Reasons of change

[webfact]

Probe takes a toll on DTAC share price

By PETCHANET PRATRUANGKRAI

THE NATION

Total Access Communication (DTAC) has seen a 13-per-cent fall in its share price since the launch of a probe into whether it was circumventing the Foreign Business Act, following a complaint from TrueMove early last week.

DTAC's share price fell to Bt53.25, against a high of Bt61 since being listed on the stock market in 2007. It closed at Bt54.25 yesterday, up 1.88 per cent from the previous trading day.

The decline in DTAC's share price was due mainly to speculation about the probe, many market watchers said. There was a large number of big-lot trading in June, accounting for 8.8 million shares or Bt495 million, up from 4.95 million shares or Bt291 million in May.

The Business Development Department will definitely conclude its investigation on July 4, irrespective of whether the shareholders of Total Access Communication submit evidence to clear themselves or not, a top department official said.

Banyong Limprayoonwong, director-general of the department, said yesterday that in case no additional documents were presented to the department, the investigation committee would not delay concluding the probe. The department has its own documents and information on whether DTAC has nominee shareholders as alleged by TrueMove, he said.

Companies owning DTAC shares yesterday asked for a delay until next week for the submission of evidence to clear themselves from the allegation of being a nominee company. Those firms had informed him that they were not ready to submit the evidence yesterday and needed a few days to gather information, Banyong said.

He added that they should submit the evidence as soon as possible, preferably by Tuesday.

"They have been given a chance to clear themselves from the allegation. Without their evidence, we can proceed with our investigation based on the available data," he said.

He emphasised that the committee was committed to concluding the probe on the set date and to ensure the least impact on their businesses.

The panel investigating the case has invited Thai Telco Holdings, Tak Wu, Borelo and other shareholders in DTAC to provide more information for the probe. Those companies have significant shareholdings in DTAC.

He said the conclusion could lead to three possibilities:

n The case will be concluded if DTAC had not breached the Foreign Business Act.

n If DTAC was found to have breached the law, the department will forward the case for prosecution.

n If the committee finds some evidence of DTAC having a nominee to own the company's asset for foreigners, the panel will seek cooperation from other related agencies for more in-depth investigation.

Banyong also clarified that the department was neither rushing to conclude the case nor did it have any target.

"This case involves service to the public and is worth billions of baht. Telecommunication is one of the key businesses in the Kingdom and the panel understands that it has to make a fair judgement and with clarity to all parties involved," he said.

As the officials have experience in investigating nominee cases, including the Kularb Keaw company, the panel knows clearly what kind of information or details it should examine. Moreover, many legal officers have been brainstorming and meeting every day in relation to this case.

In addition, the department plans to ask the new government to amend the Foreign Business Act soon to make interpretations of the act clearer so that it plays a balanced role in protecting Thai businesses while also promoting investment growth, said Banyong.

Following the fast-changing business environment and liberalisation, the department will review the act. The Foreign Business Act BE 2542, has been enforced since 2000. There are some details that need to be modernised, he said.

Banyong added that the department could also review the annex III or specify type of businesses under the protection of this law.

Many foreigners are concerned about the clause (21) in the annex III of the act, which stipulates that all service businesses are subject to protection under the law.

-- The Nation 2011-06-25

[Arkady]

According to one of the Wikileaks cables the problem with going after nominees is that Thai businessmen make far greater use of them to circumvent the law than foreigners do. It is routine for the business elite to avoid disclosing shareholdings over 5% in listed companies and even to avoid making mandatory general offers through the use of nominees to disguise their real shareholdings, not to mention, of course, politicians who maintain controlling interests in businesses through nominees while in office. The cable alleged that a former finance minister told the embassy that was the reason the Sarayut government decided on its ill fated attempt to amend the Foreign Business Act, rather than simply prosecute under the Telecoms Act which also proscribes majority foreign ownership and would have limited and ill effects on foreign investor confidence to the telecoms sector. Since the Telecoms Act has nothing that could be construed as the definition of a nominee, it would have been left up to the courts to define nominee which might have had serious ramifications for influential Thai "captains of industry", whose interests were apparently far more important to the government than foreign direct investment.

Anyway that government was so incompetent that it failed to ensure sufficient delegates were in the NLA assembly at the time of the vote and failed to pass its draconian amendments to the FBA. The Commerce Ministry's Business Development Department has promised to present new draft amendments to the next government. The BDD is generally regarded as xenophobic with some justification but they did in fact propose freeing up most service businesses to the Sarayut government lessen the sweeten the effect of tightening up the definition of nominee and outlawing preferred share structures. The Sarayut "ginger" cabinet rejected that proposal and went for the most draconian option instead and also ranted unconvincingly about foreigners having bought up the entire coastlines of Phuket and Samui. The Abhisit government didn't want to deal with the FBA as it had other priorities but it is something that should not be ignored by the next government in order to settle uncertainties facing foreign investors. I would think the BDD will try to revive its attempt to tighten up the definition on nominee while also opening up several services subsectors to 100% foreign ownership. At any rate 70% ASEAN ownership will have to be permitted in 2015 under the AEC. For large investors this would be good but small investors would still need to apply for an alien business licence which involves a huge amount of documentation, scrutiny, expense and delays. A new FBA that only applies to strategic sectors and allows foreigners to own 100% of everything else without an alien business licence would make far more sense for today's global competitive environment. Maybe pigs will fly....