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18 November 2014
Read in Minutes


Law firms want FBA obstacles removed

Big law firms are urging the government to facilitate investment by multinational corporations that help to develop businesses in Thailand and to reduce obstacles to foreign involvement.

They are also calling for clarity from the government about proposals to alter the Foreign Business Act (FBA).

The proposed changes by the Business Development Department are unclear, particularly the definition of a foreigner, voting rights and shareholding structure, Rungtip Sathienrapabayut, an associate at International Legal Counsellors Thailand Ltd, told yesterday’s final hearing held by the Commerce Ministry about amendments to the controversial FBA.

A working panel will summarise the hearings and hammer out a first draft, which is expected next month.

“As far as we’ve discussed with foreign firms that have invested in Thailand, they don’t want the government to get deep into management control,” Ms Rungtip said.
She also called on the government to revise FBA rules that prohibit foreign involvement, as foreign companies believe they restrict their investment opportunities, particularly in service sectors such as loan guarantees, lending and leasing services.

“Services that don’t affect the country’s national security or harm the economy should be opened freely to foreign involvement,” Ms Rungtip said.

“For instance, lots of difficulties remain, particularly when foreign parent firms extend interest-free loans to local subsidiaries and affiliates. The existing law requires them to ask for permission from authorities and pay a permission fee of a maximum 250,000 baht.

“It takes three or four months for authorities to grant permission.”

She said foreign firms that signed agreements to invest in infrastructure with the government should be granted a licence automatically.

Kitipong Urapeepatanapong, chairman of the local office of law firm Baker & McKenzie, said the definition of “foreign” under the planned FBA amendment, in which voting rights were accounted for in addition to the proportion of shareholdings, capital and management control, were too broad.

“The annexes on List 3 should be revised to clarify which specific industries need further protection,” he said.

Mr Kitipong said the service sector should be liberalised, with minimum conditions for capital and the number of Thai employees.

True Corporation vice-chairman Athueck Asvanont said FBA amendments were in an early stage, but he would prefer to see amendments that offered clear definitions of the types of business that the government wanted to control.

Duenden Nikomborirak, research director at the Thailand Development and Research Institute, said if the government adopted a stricter definition of “foreign” in the FBA, restrictions for foreign investment in service businesses should be eased.

“Service businesses that would cause no harm to the country or national security such as telecoms should be liberalised for foreign investment,” she said.



First published: Bangkok Post, November 14, 2014