Democrats worried by FBA change

The Democrat Party yesterday expressed concern that the government's amended Foreign Business Act (FBA) could have a domino effect not only on foreign direct investment, but also on the confidence of Thai investors looking to expand.

Deputy secretary-general Korn Chatikavanij said demands had come from both sides and that if foreign investors felt uncertain, then there would be a reduction in local investment, as well.

"If Thailand has troublesome regulations, Thai investors will also drop their plans and other activities, such as employment, and consumer spending will fall," he said.

Korn yesterday accompanied party leader Abhisit Vejjajiva to meet with members of the International Chamber of Commerce in Bangkok to talk about the planned amendments.

Korn noted that foreign businessmen were concerned about questions of "voting rights" and "nominees". They compared Thailand's investment regulations with those of neighbouring countries like Malaysia and Vietnam. In particular, Vietnam recently announced the withdrawal of restrictions on foreign investors, especially on management-control rights.

"Does the Thai government still insist to investors that the amended foreign-business law will add advantages to the existing law? Foreign investors are clearly confused, and even Thai investors are becoming bewildered," he said.

He insisted that the existing FBA had worked well. If the law has some weak points, it should be amended point by point. For instance, the government should define "nominees" as investors who really invest their own money, not as ones who are circumvented by other investors. In addition, Annexes I, II and III also define which business are open to foreign investors and which are prohibited. The government should broaden Annex III, because some service businesses have already had double protection through special laws designed to protect local investors and interests in terms of the portion of foreign shareholders.

"Any definition of a 'nominee' in the existing foreign-business law is clear, as are the penalties for violations. This amendment has tightened conditions against foreign investors, particularly on 'voting rights'," he stressed.
He also suggested the government explain its real objective. "Is it to prevent a repeat of the Kularb Kaew nominee case, or is it for other reasons?" he said.