Foreign ownership regulations need to be changed, says SEC

Economy November 10, 2014 01:00

By ERICH PARPART
THE NATION

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THE Securities and Exchange Commission has said foreign ownership regulations should be relaxed in order to attract more foreign investors.



The call for the red-tape overhaul came as the Taiwan Stock Exchange revealed that getting rid of regulation barriers was key to luring back local companies that had listed abroad.

SEC deputy secretary-general Tipsuda Thavaramara told a seminar arranged by the Association of Thai Securities Companies that it was “almost embarrassing” that Thailand still had regulation barriers regarding foreign ownership.

Tipsuda also said the list of industries protected by the Foreign Business Act could be shortened to lower these foreign investment barriers. “The FBA list is quite broad, especially list 3, which also stated that foreigners who provide a service that is not contained on the list must still obtain a foreign business licence prior to commencing operations,” she said.

“Therefore, an exemption has to be sought case by case, which is why the SEC has invented the NVDR [non-voting depository receipt] to allow access to financial benefits for foreigners who do not want to express any control, but there are complications and it is not the same as real holdings.

“It would be better if the FBA’s list is shortened, as the market always has issues against NVDR but we always told them [the markets] that the regulations cannot be further relaxed because of the FBA.”

Nevertheless, Tipsuda revealed that the SEC was working on vehicles to facilitate overseas investment and it expected to introduce an infrastructure trust early next year to go along with an infrastructure mutual fund.

This, she said, would allow investors to invest in a wider range of infrastructure, domestic and international, in order to support regional connectivity.

This would result in the introduction of a depository receipt that would be listed and traded on the SEC while allowing the listing of depository receipts based on shares already listed on exchanges in the Greater Mekong Sub-region (GMS).

Tipsuda said another vehicle that was going to be introduced next year was the GMS mutual fund, and the SEC planned to relaxed investment restrictions for retail mutual funds so all the fund assets could be invested in GMS products.

She said these included shares of listed companies in Laos, Cambodia, and Vietnam where mutual funds offered for retail would be allowed to invest up to 100 per cent in shares of listed companies that were not member countries of the International Organisation of Securities Commissions.

Meanwhile, Taiwan Stock Exchange president Michael Lin said Taiwan had worked hard to amend many regulations, including the country’s Security Exchange Act, in order to lure back Taiwanese companies that had listed abroad.

He said doing so had attracted companies from the United States, Japan, Hong Kong, and Singapore.

“The regulation issues are the first and foremost barriers that need to be removed in order to attract foreign investment and lure back companies that went abroad to be listed,” he said.

Lin revealed that currently there were 38 foreign companies listed on Taiwan Stock Exchange and the funds raised by these companies amounted to US$5.3 billion (Bt174 billion) in 2013, which was almost the same as the amount raised by local companies.

 

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