Foreign Investors Anxious Of Revision To Investment Rules

[george]

Foreign investors anxious of revision to investment rules

BANGKOK: -- Foreign business community waited nervously Monday as the government prepared to unveil new rules for investing in Thailand, which could dramatically change the way companies operate here.

The government is expected to consider Tuesday a revision to the Foreign Business Act, which is expected to redefine requirements for voting rights and shareholding structures of foreign companies that operate here.

Pramon Suthiwong, chairman of Thailand's Board of Trade business group, said he expected the law to limit foreign ownership in Thai companies to about 50 per cent, while redefining voting rights for local subsidiaries.

-- AFP 2007-01-08

[george]

Foreign businesses urge government to delay alien business law

BANGKOK: -- Thailand's foreign business community urged the Thai government to delay approval of the amended Alien Business Law, as any immediate move on this front may result in withdrawal of foreign investments from Thailand.

In a show of its collective stance, Peter Van Haren, chairman of the Foreign Chambers of Commerce in Thailand on behalf of 28 foreign trade chambers and missions called on the Cabinet to withdraw from the agenda of its weekly meeting Tuesday an item to approve the amended Alien Business Law as proposed by the Commerce Ministry.

Mr. Van Haren said the approval of this legislation as it stands would send negative messages to foreign investment throughout Thailand.

Of particular concern to the foreign businesses operating in Thailand is the clause demanding that Thai shareholders have over 51 per cent voting rights, enforcement of which would drive the majority of current and potential investors away from the kingdom, he said.

Mr. Van Haren said the Foreign Chambers of Commerce in Thailand have officially petitioned Prime Minister Surayud Chulanont, in a letter dated 22 December, requesting that a new committee be appointed to confer with all stakeholders within six months. The Chambers are willing to sit in on the committee meetings to provide information on the amendments.

In the letter, the Chambers also proposed changes to the law to open investment opportunities in sectors hitherto preserved only for Thai nationals.

Mr. Van Haren said passage of this law at this juncture when Thailand is facing multiple problems with the political and security situation would further erode investor confidence.

--TNA 2007-01-08

Foreign trade chambers urge Govt to delay revised Foreign Business Act's implementation

BANGKOK: -- Foreign trade chambers Monday urged the government to delay implementing the revised Foreign Business Act by at least another six months, so that the companies to be affected by the revision could take part in the revision process.

Peter J. van Haren, chairman of the Joint Foreign Chambers of Commerce in Thailand, said the foreign chamber and 28 embassies in Thailand are of the opinion that the implementation should be delayed.

He said if the Thai Cabinet tomorrow approves the revised law as requested by the Commerce Ministry, it would severely affect foreign investment. The main concern is in the clause that stipulates the voting right of foreign investors in companies established in Thailand.

--The Nation 2007-01-08

[tuky]

I am not investment savvy, anyone want to fill those of us that are not too wise on the implications of this Act being passed?

[Dupont]

I am not investment savvy, anyone want to fill those of us that are not too wise on the implications of this Act being passed?

In a nut shell a company has to be 51% Thai owned. But each one of your shares had 10 times the value of the shares held by the Thais. Put simply you had 490 votes and they had 51 votes.

Most Thai proxies actually sign away their shares BEFORE the company is set up and as thus never take part in the voting process anyway. If they kick up, they have signed away their shares so you just put sombody elses name on the bottom of the share transfer certificate and repeat the process.

Give em 51% of the votes and nobody is going to want to do any business here at all.

This will kill off inward invest absolutely dead if they go ahead, as it means you have no control whatsoever over your business. Before, the Thai shareholders couldn't vote you down, but they received certain payments and most small businesses employed them anyway as you need Thai Staff to gain a work permit for a falang. Ususally you emply the wife, her sister, a mates wife etc.

So before anybody groans on about exploited Thais, they were the ones that were getting something for nothing anyway. Something they will loose out on if this Junior High School devised policy is ever implemented.

Edited January 8, 2007 by Dupont

[d44]

I am not investment savvy, anyone want to fill those of us that are not too wise on the implications of this Act being passed?

Lots of money down the drain

[tuky]

ahh, so how do you think it would effect Thailand as a country?

[Dupont]

ahh, so how do you think it would effect Thailand as a country?

At its ultimate extreme it would go the way of Zimbabwe.

The farms there were productive and profitable until the government stole them and gave them to the poor. The poor fought tooth and nail over them, didn't know what to do with them and they are now poorer than before.

It won't though as the Thais have a greater respect for money than Mugabe.

If they take over businesses etc. they will not retain the value they once had. Further, there will be no new capital with which to expand, diversify or keep up with technology or trends. Nobody will want to deal with them as they would be viewed as totally untrustworthy so it would spiral slowely downwards.

won't happen though.

[d44]

ahh, so how do you think it would effect Thailand as a country?

Thailand will remain to be #1 rice exporter for quite a while.

Seriously, I don't know and I don't care. I'm not a macroeconomist. I do care about my company. Next border run i'll be spending in KL to see what the posobilties are over there. You know, eggs and baskets ? I can't imagine others *not* taking similar measures.

[tuky]

Thanks guys,

As Dupont says I can't see it getting that bad, Mugabe and whoever Thailand can produce would not be in the same league as far as ruthlessness is concern (I hope) andlike the recent stock market debacle I am sure they would back peddle fairly quickly.

d44, unsettling to read things like this I am sure. I wonder how it would effect the big corporations?

If enough smaller guys like you pulling out do you think the Gov't would take notice?

I know nothing about all of this but I do find it interesting, I hope you do not mind my questions..

[mark lamai]

as i mentioned elsewhere

if this new law requires a company to re-allocate the voting rights,

as was being talked about,

any foreigner holding land and/or property via a company,

will find that he now effectively only "owns" 49%

and the thai directors can vote to sell it or anything else.

pretty scary

[womble]

ahh, so how do you think it would effect Thailand as a country?

Thailand will remain to be #1 rice exporter for quite a while.

Seriously, I don't know and I don't care. I'm not a macroeconomist. I do care about my company. Next border run i'll be spending in KL to see what the posobilties are over there. You know, eggs and baskets ? I can't imagine others *not* taking similar measures.

actually vietnam how holds that crown, and there are many others that they will more than likely take away from Thailand..........

[bkkandrew]

as i mentioned elsewhere

if this new law requires a company to re-allocate the voting rights,

as was being talked about,

any foreigner holding land and/or property via a company,

will find that he now effectively only "owns" 49%

and the thai directors can vote to sell it or anything else.

pretty scary

I recall talking about four years ago to a friend thinking of investing in property, using a nominee type company to do this. I cautioned him about that it was against the spirit of the law govening ownership and that one fine day, this scenario may come to pass. He didn't buy, tomorrow may find out many people and my friend will no doubt buy me a beer

Edited January 8, 2007 by bkkandrew

[Dupont]

as i mentioned elsewhere

if this new law requires a company to re-allocate the voting rights,

as was being talked about,

any foreigner holding land and/or property via a company,

will find that he now effectively only "owns" 49%

and the thai directors can vote to sell it or anything else.

pretty scary

I recall talking about four years ago to a friend thinking of investing in property, using a nominee type company to do this. I cautioned him about that it was against the spirit of the law govening ownership and that one fine day, this scenario may come to pass. He didn't buy, tomorrow may find out many people and my friend will no doubt buy me a beer

Well he has missed out and you owe him a few baht I would say.

As property gone up more than 100% here in the past 4 years, if he bought back then for a million, valued it now at 2 million give the thai shareholders 51 percent he has just about broken even.

Prices have more than doublen where I live in the past two years, so please leave out the told you so's.

What day? Nothings happend and even if they proceed, the nightmare of taking 14,000 businesses to court or processing them and robbing them of land shareholdings etc. in the full glare if the intenational press will never happen. They would bankrupt the country before they take over a single rai. The Courts would be tied up for years, even then nobody would leave so it would have to be done forcefully. Tie the police up evicting elderly falangs, god forbid that they should injure a foreign pensioner dragging him out of his home! and whose left to stop the bombers!

No fight as gone up yet as nobody believes it will be pursued, certainly not retroactively. Should it happen, there will be the most enormous fight. Think anybody here is going to let them take our livelihoods away withou a fight.

No way mate, no way. I've been here 15 years and if I gave up half my house, I'd still walk away with more than I came with! Think of the rent I've saved as well! Were not the mugs you smug posters think.

Edited January 8, 2007 by Dupont

[jaidam]

as i mentioned elsewhere

if this new law requires a company to re-allocate the voting rights,

as was being talked about,

any foreigner holding land and/or property via a company,

will find that he now effectively only "owns" 49%

and the thai directors can vote to sell it or anything else.

pretty scary

I recall talking about four years ago to a friend thinking of investing in property, using a nominee type company to do this. I cautioned him about that it was against the spirit of the law govening ownership and that one fine day, this scenario may come to pass. He didn't buy, tomorrow may find out many people and my friend will no doubt buy me a beer

U r joking right?? Is your friend still speaking to you?

Against all "expert" advise, my company bought 1 rai of seaview TPB5 land and built a fairly cheap 2 level wood house 4 years ago. Total cost of land + house was 900k baht.Total yearly land tax of 7 baht.

Assuming I had found a similar property for rent at 15,000 baht/month ( unlikely) and had rented said property for 4 years, I would have spent 720k baht. Allowing the Thai govt 1 year to totally confiscate my property I will save a further 180k baht. Total that would have been spent over the 5 years rented = 900k.

So even if I have my land/house confiscated with zero compensation at the end of this year I will be in the same situation as someone who had listened to the don't buy land argument. You owe the beers my friend.

[mrbojangles]

No way mate, no way. I've been here 15 years and if I gave up half my house, I'd still walk away with more than I came with! Think of the rent I've saved as well! Were not the mugs you smug posters think.

So even if I have my land/house confiscated with zero compensation at the end of this year I will be in the same situation as someone who had listened to the don't buy land argument. You owe the beers my friend.

Don't jump on his case too much guys. I don't think bkkandrew was being smug, i think he was just thinking about his mates case.

I own quite a bit of land (well the mrs does ) and although you seem satisfied with your own investments (saving on rent etc.) do you wish you had gone the way of buying a condo instead ?

[brazil]

as i mentioned elsewhere

if this new law requires a company to re-allocate the voting rights,

as was being talked about,

any foreigner holding land and/or property via a company,

will find that he now effectively only "owns" 49%

and the thai directors can vote to sell it or anything else.

pretty scary

I recall talking about four years ago to a friend thinking of investing in property, using a nominee type company to do this. I cautioned him about that it was against the spirit of the law govening ownership and that one fine day, this scenario may come to pass. He didn't buy, tomorrow may find out many people and my friend will no doubt buy me a beer

Well he has missed out and you owe him a few baht I would say.

As property gone up more than 100% here in the past 4 years, if he bought back then for a million, valued it now at 2 million give the thai shareholders 51 percent he has just about broken even.

Prices have more than doublen where I live in the past two years, so please leave out the told you so's.

What day? Nothings happend and even if they proceed, the nightmare of taking 14,000 businesses to court or processing them and robbing them of land shareholdings etc. in the full glare if the intenational press will never happen. They would bankrupt the country before they take over a single rai. The Courts would be tied up for years, even then nobody would leave so it would have to be done forcefully. Tie the police up evicting elderly falangs, god forbid that they should injure a foreign pensioner dragging him out of his home! and whose left to stop the bombers!

No fight as gone up yet as nobody believes it will be pursued, certainly not retroactively. Should it happen, there will be the most enormous fight. Think anybody here is going to let them take our livelihoods away withou a fight.

No way mate, no way. I've been here 15 years and if I gave up half my house, I'd still walk away with more than I came with! Think of the rent I've saved as well! Were not the mugs you smug posters think.

good on you

you seem to be the only one on this thread with any usefull info

bring on tuesday d day and lets get it over with!

its just so facist right now the policies going through the state

all they care about is keeping the same rich families RICH!

[Dupont]

No way mate, no way. I've been here 15 years and if I gave up half my house, I'd still walk away with more than I came with! Think of the rent I've saved as well! Were not the mugs you smug posters think.

So even if I have my land/house confiscated with zero compensation at the end of this year I will be in the same situation as someone who had listened to the don't buy land argument. You owe the beers my friend.

Don't jump on his case too much guys. I don't think bkkandrew was being smug, i think he was just thinking about his mates case.

I own quite a bit of land (well the mrs does ) and although you seem satisfied with your own investments (saving on rent etc.) do you wish you had gone the way of buying a condo instead ?

No I'm happy other than the constant changes to visas and laws etc. Being married its no loss at all to me in any event.

Should the worst happen, I have lived in it for 5 years now, paid 1.3 million for it and its worth (before the latest scare) about 5 million.

So 5 million / 2 = 2,500,000 which is 1,200,000 more than I had then. Add to it another million that I would have lost in rent and we are ok.

I was too hasty with bkkandrew. My anger is for the older people, many of whom are very worried about this as they expected peace and quiet in there dotage. That said, many of them have fought in Korea and Vietnam so will have more fight in them than most people expect should they try and force them out of their homes. The real investors, I don't really give a hoot for (apologies to BT).

Its a bit worrying for me now. I'm only 47 and am thinking now about retirement plans and security at a time I should be concentrating on my family. I, like many others have lived through these changes, coups and scares down the years and know they don't amount to much. There does come a time though when you wonder how much more hassle you are going to get in your life and if you are ever going to have any peace... Unlikely it seems, which is going to upset their posturing for the retirement market.

[Kan Win]

d44, unsettling to read things like this I am sure. I wonder how it would effect the big corporations?

I would like to know that one as well.

The car manufacturers, computer and electronic manufacturers, least we forget “Lotus & "T" ................” and the other big supermarket chains. etc….

What about them? Being out voted by ………………………………….the “Really Owners” ? or has BOI (Board of Investment) given them a special treatment………………?

Are they after the so called “Big Fish” or the “Small Fry”.

As “tuky” mentioned

I know nothing about all of this but I do find it interesting, I hope you do not mind my questions..

Yours truly,

Kan Win

[Kan Win]

Should the worst happen, I have lived in it for 5 years now, paid 1.3 million for it and its worth (before the latest scare) about 5 million.

How much it is worth and how much you Kan sell it for are two different issues.

Missues has our place and only the view is 6 mil ++++ up, never mind the house, that comes free.

Yours truly,

Kan Win

[Galong]

I wish my country would start f*&^ing the Thais that live there. Thailand gets worse by the day.

[puipuitom]

ahh, so how do you think it would effect Thailand as a country?

Thailand will remain to be #1 rice exporter for quite a while.

Rice exporter: yes, but nr 2 = Vietnam very close. As the Thais were not clever enough to register "Jasmine" rice after so much investment in that name, now Vietnam is grasping the benefits.

So, the Thais come now with Hom Mali rice.

"Wherefrom? Mali ?? That is a Sahel country in Africa isn't it ? "

"Sorry, no need" is the reply I get so often ( yes, I import tropical foods to EU . Donot forget: here is bread+potato country, not rice+noodle country )

Seriously, I don't know and I don't care. I'm not a macroeconomist. I do care about my company. Next border run i'll be spending in KL to see what the posobilties are over there. You know, eggs and baskets ? I can't imagine others *not* taking similar measures.

That's why I added "Tropifood" to my company mission. When I see the speediness the Chinese are taking over, in 10 years half of Thai export is wiped away.

"So, let's speed up with chasing away the foreign investment", looks the habbit of the Thai government.

[Finansjohan]

Pramon Suthiwong, chairman of Thailand's Board of Trade business group, said he expected the law to limit foreign ownership in Thai companies to about 50 per cent, while redefining voting rights for local subsidiaries.

- AFP 2007-01-08

I can't believe I am reading this. If foreigners actually were totally forbidden to control the majority of investments, who in their right mind would ever think of investing in Thailand? "Yeah, I love giving you cash and screwing me over, please go ahead".

Says something about what economic imbecilles are running the country right now, that they are even thinking about it. Of course we already knew that from last weeks *creative* currency regulations.

Let me guess, will foreigners start selling assets anytime soon?

[d44]

d44, unsettling to read things like this I am sure. I wonder how it would effect the big corporations?

If enough smaller guys like you pulling out do you think the Gov't would take notice?

I know nothing about all of this but I do find it interesting, I hope you do not mind my questions..

Assuming it does come to the worst...........

I don't know of a big corp that has all their cards on thailand so i guess it'll be a write-off and a stock drop.

Smalltime bussiness owners would have the choice of constantly being at the mercy of the oh so reliable thai partners or to gut the company a.s.a.p. On the positive side, we now have a lot of thai partners to pick up the tab for all that severance pay..........

Will the government notice? The reaction to 19/12 was brutal and immediate and the measure consequently was (partially) revised the next day. The response to a 'worst case' decision will be much slower, no mass layoffs etc. They would notice in the quarterly or whatever report when it's way too late.

To some extent it already *is* too late. I know one guy that already decided to relocate to Vietnam. Not because the Vietnamese are cheaper (he says they are) but because of all the BS here. He employs thais by the hundreds......

Two others wanted to setup shop here. Now looking elsewhere.

[wolf5370]

Two questions:

How does this affect the big guys like Tesco Lotus and Carrefour? Although they use companies (like Lotus) as 'partners' to comply with current law, would Tesco be happy with lossing the voting share - I think not.

How does this affect, if at all, the so called 'special relationship' trade - eg Coke etc?

Just wondering.

[Phil Conners]

Property gone up 100% in the last 4 years? You must be dreaming. It may have happened on select property but on average I see prices now being about the same as 4 years ago, certainly not more.

There are a lot of better quality constructions going on now and selling at a higher price, but compare apples with apples.

Or do you mean land value?

Edited January 8, 2007 by Phil Conners

[wolf5370]

Speculation and scare mongering perhaps, but could this be a move by the Chinese 'overlords' to remove foreign competition and leave LoS open to having the financial blood sucked out of it?

[capt_canada42]

Property gone up 100% in the last 4 years? You must be dreaming. It may have happened on select property but on average I see prices now being about the same as 4 years ago, certainly not more.

There are a lot of better quality constructions going on now and selling at a higher price, but compare apples with apples.

Or do you mean land value?

God you must live in the out back in Phuket here the sky was the limit !

[d44]

Speculation and scare mongering perhaps, but could this be a move by the Chinese 'overlords' to remove foreign competition and leave LoS open to having the financial blood sucked out of it?

Simpler theory: Face. Undo thaksin's 'shame' by getting rid of temasek and charging that 37%. Problem is collateral damage (FDI). maybe it's acceptable to them, maybe not.

[deminister]

Are there still opportunists out there, who thought that removing thaksin was a good thing for the country? This doictatorship is so vindictive that they run this country into the ground before it becomes clear to the outside world that they have copied the Burmese system, and that they will never give up power. It would be great when each and every country anywhere else in the world would draw up laws minimizing Thai ownership and voting rights. That will hurt the men in uniform as they all have fast assets abroad.

[Martin]

My understanding is that these moves by the government are simply their way of indicating that they realise that there has been a lot of bending of the laws relating to Thailand keeping control of its economic future in Thai, not foreign, hands.

It would appear that Thailand will be better off without such foreign "investors" now.

Times are changing; from a hundred years (and more) of fuel getting more and more easily-won (i.e. cheaper) to a hundred years (and more) of fuel getting more and more hard-to-win (i.e. expensive).

But Thailand's fundamentals are sound. It can keep its populace well fed and comfortably housed, and doesn't have to worry about fuel prices continuously rising from here on in, since the winter won't freeze anybody to death for lack of fuel.

The costs of what fuel it needs for transportation will always be more than covered by the receipts from exporting surplus rice, since world-wide food costs, and prices, are going up with the cost of inorganic fertiliser that rises with the cost of fuel.

It is in Thailand's best interests, now, to de-couple itself from use of foreign capital, and to 'encourage' foreign capitalists to take their speculations elsewhere.

As several postings above have pointed out, some foreign capitalists (both investors and speculators) have had some years of having a good run for their money and they will, of course, ask their Foreign Chambers of Trade to get them any reprieve possible. That is what Foreign Chambers of Trade are set up for.

And governments are approved into office (whether by election or acceptable coup) to tell Foreign Chambers of Trade what conditions will be applied and what will be acceptable in the way of foreigners trading within the borders of the country, and what won't.

The history of Siam and Thailand is a succession of skirmishes against those foreign entities (economic as well as political) that would colonise the country if they could. Various limitations to its abilities to skirmish have meant that it has often had to cede some ground until such time in the future as it could take it back.

This thread is about one such 'time of taking back' of a bit of 'the commanding heights of the economy'.