Foreign Business Act of 1999 (Thailand)
The Foreign Business Act was a law enacted by the
Chuan Leekpai-controlled National Legislative Assembly of Thailandin 1999 that limited foreign ownership of certain Thai industries. It's predecessor was the Alien Business Act of 1972, enacted by a military junta. Industries which must be majority-owned by Thais included the newspaper business, radio stations, television stations, rice farming, animal husbandry, fishing, land trading, mining, wholesaling and retailing, restaurants, and all service businesses. The law criminalized nominees, any Thai who held shares on behalf of a foreigner. Nominees could be fined 100,000 to 1 million bahtand face up to 3 years in prison. However, the law did not prohibit foreigners from being the majority in the board of directors and also did not prohibit having different classes of shares with differing voting rights. This loophole allowed thousands of foreign-controlled businesses to operate in Thailand.
The new draft Foreign Business Act
The first draft was issued by the
Thai Ministry of Commercein December 2006. A second draft was done in March and the third and final draft was approved by the cabinet in April 2007. The main points of contention are :
*1. The draft proposes to extend the definition of alien (foreign individuals or companies) as being that any company where foreigners hold half or a majority of the voting rights would be classified as alien and thereby restricted from participation in businesses regulated under the Foreign Business Act.
*2. limited grandfathering is included. All foreign owned companies as under the new definition and that have been operating for a year have to apply to the Ministry of Commerce for a certificate with a year. Once the certificate has been issued they have to adjust their
shareholdingor voting profile to conform to the new definition of the act within 3 years. This would exclude most service businesses.
*3. 100% foreign ownership was allowed for retail and wholesale businesses under the Foreign Business Act with the condition that 100 million
Bahtcapital was fully paid or 20 million Bahtper shop. That has now been abolished under the new Foreign Business Act.
Objections of the foreign business community
The foreign business community have objected to the draft on the following bases.
Thailandas a WTOmember had equal national treatment of businesses of all WTOmember countries, provided foreign equity investment was limited to 49%. The draft Foreign Business Act eliminates those rights.
*2. Foreign companies in
Thailandhad for years structured their companies into different classes of shareswith differential voting rights. These had been accepted by the Ministry of Commerce for years. The new Foreign Business Actwill make those structures illegal.
*3. All other countries such as Malaysia, Vietnam, China and India are opening their markets to foreign investment yet the draft Foreign Business Act by narrowing the definition of alien closes the
Thaimarket and makes Thailandlook as if it has a protectioniststrategy.
* British Chamber of Commerce Thailand,(Draft FBA and Objections) [http://www.bia.co.th/legalupdates/Foreign%20Business%20Act%20BIA%20art%20250507.doc]
* Bangkok Post, [http://bangkokpost.net/Business/23Nov2006_biz03.php Who can own what?] , 23 November 2006
* Bangkok Post, [http://www.readbangkokpost.com/business/foreign_business_act/will_unelected_nla_change_fore.php M.R. Pridiyathorn critiques proposed changes to foreign investment policy] , 23 August 2007
U.S.-Thai Treaty of Amity
Wikimedia Foundation. 2010.
Look at other dictionaries:
Thailand — /tuy land , leuhnd/, n. 1. Formerly, Siam. a kingdom in SE Asia: official name of Siam 1939 45 and since 1949. 59,450,818; 198,242 sq. mi. (513,445 sq. km). Cap.: Bangkok. 2. Gulf of. Also called Gulf of Siam. an arm of the South China Sea, S of… … Universalium
Business and Industry Review — ▪ 1999 Introduction Overview Annual Average Rates of Growth of Manufacturing Output, 1980 97, Table Pattern of Output, 1994 97, Table Index Numbers of Production, Employment, and Productivity in Manufacturing Industries, Table (For Annual… … Universalium
Foreign relations of India — The Republic of India is the world s most populous democracy and has one of the fastest economic growth rates in the world (8.9 percent GDP increase in 2007, the second fastest major economy in the world after China). [… … Wikipedia
Foreign relations of Mexico — Mexico This article is part of the series: Politics and government of Mexico … Wikipedia
Foreign relations of France — France This article is part of the series: Politics and government of France … Wikipedia
Foreign relations of Burma — Burma (Myanmar) This article is part of the series: Politics and government of Burma … Wikipedia
Foreign relations of Israel — Israel This article is part of the series: Politics and government of Israel Basic Laws Jerusalem Law … Wikipedia
Foreign policy of the United States — United States This article is part of the series: Politics and government of the United States … Wikipedia
Foreign relations of Serbia — Serbia This article is part of the series: Politics and government of Serbia … Wikipedia
Foreign exchange market — Forex redirects here. For the football club, see FC Forex Braşov. Foreign exchange Exchange rates Currency band Exchange rate Exchange rate regime Exchange rate flexibility Dollarization Fixed exchange rate Floating exchange rate Linked exchange… … Wikipedia