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23/04/2007
Thailand to weigh new foreign business ownership rules
By Orathai Sriring (Reuters)
BANGKOK: Thailand's military-appointed legislature will debate this week proposed changes to foreign business ownership rules that are still making foreign firms nervous despite government efforts to soothe their fears.
Business chiefs fear foreign companies will be driven away by the new rules, which emanate from the furor generated by the takeover of Shin Corp., the telecommunications giant founded by the former prime minister, Thaksin Shinawatra, by Temasek, the Singapore government investment firm.
At the least, the changes could stifle foreign investment in the export-dependent economy, business executives said.
"While other Asian countries, with less political and economic worries and larger markets, are opening up the doors for foreign investment, Thailand is doing the opposite," said Paul Strunk, head of the German-Thai Chamber of Commerce.
"At present, the risks for Thailand's further economic development seem to originate more from the inside than from outside the country," he said.
Foreigners had poured money into Thailand over the past 30 years using gray areas in the old rules to run companies with less than a majority stake by using Thai frontmen.
But then the government installed by the military after a coup in September decided to launch an assault on the use of proxies, which it alleges were used illegally in the Temasek deal to give it control without a formal majority stake. Temasek has denied any wrongdoing.
The National Legislative Assembly will start debating the rule changes on Wednesday, with deliberations expected to last two to three months, an assembly member, Somchai Sakulsurarat, said. If passed, the changes would need the king's approval before becoming law.
But there is still considerable uncertainty over how some of the new rules will work and how they will be implemented, especially one change aimed at ending the longstanding practice of using proxies to stay under a 49.99 percent ceiling on foreign ownership.
"Many Japanese companies are very concerned about the new law," said Tetsuji Banno, head of the Japanese Chamber of Commerce. "If they don't understand it well, they may put new investment elsewhere."
That is despite the fact that the changes will not affect foreign manufacturers such as Japanese and American auto firms, which enjoy investment privileges from the Board of Investment.
The announcement of the changes in January and a central bank move in December to impose tough capital controls sent Thailand's share market sharply lower. Board of Investment data show that the value of foreign investment applications, mainly from Japan, dropped by 23 percent in the first two months of this year from a year earlier.
Foreign investment applications in September 2006 through February 2007 dropped about 49 percent from a year earlier.
"Making any investment law more strict and difficult in terms of easing ability to invest in Thailand will have a negative impact on the flow of investment," said Peter van Haren, the head of the Joint Foreign Chambers of Commerce in Thailand, a coalition of 28 national business groups representing 10,000 companies.
10:00 Posted by soci | Permalink | Comments (2) | Email this | Tags: Singapore, Thailand, Temasek
Comments
Thank you Temasek for screwing it up for everyone.
Yes, you may have acted legally (hell, everyone uses Thai proxies or else no one would make any dough), but you didn't protect your flank and allowed politics to get in the way.
Libertarians have long warned against governments forming private companies and doing business with each other. Any which way you cut it, you will definitely encounter *conflicts of interests*. Fancy having a Prime Minister who directs the cabinet and the law-making powers "moonlighting" as a telco tycoon. What were the people thinking?!? Are they thick or what?
Way back in 1855, King Mongkut signed a treaty known as The Bowring Agreement with Great Britain. He virtually had no choice but to do so. The menacing English army and navy, along with the British East India Company were busy having fun playing "the great colonisers" in Malaya. Mongkut signed the treaty — essentially a "free trade agreement" with Great Britain to avoid the likelihood of Thailand being colonised by the English, thus securing Thai sovereignty.
The English business folk got a great deal — they were not subject to Thai law, they could buy property and virtually do anything they liked, which no doubt led to "problems" as well as jealousy from the locals. The law was later amended and Thai law was applied universally.
Smoke and mirrors are part of the political and business landscape in Thailand. *Everyone* has a special interest somewhere — the military (even they are factionalised), those loyal to the Royal Court, big local business, big foreign business, the international bankers... and somewhere at the bottom of the food chain, your average Thai man and woman.
Almost everyone I've spoken to would rather have Thaksin back as "the lesser evil". They, the freedom-loving Thais, simply hate being under military rule. One cab driver said that Thailand would end up as communist as Myanmar, if the military rule persisted.
But things are moving, albeit slowly. That can't be helped — there is a lot of maneuvering in Thai politics — nothing stays the same — loyalties and relationships are dynamic. A new constitution is being drafted, and the govt has promised the people there will be elections forthcoming. although the govt banned political rallys, the people protest often — they turn up in their yellow shirts (symbolising loyalty to The King) and stake their claim as Royal subjects and a sovereign people, not pawns of a military junta. I must say I find their spirit admirable.
It kind of makes your average Singaporean look like a wus and a craven wimp, actually. The Thais want their messy, loud, chaotic democracy, and over the decades Thai blood has been spilled toward that goal.
I wish them well.
Posted by: Matilah_Singapura | 24/04/2007
It's started...
http://nationmultimedia.com/2007/04/28/headlines/headlines_30032932.php
The Nation, Bangkok April 28, 2007
ECONOMIC SLOWDOWN
Fears of lay-offs grow by the day
Growth needs to start accelerating soon or industrial sector will be hit: Finance Ministry
The economic slowdown has started to affect employment, with lay-offs expected if growth does not pick up soon, according to the Finance Ministry.
Signs of unemployment are evident in the manufacturing sector, which saw February's employment numbers expand only 1.7 per cent, compared with 5.5 per cent in January. Employment in the service sector grew only 1.8 per cent in February, compared with 3.5 per cent in January.
Thailand experienced high employment while deposed prime minister Thaksin Shinawatra's was in power as the economy grew throughout those years. It now has to grow by 5 per cent to absorb the new workforce at around 300,000 to 400,000 a year.
The threat of unemployment is expected to be visible in March, when new graduates are set to enter the job market.
[ continued at http://nationmultimedia.com/ ]
Posted by: Matilah_Singapura | 28/04/2007
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