Foreign Investors Anxious Of Revision To Investment Rules

[bkkandrew]

BREAKING NEWS

Cabinet approves changes for foreign firms

(Bangkokpost.com, Agencies)

The Cabinet on Tuesday approved in principle changes to regulations on foreign businesses but the law still must go before a panel of legal experts for revisions, a deputy spokeswoman said.

"They approved in principle the Foreign Business Act but the Council of State will study the legal details for proper implementation,'' said Netrpreeya Chumchaiyo, deputy government spokeswoman said.

The crux of the changes centres on the redefination of the word ''alien''. That means any company in which foreign partners hold more than 50 percent of the voting rights, including the voting rights of their nominees, will be considered as alien company.

The amended law will, from now, go to the Council of State which will fine-tune it before it is submitted to the National Legislative Assembly for debate.

Prime Minister Surayud Chulanont's cabinet met for nearly five hours Tuesday to consider the changes, which could redefine shareholder rights and ownership structures for local subsidiaries of international firms.

Commerce Minister Krirk-krai Jirapaet was set to brief the revised Foreign Business Act to reporters at 3 p.m. on Tuesday.

The foreign business community has warned of potentially severe economic fallout from the mooted changes and urged the government to delay the new measures by six months.

Companies have traditionally set up their operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners.

Immediately after the Cabinet's decision was announced, the stock market reacted by falling 10.6 points or 1.64 percent. The index plunged further by 14.45 points to 617.43 points before it rebounded to 620 points.

Analysts fear the revised law could force foreign companies to sell off huge amounts of stock to Thai investors, who might not be able to absorb a large number of shares over a short period.

Oh they'll "absorb" them all right. They be given them!!!

Edited January 9, 2007 by bkkandrew

[Mic]

Jan. 9 (Bloomberg) -- Thailand's junta-appointed government tightened foreign investment rules, imposing new limits on stake holdings and the use of the country's citizens as nominee owners of companies.

It's even much worse that we have anticipated.... !

Waiting for the details ! But already with the "90-day deadline for Thai nominees to disclose their holdings" it's going to be a furious "Jailhouse rock" in thailand tonight !

They are insane.

Can you imagine ? My maid has shares in 4266 companies. That's look uggly, huh ? !

Ah ah ah ah

Ten years ago I was thinking to invest in Thailand for a company. I was thinking it was a good idea to live over there. I know the country since 1980. Nowadays I must say that I'm happy that I didn't do it. Not only because the new nationalism and ThaiRakThai but because of that what unfolds now. Things worsend a lot since the 80s. Do I glorify the past?

Regards Mic

[bkkandrew]

And...

Thai stocks tumble on approval of new business rules

Thai share prices were down 2.03 percent in Tuesday afternoon trade following the announcement that the Cabinet had approved new regulations on foreign businesses here, dealers said.

Under rules approved "in principle" by the cabinet, foreign investors will be limited to holding no more than 50 percent of the shares or the voting rights in companies, although the law will not take effect immediately.

Analysts fear the revised law could force foreign companies to sell off huge amounts of stock to Thai investors who might not be able to absorb a large number of shares over a short period.

The Stock Exchange of Thailand (SET) was down 12.84 points to 620.98 while the blue chip SET 50 index fell 9.28 points to 431.89.

C/O The Nation..

Meanwhile, the current fall is 16.72 (nearly 3%) and falling... (Source - SET)

[cclub75]

However, beware of very poor reporting...

I mean the first info on bloomberg might be totally wrong.

Quote from nation : ""Foreign investors who altogether hold more than a 50 per cent stake in a company must lower their stake within a year," Pridiyathorn Devakula said after a cabinet meeting.

"Foreign investors who hold more than 50 per cent of voting rights must also reduce their voting rights within two years,"he added.

The 50-per cent cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, he said."

So as i said, it's a matter of lists (1 and 2 are national security and culture, so no problem). The key is all other businesses (the list 3). If list 3 is scraped or emptied, then there is no problem anymore.

I do not understand why the minister manages in such poor way his communication.

Bloomberg speaks worldwide of all businesses. But it's wrong (apparently) !

The minister should come with a complete and clear statement for christ sake ! Investors outside do not know the subtility of FBA text.

[birago23]

616...and falling...

Ok, so let all the maids in Isaan who are shareholders take power! And lets explain this to a japanese investor.

I bet this time they are going to beat the 820 billion baht loss at the stock exchange.

One year time to find a new place...Invest money into Thailand now??? HAHAHA Put some money on my Thai Bank Account...DREAM ABOUT IT! Do something beneficial to help Thai economy??? Pay truthfully tax??? Should the maid shareholder's take care of that.

With my last act in power as CEO of my company I just increased my salery to all what is in the companies money chest, fired my staff and I am off to a sunny Thai beach, enjoying every sip of my beer as it gets cheaper and cheaper.

WAKE UP THAILAND! No one can be THAT STUPID!

[Dupont]

It'l fall more when the Thai realise it's not a blip and that a lot of that lovely falang money that just left town, wont be back.

I remember the Thai fund manager on TV last time, when it dropped off 60 points she thought it was a good time to buy... bought and it came down another 50 points!!! It was the Thai's that lost that one as they fully expected the money to come back in.

Set 616 and falling. Will the last foreigner to leave Thailand please turn off the lights!

[Arkady]

The Surayud government and CNS are floundering in justifying the coup and losing their only support base, the Bangkok people who wanted Thaksin out. They cannot show any results in prosecuting Thaksin and his cronies because they enjoy too much protection in the police, military, bureaucracy and even the government itself, including Pridyathorn who has clashed with the AEC over Thaksin's wife's land purchase at a knock down price and tried to protect the head of the Revenue Dept. There are too many people with dirty hands that refuse to cooperate to avoid incriminating themselves or their friends. Revising the Foreign Business Law is something they feel they can do because foreigners are always a soft target. They think this helps justify the coup vis a vis the Temasek affair and might appeal to the nationalist sentient of some simple folk.

Thailand will end up its toughest foreign investment law to date which will also be the toughest one in Asia, including I think Burma. The beneficiaries may be a few wealthy Thai Chinese who may be able to take over foreign businesses at a knock down price. The losers will be the Thai economy in general ordinary Thai people who will lose job opportunities. Foreign investment makes a huge difference to the economy because it brings in new technology and trains Thais up to international standards.

This seems to hit large multinationals and small foreign businesses alike. The bottom line is that all businessmen, including Thais investing abroad, want to own and control their business and need the freedom to choose whether they want local partners and on what terms. For many foreign businessmen it will be a no brainer to move elsewhere, rather than put up with cocky Thai Chinese interfering with their business.

The original Foreign Business Law grandfathered foreign companies that were already here like Diethelm and Berli Jucker and this is usually the case with Thai legislation. This time however it seems that existing preference share structures that were legal under the 1972 and 1999 laws will not be grandfathered. This is essentially expropriation.

[cclub75]

The original Foreign Business Law grandfathered foreign companies that were already here like Diethelm and Berli Jucker and this is usually the case with Thai legislation. This time however it seems that existing preference share structures that were legal under the 1972 and 1999 laws will not be grandfathered. This is essentially expropriation.

Watch out.

If you read the quote of the minister (on Nation) then it's totally different.

-the cap of 50 % of voting rights etc... shall apply ONLY to companies who work on "national security", "culture" or "national ressources" domains.

So basically, I believe that the announcement is actually an easing of rules for foreigners !

I mean : we are not speaking about mining or paiting of Lord Budha's image (activities already prohibited by the FBA, with list 1 and 2). What is important is everything else. The famous List 3.

The reporting on bloomberg might be totally false.

But like always : it's impossible to have a good and accurate reporting in Thailand... Very frustrating.

[Dupont]

The original Foreign Business Law grandfathered foreign companies that were already here like Diethelm and Berli Jucker and this is usually the case with Thai legislation. This time however it seems that existing preference share structures that were legal under the 1972 and 1999 laws will not be grandfathered. This is essentially expropriation.

Watch out.

If you read the quote of the minister (on Nation) then it's totally different.

-the cap of 50 % of voting rights etc... shall apply ONLY to companies who work on "national security", "culture" or "national ressources" domains.

So basically, I believe that the announcement is actually an easing of rules for foreigners !

I mean : we are not speaking about mining or paiting of Lord Budha's image (activities already prohibited by the FBA, with list 1 and 2). What is important is everything else. The famous List 3.

The reporting on bloomberg might be totally false.

But like always : it's impossible to have a good and accurate reporting in Thailand... Very frustrating.

Right or wrong, The Chamers of Commerce (TCC) should have been fully informed of this beforehand if he wanter the full message to be received.

To cockily ignore people vastly more intellegent and in tune financially than himself with a "This it Thailand" quip is where he went wrong again.

Now we have a full day of speculation again until the meeting tomorrw that he has summoned everybody to. I think they (TCC) should tell him to go and boil his head!

No wonder there is misnformation.

Mind if the Chamber of Commerce had told him what they want and made it sound like it was his idea, they could have got it. It's an old trick but it works.

[d44]

So basically, I believe that the announcement is actually an easing of rules for foreigners !

Hope for the best, prepare for the worst.

[Jai Dee]

SET Index

SET100 Index

SET50 Index

mai Index

[cclub75]

No wonder there is misnformation.

Yes and no.

The work of Nation, Bangkok Post, and AFP is appaling.

I mean as a journalist you can't put in title (like they do right now) "Thailand to limit foreign stake in firms to 50 per cent", when after in your paper you say that the minister said that this cap apply only for companies in culture, mining or national security domains !

Because after that, the lazy and incult journalists of Bloomberg will pick up this title and send it through the wired agencies all over the world.

I mean : it's insane.

I start to believe that it's made on purpose, to create panic and a sell off on the stock market.

[Arkady]

The original Foreign Business Law grandfathered foreign companies that were already here like Diethelm and Berli Jucker and this is usually the case with Thai legislation. This time however it seems that existing preference share structures that were legal under the 1972 and 1999 laws will not be grandfathered. This is essentially expropriation.

Watch out.

If you read the quote of the minister (on Nation) then it's totally different.

-the cap of 50 % of voting rights etc... shall apply ONLY to companies who work on "national security", "culture" or "national ressources" domains.

So basically, I believe that the announcement is actually an easing of rules for foreigners !

I mean : we are not speaking about mining or paiting of Lord Budha's image (activities already prohibited by the FBA, with list 1 and 2). What is important is everything else. The famous List 3.

The reporting on bloomberg might be totally false.

But like always : it's impossible to have a good and accurate reporting in Thailand... Very frustrating.

Right or wrong, The Chamers of Commerce (TCC) should have been fully informed of this beforehand if he wanter the full message to be received.

To cockily ignore people vastly more intellegent and in tune financially than himself with a "This it Thailand" quip is where he went wrong again.

Now we have a full day of speculation again until the meeting tomorrw that he has summoned everybody to. I think they (TCC) should tell him to go and boil his head!

No wonder there is misnformation.

Mind if the Chamber of Commerce had told him what they want and made it sound like it was his idea, they could have got it. It's an old trick but it works.

Yes, the press conference sounded a lot more positive. The devil is in the details and it still has to go through the Council of State but let's hope the new restrictions apply only to list 1 and 2 sectors. It's OK by me if the Thais protect strategic industries and agriculture etc. Perhaps they can also score the political points, as Temasek will still be forced to divest either in Shin Corp totally or at least in Sattel, Air Asia and ITV, if there's anything left of it.

I agree that Pridyathorn is cocky little SOB who likes making stupid flippant comments on serious matters. He made similar stupid jokes to reporters before the capital controls were announced only to be laughing on the other side of his dumb face the next day. Surayud should dispose of him asap.

[Bruce1]

The bottom line is, why would anyone invest anywhere if they can't control what happens with their money?

The answer is - they wouldn't.

The world is a big place. Thailand is a small place. End of story.

Very sad for Thailand.

Edited January 9, 2007 by Bruce1

[Chopperboy]

The bottom line is, why would anyone invest anywhere if they can't control what happens with their money?

The answer is - they wouldn't.

I disagree, a lot of Ferangs like their Thai wives to control all the money!

[HenryB]

Well they just approved it according to The Nation

http://www.nationmultimedia.com/2007/01/09...es_30023662.php

I can't believe so many smart faranging invested in a country that told you in advance you cannot own anything. A bunch of Thai lawyer told you it was ok. please watch these same lawyers take over you company's.

Edited January 9, 2007 by HenryB

[Bruce1]

I don't even let my farang wife control all my money! (Well, maybe I let her THINK she does, but you know what I mean).

[samran]

So basically, I believe that the announcement is actually an easing of rules for foreigners !

Hope for the best, prepare for the worst.

I'm prepared to be totally wrong here (and houded to kingdom come), but I'm going out on a limb here to say that people will end up being pleasantly suprised.

My call: List three is still up for debate. This is the important one for foriegners, and the one that officially "no comment" has been made on.

My reasoning: Nothing other than if you look at it, cabinet is stacked with just about as many economic liberals as you'll ever see in Thailand. Not many economic protectionists.

The Finance Ministry team, contrary to what you may think, are quite liberal minded (in the Australian sense, not the US sense) and accepting of foreign investment. The Energy Minister as well, while a hard arse, is a pretty rational thinker on economic matters. And, while professional technocrats, many of them also run successful businesses, so they are aware of the negative impact.

As others have said, things will be muddled, but knowing the track record of some of the ministers involved, they'll be wanting to scrap as much of list three protection as they can.

But, just my humble opinion.....

[HenryB]

So basically, I believe that the announcement is actually an easing of rules for foreigners !

Hope for the best, prepare for the worst.

I'm prepared to be totally wrong here (and houded to kingdom come), but I'm going out on a limb here to say that people will end up being pleasantly suprised.

My call: List three is still up for debate. This is the important one for foriegners, and the one that officially "no comment" has been made on.

My reasoning: Nothing other than if you look at it, cabinet is stacked with just about as many economic liberals as you'll ever see in Thailand. Not many economic protectionists.

The Finance Ministry team, contrary to what you may think, are quite liberal minded (in the Australian sense, not the US sense) and accepting of foreign investment. The Energy Minister as well, while a hard arse, is a pretty rational thinker on economic matters. And, while professional technocrats, many of them also run successful businesses, so they are aware of the negative impact.

As others have said, things will be muddled, but knowing the track record of some of the ministers involved, they'll be wanting to scrap as much of list three protection as they can.

But, just my humble opinion.....

Here we go again a dreamer or a Thai lawyer.

Edited January 9, 2007 by HenryB

[Brutiniero]

Hmmmm, maybe I am paranoid, but may somebody explain me why the volume in the end of the chart (SET) is so incredible high, with no movement in the notice of the SET itself ?!?!?!

[Brutiniero]

is this accumulated or what !?!?

[Dupont]

The bottom line is, why would anyone invest anywhere if they can't control what happens with their money?

The answer is - they wouldn't.

The world is a big place. Thailand is a small place. End of story.

Very sad for Thailand.

We have a reasonable control over things and theres the old adage "don't invest more than you can afford to walk away from".

We know the risks and accept them as facts of life here (the mad changes to visa's and land laws every 5 minutes) but it's still worth it. Its a price we pay to have the life we love basically.

I'm actually alright jack (work for the wife in 100% Thai company, have "O" renewed visa for 6 years, land in her name but house and land worth 3-4 times what I paid for it so if I loose half of it <deleted>, I still have much more than I came with), but I don't want to see the country go to the dogs.

As I've said on other threads, I feel sorry for the retirees out here. They are the ones that find it hardest to put up with this shit and the ones that worry the most. I could walk out tommorrow and start again no problem, but they can't.

We have to play as a team out here as they may come for us next! I might be legal now, but I do know and always have known, that that can change overnight and it could change when I am 80, then what would I do? Mind you unless this booze crackdown works on me, I'll have pickled meself long before then.

[slimdog]

Hmmmm, maybe I am paranoid, but may somebody explain me why the volume in the end of the chart (SET) is so incredible high, with no movement in the notice of the SET itself ?!?!?!

It's off hour trading..

You can find out more at:

http://www.set.or.th/en/operation/trading/offhours_p1.html

Hope of some help

[Dupont]

Well they just approved it according to The Nation

http://www.nationmultimedia.com/2007/01/09...es_30023662.php

I can't believe so many smart faranging invested in a country that told you in advance you cannot own anything. A bunch of Thai lawyer told you it was ok. please watch these same lawyers take over you company's.

Smarter to have invested here 5 years ago than not!

House 5 years ago 1 mill. Today 5 mill loose 50% = 2.5mil profit over 5 years 1.5 mill PLUS 5 years rent!! I've paid nothing for 5 years. The same house here is now 35k per month!!

so say 20k a month for arguments sake X 5 years (60 monthe) = 1,320,000 in rent saved. I've saved more in rent than I paid for the house in the first place.

And thats the WORST CASE scenario!!

Whose the knob now mate?

Edited January 9, 2007 by Dupont

[gharknes]

I rent a condo, I could buy if i want, my friends who are buying or have bought ask me ! why don't I buy

Answer..............I don't buy because the Thai authorities can change to rules any time they like...and oftern do, there is political instability here even when it's suposed stable, no way would i buy anything, rent it simpple cheap and safe.

Also as I have said before, putting money in a thai bank account is also risky, I know it has to be done to meet retiremnt regulations but why shouldn't money in a foreign account be staisfactory

[OlRedEyes]

Mmmm... Thai culture. Ambiguous hole again

With China, Vietnam etc so close, who in his right mind would trust Thai politics and economics in the next decade and invest here?

I sure won't. No matter what list 3 says.

[birago23]

This just came on Bangokpost:

IT WILL SURELY BOOST THE CONFIDENCE OR FOREIGN INVESTORS!! YEA!!! why not allow soldiers to run my company???

CNS considers tightening martial law

(Bangkokpost.com)

The Council for National Security on Tuesday reconsidered the tightening of martial law after Bangkok was hit by a series of bombings on New Year's Eve, said CNS chairman Sonthi Boonyaratkalin.

Gen Sonthi said the CNS members revised the implementation of the martial law to be stricter at its meeting after the capital was hit by deadly blasts.

Gen Sonthi, however, assured that CNS did not have the idea to issue a new law to equip the council with more power.

Whether to lift bans preventing political parties from engaging in activities, Gen Sonthi said it is important to maintain the coup maker's two announcements -- no. 15 and 27 -- because the situation of the country is not yet back to normal.

CNS spokesman Colonel Sansern Kaewkamnerd, meanwhile, said there would be a major reshuffle of government officials in various ministries in April. The reshuffle, he explained, is a part of the CNS's get-tough approach to shape up officials who do not devote themselves to their work. They will be given 1-2 months to shape up or they will be shipped out, he warned.

[Brutiniero]

Thanks!

[BlackArtemis]

Honostly i am kinda hoping this makes the baht cheaper and land prices drop... So I can buy some nice land in CM.

[samran]

So basically, I believe that the announcement is actually an easing of rules for foreigners !

Hope for the best, prepare for the worst.

I'm prepared to be totally wrong here (and houded to kingdom come), but I'm going out on a limb here to say that people will end up being pleasantly suprised.

My call: List three is still up for debate. This is the important one for foriegners, and the one that officially "no comment" has been made on.

My reasoning: Nothing other than if you look at it, cabinet is stacked with just about as many economic liberals as you'll ever see in Thailand. Not many economic protectionists.

The Finance Ministry team, contrary to what you may think, are quite liberal minded (in the Australian sense, not the US sense) and accepting of foreign investment. The Energy Minister as well, while a hard arse, is a pretty rational thinker on economic matters. And, while professional technocrats, many of them also run successful businesses, so they are aware of the negative impact.

As others have said, things will be muddled, but knowing the track record of some of the ministers involved, they'll be wanting to scrap as much of list three protection as they can.

But, just my humble opinion.....

Here we go again a dreamer or a Thai lawyer.

No, usually a cynic and an economist (sometimes). And fully prepared to be wrong.