Thailand: Foreign Business Act 'needs to reduce protection'

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INCENTIVE
FBA 'needs to reduce protection'
Erich Parpart
The Nation

BANGKOK: -- Foreign business lobbies believe that regulations regarding the protection of some Thai businesses need to be revised to encourage more foreign investment and support the much-needed transfer of technology to this country.

Uli Kaiser, president of the Thai-European Business Association, said yesterday that some industries such as banking and insurance were tightly regulated. They are not investment-friendly for foreign businesses.

The country needs to look at each of the protected industries while doing a cost-benefit analysis of opening up those businesses before amending the rules to encourage more investment from abroad.

"Some regulations need to be look at again and adjustment has to be made. Does it make sense to continue this protection of local players? Because one thing is for sure, protection of the local industry can actually be to the disadvantage of the country as seen in the case of Malaysia and the development of its automobile industry, which was highly protected 15 years ago. And now they are falling behind in the industry due to the lack of technology transfer," he said. "The skill level is not low in Thailand. There are highly complicated assembly lines in electronics, there is a strong agriculture sector and Thailand has very strong manufacturing.

"But the question is, how can Thailand shift up productivity, the value-added? This is only possible in my view, because we are not going to R&D our own product, we have to bring in foreign investment," he said.

Gunning for added value and the transfer of know-how will automatically increase the skill set of the labour force.

"If you have higher techniques, you will get higher quality products and then you will get better skills," he said.
Darren Buckley, president of the American Chamber of Commerce in Thailand, said some of the Foreign Business Act's regulations that serve to shelter industries that are not ready to compete with foreign businesses could be relaxed.

Some of the industries that are under protection can now compete with foreign businesses, and increasing healthy competition from abroad would encourage the development of those industries, he claimed.

Industries involved in the security of the country and businesses with unique products and services regarding arts and culture or natural resources and the environment deserve to be protected by the FBA. However, local businesses that are now ready to compete with outsiders should be taken off the restricted lists, he said.

According to the FBA of 1999, some "businesses in which Thais are not ready to compete in undertakings with foreigners" are accounting, legal services, architecture, engineering, advertising, hotel operations excluding hotel management, tourism, retailing and wholesaling in all categories of goods having of less than Bt100 million capital, and construction, excluding construction of infrastructure in public utilities where the minimum foreign capital is Bt500 million.

Source: http://www.nationmultimedia.com/business/FBA-needs-to-reduce-protection-30246142.html


-- The Nation 2014-10-24

[HiSoLowSoNoSo]

"businesses in which Thais are not ready to compete in undertakings with foreigners"

"Thainess" in a nutshell.

Edited October 23, 2014 by HiSoLowSoNoSo

[IamNoone88]

They should just copy Singapore's business and investment policies. The world has moved on and it is very much compete or move elsewhere. Look at the BOI FDI and how much that has fallen. The FBA is outdated and should be slung out .....

[shirtless]

The rule is if it makes money you cannot compete, we should have the same arrangements for thais in western countries, then maybe things will change.

[SOTIRIOS]

....God forbid an 'even playing field'.....

...if you want to apply to The U.N.......a good place to start is ....no unfair business practices....in this day and age of free trade........

[Cake Monster]

Too much at stake for the thai elite, so nothing will ever happen that reduces their incomes.

[retsdon]

ASEAN free trade compliance is going to be brutal for Thailand.

[Always18]

"businesses in which Thais are not ready to compete in undertakings with foreigners"

"Thainess" in a nutshell.

"Not ready" in this context is a euphemism for "not willing" and "not able"....................it will be a cold day in Hell before Thais are "ready" to compete with foreigners.

[razer]

Naaah. Thailand wants carte blanche over excessive taxation of imported products and at the same time free market access to the world. WE WANT SOMETHING FOR NOTHING! Mind you, we are talking about the 2% elite.

[Time Traveller]

They should just copy Singapore's business and investment policies. The world has moved on and it is very much compete or move elsewhere. Look at the BOI FDI and how much that has fallen. The FBA is outdated and should be slung out .....

What works for Singapore, doesn't mean it will work for anywhere else.

[Time Traveller]

The rule is if it makes money you cannot compete, we should have the same arrangements for thais in western countries, then maybe things will change.

No that's a stupid idea. The places that have tariffs and anti-competition laws to protect industries end up like many places in Europe/Japan where everything is so expensive. On the other hand places like US with more open trade and less tariffs actually have many goods cheaper than the "low cost" protectionist countries like Thailand.

[MobileContent]

Insurance and Banking?

To be honest I prefer the Western banks keep a low profile in Thailand. I still remember the IMF Bailout when the western bank objected of the government bailing them out and what they did in the west is the opposite by bailing them out and pumping good money after bad money.

Insurance companies are already present also I have no idea what is the current shareholdings but foreign insurers are present on the local market with Thai partners.

I hope that with the AEC market coming up that things will change Intra Asean at least.

[mrtoad]

Anything which creates more level playing fields will be of benefit to Thailand in the future, more skill exchange, more competition and more learning will all come from that. The over protectionism makes it difficult for innovative businesses that have the potential to employ large work forces, but have to make sure that theu have to meet certain criteria s, such as "only a Thai National can hold this position".

Talking about it, and it actually happening are a whole different thing.

[Arkady]

The same protections for 'Thai businesses not yet ready to compete' have been in place since the original Alien Business Law of 1972 with the wording virtually unchanged in the 1999 Act. If these businesses have failed to make themselves competitive in 40 years, there seems little point in extending the protection further.

Ordinary Thais are forced to pay higher prices for lower quality goods and services from these uncompetitive businesses and miss out on employment and training opportunities at foreign firms which might come to Thailand, if they were welcome to own their own businesses without nominees or low value added Thai partners. All this opportunity cost to protect a small number of families who profit from low quality protected businesses. At any rate they will have to allow ASEAN firms to own 70% of their businesses under AEC.

Si just abolish the FBA and replace it with a modern investment code that only restricts foreign ownership in 'strategic' businesses like media, ports, arms manufacturing etc.

[Thai at Heart]

CP, the Thai banks and the Japanese car manufacturers are going to put a stop to this in a millisecond.

This law has built billions in wealth for a few

[Unwisemonkey]

This is the most civil TV thread I've read in a long time. I guess we're all in agreement here. The problem is most SME's owners are too wrapped up in the national cult of personality to realize this while the Thai elite are all too aware of the benefits to the little guy. At the end of the day though Thailand is in a unique position to benefit from sharing from all of her friends if the people chose to they could be benefiting from India, China, U.S. EU, AUS, and S. America. I think I can speak for all of us who have kids here that we'd rather see Thailand become a Southeast Asian Powerhouse for our offspring's benefit to have dual citizenship in two developed countries rather than the current state.