The investors are cooperating with local people to avoid Thailand's investment laws, which do not allow foreigners a stake of more than 49 per cent. The investors use the locals as major shareholders when setting up their companies, and in return the investors remain minority shareholders on paper. But in fact, the foreigners control management and capital, while the locals are nominees.

The TCT said it was worried about the issue, because it had become a growing concern.

TCT president Kongkrit Hiran-yakit said most of the investors were European.

"These people know Thailand very well. They come here very often for vacations. So they just want to make a profit this way," said Kongkrit.

He said tourist destinations like Phuket, Koh Samui and Koh Pha-ngan were favourite investment sites. Most investors preferred to build small and medium-sized properties, because they were less expensive and easier to manage.

"On Koh Pha-ngan, for example, I have not seen local people dare to build a hotel. They've never run a business before," said Kongkrit.

The foreign investment is not only in hotels and resorts, but also in travel companies and diving and cruise operations.

The council is starting to solve the problem here by working with the Forestry Police in compiling information about abnormal investments. They are also considering enforcing investment zones, in order to protect local resources. Moreover, they are inspecting ownership in the areas affected.

Kongkrit said that almost all inbound tour operators were already owned by foreigners. The flow of foreign investment here will be boosted by free-trade agreements (FTAs) for the tourism sector that will take full effect in 2010.

"Although the Kingdom will follow international rules, such as with FTAs, we need to save our small and medium-sized businesses," Kongkrit said.

The TCT has urged the government to help local operators through increased marketing activities.

The tourism industry is expected to grow throughout the rest of this year and into next.

One good sign is the opening of the new Suvarnabhumi Airport, which will boost tourist capacity. Meanwhile, tourism in southern Thailand is recovering to normal levels before the 2004 tsunami, Koh Chang is being developed, and the Eastern Seaboard is booming.

Airports of Thailand Plc, operator of five international airports upcountry, also plans to reduce landing and parking fees, in order to boost air travel. Another favoura-ble factor is the celebration of the 60th anniversary of the accession to the throne of His Majesty the King.

Suchat Sritama

The Nation