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Tue, Jan 09, 2007 - Page 10 News List

Bangkok to unveil new rules for foreign investment

AFP , BANGKOK

Thailand's foreign business community waited nervously yesterday as the government prepared to unveil new rules for investing in the kingdom, which could dramatically alter the way companies work there.

The military-installed government is due to consider today a revision to the Foreign Business Act, which is expected to redefine requirements for voting rights and shareholding structures of foreign companies that operate here.

Pramon Suthiwong, chairman of Thailand's Board of Trade business group, said he expected the law to limit foreign ownership in Thai companies to about 50 percent, while redefining voting rights for local subsidiaries.

"We proposed several options to the Commerce Ministry, but basically Thailand will give them a period of one to two years to adjust themselves to comply with the new law," Pramon said.

The changes come with Thailand's stock market still in a slump after the deadly New Year's Eve bombings in Bangkok and new foreign currency requirements that sparked a crash last month.

Under a long-recognized practice in Thailand, thousands of foreign companies with operations there are nominally owned by Thais, but controlled by foreigners.

The practice fell under a harsh spotlight last year when former prime minister Thaksin Shinawatra's family sold telecom giant Shin Corp to a group of investors led by Singapore's state-linked investment firm Temasek Holdings.

Following a mandatory tender offer, the Temasek-led investors ended up with a 96 percent stake in Shin Corp worth some US$3.8 billion.

Public outrage over the deal -- which gave the Singapore firm key stakes in Thailand's biggest mobile operator, a TV station and an airline -- eventually led to the military coup that ousted Thaksin in September.

Amid political pressure after the coup to find wrongdoing in the Shin Corp deal, the Commerce Ministry last year ruled that the takeover violated foreign ownership requirements.

Police have opened an investigation into the ministry's findings, which has cast doubt on the legality of the shareholding structure of thousands of local subsidiaries of foreign companies operating there.

Peter van Haren, chairman of the Joint Foreign Chamber of Commerce in Thailand, said the revised law would only add to the negative business sentiment that reigns in Thailand.

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