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NLA draft on FBA will reopen debate
The Nation – 14 March 2007
ACHARA PONGVUTITHAM, PETCHANET PRATRUANGKRAI
The government is likely to face a tough debate today regarding the new draft of the amended Foreign Business Act (FBA) that was drawn up by a group of National Legislative Assembly (NLA) members and will provide greater flexibility on voting rights.
A high-level Commerce Ministry source said Deputy Prime Minister Kosit Panpiemras would receive the NLA's new draft amendment today.
"The government must receive the NLA's draft; otherwise, assembly members would propose its amended draft version directly to the NLA. Consequently, the Commerce Ministry's draft of the FBA amendment would be dropped," the source noted.
The NLA draft concentrates on flexibility of voting rights that indicate whether a company is majority-owned by foreigners. Under the proposal, a company with foreigners holding more than 50 per cent of voting rights would not be defined as an alien business, but rather would be subject to inspection to determine the real intention behind conducting business, financial source and qualifications of the investors and their partners.
There are thus two versions of the amended FBA. The first one drawn up by the Commerce Ministry has stringent restrictions on voting rights aimed at clarifying foreign businesses. It also focuses on the nominee issue by inspecting shareholders of any suspected companies whether or not they are representatives of foreign investors.
The latest draft by the NLA members offers a friendlier approach to foreigners through flexible voting rights.
The source said the Cabinet would carefully consider both versions. The process should be completed within 30 days, after which it will be forwarded to the NLA for consideration.
"The NLA proposal is not a backtracking, but rather a sidetrack, while the Commerce Ministry's version of the draft law is aimed at tackling the issue of foreign businesses," said the source.
However, the NLA proposal will pose difficulty in terms of law enforcement and inspections.
"Officials may be afraid to point out whether a company is a foreign business and has a nominee, because it's hard to prove its real intentions behind doing business," the source said.
To ensure implementation of the FBA amendment, the government will consider changing some articles of the Commerce Ministry's draft Act and add some proposals that have been raised by the NLA.
The ministry's FBA amendment has drawn a lot of criticism from foreigners, due to its stringent restrictions on voting rights and nominee conditions. The fear is that foreign investors will lose confidence in doing business in Thailand and move their investments to other countries.
Keisuke Matsumoto, secretary-general of the Japanese Chamber of Commerce in Bangkok, said foreign investors would welcome more flexibility in the FBA.
"Japanese investors are extremely concerned about the voting-rights limitation, as the regulation will control business operations. We [foreign investors] want more flexibility. The NLA proposal should create a better atmosphere for foreign investors," he said.
Matsumoto said Japanese investors wanted to have a dialogue with the economic ministers of the government, in order to seek a better understanding of the FBA amendment.
Investors want the government to reduce the number of businesses under Annex III, he added.
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