Jump to content
IGNORED

Pridiyathorn tries to ease fears


Braveheart

Recommended Posts

Extracted from the Bangkok Post

 

Joint chambers warn of blow to investment

 

CHATRUDEE THEPARAT & DARANA CHUDASRI

 

The government is prepared to extend the transition period for foreign-owned companies to comply with the Foreign Business Act if necessary, according to M.R. Pridiyathorn Devakula, the finance minister and deputy prime minister. Authorities would also annually review the business sectors set out under the so-called List 3 of the FBA to determine what sectors are ready for full liberalisation.

 

M.R. Pridiyathorn and other policymakers yesterday sought to ease investor concerns about the FBA reforms and insisted that Thailand remained open to foreign investment.

 

''The intention of the changes is not to impede foreign investment or to create new obstacles to foreigners,'' M.R. Pridiyathorn said. ''We are actually relaxing the rules in some areas, and clarifying what the law actually is for those companies that don't know right now if they are in the right or the wrong.''

 

M.R. Pridiyathorn said reports that up to 40,000 foreign firms would be affected by the FBA changes were overblown.

 

''In reality, only 2,428 companies will potentially be affected. And of these firms, many are exempt due to Board of Investment privileges or because they operate under the [uS-Thai] Treaty of Amity,'' he said. ''Overall, only 1,337 companies are expected to have to restructure, with only 15 being companies listed on the Stock Exchange of Thailand.''

 

On Tuesday, the cabinet approved a plan to reform the 1999 FBA to address the widespread practice of nominee shareholdings long used to evade the 49% shareholding limit set under the law.

 

The definition of foreign companies will now be expanded to include either majority shareholdings, both direct and indirect, as well as firms where foreigners hold a majority in terms of voting rights.

 

Companies in breach of the majority shareholding limit must report to the Commerce Ministry within 90 days and restructure their operations within one year.

 

Firms in violation in terms of voting rights will be treated differently. Those operating under List 1 and List 2 of the FBA, which includes 22 sectors overall ranging from media, rice farming, transport and mining, would have two years to reduce foreign voting rights to a minority.

 

Companies currently operating under List 3, which includes 21 sectors, including services, would be ''grandfathered'' with no need to change their voting structures but would have to report their status to the Commerce Ministry within one year.

 

M.R. Pridiyathorn, who met with representatives of 28 foreign chambers of commerce yesterday, said the government was prepared to extend the transition period for firms to restructure if needed.

 

''To help reassure the foreign chambers, we will consider in the National Legislative Assembly extending the transition period for companies,'' he said.

 

''But one must be fair to the government as well. If [foreign chambers] ask for a 10-year period, we can't do this.''

 

Sectors on List 3 would also be reviewed on an annual basis, he added.

 

''We have not increased the number of sectors that remain under protection. And exporters and manufacturing companies are completely not involved,'' he said.

 

M.R. Pridiyathorn said telecommunications companies would also have to restructure if their foreign shareholdings were in violation of the limit. But in terms of voting rights, existing firms such as Advanced Info Service or DTAC would be grandfathered along with other companies operating in sectors under List 3.

 

The FBA reforms follow last year's investigation into the takeover of Shin Corp by Singapore's Temasek Holdings. The government has said Temasek used nominees to skirt the 49% shareholding limit.

 

Satit Chanjavanakul, the secretary-general of the Board of Investment, said projects that received privileges from the board would be unaffected by the changes.

 

Promoted projects were allowed to have up to 100% foreign ownership, and most were operating in manufacturing sectors excluded from the FBA, he said. Even after promotional privileges expired, the companies would continue to be exempt from the FBA rules, Mr Satit said.

 

But despite the official clarifications, analysts and foreign business leaders said the FBA reforms would continue to weigh on sentiment for the near future.

 

Peter Van Haren, the chairman of the Joint Foreign Chambers of Commerce (JFCC), said that while foreign investors better understood the government's intentions, few were comfortable with the reforms.

 

''We will submit new suggestions to the government within two weeks. The position of the JFCC continues to be to scrap List 3 altogether,'' he said. ''Frankly, an extension on the time for compliance does not help much, as foreign shareholders would still have to cut their stakes.''

 

Mr Van Haren warned that the reforms would definitely impact future investment in Thailand and increase the burden on companies to seek local partners.

 

But Dusit Nontanakorn, the secretary-general of the Thai Chamber of Commerce, doubted that many foreign firms would cut back their investments.

 

''They can do so if they want. We can't prevent that. But I'm confident that not many will do so,'' he said.

 

Prasarn Trairatvorakul, the president of Kasikornbank, said a review of the principles of restraining business competition from foreigners was long overdue.

 

But given the sensitivity of the issue, the authorities should consider the appropriate timing of any regulatory change.

 

''The time given for foreign companies to restructure their shareholdings and voting-right privileges isn't too short. But personally, what I believe is even more important is to consider the suitability of the FBA, the appropriateness of the timing and whether the foreign business community genuinely understands the changes or not,'' Dr Prasarn said.

 

Banluasak Pussarungsri, the manager of Bangkok Bank's macroeconomic analysis centre, agreed that the principles of the FBA should be reviewed.

 

He added that the vehement opposition to the changes voiced by the foreign business community deserved attention.

 

''I've never seen foreign investors come together on any one issue quite like this one,'' he said. ''We should listen to what they are saying.''

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now


  • COVID-19

    Any posts or topics which the moderation team deems to be rumours/speculatiom, conspiracy theory, scaremongering, deliberately misleading or has been posted to deliberately distort information will be removed - as will BMs repeatedly doing so. Existing rules also apply.

  • Advertise on Pattaya Addicts
  • Recently Browsing

    • No registered users viewing this page.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.