A potential change to Thailand’s Foreign Business Act (FBA) has made investors and companies who are doing business in the country uneasy. Under the proposed amendment to the law, foreign nationals will no longer have the ability to control the majority of a company in Thailand.
Currently, no more than 49% of shares in a Thai business may be owned by foreigners; however, this does not limit them from making up a large part of the board of directors, or by holding shares with different voting rights. This allows companies to effectively be foreign controlled.
Mitsugu Saito, minister of the Japanese Embassy in Thailand, said that the FBA change would affect over half of all Japanese businesses in the country. He warned that that such a law would further damage the already shaky investor confidence, and have a large impact on current and future foreign direct investment (FDI) in Thailand.
“The embassy is quite seriously concerned about the draft amendment. If the law is changed, the ownership of a joint venture has to be a Thai national, and they [the Japanese] will have to decide to give up foreign ownership or withdraw their business from Thailand. ” said Saito.
The American Chamber of Commerce in Thailand (AmCham) expressed similar thoughts, echoing fears about the ability for foreign companies to continue operating and investing in Thailand.
“We sincerely hope the Thai government will not rush to enact restrictive and damaging amendments that will adversely impact the Thai economy,” said Darren Buckley, president of AmCham.
The European Association for Business and Commerce in Thailand (EABC) is also concerned. “We expect restrictions in the FBA to be relieved, not become more restrictive,” said Rolf-Dieter Daniel, the organization’s president.
A similar amendment to the FBA was implemented in 2007, which led to the Thai stock market plummeting by around 15% in one day.