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ASEAN ANALYSIS  6 August 2010

The Asean Economic Community draws closer

By David Swartzentruber
AseanAffairs   6 August 2010

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Needs make for strange bedfellows

At week’s end an interesting development in Thailand may portend future battles centering around economic steps taken by individual Asean countries and provisions that the country has agreed to in signing Asean treaties.

The National Telecommunications Commission of Thailand is preparing for an auction of the 3G spectrum in September. The commission has dreamed up a rule, published on its web site, to curb what is described as “foreign domination” of the local telecoms industry. Foreign dominance is regarded as determining policy or exercising control beyond the amount of shares owned and determined by law.

The rule would bar foreigners from senior management from managers to top executive as well as taking nationality into consideration when bidding on the new 3G licenses.

It would appear that if the rule is adopted it would go against provisions of the Asean Economic Community (AEC) agreement that allow for liberalizing the service sector, including telecoms, and allowing foreign ownership up to 75 percent. The AEC goes into effect in 2015 and this NTC move seems to counter liberalization.

There is already Singapore and Norwegian involvement in the local telecoms industry. A mobile telephone company also said that the rule would have no impact on it because the rule could not be applied retroactively.

In addition the NTC went on the road to drum up interest in the upcoming 3G auction and there was apparently substantial interest from Chinese, Malaysian, Korean and Japanese companies. If the rule were to be adopted the NTC would appear to those companies as somewhat disingenuous in its road show efforts and the NTC could be accused of squandering taxpayer money for the roadshows.

For the sake of progress in its telecom industry, as it already lags behind other Asean countries, Thailand would be wise to drop this short-sighted nationalistic regulation, not to mention that adopting the rule would place it into conflict with the provisions of the Asean Economic Community that have previously been signed.

The public hearing is scheduled for August 20.

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