An international partner in the law firm Baker and McKenzie, Kitipong Urapeepatanapong, has urged the Thai government to consider liberalising the Foreign Business Act to take account of factors such as consumer benefits and employment.

"While other countries are opening up their economies, why does Thailand have to step backwards by setting up additional unattractive requirements to cause unnecessary complications for investment?" he asked.

The Cabinet last week approved draft amendments to the Foreign Business Act, which will set a clearer definition of foreign corporate entities, including Thais holding shares on behalf of foreigners, to clear up the issue of nominees circumventing the law.

However, the draft law does not open up more sectors for foreign investors, as the business lists subject to protection are barely changed.

Kitipong said foreign investment had played a vital role in driving the Thai economy over the past 30 years.

"I hope that the drafted law will be thoroughly considered by the Council of State and the National Legislative Assembly. Besides,

the government should listen to the opinions of stakeholders to ensure that Thailand's new law will be wellreceived," he said.

The current law consists of three lists of businesses subject to different degrees of protection. Annex 1 is the most protected list, followed by Annex 2. Annex 3 consists of businesses open to foreigners, subject to conditions.

Kitipong said that in exchange for amending foreign business laws, the government should open up some business sectors under Annex 3 to send a positive signal to foreign investors to maintain their confidence that the government intends to continue with liberal policies.

He agreed with the government's statement that the amendments will clean up vagueness in law enforcement according to the principles of good governance.

However, the proposed amendment might create a long-term impact. "If the cleanup spreads out dust, or some dust is swept under the carpet, no one will want to come to the house or to invest in the country," he said.

"I hope that the law that passes through the National Legislative Assembly will be a step forward and not a step backward," he said.

In summary, he said the draft amendments to the Foreign Business Act will define as foreign companies those with foreign voting rights of more than 50 per cent and will set a new definition of "foreigners" according to the law.

Foreign companies will be able to continue doing businesses under Annex 3 of the Act if they notify the government within one year of the amendments becoming law.

Foreign companies will be required to rectify their shareholdings within two years if they operate businesses under Annex 1 or Annex 2.

Thais who hold shares on behalf of foreigners are required to inform the Commerce Ministry's Business Development Department within 90 days of the amendments becoming law and correct the shareholding within one year.

Kitipong said he considers this requirement an "amnesty" to enable violators to correct themselves.

The government plans to amend Annex 3 by withdrawing business restrictions for tourism, financial services, securities and the agricultural futures market, but excluding exemptions previously provided for retail business.

Penalties are also increased under the draft law.