Restrictions On Foreigners' Voting Rights Relaxed

[midas]

I was about to open a Thai company in the next 6 month. Well, this is the kind of news that finally changes my mind. I'm tired of all all this. One day this the next day this. They make up a weird investment rule, the markets crash and the next day they more or less say sorry they didnt mean it. What's up with this government.

I'll open my new business in Hong Kong and for sure not in Thailand.

And others will do the same in other nearby countries - this government thinks that foreign investors

have got nothing better to do than constantly try to interpret new rules and laws in Thailand- its a joke

[Dupont]

They changed the rules every day? Really? I thought this amendment has never even been passed as a law. It's all still been in the process of revision and getting apporved. And it's still not even certain if this revised one will get passed after the legislative assembly has looked at it. They changed the rules every day?

It's not law but it might as well be considering the impact it has had on the property market. What is needed is stability and transparency, neither of which are apparent right now.

Thats right, they just don't have the common sense to see that this is a confidence matter. Serious investors, retirees etc. will be put off this for years to come. We have longer memories than Thaigoon and his ilk.

Even if they throw this out, or rescind it next year when the sh1t hits the fan, it will put of sensible investors.

The ones it won't put off, are jack the lad bar owners, touts, illegal teachers, dodgy dive operators and sexpats. They are the only ones that will put up with this stupidity as they are either here for a short period of their lives, or here for something other than the potential to make money.

How long before Cambodia is flying past in the fast lane in the wake of Vietnam and China?

Cambodia is selling off land and encouraging investment and development of the islands off Sihanookville. That place is rocketing up the ratings. See the BBC there last month almost gushing at the pace of development. Pricing out the hippes there as well, not just talking about getting rid of them and then letting them do what the hel_l they like here (see Koh Phang Ngan).

Still, there is always the traditional enemy (the ones who they managed to beat in a few battles) to lord it over!! The Burmese have given them an undeserved feeling of superiority for ages now.

[Plus]

They changed the rules every day? Really? I thought this amendment has never even been passed as a law. It's all still been in the process of revision and getting apporved. And it's still not even certain if this revised one will get passed after the legislative assembly has looked at it. They changed the rules every day?

It's not law but it might as well be considering the impact it has had on the property market. What is needed is stability and transparency, neither of which are apparent right now.

There was an impact on the property market from the proposed FBA amendments? I'm afraid you are confusing it with capital control measures.

I seriusly doubt Annex 3 includes owners of bars and restaurants and I don't know any farang owned hairdressering salons.

Instead of endless scaremongering, could someone actually clarify what foreign owned businesses are covered by Annex 3.

[Arkady]

http://www.bangkokpost.com/Business/11Apr2007_biz35.php

Cabinet exempts telecoms, retail, hotel businesses from FBA

Critically, the cabinet yesterday exempted businesses in the telecommunications, retail and hotel sectors from the FBA rules, under the principle that these businesses operated under their own separate laws.

List 1 represents businesses banned to foreigners, including media and rice farming. List 2 sectors, which include firearms production and transport, are restricted for national security reasons, while List 3 covers most service sectors.

Pramon Sutivong, the chairman of the Thai Chamber of Commerce, cautioned that the latest changes did not necessarily represent the final version of the final law, as the National Legislative Assembly was likely to set up a separate panel to consider the draft.

BTW Pramon Sutivong who in the rest of the quote said the new version would make foreign investors happier was chairman of the committee that drafted the original FBA amendments for the Commerce Minister. So he is basically commenting on his own gruesome handiwork but the Thai press never bothers to mention this when they quote him.

The exemptions mentioned above are meaningless because they are covered by other laws that take precedence over the FBA - just like banks which would technically be limited to 50% foreign ownership under the FBA but are actually restricted to 25% under the Commercial Banking Act which the Bank of Thailand has discretion to waive and did in the wake of the financial crisis. Likewise telecoms are limited to 49% under the Telecommunications Act. But they are trying to represent these "exemptions" as concessions. Give us a break.

[cclub75]

I seriusly doubt Annex 3 includes owners of bars and restaurants and I don't know any farang owned hairdressering salons.

Instead of endless scaremongering, could someone actually clarify what foreign owned businesses are covered by Annex 3.

Plus, we are not scaremongering here... It's serious business. And not bars discussions.

The Act (version 1), with the 3 lists :

http://www.dbd.go.th/eng/law/fba_e1999.phtml

We still don't have the text of "FBA 2 / draft 4" that was accepted by Cabinet yesterday... And certainly not the content of List 3. Except the fact that some -conflicting- reports said that finances services (futures markets) and some other would be scrapped from List 3 (because they would be taken care of with specific laws... that do not exist for the moment).

As usual, everything is blured, conflicting, moving, mixed, bordelloling (sorry for the neologism). And oh yes, i forgot : frustrating.

[Arkady]

They changed the rules every day? Really? I thought this amendment has never even been passed as a law. It's all still been in the process of revision and getting apporved. And it's still not even certain if this revised one will get passed after the legislative assembly has looked at it. They changed the rules every day?

It's not law but it might as well be considering the impact it has had on the property market. What is needed is stability and transparency, neither of which are apparent right now.

Thats right, they just don't have the common sense to see that this is a confidence matter. Serious investors, retirees etc. will be put off this for years to come. We have longer memories than Thaigoon and his ilk.

Even if they throw this out, or rescind it next year when the sh1t hits the fan, it will put of sensible investors.

The ones it won't put off, are jack the lad bar owners, touts, illegal teachers, dodgy dive operators and sexpats. They are the only ones that will put up with this stupidity as they are either here for a short period of their lives, or here for something other than the potential to make money.

How long before Cambodia is flying past in the fast lane in the wake of Vietnam and China?

Cambodia is selling off land and encouraging investment and development of the islands off Sihanookville. That place is rocketing up the ratings. See the BBC there last month almost gushing at the pace of development. Pricing out the hippes there as well, not just talking about getting rid of them and then letting them do what the hel_l they like here (see Koh Phang Ngan).

Still, there is always the traditional enemy (the ones who they managed to beat in a few battles) to lord it over!! The Burmese have given them an undeserved feeling of superiority for ages now.

You are right. Once Thailand gets on investors' blacklist it will take a long time to get back on again, particularly since its economic prospects are poor compared to its regional competitors. Even if another government gets rid of the amendments it will not help because the issue of nominees will still be there. Not many foreigners have any appetite to use nominees for a new investment now and most have zero interest in getting real Thai majority shareholders. In fact the issue has now received so much attention and the Thai rhetoric has been so threatening that foreign investment would still be screwed if the government dropped the FBA amendments, albeit to a slightly lesser extent. To get investment back it will necessary to delete Annex 3 completely and even thent may still take a long time before people are confident that a new set of bufoons will not come in and set back the clock again.

[cclub75]

The exemptions mentioned above are meaningless because they are covered by other laws that take precedence over the FBA - just like banks which would technically be limited to 50% foreign ownership under the FBA but are actually restricted to 25% under the Commercial Banking Act which the Bank of Thailand has discretion to waive and did in the wake of the financial crisis. Likewise telecoms are limited to 49% under the Telecommunications Act. But they are trying to represent these "exemptions" as concessions. Give us a break.

Very good remark !

And we could add : the Transportation Act... The one that Temasek with Shin deal violated big times (Air Asia).

You remember ? Last year : panick among Temasek... The Thais start to say that Air Asia can not be controled by foreigners, because of Transportation Act... So what they did ?

They sold Shin 50 % stake in Thai Air Asia, to a new company (where they have 49 %) and... a thai guy who was... perfectly unknown... came out and "bought" the rest Face saved ! The company was still "thai". But more importantly : the aviation licence was saved...

http://www.nationmultimedia.com/search/pag...amp;id=20000972

Since then, thai authorities, again, are working days and nights to just figure out if, indeed, Temasek used thais nominees for the Shin deal. A very difficult question, really. Look at this :

Kularb Kaew Co reported it was 51 per cent owned by Thai shareholders, including Pong Sarasin, who is Shin's chairman, but according to the company's books, the Thai shareholders are entitled to only 3 per cent of profits and only 5.1 per cent of the voting rights.

http://www.nationmultimedia.com/search/pag...amp;id=20002641

51 % of shares, for 5.1 voting rights and only 3 % of profits ? Ouah ! That's a deal ! Pure gold. Those thai "investors" must have been at least at primary school.

Edited April 11, 2007 by cclub75

[Arkady]

I seriusly doubt Annex 3 includes owners of bars and restaurants and I don't know any farang owned hairdressering salons.

Instead of endless scaremongering, could someone actually clarify what foreign owned businesses are covered by Annex 3.

Plus, we are not scaremongering here... It's serious business. And not bars discussions.

The Act (version 1), with the 3 lists :

http://www.dbd.go.th/eng/law/fba_e1999.phtml

We still don't have the text of "FBA 2 / draft 4" that was accepted by Cabinet yesterday... And certainly not the content of List 3. Except the fact that some -conflicting- reports said that finances services (futures markets) and some other would be scrapped from List 3 (because they would be taken care of with specific laws... that do not exist for the moment).

As usual, everything is blured, conflicting, moving, mixed, bordelloling (sorry for the neologism). And oh yes, i forgot : frustrating.

Annex 3 of the FBA does indeed include bars, restaurants and hairdressing saloons which are also professions that individual foreign workers are barred from by the Alien Employment Act of 1979.

The non-commodities financial futures referred to are in fact covered by an existing law, the Derivatives Act, and governed by the SEC. This law allows foreign brokers to operate in the futures market because the SEC reasoned with very un-Thai logic that, since no Thai firms had any experience of the business prior to 2006, the experience of foreign firms was essential to develop the market. Amazingly no Thais have ever complained about this.

[Arkady]

The exemptions mentioned above are meaningless because they are covered by other laws that take precedence over the FBA - just like banks which would technically be limited to 50% foreign ownership under the FBA but are actually restricted to 25% under the Commercial Banking Act which the Bank of Thailand has discretion to waive and did in the wake of the financial crisis. Likewise telecoms are limited to 49% under the Telecommunications Act. But they are trying to represent these "exemptions" as concessions. Give us a break.

Very good remark !

And we could add : the Transportation Act... The one that Temasek with Shin deal violated big times (Air Asia).

You remember ? Last year : panick among Temasek... The Thais start to say that Air Asia can not be controled by foreigners, because of Transportation Act... So what they did ?

They sold Shin 50 % stake in Thai Air Asia, to a new company (where they have 49 %) and... a thai guy who was... perfectly unknown... came out and "bought" the rest Face saved ! The company was still "thai". But more importantly : the aviation licence was saved...

http://www.nationmultimedia.com/search/pag...amp;id=20000972

Since then, thai authorities, again, are working days and nights to just figure out if, indeed, Temasek used thais nominees for the Shin deal. A very difficult question, really. Look at this :

Kularb Kaew Co reported it was 51 per cent owned by Thai shareholders, including Pong Sarasin, who is Shin's chairman, but according to the company's books, the Thai shareholders are entitled to only 3 per cent of profits and only 5.1 per cent of the voting rights.

http://www.nationmultimedia.com/search/pag...amp;id=20002641

51 % of shares, for 5.1 voting rights and only 3 % of profits ? Ouah ! That's a deal ! Pure gold. Those thai "investors" must have been at least at primary school.

The original Thai nominees in Kularb Kaew were well chosen by Temasek because they are untouchable due to their connections. That is why the police keep mislaying the file. Nothing serious will ever happen to Kularb Kaew or Temasek. The Thai establishment is quite willing to sacrifice its foreign investment prospects instead as a weird kind of proxy punishment.

[cclub75]

To allow you to better understand how work the FBA... Or, more exactly, how it doesn't work...

Here is a guide, published by Department of Business Development... for the application process and documents required when you wish to open a "foreign company" under list 3 of FBA (to remind you : you prepare a dossier to ask a licence, and then some committee or sub-panel will allow you. Or not).

Thai civil servants must have been very surprised during all those long years : nobody went to see them....

http://www.dbd.go.th/index_en3.phtml

http://www.dbd.go.th/eng/Application.pdf

However, because they know that ridicule doesn't kill... They give us statistics !

In seven years, from 2000 to 2007, formally 1714 companies, foreign under FBA, have asked for a licence.

1714 kamikazes.

And you should look at the details (357 of them if was for contracts with the gvt).

http://www.dbd.go.th/thai/statistics/alien_list.phtml

So basically, we can say today that FBA = 1714 companies under list 3 (I'm sorry, before I wrote manytimes "none". I was a bit wrong...)

For a law that exists (with a few amendments) since... 30 years. Meanwhile, it would be funny to know how many "thai" companies have foreign shareholders (less than 50 %)...

Do you understand now the crazyness of all this discussion ?

FBA is a fiction. And the gvt, apparently, wants to make it real. It's insane.

Edited April 11, 2007 by cclub75

[Plus]

Annex 3 of the FBA does indeed include bars, restaurants and hairdressing saloons...

From one of those links up the page:

"List 3 – businesses which Thais are not competitive e.g. Rice milling and flour production, fishery, forestry from forestation, accounting service, legal service, other services etc."

I don't think the Dept of Business Development would stoop so low as to intentionally omit bars and restaurants from their "brief explanation", they are the most popular businesses for expats afterall.

And again, if this group of people is left unaffected, it's a storm in a teacup.

[hammered]

I guess when the big investors come to compare Cambodia or whereever with Thailand they will overlook the major issue of uninterrupted power supply and go with Thailands so called competitors. Oh yes cambodia et al are really threatening Thailand. Maybe for some dodgy sexpats or short time teachers or **** all money investors but who else? Maybe a few small buck investors dont like what is going on but lets cut the end of the world scenario. The big boys will still be here.

[ThaiGoon]

I guess when the big investors come to compare Cambodia or whereever with Thailand they will overlook the major issue of uninterrupted power supply and go with Thailands so called competitors. Oh yes cambodia et al are really threatening Thailand. Maybe for some dodgy sexpats or short time teachers or **** all money investors but who else? Maybe a few small buck investors dont like what is going on but lets cut the end of the world scenario. The big boys will still be here.

And to Plus' post in #33 as well.

[cclub75]

From one of those links up the page:

"List 3 – businesses which Thais are not competitive e.g. Rice milling and flour production, fishery, forestry from forestation, accounting service, legal service, other services etc."

I don't think the Dept of Business Development would stoop so low as to intentionally omit bars and restaurants from their "brief explanation", they are the most popular businesses for expats afterall.

For the complete (actual) List 3 :

http://www.dbd.go.th/eng/law/fba_e1999.phtml

"(17) Hotel business, except for hotel management service.

(18) Guided tour.

(19) Selling food or beverages."

You'll notice by the way the very tasty last line :

"(21) Other categories of service business except that prescribed in the ministerial regulations."

Basically : everything else.

Edited April 11, 2007 by cclub75

[Lancashirelad]

So whats left that you can you do business wise, legally, in Thailand?

and, can you "own" a Road Haulage company, but not drive?

[cclub75]

So whats left that you can you do business wise, legally, in Thailand?

and, can you "own" a Road Haulage company, but not drive?

Oh, but you can...

But there are some (minors) conditions :

If you own less than 50 % of shares and voting rights (new rule of FBA 2) of the company, then you can do whatever you want. There is only a small problem (a mere technicality for the thai gvt) : you do not control the company.

It's not yours.

If really you insist to own your investment, to keep the control on the business you wish to create and the money you wish to invest (a really stupid idea, let's be honest) then FBA shall apply :

-List 1 and List 2 activities : achtung forbiden.

-List 3 activities (everything else, especially in services) : you need to ask for a licence. And your company will be classified as "foreign" (if they give you the licence).

With less rights, more red tape, discriminatory provisions (a thai company can be created by an individual of 18 years old, but a "foreign company" it's 20 years minimum. Why ? Because. Don't ask silly farang questions).

That's the paradisiac path the thai gvt want us to take. And with a smile please. A smile.

To go a little bit further, actually you have other ways :

-you're american, then you can create your company under Amity Treaty (a special regime for US nationals only)

-or last solution : ask for BOI privileges. BOI was created to promote exportations. So for Road Haulage... It might be a bit difficult.

Voila, you see, it's very easy.

PS : watch out, with Road Haulage you might have to endure the... Transportation Act.

Edited April 11, 2007 by cclub75

[Mobi]

Am I right in assuming that if the latest amendments to the FBA become law, then all the farangs owning property through companies will be in serious shit?

I know for a fact that Pattaya lawyers are working overtime setting up companies with 100% Thai shareholders for the purpose of buying land, and then transferring some of the shareholding to farangs after the land has been transferred.

Not sure how they are handling the 51/49 % split, but there would be little point in doing it if they weren't allocating some shares to Thai 'nominees'.

[ThaiGoon]

-List 3 activities (everything else, especially in services) : you need to ask for a licence. And your company will be classified as "foreign" (if they give you the licence).

With less rights, more red tape, discriminatory provisions (a thai company can be created by an individual of 18 years old, but a "foreign company" it's 20 years minimum. Why ? Because. Don't ask silly farang questions).

Like what?

Take a look at this: http://www.rd.go.th/publish/6044.0.html. Seems to me that foreign companies are being given even more tax breaks(or provileges) than Thai ones are.

Taxpayer Tax Base Rate

1. Small company1

- Net profit not exceeding 1 million Baht 15%2

- Net profit over 1 million Baht but not exceeding 3 million Baht 25%

- Net profit exceeding 3 million Baht 30%

2. Companies listed in Stock Exchange of Thailand (SET)

- Net profit for first 300 million Baht 25%

- Net profit for the amount exceeding 300 million Baht 30%

3. Companies newly listed in Stock Exchange of Thailand (SET)

Net Profit 25%

4. Company newly listed in Market for Alternative Investment (MAI)

- Net Profit for first 5 accounting periods after listing 20 %

- Net Profit after first 5 accounting periods 30 %

5. Bank deriving profits from International Banking Facilities (IBF) Net Profit 10 %

6. Foreign company engaging in international transportation Gross receipts 3%

7. Foreign company not carrying on business in Thailand receiving dividends from Thailand Gross receipts 10%

8. Foreign company not carrying on business in Thailand receiving other types of income apart from dividend from Thailand Gross receipts 15%

9. Foreign company disposing profit out of Thailand Amount disposed 10%

10. Profitable association and foundation Gross receipts 2% or 10%

11. Regional Operating Headquaters (ROH) Net Profit 10%

[ThaiGoon]

More from the same webite:

Income Tax Guide for Foreign Company

Tax Benefits

A company that chooses to register under Thai law shall enjoy various tax benefit schemes such as;

- Income tax holiday from 3 to 8 years for business with Investment Promotion Privileges.

- Reduction or exemption of import duties on raw material and imported machinery for business with Investment Promotion Privileges or industries setting up in Export Processing Zone and Free Trade Zone.

- Double deduction for the cost of transportation, electricity and water supply for industries with Investment Promotion Priviledges.

- 200% deduction for the cost of hiring qualified researchers doing research and development project.

- 150% deduction for the cost of employee’s training in order to improve human capital.

- Small and medium size company can choose to deduct special initial allowance on the date of acquisition for computer (40%), plant (25%) and machinery (40%).

Last update : Friday, June 30, 2006

And here from BOI, (Thailand) Board of Investment:

"The incentives granted can include the following rights: majority foreign ownership; ownership of land and buildings; exemption from import duty on imported raw materials and machinery used in the promoted business; and exemption from corporate income tax for up to eight years."

So I guess it must be absolutely terrible to be a foreign company in Thailand.

[cclub75]

ThaiGoon, I'm sure that FBA 2 gives you a lot of satisfaction...

However :

-you mix apples with oranges, FBA with BOI.

-you don't take time to read the texts

I never talked about fiscality, or BOI privileges.

This thread is about FBA.

The red tape and discriminatory provisions I talked about are in the text of FBA. The core, the essence of FBA is discrimination, with on one hand "thai" companies , and on the other hand "foreign" companies, despite the fact that both are operating on the same soil, and both have to respect the same set of laws (thai laws).

If you want to say that FBA gives privileges to companies, then I suggest you read it again.

http://www.dbd.go.th/eng/law/fba_e1999.phtml

However, I agree that companies operating under BOI privileges have indeed... privileges over regular companies.

I guess that's the whole point of the program, an incentive, to promote and fuel exportations. But that's another debate.

Like what?

Take a look at this: http://www.rd.go.th/publish/6044.0.html. Seems to me that foreign companies are being given even more tax breaks(or provileges) than Thai ones are.

Taxpayer Tax Base Rate

1. Small company1

- Net profit not exceeding 1 million Baht 15%2

- Net profit over 1 million Baht but not exceeding 3 million Baht 25%

- Net profit exceeding 3 million Baht 30%

2. Companies listed in Stock Exchange of Thailand (SET)

- Net profit for first 300 million Baht 25%

- Net profit for the amount exceeding 300 million Baht 30%

3. Companies newly listed in Stock Exchange of Thailand (SET)

Net Profit 25%

4. Company newly listed in Market for Alternative Investment (MAI)

- Net Profit for first 5 accounting periods after listing 20 %

- Net Profit after first 5 accounting periods 30 %

5. Bank deriving profits from International Banking Facilities (IBF) Net Profit 10 %

6. Foreign company engaging in international transportation Gross receipts 3%

7. Foreign company not carrying on business in Thailand receiving dividends from Thailand Gross receipts 10%

8. Foreign company not carrying on business in Thailand receiving other types of income apart from dividend from Thailand Gross receipts 15%

9. Foreign company disposing profit out of Thailand Amount disposed 10%

10. Profitable association and foundation Gross receipts 2% or 10%

11. Regional Operating Headquaters (ROH) Net Profit 10%

Edited April 11, 2007 by cclub75

[ThaiGoon]

ThaiGoon, I'm sure that FBA 2 gives you a lot of satisfaction...

However :

-you mix apples with oranges, FBA with BOI.

-you don't take time to read the texts

I never talked about fiscality, or BOI privileges.

This thread is about FBA.

The red tape and discriminatory provisions I talked about are in the text of FBA. The core, the essence of FBA is discrimination, with on one hand "thai" companies , and on the other hand "foreign" companies, despite the fact that both are operating on the same soil, and both have to respect the same set of laws (thai laws).

If you want to say that FBA gives privileges to companies, then I suggest you read it again.

http://www.dbd.go.th/eng/law/fba_e1999.phtml

Yeah, all the red tape and discriminatory provisions like

(1) Being not younger than 20 years old.

(2) Having residency or being permitted to temporarily enter into Thailand under the immigration law.

(3) Being neither incompetent nor quasi-incompetent.

(4) Not being a bankrupt.

(5) Never having been punished by a court judgement or fined for an offense under this Act or Announcement No. 281 of the National Executive Council No dated November 24, 1972 unless they have been released at least five years prior to the date of the license application.

(6) Never having been imprisoned for fraudulent acts, debtor cheating, embezzlement, offenses connected with trade under the Criminal Code or for offenses relating to fraudulent loans to the public or for offenses under the immigration law unless they have been released at least five years prior to the date of application.

(7) Never having a license issued under this Act or under Notification No. 281 of the National Executive Council dated November 24, 1972 revoked during the five-year period prior to the date of the license application.

How terrible are these rules, ehh? Asking the investors to not be incompetent nor bankrupt. These must scare away a lot of potentially good foreign investors.

The point of posting the benefits foreign companies could get from BOI was to show that it's actually pretty good to be a foreign company investing in Thailand. Of course, this fine point was lost on you.

[highdiver]

I have looked at all the posts and went through the boi web site and as such found no change in the new amendmant apart from the nominee situation.

if the law untill now has been "not understrood" and various schemes (prefered shares)were set up by lawyers to contirdict the law,... the FBA has now made it very clear what the law is.

it is realy very simple .

1.under thai law the Nominee sate is forbiden and it has allways been that way. they are now making sure that all those who did "not understand" it clearly do so from now on.

you can not nominate nominees to hold your shares!!! you need to have proper investors and proper share holders and not your lawyers wife, staff, cleaner etc...the thai share holder nust be able to prove capital investment in the company.

2.to conduct business in Thailand you must be a Thai or a thai company with Thai majority share holders and Thai majority voting rights. prefered share scheme is not legal.

3. forigners can invest in thailand trough BOI investment incentives and obtain 100% controll but they must be done through the BOI.

Thiland wants forign investment where the Thai people need it. they do not want a small time investors setting up a company with nominees for the sake of opening a resteraunt or bar and competeing with the locals. they dont want companies that are only set up to buy land for a farrang that wants to own a house in thailand.

4. forigeners wishing to conduct business in Thailand can only do what is permited under the lists.

if they wish to get a permit to engage in buisness that is noramlly not permited then they need to have a liscence.

all the other amendmants are designed to save face and allow all businesses that have previously attemepted to overide the law to confirm with it.

the message is clear. if you are a big investor and you go through the BOI they will give you everything however if you are a small time bar owner or a land buyer then get a permit or face the penalties.

[LaoPo]

The point of posting the benefits foreign companies could get from BOI was to show that it's actually pretty good to be a foreign company investing in Thailand. Of course, this fine point was lost on you.

Thaigoon, I have been following your posts recently and I admire you as a Thai (true, right?), defending your country and it's rules. You are truly a fighter and Thailand needs more people like you, making sense...but you and your rulers are not always showing a 'clear' view.

However, the business' and investors' faith in the Thai economy, it's ever changing laws, change of governments, by means of a 'coup' or not, is way down and almost to zero at the moment because of, and resulting in:

*declining growth

*declining exports (since 2 or 3 months)

*declining imports (same)

*declining 'Asian' tourism of more than 7% in the past 2 months

*declining sales of real estate to expats/tourists/retirees

*declining confidence in general amongst the Thai themselves

and,

an almost unexplainable very expensive Baht which hurts the economy, especially for the 49% of the Labor Force in Thailand who work in 'Agriculture', but, which will also have a tremendous negative effect for the tourist & service industry; just wait for it!

I admit that the tax-exemptions for foreign companies are not that bad and maybe even good....

but,

why is Thailand than in such trouble ?

don't you think there are other countries in your region, benefitting investors with tax-benefits?

when was the last time you were in China or Vietnam and look for yourself what's going on there ?

I know, the answers will not be so easy but the fact remains that many investors are not willing to wait for the uncertain and 'risky' situation in Thailand anymore, and therefore will decide (or has decided already) to buy, produce, or do business with other economies in the 'East' where the 'barriers' are not so complicated and uncertain as in your (and ours) beloved country.

My humble opinion:

Thailand needs -urgently- a new democratic government, without some generals watching over their shoulders; A goverment which is free to take drastic and urgent steps to 'boost' Thailand again and forget about the 'old' elite which is holding up the progress of this country and it's people.

The way it's going now is a tragedy.

Let's hope there will be some revival...soon !

Good luck to you.

LaoPo

[ThaiGoon]

LaoPo, it's pretty obvious that political instability so far has been the biggest problem for the economy, but, IMHO, the point of the discussion of this thread is whether the new amendment to the FBA is as bad to foreign companies in Thailand as some on here have made it out to be. And of course the sooner the general election can take place, the better it will be for the country.

[LaoPo]

LaoPo, it's pretty obvious that

1. political instability so far has been the biggest problem for the economy, but, IMHO, the point of the discussion of this thread is whether

2. the new amendment to the FBA is as bad to foreign companies in Thailand as some on here have made it out to be. And

3. of course the sooner the general election can take place, the better it will be for the country.

1. Right; but political unstability is not the only factor; I would like to add the -ever changing and uncertain- laws and rules for investors, expats, visa and retiree possibilities

2. It is bad; why would foreign investors and financial experts have so much doubt about Thailand ?

3. You're right.

LaoPo

[ThaiGoon]

1. Right; but political unstability is not the only factor; I would like to add the -ever changing and uncertain- laws and rules for investors, expats, visa and retiree possibilities

The only "ever changing and uncertain laws and rules for investors, expats" that this gov't is responsible for and that I'm aware of is the capital controls. The amendment to the FBA has never come to effect yet. And what are "uncertain rules for visa and retiree possibilites" that this ogv't has passed?

2. It is bad; why would foreign investors and financial experts have so much doubt about Thailand ?

The only sticking point in the new FBA right now seems to be that a lot companies that used nominees will have to comply with the new law (if it's passed by the NLA.) They don't wanna do that. I think that's why we still see some foreign investors oppose to the new FBA. Huge companies that invested through BOI won't impacted one bit. It's those companies using dodgy nominees who don't wanna see the changes.

[ChiangMaiAmerican]

Several people have referred to the Treaty of Amity suggesting it provides protections for Americans. While in a very limited way it does, here are the realities of how it is applied by the Thai government.

From the Treaty:

ARTICLE III

l. Each Party shall at all times accord fair and equitable treatment to nationals and companies of the other Party, and to their property and enterprises; shall refrain from applying unreasonable or discriminatory measures that would impair their legally acquired rights and interests; and shall assure that their lawful contractual rights are afforded effective means of enforcement, in conformity with the applicable laws.

Remember William Monson? He was arrested and found not guilty. He has been waiting nearly 20 years for justice. The Thai courts blocked his attempt to charge Thaksin with perjury claiming the statute of limitations had expired. The courts had for years blocked his attempts to file the complaint and then held him responsible for not filing within the time permitted. He did in fact file within the time limit but the court ruled against him because Taksin did not appear in court within the time limit. We know about Monson because he is high profile. How many others are there we never hear of ?

ARTICLE IV

l. Nationals and companies of either Party shall be accorded national treatment with respect to establishing, as well as acquiring interests in, enterprises of all types for engaging in commercial, industrial, financial and other business activities within the territories of the other Party.

Try to open a foreign labor recruiting company. You will be told that 75% of the shareholders of the company must be Thai nationals. Try to open an English school. The Ministry of Education will tell you the shares must be controlled by Thais. Numerous other examples can be cited as well.

4. Enterprises which are or may hereafter be established or acquired by nationals and companies of either Party within the territories of the other Party and which are owned or controlled by such nationals and companies, whether in the form of individual proprietorships, direct branches or companies constituted under the laws of such other Party, shall be permitted freely to conduct their activities therein upon terms no less favorable than like enterprises owned or controlled by nationals of such other Party or of any third country.

Only problem is the various Ministries of the Thai government maintain they have the right to regulate a treaty business under different rules than those for Thai companies (i.e. the same rules as a foreign company). Try asking if a treaty business can operate as a foreign labor recruiter. Try asking if a treaty company can own 100% of a tutoring business. Many more examples can be easily found.

5. Nationals and companies of either Party shall enjoy the right to control and manage the enterprises which they have established or acquired within the territories of the other Party, and shall be permitted without discrimination to do all things normally found necessary and proper to the effective conduct of enterprises engaged in like activities.

Try telling that to the Ministry of Labor. Ask a Thai attorney how this provision can be applied without obtaining a work permit. Ask the attorney why the Ministry of Labor can create additional requirements in order for a treaty business owner or his appointed representative to obtain the needed work permit in order to "control and manage the enterprises which they have established or acquired within the territories of the other Party." They won't have an answer other than "Thai law says something different therefore the treaty provisions don't count." Very often you will hear along with that statement, "This is Thailand." An American can own the business on paper but without additional approval based on additional requires that go above and beyond what Thailand agreed to, the American cannot provide oversight of that business. Even visiting the premise can bring a charge of unlawful work in Thailand. If the American is foolish enough to appoint a Thai managing director without the ability to provide oversight he may well see his investment capital disappear and his business bankrupt. Then let him ask the police and the court to go after the Thai national for fraud and embezzlement and see what happens. A Thai national always trumps a foreigner.

6. Nationals and companies of either Party shall be permitted, in accordance with the applicable laws, to engage, within the territories of the other Party, accountants or other technical experts, executive personnel, attorneys, agents and other specialists of their choice. Moreover, such nationals and companies shall be permitted to engage accountants and other technical experts, regardless of the extent to which they may have qualified for the practice of a profession within the territories of such other Party, for the particular purpose of making examinations, audits and technical investigations for internal purposes exclusively for, and rendering reports to, such nationals and companies in connection with the planning and operation of their enterprises within such territories.

Same as #5. Try telling the MOL you want to bring in foreign engineers for R&D. Try telling the MOL you want to bring in your own internal auditors from abroad. See what happens.

ARTICLE VII

1. Neither Party shall apply restrictions on the making of payments, remittances, and other transfers of funds to or from the territories of the other Party, except (a) to the extent necessary to assure the availability of foreign exchange for payments for goods and services essential to the health and welfare of its people, or (in the case of a member of the International Monetary Fund, restrictions specifically requested or approved by the Fund.

Anyone remember the currency restrictions? Anyone try to transfer money abroad before the currency restrictions? The banks want a detailed explantion of why you are transferring the funds out of the country. The reason? The bank clerk says it is because Thailand doesn't want money sent out of the country because it would hurt the economy.

Now contrast the way Americans with treaty businesses are treated by the Thai government with the way Thais are treated in the US.

1. The courts will provide fair and equitable treatment to Thai business owners and other foreign nationals. The nationality of the defendent or the plaintiff is does not bear on the outcome except in the event of hate crime laws where the nationality, race religion, etc. is shown to demonstrate the crime was based on those factors. For those that do not know, the additional charge of hatee crime brings a substantial additional sentence for the perpetrator. In a civil case, if the ruling is unacceptable and it can be shown that nationality or race likely played a art in the ruling, the verdict can be appealed and overturned. This in fact has happened on a number of occasions. In the US the courts will provide relatively quick verdicts even on appeal. In criminal cases they are required to provide speedy trials so a possibly innocent defendent doesn't languish in prison wait5ing for justice. Monson has been waiting almost 20 years with no resolution in sight despite the fact Thaksin is now disgraced and no longer holds power (at least in theory).

2. There are no additional requirements based on nationality once the Thai opens a treaty business in the US.

3. Once the business is approved a visa is issued allowing the Thai owner to live in the US and operate his business period. There is no requirement that the owner pay himself a minimum salary much less one that would place him in the top 5% of US wage earners. There is no requirement that the owner employ a minimum number of Americans in order to be able to operate his treaty business. There are no regulations stating the Thai must only work at one locations and within a limited set of duties. The Thai can freely conduct business anywhere as long as it is related to his treaty business. If there is a need, the Thai can even sweep the floors of the business without potentially being charged with illegal work.

4. Thais can freely bring in people as agreed in Article VII #1. There is no requirement that they employ a minimum number of Americans to do so. There is no requirement they pay more than the national minimum wage to these employees. As stated in the treaty, there is no requirement they prove they cannot find American employees to perform this work before they are allowed to apply for the visas.

In short, it appears from the Thai government's side the only purpose of the treaty is to provide extraordinary benefit to Thai nationals seeking to do business in the US. The government as no intention of providing the reciprocity called for in the agreement and will fight any suggestion they do so. In Thailand this is called being clever. In other countries this is called perfidy.

Edited April 12, 2007 by ChiangMaiAmerican

[victor15]

Thai Cabinet okay’s Business Act amendments

NOTE: New rules for foreign business still have to clear National Assembly

The Cabinet yesterday approved the revised amendments to the Foreign Business Act, but it remains uncertain whether the bill will pass the National Legislative Assembly.

The assembly will debate the amendments on April 18. Some 50 of its members have been up in arms against the changes, saying they jeopardize foreign investment.

Commerce Minister Krirk-Krai Jirapaet said he was ready to bring the amendments to the assembly.

The Cabinet approved the new draft of the Foreign Business Law after the Commerce Ministry agreed to revise it to make it friendlier to foreign investment. An earlier draft submitted for Cabinet approval in February was rejected.

There are six key amendments:

First: the new draft will focus on the voting rights of foreign shareholders. If a company is 49 per cent foreign owned but foreigners hold more than 50 per cent of its voting rights the company will be defined as a foreign one.

Second: it will take out more businesses covered under Annex III. This will allow these businesses, such as insurance and non-commodity futures market, to be covered by specific laws.

Third: the new draft will remove the amnesty for those violating the nominee law.

Fourth: the draft will increase the penalty for those violating the Foreign Business Law - from three to five years in jail, and from Bt100,000 to Bt1 million in fines to Bt500,000 to Bt5 million.

Fifth: it will expand the period from two to three years for foreign companies operating in Annex I and Annex II to revise their ownership structure to conform to the new law. Moreover, foreign companies in Annex III must inform the Commerce Ministry within one year that they have foreign ownership status before continuing to operate as normal.

Sixth: a 17-member committee will be formed to rule whether a company is Thai or foreign owned in case of a dispute.

The Commerce Ministry says the amendments create more transparency by clearly defining foreign ownership and delineating the types of businesses that are open to foreigners.

It is also aiming to make it clear once and for all that using nominees to circumvent foreign-ownership caps is prohibited.

The draft is a compromise between an earlier version from the Commerce Ministry and those of the Council of State and the assembly.

The assembly can reject it and introduce its own for a vote.

However, the Commerce Ministry insists that its draft is better than those from the assembly and the Council of State.

The ministry’s new draft takes into account key concerns raised by the Cabinet and the foreign business community, said Skol Harnsuthivarin, secretary to Krirk-Krai.

The draft maintains the clause on voting rights, which is a major concern of the Thai government.

However, the draft will not focus on management control as the Council of State suggested, as the government considers that it would be too stringent for foreign investors, Skol said.

The new draft removes the amnesty clause because it would like to create fairness for Kularb Keaw, now under police investigation over allegations it acted as nominee for Singapore’s Temasek Holdings in the Shin Corp takeover.

Another 14 companies are also facing a complaint that they might have used nominees to circumvent the foreign business law. They are now being investigated by the Commerce Ministry.

Pramon Suthivong, chairman of the Board of Trade of Thailand and Thai Chamber of Commerce, said most businesses affected would find the latest draft more satisfying but there would be some who might be unhappy with it.

“It is impossible to satisfy all parties, particularly foreign investors. But since it is necessary to amend the law, the government has to go ahead and do it” Pramon said.

Asked about the impact of the new draft on foreign investors’ confidence, Pramon said he believed they would not withdraw from the Kingdom.

All existing businesses will be able to operate freely under the new draft, but new ones might need time to study it more closely, he said.

Board of Trade deputy secretary-general Pornsilp Patcharintanakul said the private sector was delighted with the government’s move to put all companies on an equal footing.

Keisuke Matsumoto, secretary-general of the Japanese Chamber of Commerce in Bangkok, said Japanese investors were still concerned about voting rights as the change would force many to restructure their companies.

However, Keisuke said Japanese investors expected the government to become more flexible and hold discussions with them before implementing the new rules.

FOREIGN OWNERSHIP Cabinet exempts telecoms, retail, hotel businesses from FBA Wednesday April 11, 2007 - Bkk Post

Foreign companies using illegal nominees could face five years in jail under a plan to toughen foreign ownership rules.

Cabinet ministers yesterday endorsed the revisions to the Foreign Business Act, which also increases fines by five-fold to up to five million baht, according to Commerce Minister Krirk-krai Jirapaet.

”The cabinet agreed to raise the penalty for violations, both in terms of fines and prison terms,” he said.

The original FBA draft approved by the cabinet on Jan 9 called for maximum sentences of three years and fines of up to one million baht.

The government also scrapped a proposed amnesty that would allow foreign-controlled businesses operating in List 3 sectors to maintain minority voting rights.

The Council of State, the government’s legal advisory body, noted that the ”grandfather” clause was unfair to other companies.

But companies will be given three years instead of two to comply with the law.

Critically, the cabinet yesterday exempted businesses in the telecommunications, retail and hotel sectors from the FBA rules, under the principle that these businesses operated under their own separate laws.

Companies in these sectors can continue to operate with foreigners holding majority voting rights until they cease operations.

The 1999 FBA outlines 43 types of businesses restricted to foreign companies.

List 1 represents businesses banned to foreigners, including media and rice farming. List 2 sectors, which include firearms production and transport, are restricted for national security reasons, while List 3 covers most service sectors.

Pramon Sutivong, the chairman of the Thai Chamber of Commerce, cautioned that the latest changes did not necessarily represent the final version of the final law, as the National Legislative Assembly was likely to set up a separate panel to consider the draft. _

[Chang_paarp]

A simple way of testing how fair these nefarious rules/laws are would be to ask those who are drafting them:

Would they invest under this reglatary set-up?

If not what would they like to see changed so they would invest.

I'll resume sleeping now, and the dream will go away.

[jayjayjayjay]

"We added the criminal penalty in order to promote good corporate governance in the business sector," Krirk-Krai said. He said the draft would be submitted to parliament before Friday.

"I personally believe that the amendment will not affect foreign investment in Thailand or investor confidence because direct investment usually focuses on the rate of return and the investment opportunity," he said.

With this sort of penalty we now have a good reason NOT to think of Thailand as "TIT" any more. So many things for the last 20yrs have allowed me follow trends and bend the rules a little, but it's now time to wake up and realise theres no point any more....