February 1, 2007
Pridiyathorn says existing firms unaffected by new rules
source: The nation
Finance Minister Pridiyathorn Devakula said Wednesday that proposed
changes to the its investment law would have little effect on
businesses already operating in the country.
The comments were the latest effort in damage control by Thailand's
post-coup government, which has frightened investors with a series
of abrupt policy changes in the last two months.
Pridiyathorn told a seminar organised by the Export-Import Bank
of Thailand that proposed changes to the nation's investment law
would apply mainly to new ventures.
"After the amendment, foreign investors can still hold more
than 49 per cent in Thai companies if they inform the Commerce
Ministry," he said.
In announcing the changes to the Foreign Business Act earlier
this month, officials had said that new and old businesses would
be barred from holding more than 49 per cent of the shares and
the voting rights of companies in Thailand.
The amendments aimed to close a widely exploited loophole in
Thai law that had underpinned much foreign investment in the country
but sparked fears that the firms would have to sell off large
amounts of shares to comply.
But on Wednesday, Pridiyathorn insisted that the amended law
would only impose a reporting requirement on most existing businesses,
to allow the public to understand what has been a murky legal
area.
New companies coming into the country would, however, have to
comply with the cap.
"The revised draft is to acknowledge the facts around what
was already happening in Thailand for a long time but (which)
was previously not clear to the public," Priduyathorn said.
"The 30 per cent reserve rules were imposed in order to
help exporters to survive. It doesn't mean that Thailand doesn't
welcome foreign investors,"
Pridiyathorn told the seminar.
"I have talked to foreign investors about how they can manage
the withholding rules in order to make their new investments.
If the baht gets too strong, their profit margin (from Thai operations)
would be lessened."
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