VZCZCXRO5658
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #5799 3180949
ZNR UUUUU ZZH
R 140949Z NOV 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 0650
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC

UNCLAS BANGKOK 005799 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USTR 
USDOC FOR 4430/EAP/MAC/OKSA 
 
E.O. 12958:N/A 
TAGS: ECON EINV TH
 
SUBJECT:  FOREIGN BUSINESS ACT AMENDMENTS MAY PASS BY END OF MONTH 
 
REF: A) BANGKOK 4442; B) BANGKOK 4588 
 
¶1.  Summary:  Thailand's National Legislative Assembly is set to 
again consider controversial amendments to the Foreign Business Act 
that would further restrict foreign ownership.  Last week, an ad hoc 
committee approved a clarification of the definition of foreigner, 
removing a barrier that had earlier prevented the amendments' 
passage in August.  The committee is still reviewing provisions that 
might grandfather companies that would be redefined as foreign under 
the new rules.  Minister of Commerce Krirk-krai Jirapaet, who also 
chairs the ad hoc committee, hopes to submit the amendments for a 
vote by the full Assembly as early as November 28.  End Summary. 
 
¶2.  A National Legislative Assembly (NLA) committee made a key 
revision to proposed amendments to the 1999 Foreign Business Act 
(FBA) that could allow the amendments to be considered by the full 
assembly by the end of November.  On November 6, a working group 
from the NLA's ad hoc Committee on the FBA submitted its 
recommendation to the Committee for a clarified definition of 
"foreigner" as it relates to foreign ownership of companies in 
Thailand.  The NLA had earlier expanded the definition of foreigner 
to include "management control" during August debate on the 
amendments (reftel A).  However, management control was not defined. 
 Minister Krirk-krai withdrew the amendments during debate and 
returned them to committee for review and revision. 
 
¶3.  The Committee has refused to disclose its new definition for 
management control, but a story in local newspaper Prachachart 
Thurakit indicated that the definition appears to be quite loose. 
According to the paper's source, a company with minority foreign 
shareholders who have complete management control would be 
considered foreign; however, if Thai partners have a voice in 
management decisions and concur with the views of the foreign 
shareholder, the company would be considered Thai. 
 
¶4.   At the Committee meeting to approve the definition of 
management control, Minister Krirk-krai detailed a new working group 
to review section 10 of the amendments which concern the status of 
companies that would be redefined as foreign under the new rules. 
The section as currently written would require companies in certain 
restricted areas to divest majority ownership within three years. 
The Committee aims to complete this most recent review and resubmit 
the amendments to the NLA floor on November 28. 
 
¶5.  At a meeting on November 9, members of the Joint Foreign 
Chambers of Commerce said they were concerned that the NLA would 
pass the FBA amendments quickly and without debate.  Although the 
loose definition of management control could allow foreign companies 
to exploit loopholes and continue business in Thailand, businessmen 
at the meeting said it could also allow the RTG to arbitrarily force 
divestiture.  The ambiguity, even for grandfathered companies, would 
make it difficult for company headquarters to authorize any new 
investments.  Chamber members also voiced doubts that the lists of 
industries restricted from foreign participation will be pared back, 
as the lists protect industries in which prominent families, 
influential with the current interim government, have financial 
stakes. 
 
¶6.  In a November 13 call on Ministry of Commerce Permanent 
Secretary Siripol Yodmuangcharoen by Econ and FCS Counselors, we 
 
SIPDIS 
noted the foreign business community's frustration that the latest 
revisions to the FBA amendments have not been made public.  Econ 
Counselor continued that foreign investors are very concerned that 
the amendments' provisions apparently would require some businesses 
to divest their holdings and give up management control.  Siripol 
said he would pass on the concerns, but said that what Thailand will 
be proposing in the new law is in line with definitions of foreign 
companies in other countries. 
 
¶7.  Comment:  Somchai Sakulsurarat, deputy chair of the ad hoc 
Committee, had earlier assured foreign businesses and embassies that 
the FBA amendments would not pass during this current government 
without major revisions.  He said that any bill that passed would 
allow current businesses to continue operations, and also pare down 
the lists of restricted sectors (reftel B).  Somchai has recently 
cut back his contacts with the foreign business community; many 
believe he is doing so as he sees he will be unable to follow 
through on his previous commitment.  End Comment. 
BOYCE