Thailand To Limit Foreign Stake In Firms To 50 Per Cent

[fire and ice]

Can someone clarify for me what are the rules in Thailand for a foreigner running & owning 100% an unincorporated business?

I am talking about a small business that rents/leases its premesis here, not buying land.

Most small businesses are surely unincorporated but operate as sole-traders and partnerships.

Is it still possible to run a business in Thailand in your own name without a company (you could still employ 4 Thais under the sole-trader business)? Or are the foreigner's work permits only issued for companies, govt agencies & NGOs?

[BlackJack]

THe past several law changes and tightening up is like someone sitting in the space shuttle saying whats this red button do and then they push it to see what will happen.

Unfortunately Thailand has no long term view or 10 year plan, 5 year plan, 3 year plan, 1 year plan.

So the buttons get pushed

So sell your bahts

bring in what you need only

Look for some cheap properties coming up.

Long term view is that Houston will recognise the problem and wack it on auto pilot until someone else volunteers to pilot the soft landing

fasten seat belts as its going to get rough

[farangsay]

Watch the baht in the coming days and months............

I've been watching it.

It was supposed to sink after the introduction of the capital inflow tax.

It didn't.

Now another dubious piece of financial legislation goes through

in a closed-door session.

Will it sink this time.

I wouldn't mid if it did a bit.

Wouldn't be bad for Thailand , would be good for me.

Unfortunately the currency seems to be wearing water wings.

The "we've been working on it for three months" bit did amuse.

One of the reasons for the Sep 19 coup was rampant corruption ?

Anybody indicted yet ? No ?

Well this financial wizard stuff is much more exciting isn't it ?

And they can do that so much faster , 'cos they're all

intellectuals and academics.

And they can't get sued or put in jail for passing a stupid law.

[Norman d'Plume]

"This is Thailand": A phrase oft quoted by a.) Foreigners to the kingdom who come across yet another reason for total bemusement. and b.) Thai persons who consider themselves of import when explaining such policfies causing bemusement to non Thais.

Policies such as these are usually referred to as the "Thai Way", a phrase that has come to mean, "We will not learn from your mistakes, or those we have ourselves made in the past. We wish to repeat said mistakes ad infinitum ourselves."

These policies are normally adopted for one of two reasons. i.) Acute xenophobia or ii.) The desire to retain the status quo and constant absolute power for the oligarcic kleptocracy who have controlled, and fed off, the country for generations.

[Riverside]

Watch the baht in the coming days and months............

I've been watching it.

It was supposed to sink after the introduction of the capital inflow tax.

It didn't.

Now another dubious piece of financial legislation goes through

in a closed-door session.

Will it sink this time.

I wouldn't mid if it did a bit.

Wouldn't be bad for Thailand , would be good for me.

Unfortunately the currency seems to be wearing water wings.

The "we've been working on it for three months" bit did amuse.

One of the reasons for the Sep 19 coup was rampant corruption ?

Anybody indicted yet ? No ?

Well this financial wizard stuff is much more exciting isn't it ?

And they can do that so much faster , 'cos they're all

intellectuals and academics.

And they can't get sued or put in jail for passing a stupid law.

Well what with the Baht doing side shows down walking street in Pattaya I think its time to pack my old suitcase and head for home for the summer. At my money is the bank in the UK and not here.

Can anybody tell me what I can put in my hand luggage these days???

[birago23]

"This is Thailand": A phrase oft quoted by a.) Foreigners to the kingdom who come across yet another reason for total bemusement. and b.) Thai persons who consider themselves of import when explaining such policfies causing bemusement to non Thais.

Policies such as these are usually referred to as the "Thai Way", a phrase that has come to mean, "We will not learn from your mistakes, or those we have ourselves made in the past. We wish to repeat said mistakes ad infinitum ourselves."

These policies are normally adopted for one of two reasons. i.) Acute xenophobia or ii.) The desire to retain the status quo and constant absolute power for the oligarcic kleptocracy who have controlled, and fed off, the country for generations.

HAHAHA GREAT EXPLAINED AND ABSOLUTELY RIGHT!

Amazing Thailand!

Land of shortsighted people!

As if the bombs haven't done enough damage - LET'S BLOW IT UP!

[womble]

"This is Thailand": A phrase oft quoted by a.) Foreigners to the kingdom who come across yet another reason for total bemusement. and b.) Thai persons who consider themselves of import when explaining such policfies causing bemusement to non Thais.

Policies such as these are usually referred to as the "Thai Way", a phrase that has come to mean, "We will not learn from your mistakes, or those we have ourselves made in the past. We wish to repeat said mistakes ad infinitum ourselves."

These policies are normally adopted for one of two reasons. i.) Acute xenophobia or ii.) The desire to retain the status quo and constant absolute power for the oligarcic kleptocracy who have controlled, and fed off, the country for generations.

spot on

[Paul MBMG]

Can someone clarify for me what are the rules in Thailand for a foreigner running & owning 100% an unincorporated business?

I am talking about a small business that rents/leases its premesis here, not buying land.

Most small businesses are surely unincorporated but operate as sole-traders and partnerships.

Is it still possible to run a business in Thailand in your own name without a company (you could still employ 4 Thais under the sole-trader business)? Or are the foreigner's work permits only issued for companies, govt agencies & NGOs?

In practice it's as near as dammit impossible to qualify for a work permit as a proprietor/sole trader. The very few exceptions to this tend to crop us less than once every blue moon!

[Paul MBMG]

QUOTE(pgrin @ 2007-01-09 03:26:23)

To those of you who hold property by way of a Thai Majority Shareholder set up and only see the possibilty that this new law will erode your voting position you have overlooked a significant detail. These new rules only apply to legally formed corporations. When you set up you land holding company using nominee shareholders you committed not one but two crimes. In a country with a functioning legal system you would not only lose your land but also be on the hook for fines and jail time. There would be no law suits filed if the Thai Gov said "We are repatriating the land you illegally hold. If you wish to contend this action please be aware that we will enforce the fines and jail time that is clearly written in the law. Kindly leave the keys at immigration on your way out of the country."

P

QUOTEI agree We have to respect Thai culture. You did the crime Now you have to do the time. The only answer is to get married and put everything in your wifes name. If not married put in GF name no problem The lady from Isan will look after you

You guys should research a little more thoroughly before spouting off. Many perfectly legal companies have been establised owning property here for the benefit of foreigners. Undertaken properly this has ben a robust structure that can be easily adapted to suit the new regulations. I'd prefer this to relying entirely on the goodwill and immortality of a spouse of any sex and nationality.

[aaaaaa]

let's put it straight:

alright, foreign investor can't hold over 50% of company's shares. that means - as many pointed out here, it is 50-50 formula.

now, what about the Thai side - according to this formula, they must invest equal amount of money into business. DO they or can they?

if they don't and can't - then it would be rather that foreigner invests much more money in reality, while legally has no more than 50%

interesting to know those "details" that guy (Devakul?) has mentioned. perhaps they'd explain this?

[Paul MBMG]

let's put it straight:

alright, foreign investor can't hold over 50% of company's shares. that means - as many pointed out here, it is 50-50 formula.

now, what about the Thai side - according to this formula, they must invest equal amount of money into business. DO they or can they?

if they don't and can't - then it would be rather that foreigner invests much more money in reality, while legally has no more than 50%

interesting to know those "details" that guy (Devakul?) has mentioned. perhaps they'd explain this?

we need to see the details before commenting on the specifics but the general outline shouldn't be a problem in practice. None of this should be an issue if done properly. The Thais seem much more aware of this than many of the posters on here.

[boxida]

I think this part of the news is interesting

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.

what areas are considered as important

to security

to natural resources

to Thai culture

More details or examples on this issue would be appreciated.

---

One said this is hot air. Who knows. Maybe he's right, we keep in mind that Thailand has a temporary government leaded by military. After the elections plenty of the said will be just hollow words.

The current political cabaret is bad for Thailand's reputation. Thailand plays with his reputation as a safe place with a trustful government and law.

I hope we do not need to become accustomed to this trembeling uncertanity.

Stop that nonsense!

---

boxida

[george]

Investment analyst forecasts foreign capital exodus after legal changes

BANGKOK: -- The chairman of the Federation of Thai Capital Market Organisations warned Thailand to brace for a halt in new foreign investment and the gradual withdrawal of foreign investment because the amendments to the Foreign Business Act passed by the Cabinet Tuesday are construed as unwelcoming signs.

Dr. Kongkiat Opaswongkarn added that foreign-invested companies operating in the retail, automobile and telecommunications sectors will be those hardest hit by the amendments which restrict foreign ownership and voting rights to 50 per cent.

The federation executive said the changes -- subject to final approval by the military-appointed National Legislative Assembly -- are deemed "unwelcoming" signals from Thailand to foreign investors.

"I believe foreigners won't put more money in Thailand as a result of apprehension over these new rules. At the same time, those already here would have to leave to comply with the cap and there will be very few Thai investors who are financially capable of filling those gaps," he said.

Dr. Kongkiat said the Thai currency and the stock market are likely to bear the brunt of the move as a consequence of such moves seen as hostile to foreign investment.

Equity research analyst Thanomsak Saharatanachai of Pattanasin Securities said a host of negative factors, including the bombs during New Year and the latest move on the Foreign Business Act are likely to slow the country's economic growth by up to one per cent this year.

Operating profits of listed companies are also likely to fall. Yet even these projected profits could disappear in the light of political certainties, including the constitution drafting being completed on schedule to pave the way for general elections.

--TNA 2007-01-09

[george]

Banker warns of Foreign Business Law amendment impacts

BANGKOK: -- Amendments to the Foreign Business Law must not shake foreign investor confidence because such investment is instrumental to Thailand's national development, a top banker warned Tuesday.

Khunying Jada Wattanasiritham, president of the Thai Bankers’ Association, said the Commerce Ministry’s amendment planned to be considered by the cabinet Tuesday is worrisome to the private sector.

However, she said she supported the move if it could clarify the law.

Khunying Jada, who is also president of Siam Commercial Bank Plc, said the Joint Private-Sector Committee met Monday to discuss three controversial issues in the law.

The areas of concern include the proportion of ownership in a joint venture that must be retained by Thais, voting rights in the management meetings, and basic management in the organisation.

She said the private sector was concerned about "List 3" sectors in the law because they allow foreign investors to run general businesses. Any amendments need to be clear-cut and prudent.

They were not worried about List 1 sectors, involving occupations linked to national security, and List 2 sectors, involving occupations in specific businesses and the protection of farmers, since they are already clear-cut.

She said the financial sector would not be adversely affected because the Financial Institution Act allows foreign businessmen to increase their shareholding portion to 49 per cent from 25 per cent.

They are even allowed to hold equities more than that unless they are unable to find strategic partners for joint investment.

Khunying Jada conceded that foreign investors wanted to see a clear-cut policy, namely, on the nominee structure and legitimate shareholding portion before making a decision to co-invest or set up subsidiaries in Thailand.

“Any amendments need to be clear if we want to boost foreign investors’ confidence,"she said. "We must not give any signal we want to count less on foreign investment because such investment is key to the national development in an age of globalisation,”.

--TNA 2007-01-09

[AsiaCheese]

Watch the baht in the coming days and months............

I'm watching it, and for some reason nobody can explain [to me], it keeps going up against USD and CHF. Hoz that??

[steffi]

It means that when they want something they will get it.

The Minister of Finance was quoted, "Why should we postpone it when we have worked on it for three months. This is Thailand," he added.

Can someone expound on what he means when he says that?

[morphic]

The Minister of Finance was quoted, "Why should we postpone it when we have worked on it for three months. This is Thailand," he added.

DOS'NT THAT SAY IT ALL

I had thought that "This Is Thailand" was said only by poorly educated people that I have encountered in bars and other places, poeple that know no better. But for the Minister of Finance to have said it says something quite profound to me about Thai culture and that is that the culture of ignorant xenophobia reallt cuts across all strata of this troubled country. Thailand has shamed itself in front of the world in the past few months and they will find ittake a long time to earn th trust of the world back again. It is amazing how much cheating and dihonesty has always gone in amazing Thailand the land of smiles, but they have realy gone too far now and are going to learn some lessons the hard way. First, they will learn the difference between people being tolerant and people being stupid. The world has been tolerant of them but the world is not stupid. Second, they will lesarn that global capitalism is a double edged sword and that cannot expect to enjoy the freedom to export and growthy wealthy without inconveniences such as a stronger currency and in future they will find intelligence rather than tantrums is to the tool to manage their economy.

[george]

Kularb Kaew is nominee under revised act

BANGKOK: -- With the revised Foreign Business Act taking effect, Kularb Kaew Co Ltd - controlled by Temasek Holdings-owned Cypress Holdings Co Ltd will be defined as a nominee company.

And to comply with the law, the company has a year to reduce its foreign shareholding ratio and voting right.

Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula Tuesday came up with the judgement, clarifying the issue that has been under the authorities' scrutiny since April last year.

"Kularb Kaew falls into the "nominee" case and it must inform the authorities within 90 days and unload the (foreign) shareholding within 1 year," he said Cabinet meeting on Tuesday.

Earlier, Temasek gestured the readiness to follow the law, if the authorities promised to enforce a similar rule to all other foreignowned companies in Thailand.

This is believed to be a major reason behind the legal amendments.

Asked what is Temasek's next step, Myrna Thomas, Temasek's managing director for corporate affairs, said yesterday "We await details. We'll then consult with our legal counsel on the implications of the changes,"

Thai government has announced it will limit foreign investors to holding no more than 50 per cent of the shares or the voting rights in companies here under legal changes approved Tuesday.

"Foreign investors who altogether hold more than a 50 per cent stake in a company must lower their stake within a year," Pridiyathorn said.

"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.

The cabinet approved the changes to the Foreign Business Act "in principle" on Tuesday.

Surayud said the government's top panel of legal advisers would continue to work on the details of the law to ensure precision and transparency.

"The Council of State is authorized to work on the details to make the law precise and transparent, without any need to be resubmitted for cabinet approval again," he told reporters.

"It will take some time for the law to take effect," he added.

The Cabinet approved Tuesday the foreign business law amended by the Commerce Ministry.

The amended act would include the requirement on the voting rights of the board members and increase the penalty for violators.

Netpreeya Chumchaiyo, deputy government spokesman, said after the Cabinet meeting that the Council of State is assigned to review the draft amendments.

Earlier, Joint Foreign Chambers of Commerce warned that the amendment might affect their decisions to do business decision.

Commerce Ministry and Finance Ministry are scheduled to make seperate press conference at 3pm.

Earlier Finance Minister Pridiyathorn Devakul vowed to press ahead with legal change that could overhaul the way foreign companies do business here despite warnings of potentially disastrous economic fallout.

Pridiyathorn insisted that foreign companies would not be scared off by the final version of the law, which has not yet been released.

Foreign business community in Thailand has urged the government to postpone the changes for at least six months.

"Why should we withdraw it? They have not yet seen the details. If they had seen the details, I am sure that they would be happy," Pridiyathorn said.

"Why should we postpone it when we have worked on it for three months. This is Thailand," he added.

The minister was speaking after attending the cabinet meeting which will consider the changes.

Pridiyathorn said he had consulted some foreign investors about the changes to the Foreign Business Act and more than half of them had found the new rules acceptable.

"I myself will talk with them. I have held talks with many investors but they have not seen all of the details and the commerce minister cannot disclose the bill before the cabinet gives its approval," he said.

"We have a record of welcoming foreign investment. We are not hostile to them. Foreign investors have made Thailand develop and we are certainly still adhering to this policy," he said.

The revised law is expected to redefine shareholder rights and ownership structures for local subsidiaries of international firms.

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

-- The Nation/AFP 2007-01-09

[Mid]

Investment analyst forecasts foreign capital exodus after legal changes

The chairman of the Federation of Thai Capital Market Organisations warned Thailand to brace for a halt in new foreign investment and the gradual withdrawal of foreign investment because the amendments to the Foreign Business Act passed by the Cabinet Tuesday are construed as unwelcoming signs.

Banker warns of Foreign Business Law amendment impacts

We must not give any signal we want to count less on foreign investment

if they can't get their stories straight , what hope for the man in the street

[LifeConvo]

So much for investment in Thailand, I know major players already planning the pull out.

The people making up these laws need to put down their crack pipes.

It's beginning to feel more and more like Burma everyday.

[george]

Thai Finance Minister to explain amendments to foreign investors

BANGKOK: -- Deputy Prime Minister and Finance Minister Pridiyathorn Devakula said he will meet urgently on Wednesday with foreign business representatives in Thailand to explain the amendments to foreign business ownership rules in Thailand which were endorsed by the Cabinet Tuesday.

Cabinet approved amendments to the Foreign Business Act imposing a strict 50-per cent cap on foreign investment and voting rights in companies operating in Thailand.

Share prices dropped by 2.69 per cent as foreign investor confidence fell in response to another blow from government after the Cabinet acted to roll back foreign business procedures which had come to be accepted over time.

The Stock Exchange of Thailand (SET) composite index lost 17.07 points, falling to 616.75, while the bluechip SET 50 index shed 12.44 points to close at 428.73 .

On Monday, foreign businessmen said they opposed the measure on the basis that the new rules would undermine investor confidence and may trigger withdrawal of foreign investment activities from Thailand.

Depending on the sectors in which they operate, foreign investors will be given one to two years to reduce their ownership and voting rights in compliance with the new regulations.

Speaking after the Cabinet meeting, Pridiyathorn said he believed the amendments would bring more clarity and thereby greater confidence in Thailand's investment climate.

He said the session on Wednesday will provide a forum for those concerned to raise questions which he will answer.

The finance minister said the amendments approved by the Cabinet Tuesday remain subject to further scrutiny by the National Legislative Assembly which may alter certain details.

--TNA 2007-01-09

[s.pylos]

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.

Doesn't this mean everything!

Considering that the Thai are of chinese descent, that tribute was paid to china until mid 19th century, the monarchy is enshrined in Hindu rites, "bpla raa" is Khmer as are most of Thai dances, the verb "tam" is of Mon origine, Chili was introduced by the Portuguese, Issan is more Lao than Thai, The north was an independent kingdom until rather recently, thai scrip is based on Khmer and so on..

I too wonder what Thai culture means...

[sandy]

[twschw]

How exactly does this new law benefit Thailand?

[LaoPo]

Thai Finance Minister to explain amendments to foreign investors

Speaking after the Cabinet meeting, Pridiyathorn said he believed the amendments would bring more clarity and thereby greater confidence in Thailand's investment climate.

--TNA 2007-01-09

Really ?

LaoPo

[Mid]

Deputy Prime Minister and Finance Minister Pridiyathorn Devakula said he will meet urgently on Wednesday with foreign business representatives in Thailand to explain the amendments to foreign business ownership rules in Thailand which were endorsed by the Cabinet Tuesday.

feeling the heat .............???

[robenroute]

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.

Doesn't this mean everything!

Considering that the Thai are of chinese descent, that tribute was paid to china until mid 19th century, the monarchy is enshrined in Hindu rites, "bpla raa" is Khmer as are most of Thai dances, the verb "tam" is of Mon origine, Chili was introduced by the Portuguese, Issan is more Lao than Thai, The north was an independent kingdom until rather recently, thai scrip is based on Khmer and so on..

I too wonder what Thai culture means...

[sandy]

You might want to add that a substantial part of the Thai language has Sanskrit roots.... However, when they refer to Thai culture, it would be a safe bet to assume they mean the current, contemporary customs, habits, traditions, language, etc. Having said that, I do think the Thai have a right to do things their own way. Sad thing is, however, Tom, Dick & Hally are so badly educated, they have got no clue as to what the greedy arrogant lot at the top is doing.

[dogleg]

How exactly does this new law benefit Thailand?

Well err It doesnt. It a case of 'Yanqui go home' populism, if (IF) its implemented as reported it will only benefit those whose turn t is at the trough.

If not then its just more background noise to depress the markets/baht and worry the old sods like me.

GF says think too mutt! they love us really. My smile is getting a bit thin tho.

Cheers all.

[Foggy Bottom]

Thai Finance Minister to explain amendments to foreign investors

Speaking after the Cabinet meeting, Pridiyathorn said he believed the amendments would bring more clarity and thereby greater confidence in Thailand's investment climate.

Bit early for the first cuckoo of Spring isn't it?

Cuckoo

Cuckoo

Cuckoo

Since when did restricting or removing someone's control of their money, or the benefits they derive from either the money or the control of it, bring greater confidence (from the losers) in those removing the control?

"Power corrupts - absolute power corrupts absolutely" was bandied about a lot in the first 8 1/2 months of last year, is it time to begin repeating it yet?

[deminister]

Pridiyathorn was probably managing director of Disney world before he joined the dictatorship. The chap commented after the stock market collapse in December that it was all temporary, he commented after the bombings that it was no big deal and now the GE's, the Philips's, the Temasek's of thiw world have to understand that this is Thailand. Thailand where a bill is not discussed with the business community that impact them. We all know that the junta and their cronies are very incompetent by now, and it woiuld be a great lesson when businesses punished these people by going elsewhere. By the way a freeze on Thai investement abroad will impact the hapy few too!

[Dawn]

I for one would really appreciate Sunbelt's take on all of this......you guys know your stuff!

Personally, I would like to know if this means I can still set up my own Limited Company, still become a Director and be in control of my business when I move to LOS?

Any advice would be greatly appreciated from the experts