• 
• 

Published on August 10, 2007

On Wednesday, Somchai Sakulsurarat and Bodin Aswananich were able to muster enough support within the NLA to torpedo Krirk-krai's bill to amend the Foreign Business Act.

But if he were to look back, he would certainly recall that former finance minister MR Pridiyathorn Devakula also faced the sharp pikes of the NLA. Pridiyathorn's attempt to amend the law to legalise the two- and three-digit lottery scheme was also derailed.

Somchai is quite influential within the NLA. As a former president of Thai Military Bank (now named TMB Bank), he has built up close ties with the military, which is now wielding its power behind the scenes. Bodin is an adviser to the Siam Cement Group and is also an executive of the Federation of Thai Industries. Both are knowledgeable concerning local industry and its interaction with foreign shareholders.

The battle over the Act reflects a bitter rift between the Surayud Chulanont government and the military-dominated NLA. The hardliners within the NLA are keen to scrutinise every single bill proposed by the Surayud government and to block them at will.

Krirk-krai had wanted to push through the amendments to the Foreign Business Act before the Surayud government ends its term. He had teamed up with Oranuj Osatananda,  at the Commerce Ministry, to work hard and lobby for the passage of the amendments at the House committee level. This was to ensure that if either one of them were away, the other would be there to follow up on the bill. The House panel scrutinising this bill met as frequently as twice a week to accelerate its passage.

This followed the fallout of the Temasek-Shin Corp deal, in which Temasek was accused of using nominees in Kularb Kaew as part of its scheme to acquire Shin Corp. Still, the Foreign Business Act amendments had received a negative response from the foreign business community in Thailand, which viewed them as too protectionist and hurting investor sentiment.

Krirk-krai thought that he had produced the best compromise possible with his set of amendments to the Act. First, the use of nominees to circumvent rules of foreign ownership would definitely not have been allowed. Second, foreign ownership in companies doing business in restricted sectors would not have been permitted to exceed 49 per cent. Moreover, the voting rights of foreigners operating in restricted businesses would also not have been allowed to exceed 49 per cent.

But Somchai and Bodin believed that the rules were still not clear enough to prevent foreign shareholders from exploiting other loopholes in order to effectively gain management control in companies doing business in restricted and sensitive sectors, such as agriculture or the telecom industry. They and their supporters argued that to resolve this issue once and for all the law must spell out clearly that foreign shareholders must also be barred from having "management control" in companies declaring themselves to be Thai.

Krirk-krai did not want to go that far. If a clause pertaining to "management control" were to be included, it would be difficult to define the legal framework. How would he define management control and what would the specific wording of the law be?

Somchai suggested that Krirk-krai introduce an organic law to support the amendments to the Foreign Business Act, which would have resolved the problem. However, that would have placed too much of a burden on the Commerce Ministry, the sponsor of the bill.

Krirk-krai would not want to put himself in a situation whereby he had passed the Act and then would have to push for the organic law to support it. What would happen if the organic law never saw the light of day?

Since Somchai and Krirk-krai could not agree on the bill, they had a showdown in the NLA. Somchai had his own version of the Foreign Business Act amendments. The members of the NLA lined up to vote on whether to take up Somchai's strict version or Krirk-krai's milder version. As it turned out, Somchai's strict version prevailed with 76 votes to 64 for Krirk-krai's version.

This obliged Krirk-krai to pull the bill altogether, otherwise the NLA would have proceeded to deliberate on the legal amendments as included in Somchai's version.

It should be noted that 30 members of the NLA walked out of the meeting without casting their votes. If they were to have voted, they would have done so in favour of Krirk-krai's version.

Krirk-krai retreated to find new ground after losing this bitter battle in the NLA. He indicated that he would try to revise the Foreign Business Act amendments in line with what the majority of the NLA had suggested. But he did not promise when he would do it or when it would be finished - or whether it would see the light of day during the Surayud government's term.

At this point, you might say that the Surayud government's attempt to amend the Foreign Business Act is dead in the water. In the meantime, foreign companies, foreign trade representatives and foreign embassies in Bangkok are cheering with elation on the sidelines.

Let's wait and see how the next government will deal with it. 

Thanong Khanthong

The Nation