Thailand seeks to reassure foreign investors on new rules; may make adjustments

Thailand seeks to reassure foreign investors on new rules; may make adjustments

	Published : Wed, 10 Jan 2007 09:15 By : Agencies Print this Story

BANGKOK (XFN-ASIA) - The government tried to reassure international investors about new investment rules which propose to limit foreign participation in some sectors.

Finance Minister Pridiyathorn Devakula met business leaders and diplomats to clarify revisions approved yesterday to the Foreign Business Act and told them that the government is ready to listen to their concerns.

'We asked them to think about it and get back to us. The government is ready to make adjustments,' Pridiyathorn told reporters after the meeting.

He insisted that foreign companies in manufacturing and exports, as well as those with existing agreed privileges, will be exempt from the new rules.

'There are altogether 2,428 foreign businesses (in Thailand). Of these, only 1,337 businesses will be affected,' he said.

Under the new rules, investors will be forced to divest if they hold more than 50 pct of the shares or the voting rights in specified industries. Companies have up to two years to comply.

The sectors most affected by the new rules are telecoms and media, Pridiyathorn said.

Among those that will be forced to restructure are mobile operator Advance Info Services (AIS), a part of telecom giant Shin Corp, which was bought by Singapore's state-linked investment firm Temasek Holdings last year, he said.

A Temasek-led group of investors bought 96 pct of Shin Corp for 3.8 bln usd, sparking public outrage that snowballed into street protests against former prime minister Thaksin Shinawatra, who founded the company.

The protests eventually led to the military coup that toppled Thaksin's government in September.

After the takeover, the Commerce Ministry declared the Shin Corp deal illegal and the government has vowed to close the loopholes that allowed the transaction to take place.

Critics say foreign investors have abused the loopholes to gain control of key Thai industries, compromising national security but Pridiyathorn insisted the changes were only clarifying long-standing rules on foreign participation.

Analysts say the timing of the changes, however, have heightened investor concerns and could damage investment in Thailand if foreign companies decide to take their business elsewhere.

Peter van Haren, who heads the Joint Foreign Chamber of Commerce, said his group still wants the government to delay implementation.

'The new draft will absolutely affect foreign investment. We have proposals to make investment easier and to tackle the obstacles,' he told reporters.

Van Haren warned that many of the companies affected by the changes -- especially in the retail, telecom and property sectors -- could decide to relocate to neighboring countries.

Pridiyathorn in turn stressed that the scope of the exemptions will allow many foreign companies to continue operating through their existing structures -- so long as they notify the government about their shareholding and voting rights.

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