Tighter Controls Sought On Foreign-owned Firms

[webfact]

Tighter controls sought on foreign-owned firms

By PETCHANET PRATRUANGKRAI

THE NATION

Published on December 28, 2009

The planned liberalisation of certain business sectors currently limited to Thai firms will be accompanied by the imposition of more stringent restrictions on foreign-owned businesses operating in the Kingdom if a series of proposals by the Commerce Ministry are accepted by economic ministers.

Under the ministry's proposed amendments to the Foreign Business Act (FBA), voting rights of foreign shareholders will be more tightly controlled. In addition, all new retail and wholesale businesses would have to be approved by the ministry. Currently, retail and wholesale operators investing between Bt1 million and Bt99.99 million have to be approved by the ministry.

In an effort to boost foreign investment, the government is considering removing some industries from the FBA's Annex III, which lists industries that are off-limits to non-Thais.

Annex III businesses that might be opened up include tour guide operators; trading in agricultural futures; stock trading; derivatives trading; commercial banking; insurance and assurance; pawnshop operators; warehousing; schools; and credit fonciers.

"The amendments should create clear regulations for controlling each type of business. It should make the environment friendlier for foreign investors and streamline business regulations. However, it may affect some Thai businesses that are not competitive with foreign firms," said a senior Commerce Industry source.

The proposed removal of some businesses from Annex III has prompted a concurrent proposal to impose stringent controls on the voting rights of foreign shareholder, which must not be higher than 50 per cent.

The amended regulations would only apply to new foreign-owned companies.

The government plans to set up an agency to supervise the act's implementation to ensure efficiency. It also plans to reduce the number of representatives from the private sector on a committee examining the proposed changes to the FBA in order to decrease conflict-of-interest problems.

The ministry's Business Development Department will be given more authority to investigate the activities of foreign-owned firms and suspend the operations of any found to be in breach of the law, the source said.

"The stringent control measures will affect foreign investors, some of whom may shift to invest in other countries as a result," the source acknowledged.

-- The Nation 2009/12/29

[newsfooter][/newsfooter]

[CockneyGit]

Yep, that'll have the international investors charging in to Thailand..!!!

Muppetts, as if there weren't enough problems attracting overseas investment here.

One giant leap... (backwards!)

[Oberkommando]

Are there any foreign investors left to discourage?

I thought we'd all gone to pastures greener already?

[dave_boo]

I see positive changes; rolling back some of those prohibited professions is a good step. I don't see anything onerous in this admittedly brief statement except for closer looks at voting rights which if I understand are badly abused by certain people creating shell companies that are Thai in name and using them to actually take control of the businesses.

[heykki]

Good news for those in financial sector.

[Stumbo]

I see positive changes; rolling back some of those prohibited professions is a good step. I don't see anything onerous in this admittedly brief statement except for closer looks at voting rights which if I understand are badly abused by certain people creating shell companies that are Thai in name and using them to actually take control of the businesses.

Good point, nothing worse than investors actually wanting control of the companies they sink their money intom, damm rude. Much better to give it to the Thais to run, too many good financial outcomes from this stretegy to even mention.

[thaijasmine]

I see positive changes; rolling back some of those prohibited professions is a good step. I don't see anything onerous in this admittedly brief statement except for closer looks at voting rights which if I understand are badly abused by certain people creating shell companies that are Thai in name and using them to actually take control of the businesses.

Good point, nothing worse than investors actually wanting control of the companies they sink their money intom, damm rude. Much better to give it to the Thais to run, too many good financial outcomes from this stretegy to even mention.

Why do foreigners bother with trying to jump through hoops in this place ?

They would much prefer us to just leave the money with Thai nationals and for to go back to our own countries

As CockneyGit said - muppets

[dumball]

thaijasmine' date='2009-12-29 21:24:41' post='3232460']Stumbo' post='3232200' date='2009-12-29 20:26:19']

I see positive changes; rolling back some of those prohibited professions is a good step. I don't see anything onerous in this admittedly brief statement except for closer looks at voting rights which if I understand are badly abused by certain people creating shell companies that are Thai in name and using them to actually take control of the businesses.

Good point, nothing worse than investors actually wanting control of the companies they sink their money intom, damm rude. Much better to give it to the Thais to run, too many good financial outcomes from this stretegy to even mention.

Why do foreigners bother with trying to jump through hoops in this place ?

They would much prefer us to just leave the money with Thai nationals and for to go back to our own countries

As CockneyGit said - muppets

Sounds somewhat like the tourism and expat situation , "Please leave your money in the big bin and exit quietly ".

[britadders28]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

[dave_boo]

Good point, nothing worse than investors actually wanting control of the companies they sink their money intom, damm rude. Much better to give it to the Thais to run, too many good financial outcomes from this stretegy to even mention.

There are plenty of other countries that have much less stringent rules in place if such rules are not to the liking of potential investors.

Why do foreigners bother with trying to jump through hoops in this place ?

They would much prefer us to just leave the money with Thai nationals and for to go back to our own countries

As CockneyGit said - muppets

There's so much white man's burden blatantly on display at times it's not a big wonder there's not a TV support group.

[coxhoedave]

Good point, nothing worse than investors actually wanting control of the companies they sink their money intom, damm rude. Much better to give it to the Thais to run, too many good financial outcomes from this stretegy to even mention.

There are plenty of other countries that have much less stringent rules in place if such rules are not to the liking of potential investors.

Why do foreigners bother with trying to jump through hoops in this place ?

They would much prefer us to just leave the money with Thai nationals and for to go back to our own countries

As CockneyGit said - muppets

There's so much white man's burden blatantly on display at times it's not a big wonder there's not a TV support group.

dave_boo - Dazed'n'confused.

Pretty apt description really reading your contribution

[ukrules]

I somehow doubt that there are many businesses that are ever started up with less than one million, this appears to mean that you would need ministerial approval to open a 7/11 store or any other minor concern. I wonder how hard this approval will be to obtain.

[Bagwan]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

Add Siemens, Bosch, Mercedes Benz, BMW, Ferrari and all those purveyors of BS designer gear in the posh malls. Hit the phu yais where it will hurt.

[JR Texas]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

Add Siemens, Bosch, Mercedes Benz, BMW, Ferrari and all those purveyors of BS designer gear in the posh malls. Hit the phu yais where it will hurt.

I just don't understand why the govt. continues to pursue outdated economic policies that keep Thailand firmly embedded in Third World status. They need to open up their markets to foreign competition, especially small scaled businesses that generate the most employment.

On another note, I am sittiing in Paragon Mall right now typing this. I just walked all over it. This is the "high season." But hardly anybody is here. There are more staff than customers.

The food stalls look deserted.........how they can stay in business is a mystery to me.

People simply are no longer flocking to Thailand......clearly the Paragon Mall wants to attract rich Japanese, but I only saw a handful.

Of course, this is just my impression at 11:30 in the afternoon on a Wednesday........I just think this place should be packed. It isn't.

[Oberkommando]

I just don't understand why the govt. continues to pursue outdated economic policies that keep Thailand firmly embedded in Third World status. They need to open up their markets to foreign competition, especially small scaled businesses that generate the most employment.

On another note, I am sittiing in Paragon Mall right now typing this. I just walked all over it. This is the "high season." But hardly anybody is here. There are more staff than customers.

The food stalls look deserted.........how they can stay in business is a mystery to me.

People simply are no longer flocking to Thailand......clearly the Paragon Mall wants to attract rich Japanese, but I only saw a handful.

Of course, this is just my impression at 11:30 in the afternoon on a Wednesday........I just think this place should be packed. It isn't.

Pride of Thailand the website says.

A lot of high end retailers keep outlets open in high profile places like Siam Paragon regardless of profitability.

[ericthai]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

Add Siemens, Bosch, Mercedes Benz, BMW, Ferrari and all those purveyors of BS designer gear in the posh malls. Hit the phu yais where it will hurt.

You guys miss the point here, none of these big companies are affected by these rules. They all bring in big dollars and investment over 10 million baht and in cases like Toyota, BMW etc where they hire thousands of thais will qualify for BOI where they can own the company 100% so things like this does not affect them, it only affects us small guys.

Also, I really dont see any big issues as they have not really said anything, just said tighter controls this can mean anything, I would think with all the talk about shell companies to buy houses, land that this will be aimed at them, but this is my guess.

What it does say is that they are looking at removing business from the list that foreigners could not operate in before but now it looks possible they can. This does seem to be a step in the right direction. As for the voting rights for share holders this is already in place looks like they are just going to look more closely and enforce it.

[animatic]

Seems to be tighter controls in the guise of liberalization.

Yes just imagine the savvy investors flocking to this honey pot!

[Dork]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

Add Siemens, Bosch, Mercedes Benz, BMW, Ferrari and all those purveyors of BS designer gear in the posh malls. Hit the phu yais where it will hurt.

I just don't understand why the govt. continues to pursue outdated economic policies that keep Thailand firmly embedded in Third World status. They need to open up their markets to foreign competition, especially small scaled businesses that generate the most employment.

On another note, I am sittiing in Paragon Mall right now typing this. I just walked all over it. This is the "high season." But hardly anybody is here. There are more staff than customers.

The food stalls look deserted.........how they can stay in business is a mystery to me.

People simply are no longer flocking to Thailand......clearly the Paragon Mall wants to attract rich Japanese, but I only saw a handful.

Of course, this is just my impression at 11:30 in the afternoon on a Wednesday........I just think this place should be packed. It isn't.

Are there malls in Texas packed at 11:30 in the afternoon on a Wednesday?

[JR Texas]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

Add Siemens, Bosch, Mercedes Benz, BMW, Ferrari and all those purveyors of BS designer gear in the posh malls. Hit the phu yais where it will hurt.

You guys miss the point here, none of these big companies are affected by these rules. They all bring in big dollars and investment over 10 million baht and in cases like Toyota, BMW etc where they hire thousands of thais will qualify for BOI where they can own the company 100% so things like this does not affect them, it only affects us small guys.

Also, I really dont see any big issues as they have not really said anything, just said tighter controls this can mean anything, I would think with all the talk about shell companies to buy houses, land that this will be aimed at them, but this is my guess.

What it does say is that they are looking at removing business from the list that foreigners could not operate in before but now it looks possible they can. This does seem to be a step in the right direction. As for the voting rights for share holders this is already in place looks like they are just going to look more closely and enforce it.

The big point is that small scale businesses are the backbone of virtually every economy on the planet..........they create the most jobs. The idea that the big companies create most of the jobs is nonsense.

About the Paragon Mall: It was not packed at 11:30 am. Traffic did pick up substantially by 12:30 pm.

Note: I have heard many people say that this is the lowest high season on record, coming after the lowest low season on record. Many do say they are seeing customers, but they are not spending much.

This is reality..........and it is hurting Thailand's economy.

To turn it around they must adjust the business and visa rules to what they used to be and open their economy to foreign investment and competition........also they have to eliminate corruption at all levels and initate fundamental changes to their education system that will make Thailand competitive.

IMHO, of course.

[hervelon]

Yep, that'll have the international investors charging in to Thailand..!!!

Muppetts, as if there weren't enough problems attracting overseas investment here.

One giant leap... (backwards!)

I am astonished by the ignorance of many thai governement officials who come up with these new laws, as if Thailand was not already perceived by foreign investors as an "unfriendly country" another nail in the coffin it seems!!

[Brewsta]

Yep, that'll have the international investors charging in to Thailand..!!!

Muppetts, as if there weren't enough problems attracting overseas investment here.

One giant leap... (backwards!)

I am astonished by the ignorance of many thai governement officials who come up with these new laws, as if Thailand was not already perceived by foreign investors as an "unfriendly country" another nail in the coffin it seems!!

But, IMHO, as the PhuYai are rarely inconvenienced or even aware/interested in these periodic 'changes', they will not be bothered.

As for championing small business trade, well, Wake Up! No way that the 'Tops' will cede their feudal control of this country - ever.

Have a great day and pray for England in the South African cricket later day - more chance of a miracle there !!

regardz,

Brewsta

[tracer]

Note: I have heard many people say that this is the lowest high season on record, coming after the lowest low season on record. Many do say they are seeing customers, but they are not spending much.

===

Well, I haven't been recently in Bangkok, but from what I can see in Phuket the difference with other years is clear:

the regular tourists who escape bad weather are back (and I wonder how long the politicians will try to continue with global warming....) Regular customers are retired couples and to be honest, they are NOT the big spenders Thailand supposedly wants... I had a look in Patong and yes, some bars say its better then ever but also say the neighbour places are empty...

In short its the thinning out off those who are bad in running a business with in some places the extra costs that rents are short time...

People still building ( I wonder if they have any customers) and when I redid my visum in October I was in and out in 30 minutes...

NEW tourists are a different matter though as most got stung last year by those T-shirt wars and the following noise about what to do about it. Tourists have an alternative to Thailand and with a travel insurance they CAN make sure they at least have a nice holiday...

I suspect that the raise in arrivals is caused by difference in Visa trips and it likely only shows many short term trips across the borders...

For the rest I see not many things getting worse or better so anyway complaining about old rules etc could be understood if Thailand had some rules (like other countries should have) in which politicians too old can be retired... or preventing extending their period in office more then 1 time..

And maybe most of all kick all corrupt ones out of politics, NOT for 5 years: permanently! If possible kick all their near relations out as well...

[ericthai]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

Add Siemens, Bosch, Mercedes Benz, BMW, Ferrari and all those purveyors of BS designer gear in the posh malls. Hit the phu yais where it will hurt.

You guys miss the point here, none of these big companies are affected by these rules. They all bring in big dollars and investment over 10 million baht and in cases like Toyota, BMW etc where they hire thousands of thais will qualify for BOI where they can own the company 100% so things like this does not affect them, it only affects us small guys.

Also, I really dont see any big issues as they have not really said anything, just said tighter controls this can mean anything, I would think with all the talk about shell companies to buy houses, land that this will be aimed at them, but this is my guess.

What it does say is that they are looking at removing business from the list that foreigners could not operate in before but now it looks possible they can. This does seem to be a step in the right direction. As for the voting rights for share holders this is already in place looks like they are just going to look more closely and enforce it.

The big point is that small scale businesses are the backbone of virtually every economy on the planet..........they create the most jobs. The idea that the big companies create most of the jobs is nonsense.

About the Paragon Mall: It was not packed at 11:30 am. Traffic did pick up substantially by 12:30 pm.

Note: I have heard many people say that this is the lowest high season on record, coming after the lowest low season on record. Many do say they are seeing customers, but they are not spending much.

This is reality..........and it is hurting Thailand's economy.

To turn it around they must adjust the business and visa rules to what they used to be and open their economy to foreign investment and competition........also they have to eliminate corruption at all levels and initate fundamental changes to their education system that will make Thailand competitive.

IMHO, of course.

You missed the point i was saying too. I did not say BMW, Toyota or the other big boys effect the economy any more or less than small business. What the point is any type of changes that are being made does not effect the big business so they don't care what happens, so you are not going to see them go anywhere as some people has suggested for them to do. Any changes made only effect small companies.

[silentnine]

"Annex III businesses that might be opened up include tour guide operators; trading in agricultural futures; stock trading; derivatives trading; commercial banking; insurance and assurance; pawnshop operators; warehousing; schools; and credit fonciers."

doe this mean farangs may be able to operate pawn shops legally

[Foggy Bottom]

"Annex III businesses that might be opened up include tour guide operators; trading in agricultural futures; stock trading; derivatives trading; commercial banking; insurance and assurance; pawnshop operators; warehousing; schools; and credit fonciers."

doe this mean farangs may be able to operate pawn shops legally

Far more interesting is the "tour guide operators" classification - this implies that farangs will be able to own (but maybe not directly work in - see rules about retail and office staff) tour and trekking businesses. If this happens, many Thais will see it as a step towards allowing farangs to become tour guides - and that's a job that's as sanctified as the land ownership issue.

If that happens, it will also be an admission that farangs are better placed to know what farangs want, and that Thai tour operators have been underserving farang tourists in the past.

I also suspect that there might be an accompanying and similar relaxation of the rules regarding transport operation company ownership - e.g. buses of all sizes, marine craft etc - in order for farang-run tour operators to operate all required facilities in-house. If the powers-that-be have not forward-thought on that aspect and the backlash that will occur from transport operators (you know - the "poor" Thais operating fleets of 2-million Baht+ Mercedes mini-buses, and employing wannabe-Schumachers as drivers) as well as the provincial tour guide associations, then it will confirm their membership of the Muppet Club. They will need to be prepared for loud protests from both tourist transport operators and tour guide / tour agency groups.

Particularly in areas like Chiang Mai and Phuket, any farang that wants to be a tour operator is going to face stiff resistance from the locals already doing it.

Just my 2 satang's worth

Foggy

[simon43]

... is going to face stiff resistance ...

or to rephrase this:

... is going to become a stiff ...

Simon

[stingray]

Maybe tescos, sony, honda, suzuki etc.. should move out of thailand and see how they like that!!!

Add Siemens, Bosch, Mercedes Benz, BMW, Ferrari and all those purveyors of BS designer gear in the posh malls. Hit the phu yais where it will hurt.

I just don't understand why the govt. continues to pursue outdated economic policies that keep Thailand firmly embedded in Third World status. They need to open up their markets to foreign competition, especially small scaled businesses that generate the most employment.

On another note, I am sittiing in Paragon Mall right now typing this. I just walked all over it. This is the "high season." But hardly anybody is here. There are more staff than customers.

The food stalls look deserted.........how they can stay in business is a mystery to me.

People simply are no longer flocking to Thailand......clearly the Paragon Mall wants to attract rich Japanese, but I only saw a handful.

Of course, this is just my impression at 11:30 in the afternoon on a Wednesday........I just think this place should be packed. It isn't.

This is correct. All this "high nose" shopping malls will go down, i guess. Peaple in a thirth world country can't afford to buy Lius Voton bags, Rolexes, etc. Japaneses Tourists, they go to Hawaii. In Waikiki are plenty of this "High Nose" Shops, like ABC, Store, etc, etc. Overthere they can make money, because it's different for a tourist to say the friend: I bough this bag in Hawaii" Than to say" I bought this bag in Bangkok" The friends would think it's a fake anyway. So all this "High Nose" Shopping Malls are on the wrong place overhere, I think, they don't belong here.

Edited January 6, 2010 by stingray

[robertson468]

I don't understand the philosophy, bordering on paranoia in the constraints imposed on both land ownership and the operation of businesses by foreigners in Thailand. My perception is we are now working globally and this has been strongly advocated by all the World Leaders during all their meetings during the recession. They all shouted from the roof-tops, "don't start operating exclusion policies and looking inwards". I would have thought this message from developed Countries and experienced high ranking politicians would have carried a message to the Thai Politicians. If I were cynical, my thought might be, perhaps the more difficult it is for a foreigner to operate in this Country, the more scope there is for the payment of "tea-money". Thank goodness I am not cynical then . I believe full democracy with far less corruption is coming to Thailand, perhaps not tomorrow, but come it will.

[Thai at Heart]

I don't understand the philosophy, bordering on paranoia in the constraints imposed on both land ownership and the operation of businesses by foreigners in Thailand. My perception is we are now working globally and this has been strongly advocated by all the World Leaders during all their meetings during the recession. They all shouted from the roof-tops, "don't start operating exclusion policies and looking inwards". I would have thought this message from developed Countries and experienced high ranking politicians would have carried a message to the Thai Politicians. If I were cynical, my thought might be, perhaps the more difficult it is for a foreigner to operate in this Country, the more scope there is for the payment of "tea-money". Thank goodness I am not cynical then . I believe full democracy with far less corruption is coming to Thailand, perhaps not tomorrow, but come it will.

Unfortunately history has shown that making business difficult for Johnny foreigner hasn't really caused any tangible problem for Thailand. Until 97, they rumbled along at 5 to 8% GDP growth perfectly happily, post 97, they got back to decent growth all with these apparently restrictive laws on the books. What compelling explanation can be given to convince anyone that they NEED more FDI for the good of the country?

The change in the next few years will be that exports in Thailand have risen in price significantly in the last few years, and Vietnam and Cambodia are on the up and up. There hasn't been this type of competition on Thailands doorstep in many years. Thailand does need more FDI in order to replace the jobs and manufacturing that it is currently and will in future lose to China, Vietnam and Cambodia. Of course, it is a rare thing for politicians anywhere to tackle a problem BEFORE it happens, so I wouldn't expect Thailand to react at all.

[Arkady]

Good news for those in financial sector.

It's not particularly good news for those in the financial sector because the FBA and the Commerce Ministry don't really have jurisdiction over finance which is under the Commercial Banking Act and the SEC Act etc and governed by the Finance Ministry. The Commercial Banking Act contains its own foreign ownership restriction of 25% that overrides the 49% restriction in the FBA. But since 1998 the Bank of Thailand and the Finance Ministry have routinely waived the foreign ownership limit for foreign banks they consider respectible enough to manage a Thai bank. There also are pretty easy rules since 1998 for foreign securities companies to get a waiver from the 40% foreign ownership limit for securities companies, if they invest more than a certain amount. I think only insurance is under the jurisdiction of the Commerce Ministry but that has its own law as well. Credit fonciers that the Commerce Ministry also proposes to liberalise effectively don't exist any as the Bank of Thailand has them merge with banks or close down and they also come under the Finance Ministry and the Credit Fonciers Act. Liberalizing banks in the FBA doesn't change the 25% foreign limit in the Commercial Banking Act or the Finance Ministry's power to waive that without consulting the Commerce Ministry.

So clearly this aspect of the liberalization is just a smoke screen that the Commerce Ministry hopes to hide behind in order to have another go at the restrictions on foreign voting rights it failed to get past under the Sarayudh government. Tour guiding and schools may represent a bit of a liberalization but not much serious investment will come into schools because of the interference from the Ministry of Education. Apart from adult language schools most of the foreign involvement in education is merely franchising where local investors pay royalties to be allowed to use their names and there is no reason why these foreign institutions would want to invest their own money in Thailand. I would also not expect any serious foreign investment in godowns as a result of liberalization. For the good of the economy it is high time that the xenophobic senior mandarins at the Commerce Ministry were transferred to inactive posts before they can inflict some serious damage. Perhaps Maj-Gen Khattiya needs some assistance in his responsibilities for arranging callisthenics sessions around the country.

Edited January 6, 2010 by Arkady