Foreign business chief urges 'give and take' by opening up

JFCCT president Nandor G von der Luehe said in an interview with The Nation last week that the opening up of the service sector would be an efficient way to benefit the Kingdom.

"To give", he said, would be to do the following: amend the Foreign Business Act to make it more liberal, provide political stability and modernise regulations such as customs procedures and business rules to help foreign investors.

If it could do these things, Thailand should be in a "winwin" position as it would not only enjoy more foreign direct investment but also technology transfer and greater employment opportunities. This would be the "take" part of the deal.

"The main area in which foreign investors would like the government to act now in facilitating investment is to release service businesses from the protection list in Annex III of the Foreign Business Act," said von der Luehe.

He said he was very happy that the Commerce Ministry was planning to liberalise businesses and amend the Act, especially as regards clause 21 of Annex III, which he said was too general in its protection of service busi¬nesses.

As the Thai service sector is now more competitive than in the past, the country should move away from its great reliance on manufacturing and try to attract more invest¬ment in services, he said.

"I believe that the cancellation of clause 21 would be a very good thing for both foreign investors and Thailand," he added.

For instance, von der Luehe said, advertising is one area in which the Kingdom now has a high capability to compete with foreign companies. Liberalisation of the sec¬tor would create a better opportunity for the industry to compete internationally.

Other businesses that need liberalising are banking, finance and tourism, he said.

However, the country has the right to reserve some businesses in sectors such as agriculture and the media - notably television broadcast¬ing and newspapers - in the Foreign Business Act protection lists, as they are sensitive industries with nationalsecurity implications.

Asked about foreign interest in investing in rice farm¬ing and other agricultural businesses, the JFCCT chief said he appreciated the agricultural sector was sensitive not only for Thailand but also for European countries.

He said the Kingdom had the right to preserve the sector for Thais, but if it did allow foreigners to invest in local operations, this would increase the level of technology and knowhow in the system, which in turn would increase efficiency.

He said Thailand should adopt a balanced approach in opening up busi¬ness sectors so as to ensure that the advantages of liberalisation did not all go the way of capitalists. Farmers and other major groups should also benefit.

When it comes to liberalisation, von der Luehe accept¬ed that it might not be possible to make much progress in the short term. However, foreign investors would like to see a concrete plan for making it easier for foreigners to invest here. An exact time frame and procedure for the adjustment of the business sector are very important, he said.

Asked about the retail sector, he said the only problem was the uneven playing field between large and small retailers.

"The problem is that the giants are competing with the local 'mom and pop' shops, and the smaller retailers are unhappy because the large operators have better bargaining power," he said.

He said the larger players should not take advantage of their ability to demand lower prices from suppliers by setting up smaller outlets that competed head on with local convenience stores.

Introduction of a retail and wholesale business law could benefit the country, but the government must ensure that all regulations create fair conditions for all players. Thailand has obtained many benefits from the entry of large retailers, he said.

To boost foreign investor confidence in these uncertain political times, von der Luehe said the government should not impose too many regulations as this could slow down those investors keen to do business in the coun¬try.

He called for the gov¬ernment to ease the immigration system and facilitate genuine businessmen, support the operation of small and mediumsized enterprises and revise com¬plicated customs rules in order to eliminate any conflict of interest among officials and create transparency for business transactions.

Despite the political uncertainty affecting new investment, von der Luehe said the Kingdom still had good fundamentals to attract foreign investors. He cited the country's skilled labour, pleasant people and fair legal system.

"I still believe in the fairness and independence of Thailand's judicial system," said von der Luehe, adding that political stability and predictability were among the most pressing needs for foreign investors.

Foreign investors hope that a peaceful solution to the current crisis can be found and that the splits in society can be healed, so that the country can get back on track and investor confidence can receive a muchneeded boost, he said.

The sectors currently being eyed by new investors are automobiles, food and services, he added.