Loosen Foreign Business Act, Thai Institute Tells New Govt

[webfact]

Loosen Foreign Business Act, TDRI tells new Govt

By THE NATION

The Thailand Research Development Institute has urged the new government to amend the Foreign Business Act so that it protects only those service sectors that involve small operators.

Deunden Nikomborirak, TDRI research director, said in a statement issued after the investigation into the ownership of Total Access Communication (DTAC) that the clause imposing a "universal" ban on foreign ownership in the service sector should be amended.

She urged the government to review the list of service sectors that should really be protected under the 40-year-old ban.

FALLING BEHIND

Without a change to welcome international players, Thailand's competitiveness will not be enhanced and the over-protected service sector could put the country behind its neighbours.

"I don't see how the universal ban on foreign ownership in the service sector benefits Thais or the economy. The universal ban instead bars enforcement, as reflected through the foreign ownership of such businesses as entertainment venues in Pattaya. The beneficiaries are large investors exploiting this law to fight foreign competitors," she said.

"Without competition, market dominance is easier."

Deunden suggested that the protections under the act should focus on the segments operated by small players, not large businesses. Social gaps cannot be addressed if large operators enjoy this kind of protection.

She is hopeful that there will be a change, particularly in some segments crucial for economic development.

-- The Nation 2011-07-09

[WinnieTheKhwai]

Good, looking forward to the new government making some progress here too. Maybe that would finally convince the remaining loud-mouths who still think PTP/TRT is/was any foreign.

(You will recall the most grotesque nationalistic and anit-foreigner statements came from PAD. And that the Democrat party did NOTHING to improve the situation for foreigners or foreign owned businesses while they were in charge.)

[EvilDrSomkid]

Good, looking forward to the new government making some progress here too. Maybe that would finally convince the remaining loud-mouths who still think PTP/TRT is/was any foreign.

(You will recall the most grotesque nationalistic and anit-foreigner statements came from PAD. And that the Democrat party did NOTHING to improve the situation for foreigners or foreign owned businesses while they were in charge.)

You think PTP will do anything to make things easier for us bad foreigners?

Most Thais usually ignore us as irrelevant or despise us... It is a cultural aspect. Westerners are just a nuisance to them.

Does not matter what party is in charge. Correct me if I am wrong, but ALL Thai political parties are nationalistic and consequently anti-foreigner (Chinese excluded, of course).

[wolf5370]

I don't think the Dems had much chance to make any such changes in the two years they were in power they hand their hands pretty much full! Though I do believe personally that they would not have made any improvements.

Hopefully, being Nationlistic and the shallow thoughts (media fed of course) of the masses will not stop policy that benefits the country - many countries know as being xenophobic (a lot of Asian ones!) opened their doors when they worked out, with an educated prod, its the best way to make money and reduce monopoly. Hopefully (agan), the new Gov, which keep saying that it is not elite, will look towars national policies that benefit the country and its people as a whole, rather than the pockets of those very elite!

As I said before, its a perfect time over the next year for this new Gov to put its "money" where its mouth is - and prove itself a people's party and not an elitist party.

[RogueExpat]

Government looks to be doing exactly the opposite.

Not much focus on education and skills development, wages to go up nearly fifty percent overnight, work permit restictions overly restictive, foreign ownership limits far too widespread, infrastucture lagging decades behind world standards, land ownership issues, bureaucratic red tape nightmare, excessive compulsory company auditing expenses, inflated currency value, ingrained theft culture in a fair size percentage of workforce, ingrained corruption that unfortunately you have to play along with to get anything done in a timely manner, etc, etc.

Throwing the FBA in the toilet and writing a new one from scratch would be a start, however, it is only one hurdle of many that make Thailand un-attractive for foreigners doing business.

When I first arrived here more than 10 years ago, opening a SME size business was relatively painless, it all started to go South in 2003 when good 'ol Mr Thaksin started on his nationalistic drivel, Thai's are No. 1, better than all foreigners campaign etc. Unfortunately, many Thai's have taken it to heart, and not only has it permeated through upper levels of government departments, whenever a mob is formed for whatever protest by whatever colour, the nationalistic rhetoric rears it's ugly head, because people listen to this, nod and cheer. Good for kicking up support for whtever your cause is.

Unfortunately, I don't think this governement is going to do any better, their only real interest in foreign investment, is in the proposed mega-projects, because there will be enough money borrowed, and spent to make a few wealthy beyond comprehension.

[Arkady]

The Democrat finance minister said they would amend the FBA to free up the services sector but they left it on their "to do" list, if they got a second term.

Thaksin was ambivalent towards foreign investors when he was in power. He is a mercurial character, who is more interested in short term agendas that the long term, and is not governed by any abiding principles. Thus when he first came to power he was down on the IMF and foreigners in general, particularly farangs as he preferred those from his ancestral homeland. To benefit his concealed business interests he amended the Telecoms Act to reduce foreign ownership from 49% to 40%, as he was worried about his competitors getting too much help from foreign partners. After his second election win, however, he had already gone full circle and was aggressively pushing for the FTA with the US which have forced open the banking sector to US banks without any restrictions. Finally, he amended the Telecoms Act again to restore the foreign limit to 49% three days before he sold Shin Corp to the Singaporean government. So his view on foreign ownership was basically that restricting it was good thing to capitalise politically on the backlash against the IMF and protect his own business, as well as get businessmen on his side. Later on he saw opportunities to profit from easing foreign ownership restrictions.

Nowadays he doesn't have businesses in Thailand that are vulnerable to foreign competition and seems to be interesting in being a trade representative for Thailand which should predispose him to allow more liberalisation. On the other hand the CP group, the owner of True, is a big supporter of Puea Thai and there are other large businesses that support him and Puea Thai that feel vulnerable to the threat of foreign competition. So probably nothing will happen for the time being. Longer term he might do something about it, if he sees some major advantage for himself that he thinks is worth annoying his businessman friends for. I would guess the TDRI's logic would be followed, i.e. only large investors will be exempted. That is how the liberalisation of securities and retail sectors was done. A minimum investment was required to get exemption and the minimum amount would be a lot more than the average farang wants to invest in his Pattaya beer bar.

[hansnl]

Good, looking forward to the new government making some progress here too. Maybe that would finally convince the remaining loud-mouths who still think PTP/TRT is/was any foreign.

(You will recall the most grotesque nationalistic and anit-foreigner statements came from PAD. And that the Democrat party did NOTHING to improve the situation for foreigners or foreign owned businesses while they were in charge.)

You think PTP will do anything to make things easier for us bad foreigners?

Most Thais usually ignore us as irrelevant or despise us... It is a cultural aspect. Westerners are just a nuisance to them.

Does not matter what party is in charge. Correct me if I am wrong, but ALL Thai political parties are nationalistic and consequently anti-foreigner (Chinese excluded, of course).

And keep forgetting that around 150,000 expats spend an average of 52,000 baht a month.

A quite considerable 93,600,000,000 baht a year.

The farang tourists bring in another load, even bigger.

Working out in a cool 2500 baht per Thai.

And of course you might ask yourself, who is making policies about "barbarians"

[SolarOhm]

The principal difficulty from what I can see is the flagrant violation of the enacted tax laws and the political and business corruption so prevalent throughout the business sector and followed by farangs as well as Thai.

.

While farangs continue to operate outside the tax rules there is little incentive for the Thai government to modify the Foreign Business Act to make it even easier for farangs to flout the revenue codes.

The present Tax laws provide ample incentive for Farang and Thai to invest in R&D and for the promotion of SMEs.

Perhaps once the Thai Government sees a positive tax revenue effect and development of the SME sector by farangs they might listen to pleas of modifying Foreing ownership rules.

And remember - ownership of companies and businesses is largely irrelevant. It is CONTROL which is the important factor. There is ample scope for farangs to "Control" everything that moves and breathes in business in Thailand. If you are genuinely interested in how YOU can achieve that for your own business you can PM me.

[Thai at Heart]

This is one of the major issues that got him into trouble before.

The moment anyone starts talking about liberalizing the FBA to allow foreign banks, foreign retailers, foreign lawyers, foreign architects, wholly owned foreign agricultural exporters and any other of the controlled industries, there are some very very senior people who will have an absolute s**t fit.

They didn't spend all this time and effort to create effective monopoly or oligopoly status just for some upstart from Chiangmai to come and mess it all up.

On 14 January 2006, hundreds of protestors headed by Sondhi Limthongkul, former senator Pratin Santiprapop, Klanarong Chantik, and Democrat MP Kalaya Sophonpanich stormed into Government House at half past midnight, overwhelming security forces. They occupied the building for twenty minutes before regrouping outside and continuing their protest.[33

http://en.wikipedia.org/wiki/Political_crisis_in_Thailand_(2005%E2%80%932006)

Funny how they rapidly took a far less public role after this event.

.

Foreign ownership of Thai private banks as of December 29, 2006.

Foreign ownership (%)

Bangkok Bank 48.8%

Kasikorn Bank 49.0%

Siam Commercial Bank 34.7%

TMB Bank 37.9%

Bank of Ayudhya 48.6%

Thanachart Bank 0.0%

Tisco Bank 49.0%

Kiatnakin Bank 44.0%

ACL Bank 20.0%

Note: (1) Foreign ownership calculated as percent foreign limit less percent foreign availability.

(2) Pre-crisis foreign limit was 25.0%.

http://econ.tu.ac.th/archan/rangsun/ec%20460/ec%20460%20readings/%E0%B9%80%E0%B8%AD%E0%B8%81%E0%B8%AA%E0%B8%B2%E0%B8%A3%E0%B9%81%E0%B8%A5%E0%B8%B0%E0%B8%AA%E0%B8%B4%E0%B9%88%E0%B8%87%E0%B8%95%E0%B8%B5%E0%B8%9E%E0%B8%B4%E0%B8%A1%E0%B8%9E%E0%B9%8C%E0%B8%98%E0%B8%99%E0%B8%B2%E0%B8%84%E0%B8%B2%E0%B8%A3%E0%B9%81%E0%B8%AB%E0%B9%88%E0%B8%87%E0%B8%9B%E0%B8%A3%E0%B8%B0%E0%B9%80%E0%B8%97%E0%B8%A8%E0%B9%84%E0%B8%97%E0%B8%A2/Discussion%20Paper/2007/Thai%20Commercial%20Banks%20One%20Decade%20After%20the%20Crisis.pdf

Anyone wonder if someone was thinking to let say a wholly owned foreign bank into the market to shake it up a little?????