VZCZCXRO6091
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #6074/01 3410923
ZNR UUUUU ZZH
R 070923Z DEC 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 0995
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC

UNCLAS SECTION 01 OF 02 BANGKOK 006074 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS USTR 
USDOC FOR 4430/EAP/MAC/OKSA 
 
E.O. 12958:N/A 
TAGS: ECON EINV TH
 
SUBJECT:  FOREIGN BUSINESS ACT AMENDMENTS STILL UP IN THE AIR 
 
REF:  A) BANGKOK 4588; B) BANGKOK 4442 
 
¶1.  (SBU) Summary:  MP Somchai Sakulsurarat told a diplomatic and 
business group that his committee is still debating amendments to 
the Foreign Business Act but is confident it would report the bill 
out to the full assembly next week.  Committee debate is focused on 
whether to grandfather foreign businesses operating in restricted 
business sectors.  Somchai was unable to add another amendment to 
require a revision of restricted sectors, but believed that the 
political parties contesting upcoming elections were in favor of a 
full review and would do so after forming a government early next 
year.  End Summary. 
 
¶2.  (SBU) Embassy and joint chambers of commerce representatives met 
over dinner on December 6 with Mr. Somchai Sakulsurarat, the 
National Legislative Assembly's deputy chair of a committee 
reviewing proposed amendments to Thailand's 1999 Foreign Business 
Act.  The meeting followed on an earlier dinner with Somchai in late 
August (see ref A).  Somchai's committee has been reviewing the 
amendments since early August after the full NLA made further 
changes to the law and returned the bill to committee (ref B).  Only 
a relatively few U.S. investors would be affected by the proposed 
amendments thanks to protection by a bilateral investment treaty 
with Thailand, but concern remains among the U.S. business community 
that the law could prolong the current pall over the current 
business climate. 
 
¶3.  (SBU) Somchai told the group that current discussion in the 
committee revolved around the extent that the law would grandfather 
the operations in restricted areas by businesses that would be 
considered foreign under the new amendments.  The current version 
requires restructuring of ownership for firms operating in areas 
covered in the FBA's List One and List Two which detail business 
areas that are in national security or culturally sensitive, though 
not for those in the less restrictive List Three which covers most 
other service sectors.  Somchai said that "our group" in the 
committee wants a complete grandfathering for businesses in all 
three lists, with the exception of media, of which foreign ownership 
is prohibited in the new Constitution.  Somchai did not say how big 
"our group" was, and said others in the committee disagreed with his 
approach and debate continued on how to proceed.  He clarified that 
grandfathered businesses would not be capped on expanding their 
operations, but would not necessarily be allowed to expand into new 
lines of business. 
 
¶4.  (SBU) Somchai said he was also pushing for a revision of the 
three lists of restricted areas for foreign investors.  He said he 
had tried to include a provision in the amendments that would have 
required a revision, but regretted that the amendments would only 
make a recommendation for the government to review the lists. 
Somchai said the political parties vying in upcoming elections had 
made statements in favor of reviewing the restricted sectors in the 
FBA and believed they would follow through after one had formed a 
government. 
 
¶5.  (SBU) Somchai chided the foreign representatives for focusing 
too much on the new definition of foreigner in the amendments and 
not enough on pushing for a review of the lists.  An embassy 
representative countered that the current FBA required an annual 
review of the lists, but that no changes had ever been made, and 
asked why it would be expected to take place in the next government. 
 Somchai replied that the FBA amendments would tighten loopholes and 
a new government would therefore feel comfortable making changes to 
the lists.  He discounted the possibility that Thai business 
interests would block any review that would bring foreign 
competition, saying that foreign businesses were already operating 
in restricted sectors and there had not been push back from local 
business. 
 
¶6.  (SBU) Somchai also expounded on the revised definition of 
"foreigner" that the committee had agreed upon, expanding it to 
include "management control" in addition to majority share 
ownership.  The committee has not released the language of the new 
definition, but Somchai explained that companies with foreign 
shareholder control over key business decisions would be considered 
foreign.  The three decision areas would be an increase or decrease 
in capital; merger and acquisition; and changes to the company's 
articles of association.  Somchai said the amendments would focus 
only on foreign control at the board level and not on management. 
 
¶7.  (SBU) Somchai is confident that the NLA committee would complete 
its review of the amendments at its next meeting on December 11, and 
would be able to schedule the bill for a final vote as early as 
December 19.  He said, however, that the NLA is prepared to continue 
considering bills after December 23 elections and through the end of 
January when he expected a new Assembly would be seated.  A U.S. 
 
BANGKOK 00006074  002.2 OF 002 
 
 
business representative gamely attempted to convince Somchai to put 
off consideration of the bill until the next government, but Somchai 
rejected the idea, saying the amendments had been in the works for 
nearly a year and would not be delayed further. 
 
¶8.  (SBU) Comment:  Somchai is perhaps overly optimistic about the 
likelihood of the FBA amendments' prospects for passage, and also 
that the next government would make a concerted effort to open 
additional business sectors to foreign ownership.  There are doubts 
that there is enough time to resolve the remaining controversies in 
time for passage by this government.  It is still not clear whether 
the NLA will continue to pass legislation after the election.  As 
well, while the political parties have expressed support for foreign 
business during campaigning, they have not made explicit promises to 
revise the lists. 
BOYCE