INVESTMENT FOREIGN BUSINESS ACT: Foreign chambers step up lobbying
INVESTMENT FOREIGN BUSINESS ACT
Foreign chambers step up lobbying
UMESH PANDEY
The Joint Foreign Chambers of Commerce is set to lobby cabinet ministers, senior officials, embassies and other chambers in its quest to clear up the thorny issue of nominee business ownership structures. Reports that authorities would give foreign-owned joint ventures only a few months to sell down their shareholdings to meet the 49% limit set under the Foreign Business Act (FBA) have raised new concerns among foreign businesses.
The Commerce Ministry previously said that it would give businesses ample time to restructure their shareholdings, but has yet to offer details. Business leaders say they may need years, not months, to find new Thai investors and wind down nominee structures in an orderly fashion.
Peter Van Haren, the JFCC president, said the organisation would seek clarification from the authorities, including the Prime Minister's Office, about the policy direction and plans to amend the FBA.
''We are going to write a letter to the various organisations and committees to seek support for our effort to seek a better business environment in the country,'' he said yesterday.
''We want to state in the letter that if the country applies further restrictions, then it will have negative repercussions.''
A government committee set up to examine the widespread use of nominees in foreign ventures is expected to deliver its recommendations soon.
The issue of nominees has become explosive since the January takeover of the local telecom giant Shin Corp by Singapore's Temasek Holdings. Temasek is accused of using a complicated shareholding structure to bypass the 49% limit on foreign investment in telecoms.
Mr Van Haren said the JFCC also intended to remind the government of the commitment it made to the World Trade Organisation in 2003: ''It states explicitly that the government will look at the 49% shareholding structure and not at who exerts control over the company.''
JFCC members met on Tuesday with diplomats and others who agreed that even if existing companies were given three years to restructure their shareholdings, it might not be sufficient.
''It is estimated that there are at least 14,000 companies using the nominee structure. If they are given three years to restructure, then their option would be to sell out. And you could end up with more sellers than buyers,'' said a US-based diplomat who attended the meeting.
He said participants were unanimous about what the government should and should not do if it wanted to maintain investor confidence, which took a huge hit this week when the Bank of Thailand imposed tough capital controls.
''The market is already very fragile and any misstep could create more problems,'' said a local analyst. ''Most people are optimistic that the decision will be on the positive side.''
Supavud Saicheua, a managing director of Phatra Securities, said he hoped for a market-friendly outcome.
''If it's true that they will give three years to restructure, then I would say it is not as bad a problem as the one we saw on Monday,'' he said. ''But to be fair to the authorities, we have to look at the details to make an assessment on the issue of nominees.''
