ASEAN KEY DESTINATIONS
Investment law in limbo
"Time is limited," Kiat Sittheeamorn, a former International Chamber of Commerce chairman, said after the government was forced unexpectedly to withdraw the bill from the army-appointed National Legislative Assembly (NLA) late on August 8.
In a last-minute ambush, rebel NLA members managed to insert a clause limiting foreign management control of companies, a move diplomats said smacked of economic nationalism.
The draft Foreign Business Act had already proposed a major tightening of the rules on future foreign investment in many commercial sectors by limiting foreign shareholder voting rights, as well as equity, to 49%.
"It's not in the interests of this country to rush this kind of bill through parliament," Kiat said. "You don't do that. You discuss with all the stakeholders."
Foreign businessmen and diplomats have complained of being shut out of consultation on revisions designed to close a loophole which had let outsiders invest in restricted sectors by using sleeping, or nominee, Thai partners for 35 years.
Diplomats say the increased restrictions violate commitments Thailand made when it was negotiating entry to the World Trade Organization and would therefore trigger an automatic challenge at the global trade body.
Foreign manufacturers in Thailand, such as US and Japanese carmakers Ford and Honda or San Francisco-based disk-drive maker Seagate Technologies, are not affected as such activities have special investment privileges.
The major protected business areas include retailing, telecommunications, construction, engineering and real estate.
Korn Chatikavanij, a senior Democrat party member and former investment banker, said revising the law after last September's coup against Prime Minister Thaksin Shinawatra was always going to be problematic.
"We suggested from the start that the government think long and hard about opening this particular Pandora's box," he said.
"There was every risk of more radical elements within parliament seeking to further amend the government's amendment to make it even more onerous for foreign investors -- and that's precisely what happened."
Commerce Minister Krirkkrai Jirapaet said the bill was being withdrawn for "further consideration", suggesting the interim government might be leaving it to its successor, to be elected in December, to deal with.
At face value, revision of the law stemmed from probes into Thaksin's business dealings, most notably his family's $1.9 billion sale of its controlling stake in the Shin Corp telecoms empire to Singapore.
However, it is also about Bangkok's old business elite -- many of whom supported the September coup against Thaksin -- getting payback for having to sell their family firms to foreigners after the 1997 Asian financial crisis, analysts say. Rebel NLA faction leader Somchai Sakulsurarat denied throwing up more barriers to outsiders, saying the number of restricted sectors should be cut -- but only after hard-and-fast rules on foreign control had 0been enacted.
"If we want to promote foreign investment, we should allow foreigners to come in by relaxing and liberalising the business classification lists, and stop letting foreign companies come in in disguise as Thai," he told a Bangkok radio station. Reuters