Thailand Urged To Remove Foreign Ownership Limits

[george]

Thailand urged to remove limitations on foreign ownership

BANGKOK: -- Mark Mobius, one of the world's most renowned fund managers, has urged Thailand to remove foreign ownership limitations or risk losing out in capital market development to other emerging giants in the region.

"If Thailand does not trust foreigners, why should foreigners risk investing their money in Thailand?" Mobius, president of Templeton Emerging Funds, was quoted as saying by the Bangkok Poston Monday.

"We can go to markets like Hong Kong or Singapore that welcome us with open arms. Even China's mainland is more welcoming than Thailand in this regard," Mobius said.

"Coupled with the slow pace of reforms, this has increased the regulatory risks for Thailand. It will keep Thailand in the Stone Age as far as capital markets are concerned," he added.

Currently there are foreign ownership limits on most industriesin Thailand and although they have been eased directly and indirectly through non-voting depository rights (NVDR), Mobius said these are not sufficient to attract more investment.

Mobius, whose fund has invested in excess of 1.1 billion US dollars in the Stock Exchange of Thailand and through private equity participation in various non-listed companies, said that although Thailand has the ability to capture a niche market in the region, it needs to look at ways of lifting the ownership limits.

"Yes, the foreign ownership limit results in different classes of shares," he said, adding that countries such as Singapore had done away with the need for foreign limits and foreign shares and the market had performed well as a result.

"This restriction is unnecessary. The government should treat foreign investors as stakeholders instead of being suspicious of their motives," he said, adding that the Bank of Thailand's limit of 5 percent per foreign investor in shares of banks is also an unnecessary obstacle.

Mobius knows Thailand well after being based in Bangkok for many years. His fund in 2002-2003 reduced its position from more than 1 billion US dollars to just 300 million US dollars in the view that the country's growth outlook was not as good as that of some other economies.

When asked by local media what Thailand should focus on to become a regional player, Mobius said the country's strengths were in industries such as tourism, automobiles, electronics, general manufacturing, agriculture and energy, oil and gas.

"Except for the last industry, there are, unfortunately, very few investment options for portfolio investors to get exposure to those industries," he said.

--Xinhuanet 2005-12-05

[rishi]

... "If Thailand does not trust foreigners, why should foreigners risk investing their money in Thailand?" Mobius, president of Templeton Emerging Funds, was quoted as saying by the Bangkok Poston Monday.

    "We can go to markets like Hong Kong or Singapore that welcome us with open arms. Even China's mainland is more welcoming than Thailand in this regard," Mobius said...

<{POST_SNAPBACK}>

... any chance, that Thailand would listen?

[Butterfly]

Actually I think limit on foreign ownership is a good thing. Might it be for land or companies. I hope the Thai government will not yield to the pressure.

Edited December 5, 2005 by Butterfly

[Guest endure]

Actually I think limit on foreign ownership is a good thing. Might it be for land or companies. I hope the Thai government will not yield to the pressure.

<{POST_SNAPBACK}>

Would you still think it a good thing if all Thais and Thai companies who live outside of Thailand were forced to relinquish the land and property that they own in foreign countries?

Edited December 5, 2005 by endure

[rishi]

Actually I think limit on foreign ownership is a good thing.

<{POST_SNAPBACK}>

I'd agree on limitations/restrictions with respect to the "kind" of business foreigners could invest in. Thailand would've been a much nicer place without Coca Cola, 7/11, McDonalds, KFC, Starbucks, Nestle, etc.

However, I'd feel a lot less stupid if Thailand would make it just slightly easier for me to invest my few million Bahts in that business I need to put up in order to survive (and which would make a few Thais able to survive as well)

[alesypalsy]

[Note the bit on the "stone age" Imagine the economy here if we could purchase property etc, I will never understand why Thailand does not come in line with the other 90% of the world, There would be nothing better for me than to be able to buy that villa by the sea with pool in my garden, But while I cannot own the land freehold I am afraid I am not going to risk losing my cash.

I think this rule will never change, but at the end of the day its upto them! its there country and I still love the place and the people.

[Khun ?]

If your first paragraph was true they would be much better without you.

Who could careless about your few million baht bar or whatever so you can profit.

Are you more or less saying thais look better on oxen and cart.

Why should thais be treated as citizens in other countries when they don't allow

other countries the same rights. To allow someone to own a house on a small plot of land is that to much. They could put a property tax and limits on selling to not more than 2 times in 5 years or 3 in 10.

I am all for not allowing lower income long term visas. This would allow lower

cost housing to be more affordable for the locals or a 3 or 4 mil baht minimum limit on owning a house and property.

Poorer thais are being priced out by lower income foreigners. Just my opinion.

I just sold my house there and not interested in living there.

Actually I think limit on foreign ownership is a good thing.

<{POST_SNAPBACK}>

I'd agree on limitations/restrictions with respect to the "kind" of business foreigners could invest in. Thailand would've been a much nicer place without Coca Cola, 7/11, McDonalds, KFC, Starbucks, Nestle, etc.

However, I'd feel a lot less stupid if Thailand would make it just slightly easier for me to invest my few million Bahts in that business I need to put up in order to survive (and which would make a few Thais able to survive as well)

<{POST_SNAPBACK}>

[silk123]

Keep the poor here poor and the thai-chinese rich rich.

Easy to see. Look who owns the country and runs it.

I'm a bit worried after hearing the kings speech as he urged similar moves before the 97 crash. Good speech to read.

[rishi]

Poorer thais are being priced out by lower income foreigners. Just my opinion.

I just sold my house there and not interested in living there.

<{POST_SNAPBACK}>

... sorry, about your bad experience... the rest however, I can't relate to ...

[ArtfulD]

Malaysia has a nice two house limit for people on the Malaysia MySecond Home visa program that includes a renewable 5 year visa.

To protect land from permanent foreign ownership the Australian way is also interesting. Foreigners are only allowed to buy new builds or build themselves...this way the land/property will always end up back in Australia citizens hands as your forbidden from selling a pre-owned property to any non-citizen.

[Guest endure]

I don't understand this need to protect land from foreign ownership. Can someone explain it to me? Are the Thais frightened that someone is going to buy up all of Thailand and take it home with them?

[Khun ?]

I know sh_it happens. Bought it for 3 mil stayed in it two weeks on vacation went back to work and a friend of mine that rented down the road who works here really liked it. Said he needed a place like that as his wife, kids, mother, father,

brother and girlfriend was having a hard time fitting in his little place.

I gave him 100K off the price plus the 2 new bedroom suits I put in it and also fixed the well. 3 year payments at 5%. He is beating me 10% on exchange from when I paid for it. I also let him keep the money because I had it rented out for 6 month contract already. This gave him a bit of cash and the time he could give notice on his rented place where had lived for a few years.

Now I don't have to worry about upkeep and gardener plus my brother decided he should stay with the parent who are old and ill instead of in Thailand.

Think I will spend a few years in S. America closer to the folks also.

House is nice but for a person like me I believe condo is much better, don't have to worry so much if your not going to be around long periods of time.

Argentina, costa rica and peru for a while maybe even DR for a few games of golf. Life in the Ex lane, never marry again, not yet anyways.

Poorer thais are being priced out by lower income foreigners. Just my opinion.

I just sold my house there and not interested in living there.

<{POST_SNAPBACK}>

... sorry, about your bad experience... the rest however, I can't relate to ...

<{POST_SNAPBACK}>

[phuketsiam]

no, they are frightend that someone will buy up all the nice bits and leave them with the crappy left overs

[OlRedEyes]

Drawing back into a protected fortress is not a recipe for advancement and progress. It's a recipe for slow deterioration and eventual starvation.

New realities in world economics have to be faced. Old-style isolation simply can never work again. The longer integration is avoided, the deeper the pain of that inevitable integration will be.

I know of no country where foreigners own most of the land or business. The same lament and concerns are heard in every country which is forced by economics to open up. The fact that as foreigners and capital moves in, the locals learn, adapt and thrive (after all, who knows the local market best?) is lost on those that have no vision or guts. So they opt for protection and slow decay. Sad.

[phuketsiam]

I know that, you know that, but nobody told Thaksin

[chownah]

I think that the restrictions on foreign ownership will remain for a long time....the reason being that foreign owned stakes in Thai businesses are not subject to the pressures of internal Thai politics and thus are not subject to the control of the Thai political establishment.

[cclub75]

I think that the restrictions on foreign ownership will remain for a long time....the reason being that foreign owned stakes in Thai businesses are not subject to the pressures of internal Thai politics and thus are not subject to the control of the Thai political establishment.

<{POST_SNAPBACK}>

Agree.

But the question remains : can this "locked situation" cause dammages to the Thai economy ? Does this situation fit with the globalization ?

A open society is better, more efficient than a closed one ?

Of course the thai establishment would like to continue the system that feed them... But on the other hand... foreign won't be fooled and they will restrain from investing in the country.

[Butterfly]

Look to what happened to Phuket ? the place has been taken over by foreigners. They were able to circle the foreigner limit laws and we now have that min-mafia of foreigner owners down in Phuket making the calls. Is that what the Thais want for the rest of Thailand ? pricing out locals ? very profitable farang businesses that overcharge everyone with their outrageous pricing ? keep the farangs out of Thailand businesses

Edited December 6, 2005 by Butterfly

[Butterfly]

A open society is better, more efficient than a closed one ?

Of course the thai establishment would like to continue the system that feed them... But on the other hand... foreign won't be fooled and they will restrain from investing in the country.

<{POST_SNAPBACK}>

How Thailand is a closed society ? This is no North Korea. I think you are confusing Open society with Liberal society. 2 different beasts.

Edited December 6, 2005 by Butterfly

[Nickerelastic]

I don't understand this need to protect land from foreign ownership. Can someone explain it to me? Are the Thais frightened that someone is going to buy up all of Thailand and take it home with them?

<{POST_SNAPBACK}>

Get real.

Tell me how any villager can compete in the house market?

No country should bend to the financial pressures of wealthy farangs.

By all means enjoy living in a beautiful country.

Do Not be so far up your own arse that because you are wealthy you should have rights.

[johnh101]

I don't understand this need to protect land from foreign ownership. Can someone explain it to me? Are the Thais frightened that someone is going to buy up all of Thailand and take it home with them?

Yes.

Chinese, Japanese, Russian Mafia and Drunken Brits.

[steveromagnino]

I think that the restrictions on foreign ownership will remain for a long time....the reason being that foreign owned stakes in Thai businesses are not subject to the pressures of internal Thai politics and thus are not subject to the control of the Thai political establishment.

<{POST_SNAPBACK}>

Yes I agree, although let's also bear in mind that many Thai Chinese business families like to have control. Therefore, much of the sharemarket is listed 30% of the company and so on... this means that whether you allow foreign ownership or not, the control firmly rests with the other 70% non listed shareholder. After 1997/98 where some families lost control to debt holders, and got cleaned out (e.g. Phayathai Hospitals) I think that the future is even more likely that listing is just quick cash without giving up control.

And what companies choose to do is up to them; supporting the govt or otherwise. But mostly I'd say the issue of govt/political interference as per Picnic alledgedly is less common, more likely it is the Thai Oil,PTT, Thai Airways, BKK Express Way situation - more regularatory and market place issues than the parties leaning on companies.... is that your opinion?

[sierra01]

I think Thailand needs to open up a little to foreign land ownership etc, maybe not the full monty but at least let them own their own bit of land with their home on it.

A lot of countries that close themselves off too much to the world do suffer because of it. By joining the WTO certain aspects/industries must open up more, as is being seen in the telecoms sector. TOT and CAT know they're coming to the end of their total monopoly and are starting to scream blue murder, they're inefficient and poorly managed, OK while you're calling the shots, a big problem when you're not.

It needs to be managed properly though, from what I've read Phuket is an example of how not to do it.

[steveromagnino]

I don't understand this need to protect land from foreign ownership. Can someone explain it to me? Are the Thais frightened that someone is going to buy up all of Thailand and take it home with them?

<{POST_SNAPBACK}>

Well since much of Thailand is involved in agricultural work, one of the theories is that rich foreigners could currently afford to come in here, and buy large pieces of farm land; driving up the prices of the land, and therefore also driving up costs to rent the land. Because of the current massive price difference between say buying a rai of land in USA/Australia or Thailand, a foreigner could perhaps arguably buy 10,000 rai in Isaan, then not allow anyone to use any of it. This would not make much economic sense, but certainly would be possible. 10,000 rai might provide employment for a village; and suddenly their means of income would be gone.

NOt saying it is right, but it is the concern of some people. There is already a shortage of land, so the idea of keeping it for Thai people is why the rules were put there and they remain. Originally much of these restrictions were actually anti Chinese, it is only the meea farang issue that seems to have brought it to the forefront again.

Of course, the way Chinese got around it back then was by becoming Thai citizens. Why this remains too difficult for other foreigners is confusing to me.

That other countries allow or don't allow is up to them and provides no indication on whether it is good or not. For instance, in New Zealand, the economy has been funded by immigration and FDI; however the current climate is one of concern by many as trophy properties on the coastline and in beautiful areas are being bought by absentee landlords (e.g. Shania Twain) at inflated prices thus pricing locals out of the market. Additionally, the increase in investment by foreigners (mostly Australian) has allegedly priced low income NZers out of the housing market, and now forces them to rent. In response to this, purchases of significant amounts of land now require approval of the government.

Of course, on the flip side, all that money theoretically ends up in a more productive part of the economy as the gullible foreigner overpays for the land....leaving that money to be invested in something more profitable.....

At least for NZ there are a ton of national parks and systems in place to retain ownership of strategic land parcels. Whether Thailand is ready to start wholesale selling of land without these checks and balances in place is another issue.

Edited December 6, 2005 by steveromagnino

[Vegemite]

Drawing back into a protected fortress is not a recipe for advancement and progress. It's a recipe for slow deterioration and eventual starvation.

New realities in world economics have to be faced. Old-style isolation simply can never work again. The longer integration is avoided, the deeper the pain of that inevitable integration will be.

I know of no country where foreigners own most of the land or business. The same lament and concerns are heard in every country which is forced by economics to open up. The fact that as foreigners and capital moves in, the locals learn, adapt and thrive (after all, who knows the local market best?) is lost on those that have no vision or guts. So they opt for protection and slow decay. Sad.

<{POST_SNAPBACK}>

Remember what happened in Fiji? Indians owned almost everything and had several generations born there. The Fijians kicked them out in a big way. A lot of them came to New Zealand and I am starting to have sympathy for the cause of Fiji back then.

[gurkle]

Foreign ownership would destroy Thailand. Housing prices are too volatile.

There is NO BENEFIT to Thai citizens by letting foreigners own housing.

Even in the US, no one can afford a house anymore with the average residence costing around $300,000 compared to the average salary of $50,000.

In the US, all the rich people and speculators are buying more than 1 house so they can flip them versus live in them, pricing normal people out of the market.

And the US government supports this Ponzi scheme by making giving away money by making lending rates below the rate of inflation, and giving tax breaks to the richest members of society to buy multi-million dollar homes.

Foreigners can get the same benefit by simply renting. The only reason to allow them to own is so they can speculate and drive up prices. There is NO other reason whatsover to let them own vs to let them rent. Hence, NO BENEFIT to Thai citizens whatsoever.

The role of Thai policy is to HELP THAI CITIZENS, NOT the rest of the world.

When it comes to owning equity/stocks, I'm okay with that. There is a real benefit to Thailand of letting foreigners create liquidity in the stock market, and giving entrepreneurs the chance to cash out at global market prices.

BTW, I would never trust anything a mutual fund manager says. They're just salesmen that charge ridiculous fees to index. Most won't even put their own personal money in their funds. When things are going good, it's all due to them, and when bad, they blame the market - pathetic.

[Dragonman]

I don't understand this need to protect land from foreign ownership. Can someone explain it to me? Are the Thais frightened that someone is going to buy up all of Thailand and take it home with them?

<{POST_SNAPBACK}>

I'm afraid farangs have already bought up lots of land and taken it home with them. Home to "farangland", otherwise known as Phuket or Koh Samui or Pattaya. I live just over 30 kilometres from Pattaya and there are very few farangs living here. Property prices are one third of those in Pattaya. If prices rose to Pattaya levels very few of the hundreds of thais living on my estate would have modern homes. Land laws should be maintained, but with variations to get rid of all the Company ownership, lease, usufruct rubbish

I would suggest Enterprise Zones where land could be acquired freely and companies set up without restrictions. The rest of Thailand should be restricted to Thai ownership, with only joint ownership allowed through marriage.

[chownah]

I think that the restrictions on foreign ownership will remain for a long time....the reason being that foreign owned stakes in Thai businesses are not subject to the pressures of internal Thai politics and thus are not subject to the control of the Thai political establishment.

<{POST_SNAPBACK}>

Agree.

But the question remains : can this "locked situation" cause dammages to the Thai economy ? Does this situation fit with the globalization ?

A open society is better, more efficient than a closed one ?

Of course the thai establishment would like to continue the system that feed them... But on the other hand... foreign won't be fooled and they will restrain from investing in the country.

<{POST_SNAPBACK}>

Clearly openness would reap rewards for the most people...but...in my opiniong the rich political people who run and own this country are not interested in rewarding all the people...only themselves. Also, in my opinion, the rich Thai people like to keep the bulk of Thais poor.....it makes them more beholding to the rich people.....some really rich people like to have really poor people around them because it is the huge difference between the wealth of the two groups that massages the egos of the rich the most....its kind of sick in my opinion but I think it is an operative principle of the Thai power structure.....it also explains why education is so poor here for most people...keeps them dumb, poor, and docile.

[phuketsiam]

Get real.     

Tell me how any villager can compete in the house market?

No country should bend to the financial pressures of wealthy farangs.

By all means enjoy living in a beautiful country.

Do Not be so far up your own arse that because you are wealthy you should have rights.

<{POST_SNAPBACK}>

Er - in my experience its the wealthy Thai's who follow this mantra more than the forigners

[think_too_mut]

Thailand is quite open to foreign investments.

There were 3800 foreign companies operating there at a significant level. Toyota, Nissan, Byer, Siemens, IBM, Hitachi..... Some have their APJ headquarters there.

Not a mickey mouse outlets like in Larnaca or Malta.

What Thais don't want is the gentrification of their homeland.

For the biz, they are quite open.

For old, bald, beer gutted and tatooed social rejects who want to buy some land - they remain closed.

I don't see that changing.