• Latest
  • Trending
Foreign investors on edge in junta ruled Thailand

Foreign investors on edge in junta ruled Thailand

March 23, 2018
Putin May Have Triggered an Attempted Coup in Armenia

Putin May Have Triggered an Attempted Coup in Armenia

March 1, 2021
Karma the Hollywood curse

Karma the Hollywood curse

March 1, 2021
Hyatt Hotels responds to calls for boycotts over hosting CPAC

Hyatt Hotels responds to calls for boycotts over hosting CPAC

March 1, 2021
Explosion strikes Israeli ship in Mideast raises tension

Explosion strikes Israeli ship in Mideast raises tension

February 28, 2021
Can Asia help Myanmar find a way out of coup crisis?

Can Asia help Myanmar find a way out of coup crisis?

February 28, 2021
Athens Travel destination post Covid

Athens Travel destination post Covid

February 27, 2021
Enforcing Regulations for Forest Risk Commodities

Enforcing Regulations for Forest Risk Commodities

February 27, 2021
Police Scotland offered oil rig to train for protest-plagued North Sea

Police Scotland offered oil rig to train for protest-plagued North Sea

February 27, 2021
Young car enthusiasts spend $7.2 billion a year customizing vehicles

Young car enthusiasts spend $7.2 billion a year customizing vehicles

February 20, 2021
Indonesian billionaire family in the crosshairs of corruption reporting

Indonesian billionaire family in the crosshairs of corruption reporting

February 11, 2021
Greenpeace: A threat to national security?

Greenpeace: A threat to national security?

February 10, 2021
Myanmar’s military takes power detains Suu Kyi

Myanmar’s military takes power detains Suu Kyi

February 2, 2021
citizendaily
  • Asia News
    • Northeast Asia
      • China
      • Japan
    • North Korea
    • Oceania
      • Australia
      • New Zealand
    • South Asia
      • Afghanistan
      • Bangladesh
      • India
      • Pakistan
    • Southeast Asia
      • Indonesia
      • Malaysia
      • Philippines
      • Singapore
      • Thailand
  • World News
    • Africa
    • Europe
      • Germany
      • United Kingdom
    • Latin America
      • Cuba
      • Mexico
    • Middle East
      • Gulf States
      • Iran
      • Iraq
      • Saudi Arabia
      • Syria
    • North America
      • Canada
      • United States
    • Russian Federation
  • Economy
    • Brexit
    • Free Market
  • Politics
    • ASEAN
    • Diplomacy
    • ISIS
    • National Defence & Security
  • Editorial
  • Environment
    • Climate Change
    • Forests
    • Water & Oceans
    • Wildlife & Endangered Species
  • Lifestyle
    • Books & Literature
    • Entertainment
    • Food & Dining
    • Religion
    • Travel
    • Tech
  • Sports
No Result
View All Result
Tuesday, March 2, 2021
  • Asia News
    • Northeast Asia
      • China
      • Japan
    • North Korea
    • Oceania
      • Australia
      • New Zealand
    • South Asia
      • Afghanistan
      • Bangladesh
      • India
      • Pakistan
    • Southeast Asia
      • Indonesia
      • Malaysia
      • Philippines
      • Singapore
      • Thailand
  • World News
    • Africa
    • Europe
      • Germany
      • United Kingdom
    • Latin America
      • Cuba
      • Mexico
    • Middle East
      • Gulf States
      • Iran
      • Iraq
      • Saudi Arabia
      • Syria
    • North America
      • Canada
      • United States
    • Russian Federation
  • Economy
    • Brexit
    • Free Market
  • Politics
    • ASEAN
    • Diplomacy
    • ISIS
    • National Defence & Security
  • Editorial
  • Environment
    • Climate Change
    • Forests
    • Water & Oceans
    • Wildlife & Endangered Species
  • Lifestyle
    • Books & Literature
    • Entertainment
    • Food & Dining
    • Religion
    • Travel
    • Tech
  • Sports
No Result
View All Result
citizendaily
No Result
View All Result

Foreign investors on edge in junta ruled Thailand

March 23, 2018
in Asia News, Economy, Featured, Southeast Asia, Thailand
0
Home Asia News
Post Views: 440

 

Thailand’s military regime, keen to promote its ambitious Eastern Economic Corridor (EEC) development program, sent mixed signals to the same foreign investors it hopes will commit capital to the multi-billion dollar scheme.

On March 19, the Board of Investment (BOI), the government agency responsible for granting promotional privileges to foreign direct investment (FDI), hosted its annual public relations event titled “Thailand – Taking off to New Heights.”

Government big wigs including Deputy Prime Minister Somkid Jatusripitak appealed to the 2,000 participants to join the ambitious EEC, designed to lift the kingdom out of its middle- income trap and move up the value-added chain to higher tech industries such as electric vehicles, robotics and biochemical.

RelatedPosts

E-wallets in Southeast Asia won’t stop burning cash

Anti-China coalition: US wants to put a bridle on China in Southeast Asia?

Coronavirus cases pass 20m as WHO points to ‘green shoots of hope’

Singapore GDP shrinks a record 41.2% in second quarter

Batik claim by China’s state news agency wades into Indonesia-Malaysia rivalry

The 1.7 trillion baht (US$54 billion) scheme will leverage into the existing Eastern Seaboard, the country’s industrial heartland that has fueled decades of industrial export-led growth that has more recently lost competitiveness to lower cost regional rivals, including China.

“We need partners,” Somkid, the junta’s economic czar, said at the event.

The next day, however, the Commerce Ministry’s Business Development Department announced plans to amend the Foreign Business Act (FBA) to tackle the nation’s long-festering “nominee problem.”

Nothing sends chills down the collective spine of Thailand’s foreign business community like plans to amend the FBA, a protectionist piece of legislation that prohibits 100% foreign-owned companies from participating in a host of business activities ranging from rice farming and making Buddha images to wholesaling, retailing and operating hotels and restaurants.

An employee works at an assembly line at the new Ford Thailand manufacturing plant located in Rayong province, East of Bangkok May 3, 2012. Ford Motor Corp is eyeing Indonesia as a production centre to help meet strong demand for cars in Southeast Asia but supply problems mean Thailand will remain its regional hub for the foreseeable future, company executives said. REUTERS/Chaiwat Subprasom (THAILAND - Tags: TRANSPORT BUSINESS) - RTR31JKS
An auto worker at an assembly line at the Ford Thailand manufacturing plant located in Rayong province, east of Bangkok, May 3, 2012. Photo: Reuters/Chaiwat Subprasom

Many elude the provision by taking on Thai nominees who are nominally shareholders in their foreign-invested ventures, but through contractual provisions lack managerial, operational or legal control. An entire industry, facilitated by local and foreign law firms, has developed around the nominee system.

Threats to amend the FBA have come and gone in the past. The last nationalistic push came months after the May 14, 2014 coup that brought then army commander General Prayut Chan-ocha and his military lieutenants to power.

That effort, coming at a time when Thailand’s international reputation was in already in tatters for reverting to military rule, especially among Western democracies, was shot down by vocal objections by various foreign chambers of commerce, including representatives of the Japanese business community which accounts for about 50% of Thailand’s manufacturing.

Japan Inc started shifting its production bases to Thailand in the mid-1980s to avoid the ill-effects of the appreciation of the yen currency following the 1985 Plaza Accord signed by five industrial nations to deliberately weaken the US dollar vis a vis the yen.

Japan has more than 2,000 registered companies in Thailand, which are the bedrock of Thailand’s export-oriented industries such as automobiles, electronics and electrical appliances. The Japanese expatriate community in Bangkok is one of the largest in the world, giving rise to a plethora of restaurants, bars, super markets, services and apartment blocks catering to Japanese customers.

SME executives from Mie prefecture in Japan meet Deputy Prime Minister Somkid Jatusripitak.†
Japanese executives from Mie prefecture in Japan meet Deputy Prime Minister Somkid Jatusripitak in Bangkok, November 15, 2017. Photo: AFP Forum

While many of the largest Japanese manufacturing companies are 100% Japanese-owned, provided they are BOI promoted, and some even own industrial land if allowed by the BOI or based on industrial estates, the majority operate as joint ventures with Thai partners.

Under the FBA, a company is defined as “foreign” if ownership is more than 50%. Most joint ventures have 49% foreign equity, with Thai partners owning the remaining shares, acting essentially as nominees. As such, joint venture companies can participate in the myriad business activities reserved for Thais under the FBA.

The existing FBA, promulgated in 1999 to replace the even more onerous-sounding Alien Business Act of 1972, a decree passed by former dictator Field Marshal Thanom Kittikachorn (1963-1973), does not prohibit the issuance of different classes of shares with different voting rights, a loophole that allows a 49% foreign-owned company to exercise majority voting rights.

The Commerce Ministry’s latest proposed amendment to the FBA would apparently change that by expanding the definition of a foreign company to one with majority foreign shares or majority voting rights.

“The new definition of foreigner will also take into account the management control or voting rights,” Kulanee Issadisai, director general of the ministry’s Business Development Department, told the Bangkok Post newspaper.

Details of the proposed amendment, which might include relaxing the list of businesses in which foreigners are excluded, have yet to be fully disclosed. But an amendment of the voting rights clause is exactly what the foreign business community dreads and what Thailand’s military and future governments should fear as well.

“If the amendment was enforced everything would collapse,” opined one foreign lawyer who has been operating in Thailand for the past 40 years.

Ratchada Railway Night Market is seen during dusk in Bangkok, Thailand, February 8, 2018. Picture taken February 8, 2018. REUTERS/Athit Perawongmetha TPX IMAGES OF THE DAY
Area view of a local night market in Bangkok, Thailand, February 8, 2018. Photo: Reuters/Athit Perawongmetha

That is what the collective foreign chambers of commerce told the Commerce Ministry three years ago, when the FBA amendment was first mooted under the junta regime. The first bid to amend the FBA was dropped after the negative implications for FDI became apparent.

“I was at a meeting with the Commerce Ministry three years ago where a Japanese representative stood up and said, ‘Don’t do this. You will destroy the county,’” recalled one former president of a European chamber of commerce. “The Japanese are concerned not because of their restaurants, but because the whole Japan Inc in Thailand is using these structures.”

While some Japanese manufacturing companies are 100% foreign owned, they need to use joint ventures to operate trading and wholesale activities which are essential to running an integrated business in Thailand.

American, European, South Korean, Taiwanese and now increasingly Chinese investors are all use Thai “nominee partners” in their joint ventures to operate many aspects of their businesses.

Thai businesses also utilize the nominee structure to their advantage. For example, when former Thai premier Thaksin Shinawatra, who made his fortune in the telecoms sector, sold his family’s 49% stake in the Shin Corporation to Singapore’s Temasek Holding in 2006, he put in place alleged Thai nominees to hold the remaining 51% to qualify as a Thai company.

An anti-government protester waves a Thai flag as he gathers with others outside the Parliament House in Bangkok May 9, 2014. Ousted Prime Minister Yingluck Shinawatra's Puea Thai Party still runs the interim government and is hoping to organise a July 20 election that it would probably win, but the protesters want the government out, the election postponed and reforms to end the influence of Yingluck's brother, former premier Thaksin Shinawatra. Protest leader Suthep Thaugsuban, speaking to supporters in a city park, urged them to rally outside parliament, the prime minister's offices and five television stations to prevent them being used by the government. REUTERS/Athit Perawongmetha (THAILAND - Tags: CIVIL UNREST POLITICS TPX IMAGES OF THE DAY) - RTR3OEXQ
An anti-government protester waves a Thai flag in May 2014. Photo: Reuters/Athit Perawongmetha

The sale fueled nationalistic street protests against Thaksin that eventually led to the September 2006 coup that overthrew his elected government.

The coup-installed regime under prime minister Surayud Chulanont also mooted an amendment to the FBA in a bid to undermine the Shin Corp sale by exposing the nominee structure of the deal. That bid was eventually dropped, however, after much lobbying by the FDI community.

Some legal experts speculate that the latest FBA amendment drive may have been motivated by the military regime’s renewed investigations into Thaksin’s business dealings, although he has been in self-exile since 2008.

Others point to powerful Thai business groups that don’t appreciate foreign competition in the local markets they dominate.

In other respects, Prayut’s regime has been pro-FDI, going out of its way to remove obstacles to investments that helped Thailand jump to #26 in the World Bank’s Ease of Doing business index last year, rising from #46 in 2016.

Thai Prime Minister General Prayut Chan-o-cha (center) observing a construction project in Bangkok in a 2015 file photo. Photo: Reuters/Athit Perawongmetha
Thai Prime Minister General Prayut Chan-o-cha (center) observing a construction project in Bangkok in a 2015 file photo. Photo: Reuters/Athit Perawongmetha

The regime has lifted restrictions on foreign participation in financial services and insurance, and introduced new incentives to attract international headquarters to Thailand that include eased rules on foreign participation in certain business activities such as wholesale and trade.

But the military government’s biggest gamble is the EEC scheme, designed to transform three eastern coastal provinces into an FDI-fueled liberal business zone to rival Singapore.

By design, the program will be heavily dependent on FDI to jumpstart high-tech and R&D driven industries where Thais lack a natural competitive advantage.

“We have done everything in our power to make sure the benefits given in the EEC are comparable, if not better, than other alternatives,” said Kobsak Pootrakool, Minister Attached to the Prime Minister’s Office. “I think this will be one of the most exciting times to invest in Thailand.”

But this week’s threats to amend the FBA have made Thailand’s foreign investment climate exciting again for reasons that could cause more FDI to leave, rather than enter, the kingdom.

Source :
Asia Times
Tags: businessInvestmentThailand
Previous Post

Life in a ‘shoebox’ for the lucky rich in Hong Kong

Next Post

Pre-election politics heating up in Indonesia

Related Posts

Putin May Have Triggered an Attempted Coup in Armenia
Bilateral

Putin May Have Triggered an Attempted Coup in Armenia

March 1, 2021
Hyatt Hotels responds to calls for boycotts over hosting CPAC
Asia News

Hyatt Hotels responds to calls for boycotts over hosting CPAC

March 1, 2021
Explosion strikes Israeli ship in Mideast raises tension
Asia News

Explosion strikes Israeli ship in Mideast raises tension

February 28, 2021
Can Asia help Myanmar find a way out of coup crisis?
ASEAN

Can Asia help Myanmar find a way out of coup crisis?

February 28, 2021
Athens Travel destination post Covid
Europe

Athens Travel destination post Covid

February 27, 2021
Enforcing Regulations for Forest Risk Commodities
ASEAN

Enforcing Regulations for Forest Risk Commodities

February 27, 2021
Next Post
Pre-election politics heating up in Indonesia

Pre-election politics heating up in Indonesia

Translate

Subscription

Popular Post

Putin May Have Triggered an Attempted Coup in Armenia
Bilateral

Putin May Have Triggered an Attempted Coup in Armenia

March 1, 2021
0

  Moscow (27/2).         Armenian Prime Minister Nikol Pashinyan has announced that his nation’s military had attempted a...

Read more

NGOs call for mass boycott of palm oil giant IOI

June 29, 2016
No peace for Greenpeace

No peace for Greenpeace

July 1, 2016

The Case Against Greenpeace

July 1, 2016
Children in ISIS Nusantara Media Outreach

Children in ISIS Nusantara Media Outreach

July 2, 2016
  • About Us
  • Creative Commons
  • Privacy Policy
  • Terms & Conditions
  • Disclaimer
  • Contact Us

Topics

Follow Us

About Us

citizendaily.news is part of the citizen Daily Media Group LLC, which delivers daily news around the globe. ​

© 2012 The Citizen Daily

No Result
View All Result
  • Asia News
    • Northeast Asia
      • China
      • Japan
    • North Korea
    • Oceania
      • Australia
      • New Zealand
    • South Asia
      • Afghanistan
      • Bangladesh
      • India
      • Pakistan
    • Southeast Asia
      • Indonesia
      • Malaysia
      • Philippines
      • Singapore
      • Thailand
  • World News
    • Africa
    • Europe
      • Germany
      • United Kingdom
    • Latin America
      • Cuba
      • Mexico
    • Middle East
      • Gulf States
      • Iran
      • Iraq
      • Saudi Arabia
      • Syria
    • North America
      • Canada
      • United States
    • Russian Federation
  • Economy
    • Brexit
    • Free Market
  • Politics
    • ASEAN
    • Diplomacy
    • ISIS
    • National Defence & Security
  • Editorial
  • Environment
    • Climate Change
    • Forests
    • Water & Oceans
    • Wildlife & Endangered Species
  • Lifestyle
    • Books & Literature
    • Entertainment
    • Food & Dining
    • Religion
    • Travel
    • Tech
  • Sports

© 2012 The Citizen Daily