Some of Thai govt's 'reforms' worry foreign investors: forum hears

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INVESTMENT
Some of govt's 'reforms' worry foreign investors: forum hears
Pichaya Changsorn
The Nation

BANGKOK: -- Foreign investors are concerned about many reforms being pursued in Thailand, especially amendments to the Foreign Business Act (FBA) and the excise-tax regime, said a German economic counsellor.

Dr Christine Falken-Grosser, economic and commercial counsellor of the German Embassy in Bangkok, told the "Asean Business Forum" held by the Thailand Management Association yesterday that many reforms had been initiated since May by the government, and some of them needed to be reconsidered.

"Investors will compare [Thailand] with other countries. From this perspective, Thailand needs to reconsider whether its policies are relevant to investments. Because there are certain aspects that make investors think twice," she said.

Falken-Grosser told The Nation on the sidelines of the conference that the planned change of foreign-ownership rules under the FBA and excise-tax reform were the two major concerns of foreign investors.

She said foreign investors, especially alcoholic-beverage and automotive companies, were worrying about the planned change in how excise tax is calculated, with a "one [formula] for everything" regime to be introduced.

"Predictability is the most important thing for investors," she said, noting that the new excise system would have dramatic effects on many industries. "The question is how it will affect investments that have already been here."

The Excise Department has announced a plan to change its tax base across the board to state-recommended retail prices from ex-factory prices, which it claims is an attempt to foster transparency and fairness.

However, Aloke Lohia, group chief executive officer of Indorama Ventures, told the conference that as a long-time investor in Thailand he thought the current military government could maintain stability and take the country into the next phase.

Dr Roger van Hoesel, managing director of Dutch company Food Valley, said the Asean Economic Community would encourage small and large companies to consolidate their operations in Asean, and thus each country in the region must be able to communicate to the rest of the world what it is positioned to be in the trade bloc.

He said Thailand, thanks to its strong agricultural base, could profile itself as a source of food and other agricultural products, which is a promising industry for the future. Nevertheless, the country would need to invest more in such areas as genomics and information technology and look beyond its home and neighbouring markets.

Aswin Techajareonvikul, president of Berli Jucker, said competition would get fiercer because of more willingness of companies to take control a larger part of their supply chain.

"There is a strong tendency for one who owns part of a supply chain to own it all," he said.

Source: http://www.nationmultimedia.com/business/Some-of-govts-reforms-worry-foreign-investors-foru-30247727.html


-- The Nation 2014-11-14

[RustBucket]

It is not surprising really. Only an idiot would invest in a politically unstable country.

Even after two years of trying to reform the country, I guarantee within 2 years, it will be back to business as usual, and we will all be waiting for the next political carnage followed by a coup.

[Businessman]

I just don't get the powers that be. They change the rules more often than their underwear. How can any foreign business accept this? Does this go on in other countries?

[Bluespunk]

"He said Thailand, thanks to its strong agricultural base, could profile itself as a source of food and other agricultural products, which is a promising industry for the future."

Damned by faint praise.

[ramrod711]

"Predictability is the most important thing for investors," she said, noting that the new excise system would have dramatic effects on many industries. "The question is how it will affect investments that have already been here."

I think the biggest concern is, will we still be able to solve all our problems with a little under the table cash?

[chainarong]

It might be a good idea for the Prayuth transparency network to listen and take on board these topic's raised by Dr Falken- Grosser, a veiled threat indeed, I rest my case.

Edited November 14, 2014 by chainarong

[NongKhaiKid]

Does LoS have to worry after all haven't they found a new best, and rich friend, in China ?

Just ignore the so hard to read fine print until the Chinese decide to point it out and by then LoS may be in way over its head.

[yellowboat]

I have worked with some wonderful and talented people in Thailand. Sadly, the government holds them back

[WhizBang]

It is not surprising really. Only an idiot would invest in a politically unstable country.

Even after two years of trying to reform the country, I guarantee within 2 years, it will be back to business as usual, and we will all be waiting for the next political carnage followed by a coup.

Indeed. I have given up all hope that any kind of meaningful reform will occur under this junta. It is becoming obvious that there are far too many vested interests to allow any real reform.

[heybruce]

It might be a good idea for the Prayuth transparency network to listen and take on board these topic's raised by Dr Falken- Grosser, a veiled threat indeed, I rest my case.

There's a Prayuth transparency network? If so, they are keeping it well hidden.

[tim armstrong]

Prayuth is a good guy- he hsn't even been there a year yet, so give him a chance.

[Ozziepat]

Companies seeking inexpensive labor, raw materials and minimally adequate infrastructure must decide among many substandard global business venues because those are where the cheap labor lives. Consider the nearby options in SE Asia; then you can begin to see why Thailand is relatively popular among foreign investors. It's a kind of least-of-evils area winner, so far. The mistake Thailand could make is to believe the situation will continue forever no matter how the business climate here is altered. Or maybe the junta clearly understands the ramifications of proposed changes but doesn't care, which would lead to some interesting speculation on motives.

[elgordo38]

Yes Ozziepat cheap labor being the key word with minimal education. Pretty soon the oligarths of the world will be able to pick and choose cheap labor world wide. The way wages and working conditions are going in North America it will not be long before they are on a par with Asia. Governments have hollowed out(at the request of their business overseers) unions, benefits and human dignity and now they are turning their attention to us pensioners to claw back some of the good pensions and benefits we were given in good faith decades ago. Governments at a stroke of a pen can reduce our pensions and benefits which now when compared to what modern workers are getting are generous. They are coming out with all kinds of idiotic ideas like tying our benefits to the stock market. What a roller coaster ride.

[Jim walker]

I think you would need to be very brave to invest a large amount of money in Thailand because the rules here can be changed with the blink of an eye if some deal upsets a member of the Junta or an elected MP proper bung not paid then the new rules are rolled in and always to suit them never the investor, they managed to fix the goose with the tourism industry and now the tourism industry relies on anticipated or expected tourists never real tourists, will they successfully manage to do the same with other investors now another delicious goose to kill.

[rickirs]

Foreign investors also want consistency. It's hard to attract foreign capital investment when laws and regulations can be changed at the whims of the NCPO and its rubber-stamp government; changes for which there are no legal appeal processes beyond that allowed by the NCPO. And given the current and ever tightening proposed anti-foreign legislation, foreign investors have no reason to expect the commercial environment will improve should they make early commitments. Even China prefers to barter with Thailand rather than pay in cash for trade; I expect Russia will follow suit.

[Strangebrew]

New hub for Thailand the Hub of lesser evils?

[Briggsy]

The excise duty "reforms" are terrifying. They remind me of the power the Customs Dept have now where they can hold imported vehicles, freight and other items for ransom at bonded warehouses through a system that allows Customs officials and Customs officials only to value an item. This value is used as the starting point to calculate all the various taxes due. There is no way to appeal.

Now they are thinking of extending this very one-sided system to excise duty. Do you realise how many domestically-produced items are subject to excise duty at the factory gate. I guarantee it is more than you think.

How can you budget a plan for a production process or budget the introduction of new products when a huge percentage of the sales price is unknown and can be plucked from the air by Revenue Dept officials.

Edited November 14, 2014 by Briggsy

[fab4]

I look forward to nickymaster's take on this as being

"very positive for Thailand"................................

Edited November 14, 2014 by fab4

[mango66]

dont close patpong and japan investors will remain;

Dont chrge taxes and german investors will remain;

Allow chemical food and dutch will remain;

Forbid to sell garbidge, and the chinese will be gone;

[heyexile]

It might be a good idea for the Prayuth transparency network to listen and take on board these topic's raised by Dr Falken- Grosser, a veiled threat indeed, I rest my case.

There's a Prayuth transparency network? If so, they are keeping it well hidden.

Quite, maybe so transparent as to be invisible.

To be fair to the good generals, more and more of top junta members recent highly profitable investment shareholdings are seeping out. And good luck to them, why should they not profit from their hard work in coup planning and implementation as that has to be good for their reformist nation.

Wring more out of foreign investors already committed to projects by changing terms/taxation mid stream? Perfectly fair Thai play! The Germans are being mild. The Japs are going nuts.

Even J Head is on it for the BBC.

http://twitter.com/pakhead

[heyexile]

Prayuth is a good guy- he hsn't even been there a year yet, so give him a chance.

Has not been where a year yet? Running the Thai army? Planning the military take over which the venerable Suthep publicly announced they had been working on together, since 2010. Implementing the take over, restricting freedoms of speech, introducing mass indoctrination in schools, attitude adjustment progs, reconcilliation camps, making brilliant investments, upsetting the `free world`, parents of slaughtered Brit tourists, \Amnesty Int, AHRC etc and on it goes.

Your post prob satire but never mind. Quite a busy bee and has had many chances, some may say it would be dangerous for some if he obtained more chances to impose much loved reformist decrees on a hapless nation which will benefit unworthy foreigners by association?

[Cake Monster]

Thai " Government " reform will be a huge issue to investors from all over the world.

Global metrics for investors have changed greatly over the last 5 years, and volatlity has become a massive issue, and Thailand has / is, showing itself to be a volatile and unstable country, due to all the infighting, massive corruption issues, and coups. When all is said and done, investors will put their money into stronger and more stable economies within SE Asia if they choose to be invested in the region.

Investors only care about one thing, - and that is profitable returns from their investments, and with the current weak economy in Thailand, and an uncertain future, the investors are right to be very concerned.

[whybother]

Foreign investors also want consistency. It's hard to attract foreign capital investment when laws and regulations can be changed at the whims of the NCPO and its rubber-stamp government; changes for which there are no legal appeal processes beyond that allowed by the NCPO. And given the current and ever tightening proposed anti-foreign legislation, foreign investors have no reason to expect the commercial environment will improve should they make early commitments. Even China prefers to barter with Thailand rather than pay in cash for trade; I expect Russia will follow suit.

Many of these FBA changes were on the cards mid last year.

[fab4]

Foreign investors also want consistency. It's hard to attract foreign capital investment when laws and regulations can be changed at the whims of the NCPO and its rubber-stamp government; changes for which there are no legal appeal processes beyond that allowed by the NCPO. And given the current and ever tightening proposed anti-foreign legislation, foreign investors have no reason to expect the commercial environment will improve should they make early commitments. Even China prefers to barter with Thailand rather than pay in cash for trade; I expect Russia will follow suit.

Many of these FBA changes were on the cards mid last year.

................and more on the books and shelved since 2007. It doesn't make them any more sensible and it doesn't make the investment environment any more consistent, if that is what you are implying - rules change here by the minute, especially with this lot in charge who will make laws and resurrect old and ignored legislation if they think it will be perceived as being "good" for Thailand. In short, Nationalism, the tired old fallback of juntas and yellowshirts.

Edited November 15, 2014 by fab4

[tingtongtourist]

Good of Thailand to keep the ba$tards out. Cheap labour is all it comes down to and only reasons other countries want in. I think english language it is called exploitation.

all big producers should be forced to operate in their own countries only!

At least that way the ba$tards would be made to pay tax like everyone else.

thailand have enough of their own rich exploiting the poor, they dont need to import and allow more of them in

[ginjag]

Foreign investors also want consistency. It's hard to attract foreign capital investment when laws and regulations can be changed at the whims of the NCPO and its rubber-stamp government; changes for which there are no legal appeal processes beyond that allowed by the NCPO. And given the current and ever tightening proposed anti-foreign legislation, foreign investors have no reason to expect the commercial environment will improve should they make early commitments. Even China prefers to barter with Thailand rather than pay in cash for trade; I expect Russia will follow suit.

Many of these FBA changes were on the cards mid last year.

................and more on the books and shelved since 2007. It doesn't make them any more sensible and it doesn't make the investment environment any more consistent, if that is what you are implying - rules change here by the minute, especially with this lot in charge who will make laws and resurrect old and ignored legislation if they think it will be perceived as being "good" for Thailand. In short, Nationalism, the tired old fallback of juntas and yellowshirts.

According to SOME all the evils of Thailand have happened in the last 6 months--correction and the last time the Military took over.

Usual story "it's everyone else's fault"

[Thai at Heart]

Good of Thailand to keep the ba$tards out. Cheap labour is all it comes down to and only reasons other countries want in. I think english language it is called exploitation.

all big producers should be forced to operate in their own countries only!

At least that way the ba$tards would be made to pay tax like everyone else.

thailand have enough of their own rich exploiting the poor, they dont need to import and allow more of them in

Hell no. That might make it cheaper for consumers.

Edited November 15, 2014 by Thai at Heart

[IamNoone88]

As a foreign investor with interests in this country for over 9 years now, this reads like the blind leading the blind. The government has no clue and the foreign business representatives and their respective chambers are toothless tigers when it comes to change. The government will make it's bed and we all have to sleep in it or choose something more comfortable in a progressive setting.

[tingtongtourist]

As a foreign investor with interests in this country for over 9 years now, this reads like the blind leading the blind. The government has no clue and the foreign business representatives and their respective chambers are toothless tigers when it comes to change. The government will make it's bed and we all have to sleep in it or choose something more comfortable in a progressive setting.

Actually i think they know exactly what they are doing. If every country had done this same protectionist policy the worlds economies would not be in this mess and each country better of.

Allowing multinationals to go anywhere and

do anything they want has only allowed the worlds smallest percentage of rich people to own and even increasing % of the world.

Time for using excuse "its good for consumer" and 'we have to look after our shareholder' are over.

These greedy rich have screwd the world so much& got away with it now they hurt because everyone else can no longer afford the crap they are peddling

[tingtongtourist]

As a foreign investor with interests in this country for over 9 years now, this reads like the blind leading the blind. The government has no clue and the foreign business representatives and their respective chambers are toothless tigers when it comes to change. The government will make it's bed and we all have to sleep in it or choose something more comfortable in a progressive setting.

And as a "foriegn investor with interest in this country" why did you come in the first place?

Why did you not stay in your own coyntry and invest in your own countries development and employ your owb countrymen?