Thailand To Limit Foreign Stake In Firms To 50 Per Cent

[Old Man River]

word .

Sorry, Mid, but I don't follow what you are saying.

[Mid]

word .

Sorry, Mid, but I don't follow what you are saying.

twice , I've got that on this board ....................

signifies agreement , hear hear , my word old chap .....................

capiesh ?

[womble]

word .

Sorry, Mid, but I don't follow what you are saying.

twice , I've got that on this board ....................

signifies agreement , hear hear , my word old chap .....................

capiesh ?

Thought it was more of a Ghetto type slang.........

[Mid]

could be ,

important ?

[Bruce1]

Interesting that in today's Post business section M.R. Pridiyathorn claims that "...investment will rise by at least 6% this year or nearly double the rate of 2006 due to the central bank's Dec. 18 measures to curb baht speculation and reforms to the Foreign Business Act".

I would have thought there were some big assumtions in that:

1. That investment will rise. We'll have to wait a year to know if that's true.

2. A rise would be the result of the baht and FBA changes.

Even if it does rise, that could be faulty logic. There could be other causes for the rise (if it happens), such as falling oil prices or government borrowing to finance infrastructure projects. Manufacturing investment decisions are usually made several years in advance, as others have said, so a year from now the figures could still just be reflecting decisions made 1-2 years ago.

Besides, hopefully we'll have an elected government by then, so they'll have to cop the criticism if it all goes downhill, while Mr Pridiyathorn fades back into the background.

Edited January 19, 2007 by Bruce1

[wintermute]

Interesting that in today's Post business section M.R. Pridiyathorn claims that "...investment will rise by at least 6% this year or nearly double the rate of 2006 due to the central bank's Dec. 18 measures to curb baht speculation and reforms to the Foreign Business Act".

The current military regime seems to be particularly adept at self denial and insulating itself from reality. Everyone knows the currency controls that caused the SET to crash was a disaster but they seemed almost arrogant about the whole thing. Their statements were basically proclaiming that THEY knew what they were doing and the REST of the world were the ones that were wrong. Of course this is ignoring the advice of investment bankers, economists, financial analysts who operate in their country as well. There is more to this regime than meets the eye it's already heading down a dangerous path of censorship and bad policies along with sparking diplomatic rows with its neighbors. It's being run exactly like clueless military men in charge of something way over their heads. I predict that things will not get better for Thailand after these well publicized debacles.

Edited January 19, 2007 by wintermute

[opothai]

you don't know where they stand. Something just doesn't add up.

censorship and bad policies along with sparking diplomatic rows with its neighbors. It's being run exactly like clueless military men in charge of something way over their heads. I predict that things will not get better for Thailand after these well publicized debacles.

but still you get the top brass saying investment will be up and every thing is hunky dory,

a bit like an estate agent talking up a slow market if you ask me

[Johpa]

Their statements were basically proclaiming that THEY knew what they were doing and the REST of the world were the ones that were wrong. Of course this is ignoring the advice of investment bankers, economists, financial analysts who operate in their country as well.....

Which in and of itself is not always a bad thing as the only people I know more delusional on economic matters than the coup leaders are the investment bankers, economists, and financial analysts who tend to believe in such things as the "invisible hand of the market" and other such Globalist nonsense.

[Bruce1]

QUOTE(Bruce1 @ 2007-01-19 16:44:47)

censorship and bad policies along with sparking diplomatic rows with its neighbors. It's being run exactly like clueless military men in charge of something way over their heads. I predict that things will not get better for Thailand after these well publicized debacles.

That wasn't me actually, it was a comment on something I said, but I don;t mind as I basically agree with it.

Its interesting to see them arguing that in 1997 Malaysia proved the conventional policies wrong by adopting different policies and now they're going to copy Malaysia. Actually, from the little I know, Malaysia's fixed currency policies have caused a rapid rise in currency valuation which now threatens to derail Malaysia's position as a low-cost manufacturer, and is forcing Malaysia to seek higher tech investments as an alternative, so what Thailand needs is exactly the opposite - a low currency, not a high one. Also, Malaysia has a very welcoming attitude towards foreign investment, much more welcoming than Thailand, from what I know. But maybe someone knows more about this than me. Is that right?

[ChiangMaiAmerican]

And yet another voice, this time from a well respected American news magazine.

From Time Magazine

Thailand: The Land of Fading Smiles

"Then, last week, Thailand's Cabinet began tightening foreign-ownership laws, closing loopholes that had made the country one of the region's most welcoming destinations for overseas investment. At the same time, the government is clamping down on the thousands of foreigners who work in Thailand without proper permits. "Given the strong regional competition for foreign investment, Thailand should be sending a message that we welcome foreigners," says Sompop Manarungsan, an economist at Chulalongkorn University in Bangkok. "Instead, we're doing the opposite"

And

""I think there is a growing group in Thailand that believes business here should belong to Thais, not foreigners," says Sukhbir Khanijoh, senior analyst at Kasikorn Securities in Bangkok."

http://www.time.com/time/magazine/article/...1580046,00.html

[pap]

from what i can glean from the news and reading about the situation in thailand, i tend to agree with a financial expert in bangkok that was interviewed on bloomberg,

basically with all the uncertainty with investment issues, the bombings and the way the government change rules, laws and regulations on a whim,

thailand is not a place to gamble with,

until there is clarity investment will dry up somewhat.

and the question is when will stability and clarity come from the present regime ????

That is exactly what I am hearing. Given the coup, bombings, capital controls and new ownership laws, the perception on Thailand by most large, long term investors is to step back and wait and see. The current regime is not oblivious to this, and may well be one reason why the next general election may be held earlier than planned.

What bothers me about the up and down, in and out posture of many of the government officials is that, over the years, many of us have worked with these people and they weren't like this before. For example, on the financial side, M.R. Pridiyathorn and Dr. Tarisa have earned the respect of a great number of foreign business people. Then, all of a sudden, you don't know where they stand. Something just doesn't add up.

Could be they don't have a choice. Could also be nationalism has kicked in which can do strange things to people and their opinions. It could also be that they are simply making mistakes. Respectable people are not infallible and occasionally the best of us screw up.

They could also be right. Thailand may increase in certain sectors of their economy. As a matter of fact it’s likely. But in relation to their neighbors they will definitely lose ground unless the competing countries make similar mistakes.

[Dupont]

And yet another voice, this time from a well respected American news magazine.

From Time Magazine

Thailand: The Land of Fading Smiles

"Then, last week, Thailand's Cabinet began tightening foreign-ownership laws, closing loopholes that had made the country one of the region's most welcoming destinations for overseas investment. At the same time, the government is clamping down on the thousands of foreigners who work in Thailand without proper permits. "Given the strong regional competition for foreign investment, Thailand should be sending a message that we welcome foreigners," says Sompop Manarungsan, an economist at Chulalongkorn University in Bangkok. "Instead, we're doing the opposite"

And

""I think there is a growing group in Thailand that believes business here should belong to Thais, not foreigners," says Sukhbir Khanijoh, senior analyst at Kasikorn Securities in Bangkok."

http://www.time.com/time/magazine/article/...1580046,00.html

Theres no problem with little racist nutters like Khun Khanijoh running round saying this, the problem is is that they are trying to steal them.

The result should the theft succeed, will be that the businesses are run in to the ground and a few rich people steal whats remaining. They will certainy wither on the vine without further foreign investment and teachnical input, its just a matter of how quickly.

"Can't compete, won't compete" seems to be the new Thai business motto. Not going to add to confidence here is it!

[pap]

Hence, for existing investments it will be a wait and see position, but new projects will mostly go elsewhere. I was happy to see that Panasonic is breaking ranks from the other Japanese and will be doing a new project in Thailand. Unfortunately, such trust by large MNC's will be few and far between.

Breaking ranks from whom? Toyota, Honda and other Japanese car manufaturers are still all solid on their investment plans in Thailand, especially the ones for the "eco" cars. If the government greenlights the new tax laws for the eco cars, there will be huge investments from these Japanese companies.

Come on Old Man River, at least try to talk more about stuff that you really know.

Thailand is not in a vacuum. Those companies have spent enough so far they can not turn back. They have to make it work. But the real fact is the money they are investing in Thailand is small when compared to India and other countries.

So what if Toyota does not pull out because they want to roll the dice. They are hedging their bet by investing monumentally more in other parts of the world.

The question is not "Did the Toyota’s of the world continue to invest in Thailand?". It is "How much less are they investing than they would have?" and "How much of a competitive disadvantage does this put Thailand at in their region?".

[Old Man River]

word .

Sorry, Mid, but I don't follow what you are saying.

twice , I've got that on this board ....................

signifies agreement , hear hear , my word old chap .....................

capiesh ?

I asked my kid before you responded, and now I really do feel old.

[Old Man River]

Thailand is not in a vacuum. Those companies have spent enough so far they can not turn back. They have to make it work. But the real fact is the money they are investing in Thailand is small when compared to India and other countries.

So what if Toyota does not pull out because they want to roll the dice. They are hedging their bet by investing monumentally more in other parts of the world.

The question is not "Did the Toyota’s of the world continue to invest in Thailand?". It is "How much less are they investing than they would have?" and "How much of a competitive disadvantage does this put Thailand at in their region?".

Some people do think it is a vacuum, as evidenced by the comments reported in this morning's papers by the Chairman of the Thai Chamber Commerce. Imagine the chairman saying these laws could help local businessmen prepare for global change. He is no fool. You know what he means is that these laws will allow some to return to the monopolies they once enjoyed before global competition was allowed in Thailand. This attitude isn't being lost on global investors, not by a long shot. First these laws and then pressure for other laws etc. Really, a terrible mistake by a government that I believe is really trying to do the right thing.

[cclub75]

Anyway. It's good to see that the international medias are not duped.

There is something coming on the agenda....

It will give us more details, regarding the real intentions of the governement : the draft of the Retail Act.

The draft should be presented by the end of the month.

That's obviously a big piece if I may say :

-because there are some "noisy" pressure groups (see the previous rallies of small retailers).

-because it looks like a clear scheme : foreign geants against small thai retailers

-and because it's big money, with 2 large companies (Tesco and Carrefour, UK and France)

So... we'll see.

[Bruce1]

Smart politicians like John Howard have the skills to pacify the loony left economic nationalists who want to put up the barriers and bar foreign investors, while finding ways to allow that foreign investment to continue, but its a skilfull political balancing act and, so far, I can't see much evidence this government knows how, or is prepared, to do that. If they try to shut down or limit the expansion of the Tescos and Big Cs and so forth to pacify street traders then we'll know they're not up to the job of managing a modern international economy.

[Paul MBMG]

Slow down guys

1) Anyone implying that TL have broken the law or used nominees needs to be very careful. I believe that the TL documentation that I've seen stands up very well under the current law and that there are no grounds for some of the libellous commenst here that TL have acted illegally.

2) Also from what I've seen, the documentation that they have used was well put together as you'd expect from a major multinational using good quality legal advice.

My point is that because they paid for proper advice, their situation up to now has been secure and they won't have any difficluties dealing with the new regulations. Yes, they have to review and take the neccessary steps but with good advice this shouldn't be too problematic. In the meantime they have to express some concerns - how would it reflect if their public comment as "don't know, don't care.." ? But their reactiosn seem far more measured than many of the posts on this board. At the risk of repeating - is that because they took good advice, they set up something robust and now they're simply preparing the neccessary adjustments to remain robust.

I also agree that the governments previoulsy supported this but laws change everywhere (otherwise you wouldn't have politicians (probably wouldn't need lawyers either - sounds worth pursuing to me - mind you poliics is illegal now in Thailand, maybe making lawyers illegal will be the next step??) - good operators are able to adjust to this.

Can't think of too many other ways to say this but it doesn't seem to be getting through.

At the risk of repeating myself, set yourself up right in the first place and there's very little to have to worry about now. Do it on the cheap initially and you'd better jump now and jump fast or else something could just be coming along that's going to bite your backside.

You may well be correct on this, but Tesco, one of the largest retailers in the world didn't do it right - they set up a Thai company with nominees and are now very concerned about the future of their operations in Thailand (yesterday's business Post), and according to another recent article in the B.Post, most of the major multi nationals also went this route for their investments in Thailand, because having a Thai company made it much easier to do business, particularly with regards the ownership of land and the restrictions on trade for foreign companies.

Mobi, I totally agree. Any insinuation that weak law firms were used by major MNC's is naive.

During the period when there was heavy FDI into Thailand, I knew of no major law firm that ever advised a client in writing to use one of the various ownership loopholes. Still, it was not out of the ordinary for these same major global law firms to paper loophole ownership structures. What couldn't be put in writing, was communicated verbally. Advising clients to use these loopholes did not come out of left field either. It was well known that these structures were being openly supported by previous governments. This is why the reaction by MNC's is now so negative. They feel cheated.

[Paul MBMG]

I think that this is what is behind all the posturing and the discussions between the international retailers and the authorities. Reconciling the opposed agendas here is a big test - I've said before that by playing to the balcony with the FBA, maybe it's easier to go softer on the retailing act.....

There is something coming on the agenda....

It will give us more details, regarding the real intentions of the governement : the draft of the Retail Act.

The draft should be presented by the end of the month.

That's obviously a big piece if I may say :

-because there are some "noisy" pressure groups (see the previous rallies of small retailers).

-because it looks like a clear scheme : foreign geants against small thai retailers

-and because it's big money, with 2 large companies (Tesco and Carrefour, UK and France)

So... we'll see.

[johnnyk]

The government is feeling pressure from small retailers over the TL and Carrefour presence and expansion.

Samesame in the USA where some states and municipalities have brought pressure over Wal-Mart's ability and desire to crush local retailers.

And many European municipalities have very strict rules about large chains as well.

Yes, they offer low prices which delights academic economists and sundry number crunchers but on balance they take more than they give by robbing communities of family businesses, turning mom and pop entrepreneurs into minimum-wage slaves and erecting sterile ugly monoliths blighting the landscape.

Edited January 20, 2007 by johnnyk

[ThaiGoon]

The government is feeling pressure from small retailers over the TL and Carrefour presence and expansion.

Samesame in the USA where some states and municipalities have brought pressure over Wal-Mart's ability and desire to crush local retailers.

And many European municipalities have very strict rules about large chains as well.

Yes, they offer low prices which delights academic economists and sundry number crunchers but on balance they take more than they give by robbing communities of family businesses, turning mom and pop entrepreneurs into minimum-wage slaves and erecting sterile ugly monoliths blighting the landscape.

Exactly. I'm all for all these big international retailers to sod off from Thailand asap really, but that's not possible. The way they have been expanding in Thailand with little or no control at all is casuing a lot of small businesses to go out of business. And a lot of people at grassroot level have been greatly impacted. The Thai government must insure that majority of their people can still be busniess owners and don't all end up working in factories or as little paid employees. They have the find a balance between accepting globalisation and protecting their own citizens at grassroot levels.

[womble]

The government are in a difficult position, on one hand they can't be seen to go against the Thai people by giving the foriegn stores a green light to xpand as they wish unchecked.

On the other hand these guys pay tax.

Yes large amounts.

[hammered]

Smart politicians like John Howard have the skills to pacify the loony left economic nationalists who want to put up the barriers and bar foreign investors, while finding ways to allow that foreign investment to continue, but its a skilfull political balancing act and, so far, I can't see much evidence this government knows how, or is prepared, to do that. If they try to shut down or limit the expansion of the Tescos and Big Cs and so forth to pacify street traders then we'll know they're not up to the job of managing a modern international economy.

They also have to worry about their own poor. The Big Cs and Tescos not only provide cheaper goods but also better paying jobs than small Thai retailers. These jobs are also better protected by Labor law giving workers more time off. The balancing act will not be easy.

[younghusband]

The government is feeling pressure from small retailers over the TL and Carrefour presence and expansion.

Samesame in the USA where some states and municipalities have brought pressure over Wal-Mart's ability and desire to crush local retailers.

And many European municipalities have very strict rules about large chains as well.

Yes, they offer low prices which delights academic economists and sundry number crunchers but on balance they take more than they give by robbing communities of family businesses, turning mom and pop entrepreneurs into minimum-wage slaves and erecting sterile ugly monoliths blighting the landscape.

Exactly. I'm all for all these big international retailers to sod off from Thailand asap really, but that's not possible. The way they have been expanding in Thailand with little or no control at all is casuing a lot of small businesses to go out of business. And a lot of people at grassroot level have been greatly impacted. The Thai government must insure that majority of their people can still be busniess owners and don't all end up working in factories or as little paid employees. They have the find a balance between accepting globalisation and protecting their own citizens at grassroot levels.

It's interesting that the anti international retailer posts of which the above is typical never touch on "the elephant in the room" which is that the advent of Tesco,Carrefour, Tops etc have made life easier and cheaper for many millions of Thais, providing better service and more choice.Tesco Lotus which is the chain I know best has also had a very positive effect on the local economy.That's not to say there isn't a legitimate debate about the pros and cons as there has been of course all over the world including the USA.Sadly mom and pop stores will have difficulties although this has as much to do with 7-11 etc.But to ignore or underestimate the huge benefits to the Thai people of the big retailers is strange.Remember much of the opposition is driven/funded by old fashioned Thai retailers who just couldn't compete in terms of modern business efficiencies and are looking to recover their position through political lobbying rather than pulling their socks up and giving the customer a better deal.

[Old Man River]

The government is feeling pressure from small retailers over the TL and Carrefour presence and expansion.

Samesame in the USA where some states and municipalities have brought pressure over Wal-Mart's ability and desire to crush local retailers.

And many European municipalities have very strict rules about large chains as well.

Yes, they offer low prices which delights academic economists and sundry number crunchers but on balance they take more than they give by robbing communities of family businesses, turning mom and pop entrepreneurs into minimum-wage slaves and erecting sterile ugly monoliths blighting the landscape.

Exactly. I'm all for all these big international retailers to sod off from Thailand asap really, but that's not possible. The way they have been expanding in Thailand with little or no control at all is casuing a lot of small businesses to go out of business. And a lot of people at grassroot level have been greatly impacted. The Thai government must insure that majority of their people can still be busniess owners and don't all end up working in factories or as little paid employees. They have the find a balance between accepting globalisation and protecting their own citizens at grassroot levels.

It's interesting that the anti international retailer posts of which the above is typical never touch on "the elephant in the room" which is that the advent of Tesco,Carrefour, Tops etc have made life easier and cheaper for many millions of Thais, providing better service and more choice.Tesco Lotus which is the chain I know best has also had a very positive effect on the local economy.That's not to say there isn't a legitimate debate about the pros and cons as there has been of course all over the world including the USA.Sadly mom and pop stores will have difficulties although this has as much to do with 7-11 etc.But to ignore or underestimate the huge benefits to the Thai people of the big retailers is strange.Remember much of the opposition is driven/funded by old fashioned Thai retailers who just couldn't compete in terms of modern business efficiencies and are looking to recover their position through political lobbying rather than pulling their socks up and giving the customer a better deal.

Thank you Young Husband. I was just about to send the message below when I read your message. I fully agree.

Not samesame in the US. In the US, the people in the individual states get to have meaningful discussions on how the modern trade affects them where they live and then they get to vote on it. In Thailand, the federal government decides for all people, in every province, what will happen and how it will happen. Just because regulations are right for California does not mean they are right for all of Thailand.

There is no question that the modern trade has adversely affected the smaller retailers. However, these small retailers have been more affected by the multiple 7-11 and other chain convenience stores that have opened up in direct competition with the mom and pop stores. Since these convenience stores are owned by local Thai companies, it was never and issue. Being able to buy at the modern trade at least has allowed small retailers the opportunity to purchase in bulk, lowering costs so they can better compete against the chain convenience stores.

The decision maker on what is right should be the majority of the people living in the areas affected, not the federal government which currently is being driven more by nationalistic issues than commercial issues.

[Paul MBMG]

did everyone see this in "The Manager" today

Manager Daily 23/01/07

Who is really destroying mom and pop shops?

Small retailers who have become known as mom and pop shops (showhuay) have been part of Thai society for a long time, but have not grown because of high costs of operating and low profits. In the past they have been forced under the control of middlemen and manufacturers in the specification of product category, price and adding profit at each stage. By the time good reach the mom and pop shop, the result is goods lacking variety and expensive prices.

When society develops, the way of life of people in society has changed, and mom and pop shops must adapt in many ways, whether in product variety or price, to be ready to compete. However, mom and pop stores’ ability to adapt has been consistently limited as the form of business remains in the control of manufacturers and middlemen traders. Mom and pop shops have no choice because they have no bargaining power in this system.

The business format of mom and pop shops only just started to change for the better about 10 years ago, when modern trade retail came to Thailand. Although in one aspect this caused increasingly severe competition, at the same time, mom and pop shops with vision changed the format of trading by becoming customers of the large modern trade retailers, which sell goods at cheap prices and have more products to choose from than middlemen traders. Most importantly, modern trade stores usually have more flexible credit systems than the middlemen, causing mom and pop shops’ cash flow to improve and be more flexible likewise.

The situation which has arisen has had direct results for mom and pop shops and consumers, as mom and pop shops can now manage their businesses more independently and with more profit, while consumers can choose from a variety of goods of the right category and quality, and at a fair price.

The increased potential and bargaining power of Mom and Pop shops in the modern era has created dissatisfaction among manufacturers and their networks of middlemen, as they cannot mandate the price of goods or the retail market in general to mom and pop shops any more. They have thus thought up the method of eliminating their rivals, the modern trade stores, by such as demanding to limit the expansion of modern traders with the Retail Law, and including organizing groups of protestors for hire in various areas nationwide, using the survival of mom and pop shops as a claim, while accusing the modern trade stores of destroying the economy, society and local cultures.

These actions have the single objective of wishing to maintain the exploitation of mom and pop shops, which is most shameful, because manufacturers and middlemen have been taking advantage of mom and pop shops and consumers for decades. There has also been hoarding of goods when they wish it. Just at the time mom and pop shops have just started to get their heads above water, they are used as a claim to recover the interests of this group. Some manufacturers in particular have shown hypocritical behaviour – while claiming they are the protectors of mom and pop shops’ interests, they are doing extensive business with modern trade stores, and can get their products distributed efficiently nationwide through modern trade store networks.

It is time that the government, mom and pop shops and consumers in general should use their faculties of discrimination to realize who in fact is killing mom and pop shops. What is sad is that even high-ranking officials at the Commerce Ministry have announced that they will use the middleman system as the leading element in developing the potential of mom and pop shops. If manufacturers and middlemen networks were sincere, then why have they never thought to do it before? They have only started to think about it after mom and pop shops have turned to do more business with modern trade stores. Who is really killing mom and pop shops? Who is really trying to limit the rights and choices of consumers?

The government is feeling pressure from small retailers over the TL and Carrefour presence and expansion.

Samesame in the USA where some states and municipalities have brought pressure over Wal-Mart's ability and desire to crush local retailers.

And many European municipalities have very strict rules about large chains as well.

Yes, they offer low prices which delights academic economists and sundry number crunchers but on balance they take more than they give by robbing communities of family businesses, turning mom and pop entrepreneurs into minimum-wage slaves and erecting sterile ugly monoliths blighting the landscape.

Exactly. I'm all for all these big international retailers to sod off from Thailand asap really, but that's not possible. The way they have been expanding in Thailand with little or no control at all is casuing a lot of small businesses to go out of business. And a lot of people at grassroot level have been greatly impacted. The Thai government must insure that majority of their people can still be busniess owners and don't all end up working in factories or as little paid employees. They have the find a balance between accepting globalisation and protecting their own citizens at grassroot levels.

It's interesting that the anti international retailer posts of which the above is typical never touch on "the elephant in the room" which is that the advent of Tesco,Carrefour, Tops etc have made life easier and cheaper for many millions of Thais, providing better service and more choice.Tesco Lotus which is the chain I know best has also had a very positive effect on the local economy.That's not to say there isn't a legitimate debate about the pros and cons as there has been of course all over the world including the USA.Sadly mom and pop stores will have difficulties although this has as much to do with 7-11 etc.But to ignore or underestimate the huge benefits to the Thai people of the big retailers is strange.Remember much of the opposition is driven/funded by old fashioned Thai retailers who just couldn't compete in terms of modern business efficiencies and are looking to recover their position through political lobbying rather than pulling their socks up and giving the customer a better deal.

Thank you Young Husband. I was just about to send the message below when I read your message. I fully agree.

Not samesame in the US. In the US, the people in the individual states get to have meaningful discussions on how the modern trade affects them where they live and then they get to vote on it. In Thailand, the federal government decides for all people, in every province, what will happen and how it will happen. Just because regulations are right for California does not mean they are right for all of Thailand.

There is no question that the modern trade has adversely affected the smaller retailers. However, these small retailers have been more affected by the multiple 7-11 and other chain convenience stores that have opened up in direct competition with the mom and pop stores. Since these convenience stores are owned by local Thai companies, it was never and issue. Being able to buy at the modern trade at least has allowed small retailers the opportunity to purchase in bulk, lowering costs so they can better compete against the chain convenience stores.

The decision maker on what is right should be the majority of the people living in the areas affected, not the federal government which currently is being driven more by nationalistic issues than commercial issues.

[Old Man River]

did everyone see this in "The Manager" today

Manager Daily 23/01/07

Who is really destroying mom and pop shops?

Small retailers who have become known as mom and pop shops (showhuay) have been part of Thai society for a long time, but have not grown because of high costs of operating and low profits. In the past they have been forced under the control of middlemen and manufacturers in the specification of product category, price and adding profit at each stage. By the time good reach the mom and pop shop, the result is goods lacking variety and expensive prices.

When society develops, the way of life of people in society has changed, and mom and pop shops must adapt in many ways, whether in product variety or price, to be ready to compete. However, mom and pop stores’ ability to adapt has been consistently limited as the form of business remains in the control of manufacturers and middlemen traders. Mom and pop shops have no choice because they have no bargaining power in this system.

The business format of mom and pop shops only just started to change for the better about 10 years ago, when modern trade retail came to Thailand. Although in one aspect this caused increasingly severe competition, at the same time, mom and pop shops with vision changed the format of trading by becoming customers of the large modern trade retailers, which sell goods at cheap prices and have more products to choose from than middlemen traders. Most importantly, modern trade stores usually have more flexible credit systems than the middlemen, causing mom and pop shops’ cash flow to improve and be more flexible likewise.

The situation which has arisen has had direct results for mom and pop shops and consumers, as mom and pop shops can now manage their businesses more independently and with more profit, while consumers can choose from a variety of goods of the right category and quality, and at a fair price.

The increased potential and bargaining power of Mom and Pop shops in the modern era has created dissatisfaction among manufacturers and their networks of middlemen, as they cannot mandate the price of goods or the retail market in general to mom and pop shops any more. They have thus thought up the method of eliminating their rivals, the modern trade stores, by such as demanding to limit the expansion of modern traders with the Retail Law, and including organizing groups of protestors for hire in various areas nationwide, using the survival of mom and pop shops as a claim, while accusing the modern trade stores of destroying the economy, society and local cultures.

These actions have the single objective of wishing to maintain the exploitation of mom and pop shops, which is most shameful, because manufacturers and middlemen have been taking advantage of mom and pop shops and consumers for decades. There has also been hoarding of goods when they wish it. Just at the time mom and pop shops have just started to get their heads above water, they are used as a claim to recover the interests of this group. Some manufacturers in particular have shown hypocritical behaviour – while claiming they are the protectors of mom and pop shops’ interests, they are doing extensive business with modern trade stores, and can get their products distributed efficiently nationwide through modern trade store networks.

It is time that the government, mom and pop shops and consumers in general should use their faculties of discrimination to realize who in fact is killing mom and pop shops. What is sad is that even high-ranking officials at the Commerce Ministry have announced that they will use the middleman system as the leading element in developing the potential of mom and pop shops. If manufacturers and middlemen networks were sincere, then why have they never thought to do it before? They have only started to think about it after mom and pop shops have turned to do more business with modern trade stores. Who is really killing mom and pop shops? Who is really trying to limit the rights and choices of consumers?

While the article above makes some good points (some of which we have already touched on), the accusation that manufacturers are out to get the modern trade (MT) is far from the truth. While middlemen are upset, having lost their jobs as mom and pops now buy from the MT, changing business environments are normal to manufacturers. Instead of selling to the middlemen, they now sell to the MT. While selling to the MT is at lower margins, this is somewhat offset in that distribution to the MT is a whole lot cheaper than the old days of getting product out to the middlemen.

[Morty]

The government is feeling pressure from small retailers over the TL and Carrefour presence and expansion.

Samesame in the USA where some states and municipalities have brought pressure over Wal-Mart's ability and desire to crush local retailers.

And many European municipalities have very strict rules about large chains as well.

Yes, they offer low prices which delights academic economists and sundry number crunchers but on balance they take more than they give by robbing communities of family businesses, turning mom and pop entrepreneurs into minimum-wage slaves and erecting sterile ugly monoliths blighting the landscape.

Exactly. I'm all for all these big international retailers to sod off from Thailand asap really, but that's not possible. The way they have been expanding in Thailand with little or no control at all is casuing a lot of small businesses to go out of business. And a lot of people at grassroot level have been greatly impacted. The Thai government must insure that majority of their people can still be busniess owners and don't all end up working in factories or as little paid employees. They have the find a balance between accepting globalisation and protecting their own citizens at grassroot levels.

It's interesting that the anti international retailer posts of which the above is typical never touch on "the elephant in the room" which is that the advent of Tesco,Carrefour, Tops etc have made life easier and cheaper for many millions of Thais, providing better service and more choice.Tesco Lotus which is the chain I know best has also had a very positive effect on the local economy.That's not to say there isn't a legitimate debate about the pros and cons as there has been of course all over the world including the USA.Sadly mom and pop stores will have difficulties although this has as much to do with 7-11 etc.But to ignore or underestimate the huge benefits to the Thai people of the big retailers is strange.Remember much of the opposition is driven/funded by old fashioned Thai retailers who just couldn't compete in terms of modern business efficiencies and are looking to recover their position through political lobbying rather than pulling their socks up and giving the customer a better deal.

You hit the nail right on the head , couldn't have been said better

But then again I only have a 19th year perspective of it

[Plus]

Remember much of the opposition is driven/funded by old fashioned Thai retailers...

Not according to the Manager's article above. It would fir perfectly with "Thai style" if middlemen indeed were behind public protests.

[LivinLOS]

We are not xenophobic. We just want to run things more effectively /../

Yeah, that's the word I was looking for...

You are xenophobic by the way, and it would take a great deal of effort to run things less effectively here.

Every single piece of paperwork I have dealt with down the past 12 years has been a nightmare and the offices a scene of total confusion, corruption and incompentence.

December 2006, Immigration boldly and loudly told me I am too young for a Non Imm 'O', even though I had one already by being married and was trying to extend it. He was on the phone talking about football at the time on the main front desk. Went to singapore, got Non imm 'O' one year. This cost me (and Thailand) 30,000 baht as I was there 4 nights.

My work permit dates were wrong, and they lost my tax forms which were stapled to it, so I had to go and get another set. They wouldn't look for them, they insisted they were never there, even though you could see bits of paper attached to the staple, and all my forms were numbered.

Curiously enough, in the Labour Office there was a woman with a big board full of rings, selling them to the staff whilst the office manager was just slumped on her desk. I further altered my job description, went back for the permit the next day, and they had processed it for an entirely different person and told me the permit was expired. It was for somebody who last worked for me over 3 years ago. All in all three visits to the labour department, about 6 wasted hours.

Tax office last week, came up with 4 different figures before agreeing that my accountants (the wife's and the 5th total) were right. This month, they (the tax office staff, the ones not playing computer games) were trying to sell my wife some gemstone rings! On the counter! They then processed my forms wrong, and put all my monies and details on an employees records so we had to go back and do it again this week.

Omission!! When I paid my water rates, the cashier tried to sell me 2 rai of land. They all had a little laminated picture of it with a phone number on it and told me it was cheap! We paid, then reported a leak on the Soi, the engineer who called, had the same saled pitch!!

Effective! Not for 3 generations at least mate.

None of this is unusual.

Superb... And approximately the same type of experiences I have built up over the years..

The phrase that a country gets the government it deserves springs immediately to mind.