VZCZCXRO9118
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #4588/01 2361057
ZNR UUUUU ZZH
R 241057Z AUG 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 9162
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 BANGKOK 004588 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE PASS USTR 
USDOC FOR 4430/EAP/MAC/OKSA 
SINGAPORE FOR TREASURY ATTACHE BAKER 
 
E.O. 12958:N/A 
TAGS: ECON EINV ETRD TH
 
SUBJECT:  TIME RUNNING OUT FOR FOREIGN BUSINESS ACT 
 
REFTEL:  BANGKOK 4442 
 
¶1.  (SBU) Summary:  Key MP Somchai Sakulsurarat assured foreign 
embassies August 23 that controversial amendments to the Foreign 
Business Act were unlikely to be reintroduced in the Assembly before 
end-of-year elections.  He further stated that a revised version of 
the amendments would only pass if the number of restricted sectors 
for foreign investment were slashed.  Foreign investors have high 
hopes that coming elections will usher in a business-friendly 
government more disposed to easing ownership restrictions.  End 
Summary. 
 
¶2.  (SBU) Somchai Sakulsurarat, vice-chair of the National 
Legislative Assembly's (NLA) ad hoc Committee on the Foreign 
Business Act (FBA), met with representatives from six foreign 
embassies over dinner on August 23 to discuss earlier deliberations 
on the FBA amendments and the prospects for their eventual passage. 
The legislation had been withdrawn during debate on August 8 at the 
request of Minister of Commerce Krirk-krai Jirapaet (see reftel). 
The bill has been returned to committee for review and revision. 
 
¶3.  (SBU) Somchai said that the FBA amendments had little chance of 
making it through the current Assembly before December elections, 
and it would be up to a new government whether to pick up the baton 
and pursue passage.  Somchai explained that the NLA had begun 
deliberations on a number of key organic laws related to the 
upcoming elections that would occupy the Assembly's time for some 
time to come, and that other bills on the agenda were higher 
priorities for the remainder of the NLA's current session.  He 
acknowledged that Minister Krirk-krai, chair of the FBA committee 
and lead proponent of the bill, could reconvene the committee within 
one or two months and present a revised bill.  Nevertheless, he 
considered it unlikely that the full NLA would take up consideration 
of the bill before elections. 
 
¶4.  (SBU) Somchai said that the NLA would only accept a revised bill 
if it included a package of changes, combining an expanded 
definition of foreigner to include management control, along with 
fewer business sectors restricted to foreign ownership.  In 
addition, Somchai said he wanted grandfathering provisions that 
would exempt all businesses currently operating in restricted 
sectors from complying with the new regulations.  He insisted that 
despite the NLA's expansion of the definition of foreigner, he and 
other NLA members "are not protectionists at all".  He explained 
that the NLA wanted foreign investors to compete freely and legally, 
but that the rules had to be as clear and transparent as possible. 
Of importance to the NLA was elimination of the usage of "nominees", 
Thais holding shares for foreigners to evade ownership restrictions. 
 
 
¶5.  (SBU) Somchai recounted the NLA's deliberations on the 
amendments on August 8, saying that without his addition to the 
definition of foreigner the bill would almost certainly have passed. 
 However, he insisted that his goal in expanding the definition was 
not to sabotage the bill's prospects for passage.  Somchai again 
assured embassy representatives that the bill would not "come out 
half-done", with an expanded definition of foreigner but without 
significant changes to restricted sectors. 
 
¶6.  (SBU) In a seminar on the FBA at Chulalongkorn University on 
August 22, former Deputy PM Pridiyathorn Devakula lambasted the new 
NLA version of the amendments, predicting that the revised version 
would drive away foreign investors.  Critics of expanding the 
definition of foreigner to include management control have 
questioned how this new criteria would be defined and how 
authorities could precisely determine control within a business.  A 
Thai-owned business employing a foreigner in a management role could 
potentially be considered foreign-owned.  Somchai admitted that the 
definition of management control was vague and would need to be 
better clarified, but said regulations would focus on management 
control exercised by board members.  Critics have also said that the 
original version of the amendment's inclusion of majority voting 
rights to the definition of foreigner was sufficient to eliminate 
most abuses of the FBA, and that any further expansion would have an 
unacceptably broad impact on foreign investment. 
 
¶7.  (SBU) Comment:  Somchai's observations of NLA proceedings and 
his assurances that amendments would only be considered with relaxed 
restrictions were welcomed by the Embassy attendees.  The investment 
community's preferred option has always been deferral of the 
amendments for consideration by a new, elected, and hopefully more 
business-friendly government.  Democrat Party members have already 
made clear they favor a broad revision of the FBA to allow foreign 
investment into restricted sectors; spin-off parties from former PM 
 
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Thaksin's Thai Rak Thai party would also likely concur.  End 
Comment. 
BOYCE