Tuesday March 13, 2007
New draft of FBA easier on foreigners
NLA version aims to restore confidence
source: Bkk Post
A group of more than 50 members of the National Legislative Assembly have proposed a new draft Foreign Business Act potentially more friendly to foreign-owned joint ventures operating in Thailand than the government's version of the bill.
A copy of the draft obtained by the Bangkok Post says that a business would not be automatically defined as foreign even if voting rights held by foreigners were more than 50% _ a controversial clause currently present in the government's own proposed FBA amendment.
Instead, the NLA version proposes establishing a new screening committee to evaluate issues such as voting rights and nominee structures on a case-by-case basis for the purposes of the FBA.
The draft was prepared by Somchai Sakulsurarat, an experienced banker and former president of Bangkok Metropolitan Bank and the Bank of Ayudhya.
NLA members who have signed the draft include Borwornsak Uwanno, Somkiat Onvimol, Sungsidh Piriyarangsan, Purachai Piumsombun, Vachara Phanchet, Pol Col Nitiphum Navarat and Sqdn Ldr Prasong Soonsiri, the chairman of the Constitutional Drafting Council.
The government's FBA amendments passed the cabinet in January despite stiff opposition from foreign business groups.
The FBA changes, as originally proposed by the Commerce Ministry, would automatically define as foreign any company in which foreign entities hold more than 50% of shares or control more than 50% of voting rights.
Rules and penalties for nominee shareholdings would also be strengthened, and companies would be required to register their status with the ministry and adjust their legal structures within one or two years.
Although the government says the new FBA exempts most exporters, manufacturers and companies receiving Board of Investment privileges, analysts and foreign business leaders have resoundingly blasted the stronger law and warn of a sharp decline in foreign investment flows.
Mr Somchai said the NLA draft aimed to restore foreign investor confidence.
"The draft Commerce Ministry version is problematic and has weakened investor confidence," he said. "All companies are deemed foreign so long as voting rights exceed 50%, even if they are straightforward and honest businesses."
The Commerce Ministry version also was unbalanced in its treatment of the rules, since existing companies would be offered time to adjust their structures unless they were under investigation for possible wrongdoing, he said.
"Discriminatory practices are unacceptable based on the universal principles of law," Mr Somchai said.
Thirteen companies are now under investigation for possible FBA violations, including Shin Corp, controlled by Singapore's Temasek Holdings; DTAC, the second-ranked mobile operator owned by Norway's Telenor; and the retailing giants Carrefour and Tesco.
Mr Somchai said the NLA version would set up a foreign ownership review committee headed by the Commerce Ministry permanent secretary to review whether companies in which foreigners held a majority of voting rights were meeting legitimate business needs.
The committee would also check whether Thai partners had genuinely invested in the business. It would monitor whether the rights and benefits to Thai shareholders were legitimate or if they were acting as illegal nominees.
"A company with foreign voting rights of over 50% will not automatically be defined as foreign under the NLA draft," Mr Somchai said.
He said that many multinationals felt the need to maintain majority voting rights for sound reasons, such as to control the use of their brands or intellectual property.
But if no clear business need was proven, then the majority rule would be enforced, Mr Somchai added. The NLA draft would not automatically clear Temasek Holdings and the questions regarding Kularb Kaew, the holding entity it set up for the Shin acquisition, he added.
"But at least under the new draft, foreign investors would not say that Thai law is discriminatory and fails to meet international standards," Mr Somchai said.
The NLA draft would also stiffen penalties for illegal nominees to up to five years in jail and impose fines of up to five million baht for both foreign and Thai nationals violating the FBA.
Mr Somchai said the NLA would review the proposed draft within two weeks.
"The draft doesn't represent pressure on the government even though the NLA has proposed the law itself. Actually, this represents a collaboration between the government and the NLA to solve the problems," Mr Somchai said.
Business leaders expressed uncertainty about the new draft and its conditions.
Peter Van Haren, president of the Joint Foreign Chambers of Commerce, said he was uncertain about the proposed law. "The moves [to ease restrictions] are positive, if it is true," he said.
Thanawat Patchimkul, the head of research at KGI Securities, said the latest move would prompt considerable confusion in the market.
"If it is true that [the NLA] is looking to get rid of the voting-rights rule, then the question is, what happens to everything that has happened to date?" he asked.
"The entire situation stemmed from the nominee question. If they say it is okay now, then the authorities need to be very clear, or else this will be just another flip-flop in policy. You can't shake up investor confidence and then come back and say nothing has happened."
Santi Vilassakdanont, the chairman for the Federation of Thai Industries, declined to comment on the NLA proposal, which he said had yet to be circulated within the business community.
"But actually, I think the Commerce Ministry version was discussed quite widely among the Industry Ministry, the FTI, the Thai Chamber of Commerce and the Thai Bankers' Association," he added.
Source Baht and Sold
Foriegner Friendly
-
GLCQuantum
- Rock Star
- Posts: 3583
- Joined: Tue Feb 20, 2007 2:00 pm
-
GLCQuantum
- Rock Star
- Posts: 3583
- Joined: Tue Feb 20, 2007 2:00 pm
-
dr dave soul monsta
- Deceased
- Posts: 1281
- Joined: Mon May 31, 2004 10:04 pm
- Location: Altissima quaeque flumina minimo sono labi
- Contact:
It's just that many posters begin threads with articles from BKK post or elsewhere but follow the article with an opinion of their own.
Is that a observation or an opinion of your own,Bearhug,
When are you going to speak for yourself? I'm sure you must have your own thoughts unless of course you're brain dead!
He may be interested in other peoples opinion on what the press have to say.
before he comments
and not every one wishes to pay 25 thb for half a rain forest full of .........
and the BKK post web site unless you sign up and pay you can only view for a short time scale. as JW said "give him a break"
and he does quote B&S
"I don't often agree with the RSPCA as i believe it is an animals duty to be on my plate at supper time"
-
GLCQuantum
- Rock Star
- Posts: 3583
- Joined: Tue Feb 20, 2007 2:00 pm
HiGLCQuantum wrote:For those of you who don't know,
If you are prepared to part with 25 baht and buy a copy of the reasonably priced BKK Post you can read all the news, daily.
Failing that you could also go to their website to catch up with the latest goings on.
Thought the article good reading for ExPats and visitor's. Visitor's could be prospective investor's, helping the Thai economy.
As for GLCQuantum's issues, please find:
BKK Post 25 baht x 365 = 9,125 baht for the year if you live in Thailand.
If you live abroad and you have a friend that is prepared to send you a copy everyday BKK Post 25 baht = 9,125 = Postage 250 baht/day appro
= 9,125 + 250 x 365 = 9125 + 91,250 = 100,375 baht per year.
If you read the BKK online then fine, read it back to back and pick out the article's concerning Thailand and foriegner's issue's. Believe a figure for the time spent reading should arrive at 2 hours/day.
Yes you could always use a link as many do, I prefer to see the article, read it untill I am satisfied or lose interest.
Thank heaven's we are all different and I respect this, so GLCQuantum carry on buying the BKK Post everyday at a cost of 9125 baht/year or 100,375 baht/year if you live outside of LOS.
Mai Pen Rai
They are indeed confused, I think some genuine concern and input from all level's of Goverment and Commercial department's is now required. They cannot afford any more misguided statement's bordering on incompetance.STEVE G wrote:If anyone read the article, there are some interesting comments at the end regarding the effects of these policy U-turns that seem to now be a feature of Thai government.
The Thai economy has been hit with some form of problem, epidemic or terrorist act for the past 4 years, these situations have all been compounded by mis-management.
-
GLCQuantum
- Rock Star
- Posts: 3583
- Joined: Tue Feb 20, 2007 2:00 pm
[/quote]They cannot afford any more misguided statement's bordering on incompetance.
The Thai economy has been hit with some form of problem, epidemic or terrorist act for the past 4 years, these situations have all been compounded by mis-management.
Exactly what I posted previously on this thread for!!
Never did I say that this was useless information. I was just wanting you to give any opinion on this topic, be it a sentence or an essay, of which I'm certain you will know more than me on. I shall read the paper everyday as usual but will continue to listen more to other peoples opinions on the matter.
Cheers.
Mr.......?
Not sure how relevant this is but it doesn't reflect the title of this thread to me:
Finance minister lets 30% rule stay
Finance Minister Chalongphob Sussangkarn and Bank of Thailand Governor Tarisa Watanagase said yesterday the government had no plans to revoke the 30 per cent withholding requirement on foreign inflows at the moment - in spite of market speculation.
Chalongphob, speaking after their first meeting since he was appointed, said: "The Finance Ministry will not put pressure on the central bank on monetary policy."
He insisted the ministry would only provide the central bank with the necessary tools to implement monetary policies without interfering with its decision making.
It was earlier speculated that Chalongphob would urge Tarisa to revoke the 30 per cent withholding requirement as he had earlier commented that the measure was too harsh.
However, Chalongphob said after the two hour meeting with Tarisa yesterday he believed the monetary and fiscal policies were well co-ordinated at the moment.
The 30 per cent withholding requirement and the hedging option will remain effective for the time being to halt speculation on the baht.
The baht continued to rise further against the dollar, closing at a new nine-year high of 34.98-35.01 - from Wednesday's 35.00-02. The rise was attributed to the sale of US dollars amid speculation the capital controls would be lifted soon.
Asked what measures should be put in place to curb the rise of the baht, Chalongphob said: "We don't know what the best measures will be. We are learning by doing. Countries that are in a similar situation are now closely watching us to see the outcome of our policy implementation."
Tarisa said the 30 per cent withholding requirement would remain intact, with the hedging alternative provided to investors effective from yesterday.
As of yesterday, the BOT will no longer require investors to deposit 30 per cent of the inflows, not bearing an interest rate, if they are hedged in foreign exchange swaps.
She also noted that during the meeting they didn't discuss interest rate cuts, in contrast to earlier reports that Chalongphob had wanted to cut the rates by half a percentage point.
Tarisa said the decision on whether to cut the rates would be up to the Monetary Policy Committee (MPC).
The source said the Finance Ministry may provide the central bank with support measures for its monetary policies, perhaps by providing more flexibility or allowing it to issue more bonds to absorb the liquidity in the market to ease the pressure on the baht.
Source : The Nation
Finance minister lets 30% rule stay
Finance Minister Chalongphob Sussangkarn and Bank of Thailand Governor Tarisa Watanagase said yesterday the government had no plans to revoke the 30 per cent withholding requirement on foreign inflows at the moment - in spite of market speculation.
Chalongphob, speaking after their first meeting since he was appointed, said: "The Finance Ministry will not put pressure on the central bank on monetary policy."
He insisted the ministry would only provide the central bank with the necessary tools to implement monetary policies without interfering with its decision making.
It was earlier speculated that Chalongphob would urge Tarisa to revoke the 30 per cent withholding requirement as he had earlier commented that the measure was too harsh.
However, Chalongphob said after the two hour meeting with Tarisa yesterday he believed the monetary and fiscal policies were well co-ordinated at the moment.
The 30 per cent withholding requirement and the hedging option will remain effective for the time being to halt speculation on the baht.
The baht continued to rise further against the dollar, closing at a new nine-year high of 34.98-35.01 - from Wednesday's 35.00-02. The rise was attributed to the sale of US dollars amid speculation the capital controls would be lifted soon.
Asked what measures should be put in place to curb the rise of the baht, Chalongphob said: "We don't know what the best measures will be. We are learning by doing. Countries that are in a similar situation are now closely watching us to see the outcome of our policy implementation."
Tarisa said the 30 per cent withholding requirement would remain intact, with the hedging alternative provided to investors effective from yesterday.
As of yesterday, the BOT will no longer require investors to deposit 30 per cent of the inflows, not bearing an interest rate, if they are hedged in foreign exchange swaps.
She also noted that during the meeting they didn't discuss interest rate cuts, in contrast to earlier reports that Chalongphob had wanted to cut the rates by half a percentage point.
Tarisa said the decision on whether to cut the rates would be up to the Monetary Policy Committee (MPC).
The source said the Finance Ministry may provide the central bank with support measures for its monetary policies, perhaps by providing more flexibility or allowing it to issue more bonds to absorb the liquidity in the market to ease the pressure on the baht.
Source : The Nation
Who is the happier man, he who has braved the storm of life and lived or he who has stayed securely on shore and merely existed? - Hunter S Thompson
How would anyone feel about having 30% of their money impounded for a year without interest?
Big investors are thinking again.
Forget it Thailand, if you think you're part of the world and if you want to be in it then play by international rules and respect them.
Meantime, the Baht gets stronger through this policy and exports decline and the Thai people start to lose their jobs etc etc.
I'm no economic expert, but that seems to turn these "business people" on.
It's called politics.
Big investors are thinking again.
Forget it Thailand, if you think you're part of the world and if you want to be in it then play by international rules and respect them.
Meantime, the Baht gets stronger through this policy and exports decline and the Thai people start to lose their jobs etc etc.
I'm no economic expert, but that seems to turn these "business people" on.
It's called politics.