At a conference with representatives of the Joint Foreign Chambers of Commerce in Thailand, he said most foreign companies in Thailand would not be affected by the amendments. The amendments would not affect companies in the manufacturing and export sectors or those that have been awarded investment privileges by the Board of Investment (BoI).

In a surprise move, he also apologised for some earlier misleading information. He excluded telecommunications companies from the proposed new regulations, meaning they are still allowed to operate under foreign control and acknowledged he had been mistaken when he previously said that sector would face the proposed restrictions.

Pridiyathorn also insisted that application of the planned law to limit foreigners' shareholding and voting rights to less than 50 per cent in sectors deemed vital to national security would be flexible.

United Communication Industry and Advanced Info Service were the two mobile-phone operators expected to be the hardest hit by the new rules until he issued his clarification.

He admitted that the law was to be amended in line with a petition against a company being a nominee. Then there was a petition against an additional 16 companies. It was thus necessary to amend the law, in order to reduce foreign shareholding in all Thai companies and foreign investors' voting rights to no more than 50 per cent.

After the meeting with Pridiyathorn, Peter van Haren, chairman of the joint chambers, complained that the amended law seemed to be more stringent - the requirement to unload excessive shareholding to below 50 per cent would be a burden on the affected companies. He noted that it did not matter if they had a year to unload the excessive shares; as long as the unloading is compulsory, pressure would be put on the share prices.

On the proposal for a longer disposition period, Pridiyathorn said, "I told them to discuss it and send us their ideas, but this must be done on a fair basis."

Van Haren said the organisation would next week send the Thai government a letter seeking reassurance that the amended Foreign Business Act would not result in more stringent controls. In the letter, they will also ask the government to abolish the law's Annex 3, which covers more than 10,000 foreign companies.

Foreign investors also want the government to come up with positive measures to promote their investment, following a string of bad news that included the Bank of Thailand's anti-baht speculation measures and the New Year's Eve bombings in Bangkok.

"Still, I think that Thailand is a good place to invest. I believe that the situation will improve in the second half," he said.

Japanese Foreign Chamber of Commerce secretary-general Keisuke Matsumoto said the amended Foreign Business Act should not have a big influence on Thailand's investment atmosphere, only on some foreign investors' confidence in the short term.

Only a few Japanese companies operate businesses categorised under Annexes 1 and 2. Most Japanese companies are manufacturers and exporters; thus, the amended act should not significantly affect Japanese companies.

However, Matsumoto said the government provided too short a grace period for foreign companies to adjust to the new law.

"The government should provide at least three years for foreign companies to restructure and adjust voting rights. Otherwise, investors will feel a little hesitant to make new investments," he said.

After the morning session, Pramon Sutivong, chairman of both the Board of Trade and the standing committee in charge of the amendments, insisted that only a few companies would have to change their shareholding structure, because most foreign investments were concentrated in the energy and auto industries, which are under Annex 3. Companies under Annex 3 are subject to neither the shareholding nor the voting-rights regulations.

"The amendments are creating fair competition, not trade barriers. So far, Thai laws covering foreign businesses have been more lenient than those of other countries," he said.

Deputy Prime Minister and Industry Minister Kosit Panpiemras said the amendment was meant to clarify ambiguous issues and should benefit the Kingdom, because most companies winning investment privileges from the BoI were spared the law.

He said any impact would be limited to the short term and that the government would answer all questions, as there was still some time before implementation, with the Council of State still reviewing the amendments. Eventually, this will affect only a certain number of companies.

"There is still time to listen to foreign investors' comments. Thailand is a free country, and our reason for amending the law is to bring more clarity," he said.