VZCZCXRO9442
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #2071 1001006
ZNR UUUUU ZZH
P 101006Z APR 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 6168
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHBY/AMEMBASSY CANBERRA PRIORITY 7002
RUEHUL/AMEMBASSY SEOUL PRIORITY 2988
RUEHKO/AMEMBASSY TOKYO PRIORITY 9135
RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 3414
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

UNCLAS BANGKOK 002071 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB AND EAP/MLS 
 
E.O. 12958: N/A 
TAGS: ECON PREL PGOV EINV TH
SUBJECT: CABINET SENDS INVESTMENT BILL TO LEGISLATURE 
 
REF: A. BANGKOK 2008 (RETAILING IN THAILAND) 
 
     ¶B. BANGKOK 883 (FOREIGN MISSIONS RESPOND TO THE FBA) 
     ¶C. BANGKOK 581 (RESPONDING TO CHANGES IN THAI FBA) 
 
¶1. (U) On April 10 the Thai cabinet approved the revised 
version of proposed amendments to the Foreign Business Act 
(FBA). The first version, approved by cabinet on January 9, 
was revised somewhat after review by the Council of State 
(RTG lawyers) and efforts by the Ministry of Commerce to 
incorporate a version of the FBA proposed by some members of 
the National Legislative Assembly (NLA). With this second 
cabinet approval, the bill now goes to the NLA for 
consideration. 
 
¶2. (SBU) That the cabinet considered and approved the FBA 
bill today was a surprise, not least to ministers other than 
the Minister of Commerce. We were told by the Finance 
Minister's key advisor that her Minister (Chalungphob) spoke 
to the Commerce Minister (Krirk-Krai) the previous evening to 
ask if there was any possibility the FBA would be tabled at 
the following day's weekly cabinet session. He reportedly was 
assured that the bill was not ready. At the cabinet meeting, 
Krirk-Krai presented the new version of the bill, announced 
that it was subject to "emergency consideration" due to the 
importance of the legislation, and a vote was duly taken. Our 
Finance Ministry contact believes the "emergency" aspect of 
the bill was to get it through cabinet before the Prime 
Minster returned to work from his current indisposition. (He 
is in the hospital, officially for a "routine check-up. 
Septel provides more detail.) 
 
¶3. (SBU) The Commerce Minister is selling the new version of 
the FBA as a "softer" version of the original. He is also 
reportedly saying that the new version takes into account 
comments made by members of the foreign business community at 
a meeting held on April 9 to discuss the FBA with members of 
the NLA and academics in front of members of the press.  The 
outcome of the seminar was the foreigners saying the bill 
"was terrible and should be scrapped" and the NLA members 
responding that the bill was going through in any case and 
the foreigners should suggest ideas to "make the bill better" 
rather than just criticize. While a copy of the latest bill 
has not been made public, we understand that the new version 
has four key changes from the January 9 edition. 
-     Companies in sectors under lists 1 and 2 of the three 
lists of proscribed industries will have three years rather 
than two to sell down their shareholdings to below 50 percent 
voting rights and equity. 
-     Penalty for non-compliance increased from up to 3 years 
imprisonment to up to 5 years. 
-     Definition of a "foreign company" is expanded to 
include not only majority equity ownership and majority 
foreign voting rights but also foreign management control. 
-     There are conflicting reports that companies may apply 
to a committee within the Ministry of Commerce to allow them 
to maintain their current share structure if the company can 
demonstrate the necessity of doing so and prove that the Thai 
stockholders are not acting as nominees. 
 
¶4. (SBU) Comment: Efforts by the Prime Minister to exert 
control over some aspects of economic policy as evidenced by 
the recent knocking back of the proposed Retail Act (reftel) 
have produced mixed results, to the continued consternation 
of foreign investors. Given the continuing decline of the 
Thai economy because of a lack of confidence in the political 
and policy outlook, the rush to pass this bill - which has 
been particularly contentious and fraught - is remarkable. In 
the meantime, we will continue to work with like-minded 
embassies to lobby the NLA. 
BOYCE