Foreign businesses await law change

Thailand's foreign business community is waiting nervously as the government prepares new rules for investment in the country, changes which could dramatically alter the way companies work here.

The military-installed government is due to consider a revision to the Foreign Business Act, which is expected to redefine requirements for voting rights and shareholding structures of foreign companies that operate here.

Pramon Suthiwong, chairman of Thailand's Board of Trade business group, said he expected the law to limit foreign ownership in Thai companies to about 50 percent, while redefining voting rights for local subsidiaries.

"We proposed several options to the Commerce Ministry, but basically Thailand will give them a period of one to two years to adjust themselves to comply with the new law," Pramon said.

The changes come with Thailand's stock market still in a slump after the deadly New Year's Eve bombings in Bangkok and new foreign currency requirements that sparked a crash last month.

Under a long-recognised practice in Thailand, thousands of foreign companies with operations here are nominally owned by Thais, but controlled by foreigners.

The practice fell under a harsh spotlight last year when former prime minister Thaksin Shinawatra's family sold telecom giant Shin Corp to a group of investors led by Singapore's state-linked investment firm Temasek Holdings.

Following a mandatory tender offer, the Temasek-led investors ended up with a 96-percent stake in Shin Corp worth some 3.8 billion dollars.

Public outrage over the deal -- which gave the Singapore firm key stakes in Thailand's biggest mobile operator, a television station, and an airline -- eventually led to the military coup that ousted Thaksin in September.

Amid political pressure after the coup to find wrong-doing in the Shin Corp deal, the Commerce Ministry last year ruled that the takeover violated foreign ownership requirements.

Police have opened an investigation to the ministry's findings, which has cast doubt on the legality of the shareholding structure of thousands of local subsidiaries of foreign companies operating here.

Peter van Haren, chairman of the Joint Foreign Chamber of Commerce in Thailand, said the revised law would only add to the negative business sentiment that reigns in Thailand.

"It would create negative effects to confidence of foreign investors in Thailand," Van Haren said.

"We oppose a change of the law that would affect a lot of (foreign) companies operating in Thailand," he said. Bangkok Post Jan. 07

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