Published on December 20, 2007
The Commerce Ministry's Business Development Department plans to use its authority under the Foreign Business Act (FBA) to make it easier for foreign investors to participate in four types of business.
The move follows the present government's failure to overhaul foreign-business laws by amending the FBA within its term. The four business types subject to relaxation of protection under the law are representative offices, regional representatives, government-related service agencies and group consultancies. All remain listed in the Act's Annex III and subject to protection. However, the ministry will amend the regulations to enable foreign investors to take part in these business sectors more easily.
Director-general Kanissorn Navanugraha said the more flexible conditions would take effect next year.
Currently, any foreign investor wanting to operate any business listed in Annex III must seek approval on a case-by-case basis. If the new conditions come into effect, foreign investors will no longer have to seek permission. The application and approval procedure will be both clear and predictable.
The FBA provides three lists of business sectors that are protected because they are regarded as critical to national security. The degree of protection is highest in Annex I, followed by Annex II and Annex III.
Foreign investors have been keen to participate in service businesses listed in annex 3, but that annex does not allow foreigners to hold more than 50 per cent of shares in a business unless they receive permission from the department's Foreign Business Act Subcommittee. This requirement has made the application and approval process unpredictable and inconsistent, Kanissorn said.
"Although the government could not proceed on amendments to the legislation, it will set up clearer conditions, starting with these four business types, so that foreign investors will feel confident about operating businesses here," he said.
The department is also considering more flexible conditions for another 13 business types in Annex III as part of its regular revision of the Act.
A study of the protected businesses should be completed by next August. If the department finds that Thai enterprises are capable of competing with foreign investors, then those businesses may be withdrawn from the protected list, he explained.
Businesses being studied by the department included beverage and food retailing, hotel operation, made-to-order manufacturing and agencies or representatives.
Although the proposed amendments to the FBA will soon fall into the hands of a new government, the department insists it will press ahead with the investigation of some of 400,000 companies, in order to determine whether they have breached existing provisions of the Act.
Kanissorn said the government wanted to ensure that there were no nominee problems in the Kingdom. The department will randomly investigate the structure of various businesses while it waits for the new Cabinet's decision on amendments to the Act.