PeterJj Van Haren: The amendments would create an enormous effect on the investment atmosphere in Thailand.

The Joint Foreign Chambers of Commerce in Thailand (JFCCT) yesterday warned the government to suspend changes to the Foreign Business Act for six months to hear comments from them - or they would consider withdrawing investments in the Kingdom.

"We cannot estimate how much capital for certain will go from Thailand if the government insists on amending this Act. However, it will not only cause a loss in certain capital, but other forms of benefits that Thailand will definitely lose," said Peter J Van Haren, chairman of the JFCCT.

The 28 foreign chambers in Thailand issued a joint statement yesterday asking the government to delay the plan to seek Cabinet approval for the amended Foreign Business Act.

They said that changes to such a significant Act would definitely undermine foreign investor confidence.

The Commerce Ministry is due to propose today that the draft amendment be approved by the interim government.

Under the joint statement, the JFCCT encouraged the government to reflect further - for at least six months - on any potential changes to the Act or other rules governing foreign investment in Thailand.

It suggested the government first organise an economic-impact study on any proposed changes.

The chambers said they backed any changes to the Act that promote economic liberalisation and opposed any amendments that take a step backward from the open investment environment in Thailand.

The JFCCT also opposed any changes to the Act that open the door to compulsory divestiture of established foreign enterprises in Thailand.

Van Haren said foreign investors were disappointed with the plan to amend the law because it would create obstacles to foreign investors, both existing and in the future.

"Foreign investors have great concerns on this matter. It is a serious issue for us and the Thai government as the amendments would create an enormous effect on the investment atmosphere in Thailand," he said.

Foreign investors did not know why the government wanted to change the law, but felt it should separate political problems from business.

Commerce Minister Krirk-krai Jirapaet confirmed yesterday that the ministry would propose that its draft of changes to the Act be put for Cabinet approval today.

However, foreign investors could oppose the changes, he said.

The Kularb Kaew nominee case involving ousted prime minister Thaksin Shinawatra has prompted the ministry to change the Foreign Business Act 1999 for the first time.

The ministry committee finalised suggested amendment late last year. It proposed that any company in which foreign shareholders' voting rights reach 50 per cent be defined as a nominee.

Van Haren said the issue of voting rights would definitely cause trouble for foreign investors who would need to restructure their business, while the government would limit how long they would be allowed to do this.

The JFCCT also asked for the government to liberalise businesses listed in the Act's Annex III to create a better trade environment for foreign investors and boost economic growth, while allowing foreigners to operate some businesses listed in Annex II.

At present, businesses in Annex II are involved in national security, culture and environment. They include salt fields, arms manufacturing, silverware production, mining, silk, and aviation transport services.

On December 22, the JFCCT submitted a letter with comments about changes to the Act to the prime minister, but the government did not respond.

In the letter, they called for the government to reconsider changes to the Act and allow foreign companies to discuss the moves with them.

They said they did not oppose the plan, but only wanted to create better understanding and help boost economic growth here.

Van Haren said that all 28 foreign chambers of commerce and their embassies agreed with the statement and wanted the government to reconsider its moves.

Foreign companies have expressed concerns about the matter, as have some big Thai firms, because amendments would affect the country's economic growth, he added.

Keisuke Matsumoto, secretary-general of the Japanese Chamber of Commerce in Bangkok, said Japanese investors were highly concerned about the amendments as they would force major investors to restructure their companies.

Most Japanese businesses have more than 49 per cent of company shares and voting rights. Keisuke said the government should allow more time for groups to restructure their companies.

Japanese investors are the largest foreign investors in the Kingdom. More than 7,000 Japanese companies operate here, while 1,276 are members of the Japanese chamber.

Keisuke Matsumoto said the government should allow more businesses to trade freely, such as advertising. It should also create a stable environment to boost understanding among foreign investors, and should not change business laws or trade policies so often.

Petchanet Pratruangkrai

The Nation