Retail Act : New Draft Approved By Cabinet

[cclub75]

By Ploy Chitsomboon

BANGKOK, May 8 (Reuters) - Thailand's army-appointed cabinet approved a draft new retail business law on Tuesday to curb the expansion of big, foreign-owned retailers at the expense of small store-owners, a government official said.

The draft, amending a version cabinet rejected last month, puts no set limits on the expansion of superstores, such as those owned by France's Carrefour (CARR.PA: Quote, Profile , Research) and Britain's Tesco (TSCO.L: Quote, Profile , Research), but creates an independent oversight committee that analysts said could restrict their number and location.

The draft, which requires the approval of Thailand's parliament, says all retailers must report to the committee within 90 days of it coming into force. Each firm would then be designated as either a retail or wholesale operator.

The previous draft was rejected because ministers were concerned that zoning regulations and the proposed committee would be open to political interference.

Tesco spokesman Darmp Sukontasap said he was still trying to find out details of the draft bill.

"To our knowledge, however, there does not seem to be any mention about the interest of consumers. Therefore, we would like to request the government to consider how this law will benefit them," Darmp said.

MORE BUREAUCRACY

According to the draft, the 15-plus member committee would be chosen from a wide variety of state and private sector entities, including university heads and the National Economic and Social Development Board (NESDB).

The creation of the committee -- in response to domestic retail groups complaining about being squeezed out by foreign operators -- was likely to crimp the spread of large-scale superstores, analysts said.

"It would make modern trade store expansion more difficult in the future," DBS Vickers Securities analyst Chanpen Sirithanarattanakul said in research note.

Until the new act was passed, the Interior Ministry would use its own town-planning zoning rules to regulate expansion of shopping centres, Deputy Commerce Minister Oranuj Osathananda said.

Amendments to the retail law have been circulating since 2002, but were never implemented under the administration of Prime Minister Thaksin Shinawatra, who was ousted by military coup on Sept. 19.

Since then, the army-backed government has sent shockwaves through the foreign investment community, imposing capital controls to stem a rise in the baht and proposing changes to foreign ownership rules that could force many firms to sell some holdings. ($1=32.55 Baht)

(REUTERS)

And other details on Bangkok Post :

If the retail giants go against the verdict of provincial authorities or violate the law in any other way, they would face up to three years in jail or fines of 3 million baht (about $86,000).

The law will now be sent to the nation's top legal experts at the Council of State, before being submitted once again to the junta-appointed parliament for final rubber-stamping.

http://www.bangkokpost.com/breaking_news/b...s.php?id=118617

[cclub75]

Some comments.

-again, the gvt is showing an amazing "esprit de suite"... a real will to push forward his economic nationalist agenda.

Last month, when the Cabinet rejected the first draft of Retail Act, we were many to think that it was a U-turn and that the subject would be postponed.

Error. They are coming back.

-basically, what is the main difference between draft 1 and draft 2 ?

In draft 1, decisions (to allow the opening of a new supermarket) would have been taken by a central committee. In draft 2, the decision will be taken on the local scale. "it will decentralise authority to provincial regulators"

-is it better or worse ?

Difficult to say. The provincial regulators would be easier to corrupt. Or not.

-so basically, we are going to see "friendly" provinces that will allow Tesco and Carrefour to operate. And others, that will block them.

-so much for the principle of equality...

-is it better or worse for foreign businesses ?

Well obviously, draft 1 or draft 2 is a step back for them. However, and as usual in Thailand, it's difficult to be able to forecast the results of a new law. It's like a "marque de fabrique" from the thai authorities : to create the maximum uncertainty.

-my point : the Retail Act doesn't create "rules" (where, how you can open a supermarket or not) nor a "frame of regulations". It just says : "a committee will decide" !

-so much for the clarity.

-So eventually, it could be only a face saving operation (a Retail Act is going to exist, on the paper, great, the people are going to applaud). And then after on the field, all the provincial regulators would welcome the supermarkets and it will be business as usual.

-but again : Thailand is not going to developp itself with such a system of regulation, pathetic and deeply inequal because totally opaque.

Edited May 8, 2007 by cclub75

[Old Man River]

Some comments.

-again, the gvt is showing an amazing "esprit de suite"... a real will to push forward his economic nationalist agenda.

Last month, when the Cabinet rejected the first draft of Retail Act, we were many to think that it was a U-turn and that the subject would be postponed.

Error. They are coming back.

-basically, what is the main difference between draft 1 and draft 2 ?

In draft 1, decisions (to allow the opening of a new supermarket) would have been taken by a central committee. In draft 2, the decision will be taken on the local scale. "it will decentralise authority to provincial regulators"

-is it better or worse ?

Difficult to say. The provincial regulators would be easier to corrupt. Or not.

-so basically, we are going to see "friendly" provinces that will allow Tesco and Carrefour to operate. And others, that will block them.

-so much for the principle of equality...

-is it better or worse for foreign businesses ?

Well obviously, draft 1 or draft 2 is a step back for them. However, and as usual in Thailand, it's difficult to be able to forecast the results of a new law. It's like a "marque de fabrique" from the thai authorities : to create the maximum uncertainty.

-my point : the Retail Act doesn't create "rules" (where, how you can open a supermarket or not) nor a "frame of regulations". It just says : "a committee will decide" !

-so much for the clarity.

-So eventually, it could be only a face saving operation (a Retail Act is going to exist, on the paper, great, the people are going to applaud). And then after on the field, all the provincial regulators would welcome the supermarkets and it will be business as usual.

-but again : Thailand is not going to developp itself with such a system of regulation, pathetic and deeply inequal because totally opaque.

CClub75, I know you have been following this closely. Thanks for the insight into the new law.

Whenever I see regulations in Thailand saying "a committee will decide", I know that it is an open door for bribery. Hence, yes, business as usual.