Restrictions On Foreigners' Voting Rights Relaxed

[Arkady]

Highdiver, I agree that real estate development, land dealing and all other named industries that are justified as strategic or sensitive can be left with Annex 1 level restrictions that are rigorously enforced. Ironically Singapore which created the Kularb Kaew problem does this and would throw the book at any foreigners or Singaporean nominees taking over a telecom company like that. Individual land ownership is a different matter and doesn't seem to be the direct target of the FBA amendments, since a company with genuine Thai shareholders owning 51% or more but with foreign voting control would still be Thai under the Land Code, if grandfathered under the FBA, unless the definition of a foreigner is also amended under the Land Code. Personally I would favour some relaxation of the land ownership rights starting with the implementation of the right for foreigners to buy up to a rai of residential land if they invest B40 million which is in the 1999 Land Code but has never been implemented because the enabling regulations have still not been issued by the Interior Ministry. Maybe some further liberalisation on these lines while still restricting the size, usage and eligibity, say permanent residents, those married to Thais who have been here on work permits for 10 years etc. That would not create a huge land grab and would make enforcement of existing laws seem more palatable internationally, combined perhaps with an extension of residential leases to 50 years with reassignment rights.

Re bar ownership etc. I don't think this is really threatening because foreigners tend to set up bars to cater to people like themselves and it is often hard for local to replicate. I remember similar views expressed in Spain before EU nationals were allowed to work there. In the event the bars that Brits and Germans have opened there have been bars that Spaniards wouldn't be seen dead in or running (and possibly you and me too) but that is what those nationalities want and it is good for tourism. Working in bars is a different matter and I do feel sorry for Spanish not being able to find a job in bars in their own country. The Alien Employment Act is different from the FBA and I wouldn't suggest opening up this sort of employment to foreigners. By and large the sort of foreigners who open bars and restaurants are those that have been here for a long time and have a Thai wife. Probably the vast majority don't use a limited company for that anyway due to the burden of administration and getting accounts audited etc. I believe most do it in their wife's name as a sole proprietorship. Since this is effectively a 100% nominee situation it is extremely hard to detect however much you reinforce the FBA. Probaby 70% or more of foreign owned bars and restaurants fail due to lack of business experience. This is good business for landlords and puts some money into the economy but is not driving Thais out of business.

[highdiver]

Highdiver, I agree that real estate development, land dealing and all other named industries that are justified as strategic or sensitive can be left with Annex 1 level restrictions that are rigorously enforced. Ironically Singapore which created the Kularb Kaew problem does this and would throw the book at any foreigners or Singaporean nominees taking over a telecom company like that. Individual land ownership is a different matter and doesn't seem to be the direct target of the FBA amendments, since a company with genuine Thai shareholders owning 51% or more but with foreign voting control would still be Thai under the Land Code, if grandfathered under the FBA, unless the definition of a foreigner is also amended under the Land Code. Personally I would favour some relaxation of the land ownership rights starting with the implementation of the right for foreigners to buy up to a rai of residential land if they invest B40 million which is in the 1999 Land Code but has never been implemented because the enabling regulations have still not been issued by the Interior Ministry. Maybe some further liberalisation on these lines while still restricting the size, usage and eligibity, say permanent residents, those married to Thais who have been here on work permits for 10 years etc. That would not create a huge land grab and would make enforcement of existing laws seem more palatable internationally, combined perhaps with an extension of residential leases to 50 years with reassignment rights.

Re bar ownership etc. I don't think this is really threatening because foreigners tend to set up bars to cater to people like themselves and it is often hard for local to replicate. I remember similar views expressed in Spain before EU nationals were allowed to work there. In the event the bars that Brits and Germans have opened there have been bars that Spaniards wouldn't be seen dead in or running (and possibly you and me too) but that is what those nationalities want and it is good for tourism. Working in bars is a different matter and I do feel sorry for Spanish not being able to find a job in bars in their own country. The Alien Employment Act is different from the FBA and I wouldn't suggest opening up this sort of employment to foreigners. By and large the sort of foreigners who open bars and restaurants are those that have been here for a long time and have a Thai wife. Probably the vast majority don't use a limited company for that anyway due to the burden of administration and getting accounts audited etc. I believe most do it in their wife's name as a sole proprietorship. Since this is effectively a 100% nominee situation it is extremely hard to detect however much you reinforce the FBA. Probaby 70% or more of foreign owned bars and restaurants fail due to lack of business experience. This is good business for landlords and puts some money into the economy but is not driving Thais out of business.

I find your remarks very educated and balanced as such I hope you will find my own.

on the contrary to what is belived or presented here by "so called"know all guests in Yhialnd. they seem to forhget the history of western countries when they were in the same state as thailand is today.

In contrast to its strong upport for foreign investment liberalisation today, when it was a capital-importing country, the USA had all kinds of provision to ensure that foreigners invest in the country but do not control its economy.

For example, the US federal government had restrictions on foreigners’ ownership in agricultural land, mining, and logging. It discriminated foreign firms in banking and insurance, while prohibiting foreign investment in coastal shipping. It demanded that all directors of national banks have to be American citizens, while depriving foreign shareholders of voting rights in the case of federally-chartered banks. It also prohibited the employment foreign workers, thus implicitly disadvantaging foreign investors that wanted to import skilled labour from their home countries.

At the sate level, there were even more restrictions. In addition to restrictions on land ownership, many states taxed foreign companies more heavily and some even refused them legal protection. Many state legislation in the financial sector were even more discriminatory. Some states imposed more strict capital base requirements on foreign financial institutions, and some even totally banned entry into certain financial industries (e.g., New York state laws banning foreign bank entry). The federal government condoned such laws and refused to take action against state governments even when there were pressures from foreign investors and governments to do so.

The More Advanced Large European Countries – the UK, France, and Germany

did not have to control foreign investment until the Second World War, as they were capital-exporting countries before that. However, when they were faced with the challenge of upsurge in American investment after the Second World War, they used a number of formal and informal mechanisms to ensure that their national interests are not hurt. Formal mechanisms included foreign exchange control and regulations against foreign investment in sensitive sectors like defence or cultural industries. At the informal level, they used mechanisms like the SOEs, restrictions on take-over, and “undertakings” and “voluntary restrictions” by TNCs in order to restrict foreign investment and impose performance requirements.

Poorer European Countries – Finland and Ireland are arguably among the most impressive cases of industrial transformation in the second half of the 20th century in Europe. However, their respective policies towards foreign investment could not have been more different, at least until Finland’s accession to the EU in 1993 – Finland basically blocking any significant foreign investment, while Ireland aggressively seeking it out.

The comparison of these two polar cases raises two important points. The first is that there is no one-size-fits-all foreign investment policy that works for everyone. Finland built its economic miracle under arguably one of the world’s most restrictive policy regimes vis-à-vis foreign investors, while Ireland benefited from actively courting and working with TNCs. The second is that, however “liberal” a country may be towards foreign investment, a targeted and performance-oriented approach works better than a hands-off approach, which is recommended by the developed countries today.and the reason they do so is thyat they require the developing countries to continue growth.

Even in the case of Ireland, a combination of carrots and sticks has been used vis-à-vis the foreign investors since the early days, and it was only when it got the balance between the two right that the country started to truly benefit from FDI.

i found nice article that you will find intresting and has a lesson to be learnt. it describes wht happened to the american comuntites that were invaded by forin dirct invetmant. should wee not learn from others expeirnce??

http://papers.nber.org/papers/W7274.pdf

[cclub75]

I find your remarks very educated and balanced as such I hope you will find my own.

on the contrary to what is belived or presented here by "so called"know all guests in Yhialnd. they seem to forhget the history of western countries when they were in the same state as thailand is today.

In contrast to its strong upport for foreign investment liberalisation today, when it was a capital-importing country, the USA had all kinds of provision to ensure that foreigners invest in the country but do not control its economy.

I feel a bit unconfortable with your posts Highdiver.

Your point seems to make comparisons, both in time and location. But it's like mixing apples with oranges.

We all know that countries are willing to protect some parts of their economy. Criterias and ways to achieve this might differ, but it's often related to "national security" : energy, telecoms, transportations, weapons etc. Fair enough.

And as you stated, even the champion of free trade and free economy do the same (USA).

And nobody denies the right of Thailand to follow this path.

But instead of talking about the gender of angels, I believe the good approach is to stick to the text and the reality on the ground. Afterall, this is the topic of this discussion :

-what is FBA 2, how it is articulated, what are the real goals of such law etc.

-and what could be its effects on FDIs and thai economy

My point is : i've got the feeling that when we start to speak about the technical side of FBA 2, its partisans (and I totally respect the fact that some people might support it), there is no real discussion. It's only "But Thailand has the right to... !".

Because... Because France did the same in 1792, after WWII, or Island, or Ireland, or whatever... I'm sorry, but we are loosing the topic.

You seem to like history. What don't you try to explain us why Thailand has had a set of regulations toward foreign businesses since 1972 (Alien Business Law then FBA 1)... And that for 35 years, these regulations were not... enforced ?

It could enlight us.

No offense : but to try to understand this huge discrepancy between reality and texts is essential to understand the motivations behind FBA 2, the political background of it.

[cclub75]

A very interesting piece in Nation this morning, that highlights the legal process for FBA 2.

It is now widely expected that the National Legislative Assembly will accept the bill for deliberation at that first reading. It would then immediately set up a scrutinising committee to review the bill section by section.

The action taken by the scrutinising committee would then be considered the second reading. A legal adviser told me that after talks with a leading member of the National Legislative Assembly, he gets the impression that the bill would pass this second reading in about two months, or before the end of June.

[...]

It is expected that the bill will be sent back to the National Legislative Assembly in July for a third and final reading and if the assembly accepts the version approved by the scrutinising committee, there will be a vote to pass the bill into law and present it to His Majesty the King for consent and publication in the Royal Gazette to complete the enactment process. This step could take another two months, so there is a strong possibility that the amendments to the Foreign Business Act will be effective by the end of August.

Full text :

http://www.nationmultimedia.com/2007/04/20...on_30032246.php

[Dupont]

A very interesting piece in Nation this morning, that highlights the legal process for FBA 2.

It is now widely expected that the National Legislative Assembly will accept the bill for deliberation at that first reading. It would then immediately set up a scrutinising committee to review the bill section by section.

The action taken by the scrutinising committee would then be considered the second reading. A legal adviser told me that after talks with a leading member of the National Legislative Assembly, he gets the impression that the bill would pass this second reading in about two months, or before the end of June.

[...]

It is expected that the bill will be sent back to the National Legislative Assembly in July for a third and final reading and if the assembly accepts the version approved by the scrutinising committee, there will be a vote to pass the bill into law and present it to His Majesty the King for consent and publication in the Royal Gazette to complete the enactment process. This step could take another two months, so there is a strong possibility that the amendments to the Foreign Business Act will be effective by the end of August.

Full text :

http://www.nationmultimedia.com/2007/04/20...on_30032246.php

Bring it on I say!!

One thing for the little racist bum lickers to talk it through the Thai Parliament, one much different and bigger thing for them to actually repossess one single 1/8th rai plot belonging to a foreign couple.! Take over a sucessful foreign run busines... HA if they managed it, it wouldn't be sucessful for long.

They may manage to steal a few land plots in the short term, but they WILL compensate the VICTIMS of this crime, whatever they may think about this now, and they WILL scare off MORE foreign investment.

Thailand is not an Island. In previous decades it was Thailand vs the rest of SE Asia, when the rest of SE Asia didn't turn up to contest as they were in the midst of cival wars, despotic dictatorships and communist insurgencies. They HAVE turned up now, are leaner and meaner and will kick serious ass if the Thais are not careful.

Screw the economy down so far and you are looking at revolution. Don't think it couldn't happen here. It's happened in much more stable areas of the world!

Edited April 20, 2007 by Dupont

[LaoPo]

Ownership laws mulled

Monday, April 23, 2007

Thailand's military-appointed legislature will this week debate proposed changes to foreign business ownership rules that are still making foreign firms nervous despite government efforts to soothe their fears.

Business chiefs fear foreign companies will be driven away by the new rules, which emanate from the furor generated by the takeover of Shin Corp, the telecommunications giant founded by ousted prime minister Thaksin Shinawatra, by Singapore government investment firm Temasek.

At the least, the changes could stifle foreign investment in an economy dependent on exports, executives added.

The National Legislative Assembly will start debating the rule changes Wednesday, with deliberations expected to last two to three months.

REUTERS

LaoPo

[ChiangMaiAmerican]

Xenophobia triumphs!

NLA members vote overwhelmingly for ministry's FBA draft

The National Legislative Assembly yesterday voted with an absolute majority to amend the Foreign Business Act (FBA) based on the Commerce Ministry's draft, after spending one hour debating whether to adopt the draft of the ministry or that of a subcommittee of the NLA which was more liberal.

full article at: http://nationmultimedia.com/2007/04/26/bus...ss_30032717.php

[LaoPo]

Reading the above link it's not quite positive for foreign investment and 'voting rights'...

and:

" Under the government's draft, the new legislation will also punish any legal consultant that advises foreign investors to breach the law. "

Watch out house owners who went/going the company-route...

LaoPo

[Galong]

Xenophobia triumphs!

NLA members vote overwhelmingly for ministry's FBA draft

The National Legislative Assembly yesterday voted with an absolute majority to amend the Foreign Business Act (FBA) based on the Commerce Ministry's draft, after spending one hour debating whether to adopt the draft of the ministry or that of a subcommittee of the NLA which was more liberal.

full article at: http://nationmultimedia.com/2007/04/26/bus...ss_30032717.php

Ah ha! "Under the government's draft, the new legislation will also punish any legal consultant that advises foreign investors to breach the law." Is this a tidbit of fairness perhaps?

[ChiangMaiAmerican]

Most likely, punish legal consultants=far less than the 5 years 5 million baht punishment for the foreigner who did not know Thai law and relied on their advice. It will hardly be an equitable punishment. After all, the legal consultants are mostly Thai and they deserve to be protected for that reason alone. Foreigners are expected to be experts in Thai law. It is foreiger's job to advise the legal consultants on the finer points of law. Following the advice of a Thai atrtorney is not a mitigating circumstance. Foreigners must pay for following an attorney's advice rather than studying Thai law.

[ChiangMaiAmerican]

The other side of the issue. Thailand in her xenophobic zeal ignores the fact that Thai citizens have been allowed to settle in and open businesses in other countries. Thailand wants the practice to continue since it brings in revenue in the form of remittances from the Thai citizens living abroad. Yet Thailand is making great efforts to eliminate small businesses owned by foreigners in Thailand. According to the Thai consulate in Los Angeles there are 100,000 Thais in that area alone. That was five years ago in 2002. How many more are in LA and other parts of the US not to mention the countries of Europe? Do the policy makers really think that the defacto confiscation of foreign businesses in Thailand will go unnoticed in other countries? Do they really believe that the defacto confiscation of the retirement homes of foreign nationals in Thailand and the arrest of the owners will escape notice in the United States, Europe and Japan. Do they really think that the citizens of those countries will look favorably on Thais and Thai business owners when the Thai government takes the assests of foreign citizens in Thailand?

Thai Town Businesses (Los Angeles)

The Thai Consulate in Los Angeles estimates that there are some 100,000 Thai people in Los Angeles County making it the largest Thai community outside of Thailand (Thai Community Development Center, 2002.) East Hollywood in particular is so populated with Thai immigrant residents and businesses that in 2000, a small strip of Hollywood Boulevard between Normandie and Western was officially designated the first and only "Thai Town" in the United States (Belgum, 2000.)

For the Thai restaurants, book stores, markets, and other business, this demarcation was considered a major victory. Previously, many of the businesses struggled for customers in their worn-down and dangerous neighborhood. With greater attention put on the area, however, the police have increased patrol, allowing for new businesses and customers to rejuvenate the area economically and physically (Belgum, 2000.)

http://www.celcee.edu/publications/digest/Dig06-02.html

Edited April 26, 2007 by ChiangMaiAmerican

[ChiangMaiAmerican]

Illinois, another area of the US with a large Thai population:

http://www.thaiassociationofillinois.com/o...nistrative.html

Any Europeans or Japanese members have examples of Thai communities and businesses in your country?

Edited April 26, 2007 by ChiangMaiAmerican

[marquess]

At the end of day, most of the people at the top don't give a ###### about the people at the bottom of the ladder! As long as they can continue with their monopolistic business practises, it's an "I'm alright Jack!" attitude. It is those poor people who will suffer in the long run, higher consumer prices, and lack of choice and employment opportunities, coupled with a poor education system.

[Gravelrash]

As I read many threads on new business laws etc, and see quotes showing the economy slowing, etc, and everyone seems to be asking "don't they know what they are doing?"

The answer is of course, yes, they know exactly what they are doing, and would have been competently advised of what the consequences will be. So instead of shaking your head in bafflement, instead start to rationalise where it is they are really heading.

I think in the long term foreign business isn't wanted here. Nor are foreigners really, however tourism will be allowed to continue as too many vested interests there. Also think those married or retired will still be able to stay, but maybe the pole will be raised a bit.

Many on this board like to believe Taksin was deposed due to corruption, extrajudicial killings etc, hardly, he went as he was steering the country in a direction that was regarded as undesirable. Time now to put things the way they should be, or why wouldn't the present gov just be adopting a caretaker role awaiting elections? What legal justification do they have for enacting critical legislation?

[LaoPo]

Time now to put things the way they should be, or why wouldn't the present gov just be adopting a caretaker role awaiting elections? What legal justification do they have for enacting critical legislation?

"Legal justification"....are you sure ?

Read this and you'll understand:

It's all about the 'old' elite, feudalism, power and money; there is no legal justification. THAT doesn't exist (yet) in this country.

http://www.atimes.com/atimes/Southeast_Asia/ID27Ae01.html

LaoPo

[marquess]

Time now to put things the way they should be, or why wouldn't the present gov just be adopting a caretaker role awaiting elections? What legal justification do they have for enacting critical legislation?

"Legal justification"....are you sure ?

Read this and you'll understand:

It's all about the 'old' elite, feudalism, power and money; there is no legal justification. THAT doesn't exist (yet) in this country.

http://www.atimes.com/atimes/Southeast_Asia/ID27Ae01.html

LaoPo

An interesting and somewhat enlightening article!

[Arkady]

I find your remarks very educated and balanced as such I hope you will find my own.

on the contrary to what is belived or presented here by "so called"know all guests in Yhialnd. they seem to forhget the history of western countries when they were in the same state as thailand is today.

In contrast to its strong upport for foreign investment liberalisation today, when it was a capital-importing country, the USA had all kinds of provision to ensure that foreigners invest in the country but do not control its economy.

I feel a bit unconfortable with your posts Highdiver.

Your point seems to make comparisons, both in time and location. But it's like mixing apples with oranges.

We all know that countries are willing to protect some parts of their economy. Criterias and ways to achieve this might differ, but it's often related to "national security" : energy, telecoms, transportations, weapons etc. Fair enough.

And as you stated, even the champion of free trade and free economy do the same (USA).

And nobody denies the right of Thailand to follow this path.

But instead of talking about the gender of angels, I believe the good approach is to stick to the text and the reality on the ground. Afterall, this is the topic of this discussion :

-what is FBA 2, how it is articulated, what are the real goals of such law etc.

-and what could be its effects on FDIs and thai economy

My point is : i've got the feeling that when we start to speak about the technical side of FBA 2, its partisans (and I totally respect the fact that some people might support it), there is no real discussion. It's only "But Thailand has the right to... !".

Because... Because France did the same in 1792, after WWII, or Island, or Ireland, or whatever... I'm sorry, but we are loosing the topic.

You seem to like history. What don't you try to explain us why Thailand has had a set of regulations toward foreign businesses since 1972 (Alien Business Law then FBA 1)... And that for 35 years, these regulations were not... enforced ?

It could enlight us.

No offense : but to try to understand this huge discrepancy between reality and texts is essential to understand the motivations behind FBA 2, the political background of it.

To put the historical angle into perspective it is worth drawing a comparison with Thailand's period of racial discrimination in the late 40s and early 50s which also involved business ownership. Under Field Marshall Phibun thousands of ethnic Chinese businesses were expropriated and taken over by the government using national security as an excuse. Many others were taken over by the military under the guise of a sham veterans' association that was supposed to provide welfare for ex-servicemen but actually went into the pockets of the military clique. Chatichai Choonhaven's father, Field Marshall Pin Choonhaven who managed to play down his own Chineseness, as a henchman of Phibun was on the board of over 50 of these expropriated Chinese companies in addition to his military and political duties. The teaching of Chinese in schools, even as a second language, was made illegal and Chinese medium schools were forced to convert to Thai medium schools or be closed down. Teachers had to pass a Thai language test to teach in a private school or be fired. Applicants to the Chulachomklao military academy had to prove that all four grandparents were not Chinese, although adoption by well to do Thais (in exchange for cash or other benefits) was permitted as an early type of "nominee" scheme to get around this. Thai-Chinese who were studying in China were considered as communists and had their Thai citizenship revoked. They were not even allowed visas to visit Thailand until the mid 90s, if they were still alive by then and there were many sad stories of families torn apart as a result of this. Later on during the communist insurgency of the 60s and 70s, Thai Chinese were often branded as communists and hunted down and killed by the Village Scouts and other right wing vigilante groups. A famous monk at the time said it was not a sin to kill a communist.

The result of the expropriation of Chinese businesses was not a success, in the same way as Mugabe's expropriation of white owned commercial farms has not been a success. It was impossible to find sufficient ethnic Thais with relevant commercial experience to manage these busineses and most of them floundered quite quickly. Eventually many of the former owners had to be recruited as salaried managers and eventually most of the industries had to be privatised again. However, some of today's businesses e.g. the liquor concessions owned by Charoen, the whisky tycoon, are direct descendants of the government monopolies created by the expropriations. Another direct result of the expropriations and the monopolies they were formed into was the industry licensing system which held back the Thai economy for decades until it was demolished by the Anand Panyarachun government in the early 90s.

Phibun who enthusiastically invited the Japanese army of occupation into Thailand in WWII modelled his political philosophy on facism and saw the Chinese as ruthless exploiters of ethnic Thais in the same way the nazis saw Jews. Many of the arguments used to defend racial discrimination against Chinese and protectionism by Phibun's nationalist military clique have been dusted off for re-use by today's military installed government and its apologists in support of the FBA amendments and the Retail Act, although this time the objective is ironically to protect ethnic Chinese business owners. The amendments will obviously passed into law by this government (if it is not toppled by another coup). Only history will show whether it was good for the Thai economy and people or whether it will come to be regarded as another mean and unproductive episode in Thai economic history.

Edited April 28, 2007 by Arkady