanese wouldn't want the Thais to own the majority of their companies,control management,and the votes.Don't make sense.

Always dangerous when you have such reliance on one country for foreign investment. In the end, no multinational company is going to be dictated to in who they can and cannot employ. The difference is that these companies promote and employ on merit and track record rather than family name. Certainly there will be some MNC's that will downsize their operations in Thailand because of this or simply up sticks and leave. There are others that will continue as they have ertain types of assets that are not removeable. My understanding is that a leading Market Research has laid off a significant number of staff recently, due to the stagnation in the econonmy and the continuing unease about these regulations. In the end it's easier for them to move operations to countries like S'pore or Hong Kong where they are also established.

Probably, a lot of the people who drew up and promoted the FBA are not particularly concerned as they have made their money, and it might even give them more protection in their fields of work. Personally, the FBA is a nonsense, but it will still end up getting implemented in some form or another that will be more restrictive than the current regulations. In a jot I don't think the government cares one bit.

Edited September 29, 200718 yr by mrtoad

I am not a business expert,especially international business.From the articles I have read it appears to me that Thailand is heading for a very bleak future,in doing business with the international community.From the FBA that they are imposing, the breaking of patents for various drugs,the piracy of many other products.The current situation with CAT and Huawei technology.The election of a "democratic" government,which is really controlled by the military.The past problems with Singapore and the Satellite,etc,etc.The threat of of kidnapping foreigners to get bird flu vaccine,and there is so much more,and more.

I cannot really foresee a big rush in wanting to do business in Thailand by the international community.Of course as I said,I don't know much about this issue.I can only look at it from the point of view of, would I bring a large company here under these circumstances.The answer to that question is no.Would you?

The threat of of kidnapping foreigners to get bird flu vaccine,and there is so much more,and more.

This for real?

If it is, there must be something other than tobacco in the ciggarettes that the clowns who thought up this brainwave are smoking.

The threat of of kidnapping foreigners to get bird flu vaccine,and there is so much more,and more.

This for real?

If it is, there must be something other than tobacco in the ciggarettes that the clowns who thought up this brainwave are smoking.

Thats what I believe, the Health Minister said, at an International conference,a few months back,I think in Switzerland,but not sure.A few weeks after, he said he was only joking.They didn't mention anybody else thinking it was funny.It was in the newspapers here in Thailand also.

The Democrates have already said that if they are elected that the FBA as presented by the Junta will be a thing of the past. Hence, when the topic of discussion is "Do they care how much investment is lost", the answer is the Democrates care.

The Democrates have already said that if they are elected that the FBA as presented by the Junta will be a thing of the past. Hence, when the topic of discussion is "Do they care how much investment is lost", the answer is the Democrates care.

They won't be able to do anything about it, with the military people, being able to vote anything out, they don't like.I understand they will be holding enough seats, by appointment to do just that.

I am not a business expert,especially international business.From the articles I have read it appears to me that Thailand is heading for a very bleak future,in doing business with the international community.From the FBA that they are imposing, the breaking of patents for various drugs,the piracy of many other products.The current situation with CAT and Huawei technology.The election of a "democratic" government,which is really controlled by the military.The past problems with Singapore and the Satellite,etc,etc.The threat of of kidnapping foreigners to get bird flu vaccine,and there is so much more,and more.

I cannot really foresee a big rush in wanting to do business in Thailand by the international community.Of course as I said,I don't know much about this issue.I can only look at it from the point of view of, would I bring a large company here under these circumstances.The answer to that question is no.Would you?

Doesn't seem to have done China any harm.

China has a different appeal compared to Thailand. For instance, it has a substantially greater population size and on that basis alone can create a huge revenue stream for a foreign company. Further, it offers lower labour rates than Thailand, plus cheap manufacturing opportunities. Thailand is no longer that competitive on a labour/manufacturing front, although it has reasonable infrastructure and convenient port access (and closer to Singapore, which is a major shipping hub).

Therefore, the clamp down on nominee shareholders is a further reason to not enter/reduce current investment/leave Thailand.

Interestingly, my organisation looked at opening up a subsidiary in Thailand to try to make use of cheap labour for engineering drafting services... after obtaining legal/tax advice, the message was pretty clear... we opened up subsidiaries elsewhere as Thailand was just too hard. The skills we would have developed for the local engineering market would have been an invaluable investment to Thailand, but the government's policies really highlight that they just don't seem interested.

The general populace don't understand the need and benefits of foriegn investment and the elite just continue to exploit those beneath them.

Without education things will stay the same.........

The threat of of kidnapping foreigners to get bird flu vaccine,and there is so much more,and more.

This for real?

If it is, there must be something other than tobacco in the ciggarettes that the clowns who thought up this brainwave are smoking.

Yes he did say it outside a WHO Conference in Geneva

Thing is i can tell him where the pre-pandemic vaccine will be stored in Thailand ;-))

The actual vaccine will not be ready for months after a pandemic breaks out depending on the strain.

I attended a talk yesterday from one of our experts on Pandemic flu - very interesting indeed. The model he actualy demonstrated was a breakout in Korat.

It showed the potential deaths under three scenario's

Doing nothing and letting the disease take its course

Using antivirals such at Tamiflu (targeted)

Using antivirals plus a pre-pandemic vaccine (there can be two scenario's here depending on how many doses of the pre-pandemic vaccine are given)

I wonder what the Thai's have planned - by the time they kidnap anyone it will be too late - public health planned by numpties.

The Democrates have already said that if they are elected that the FBA as presented by the Junta will be a thing of the past. Hence, when the topic of discussion is "Do they care how much investment is lost", the answer is the Democrates care.

They won't be able to do anything about it, with the military people, being able to vote anything out, they don't like.I understand they will be holding enough seats, by appointment to do just that.

The FBA thing was a issue to broadside Thakins deal with Temasek, which was then hijacked by nationalists and monopolist factions in the government.

The thing that everyone forgets is that the government is being presured, sometimes subtly and sometimes not so subtly by foreign chambers and foreign governments on the issue. Then there is Thailands WTO committments.

We've seen a very Thai style retreat of late on the issue. I don't expect personally to see the issue re-rasied, apart from articles in British tabloids who have fallen in love with Dr. T as he enters the very heart of Chav-land.

The Democrates have already said that if they are elected that the FBA as presented by the Junta will be a thing of the past. Hence, when the topic of discussion is "Do they care how much investment is lost", the answer is the Democrates care.

They won't be able to do anything about it, with the military people, being able to vote anything out, they don't like.I understand they will be holding enough seats, by appointment to do just that.

The FBA thing was a issue to broadside Thakins deal with Temasek, which was then hijacked by nationalists and monopolist factions in the government.

The thing that everyone forgets is that the government is being presured, sometimes subtly and sometimes not so subtly by foreign chambers and foreign governments on the issue. Then there is Thailands WTO committments.

We've seen a very Thai style retreat of late on the issue. I don't expect personally to see the issue re-rasied, apart from articles in British tabloids who have fallen in love with Dr. T as he enters the very heart of Chav-land.

Daily Telegraph a tabloid?????

You also have to remember - the majority of the Thai population are still in love with Thaksin - so much so the junta dare not let him stand in a democratic election!

Also with Burma in the news it makes people think just what type of government is next door too!