Kiat said at a seminar hosted by the National Economic and Social Advisory Council yesterday that the embassies were wondering if Singapore-based Temasek's takeover breaches the Alien Business Act.

"They wonder if there are nominees involved, because foreign shareholders in the companies involved in the complicated takeover deal control the companies, even though the companies are registered as Thai ones," Kiat told the audience.

Meanwhile, they also are concerned about the National Telecommunications Commission's proposed draft regulations for foreign dominance in Thai telecom companies.

Earlier, the Norwegian government and the European Union submitted petitions to the NTC, indicating their displeasure with the draft regulations.

"The government of Norway is seriously concerned about both procedural and substantive issues raised by this draft notification," said a letter from the Norwegian Embassy in Thailand to the NTC earlier this month.

A Norwegian company is the main shareholder in Total Access Communication, the second-largest cell-phone service provider in Thailand.

The NTC drafted the regulations as required by the amended Section 8 of the Telecommunications Business Act of 2001. Under the law, foreigners cannot own more than 49 per cent of a telecom company and foreign shareholders may not have voting rights exceeding the entitlement of their actual stakes.

Dominance is also defined as foreign shareholders or their representatives appointing or removing key policy-makers of a Thai firm, the use of nominees to dominate them, or the appointment of foreigners linked to foreign shareholders to key policy-making posts.

If dominance is exerted by a foreign government or foreign state enterprise, and the NTC believes that the dominance poses a threat to national security, it will consult with certain local agencies, such as the National Security Council. If any of the local agencies agree that a threat to national security exists, the NTC would order the licensee involved to end the foreign dominance.

Temasek's takeover has sparked questions over the possible involvement of nominees. The Commerce Ministry's Commercial Registration Department is now studying if companies involved in the deal - Cypress Holdings Co Ltd and Kularb Kaew Co Ltd - are nominees of the Singapore's state-linked investment arm.

The National Economic and Social Advisory Council's papers showed that foreign dominance in the telecom industry could yield benefits and disadvantages. Among the benefits are freer competition and technology transfer. The downside would be that small operators could be pushed out of the market. It also mentioned that foreign dominance could affect national security. 

Usanee Mongkolporn

The Nation