VZCZCXRO7335
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #0320/01 0361001
ZNY CCCCC ZZH
P 051001Z FEB 10
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 9859
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHKO/AMEMBASSY TOKYO PRIORITY 2348
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEFDHS/DIA DHS WASHINGTON DC PRIORITY
RHMFISS/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 BANGKOK 000320 
 
SIPDIS 
 
STATE FOR EAP, EEB 
STATE PASS TO USTR FOR BWEISEL, BKLEIN 
COMMERCE FOR EAP/MAC/OKSA FOR JKELLY 
TREASURY FOR OASIA 
SINGAPORE FOR FINATT SBLEIWEIS 
 
E.O. 12958: DECL: 02/05/2020 
TAGS: ECON ETRD EINV PREL KHLS EWWT TH
SUBJECT: THAI FINANCE MINISTER REAFFIRMS TO AMBASSADOR 
COMMITMENT ON ISSUES OF CONCERN 
 
REF: A. BANGKOK 248 (FINANCE MINISTER'S PLANS ON 3G) 
     ¶B. BANGKOK 234 (MAP TA PHUT) 
     ¶C. 09 BANGKOK 2969 (MODERNIZING CUSTOMS) 
     ¶D. 09 BANGKOK 2320 (MEETING WITH DEPUTY FINANCE 
        MINISTER) 
     ¶E. 09 BANGKOK 1574 (MEETING WITH FINANCE MINISTER 
        KORN) 
 
Classified By: Ambassador Eric G. John, reasons 1.4 (b) and (d) 
 
¶1. (C) Summary: In a February 4 meeting, Finance Minister 
Korn Chatikavanij reaffirmed to the Ambassador his personal 
commitment to working through economic and commercial issues 
of concern to the USG and U.S. businesses. Korn informed the 
Ambassador that draft customs law amendments may be presented 
to the Cabinet as early as next week. On the Map Ta Phut 
impasse, the Minister explained that the Thai government is 
discussing with private firms a possible way forward on their 
investment plans after the January court decision stymieing 
their hopes to proceed, and noted Prime Minister Abhisit's 
personal efforts to shore up investor confidence. The 
Minister detailed his plans to move forward the auction and 
licensing of third generation (3G) telecommunications 
services. He also pledged to look further into insurance 
industry concerns about required asset sales and Thailand's 
possible ratification of the Cape Town Convention to assist 
aircraft sales. The Ambassador noted his hope that the 
Finance Ministry's Customs Department will soon take full 
ownership of Megaports radiation detection equipment. End 
Summary. 
 
Engaging on Megaports, Cape Town 
-------------------------------- 
 
¶2. (C) In an afternoon meeting at the Finance Ministry on 
February 4, Ambassador John explained to Minister Korn 
Chatikavanij that he will meet in Washington next week with 
U.S. government and business leaders to discuss areas of 
continued and potential bilateral cooperation between the 
U.S. and Thai governments, among other topics. In that 
regard, the Ambassador informed Korn of the status of our 
cooperation on Megaports (ref d) and expressed his hope that 
the Finance Ministry's Customs Department will soon take full 
ownership of the USG-provided equipment. The Ambassador also 
flagged for Minister Korn the Cape Town Treaty, informing 
Korn that Thai Airways has advocated strongly to the Ministry 
of Transport its interest in Thailand's ratification of the 
accord. Upon Korn's admission that he is not too familiar 
with the Treaty, the Ambassador explained the U.S. would 
welcome Thailand's ratification of it since it offers 
protections to reduce the risk in cross-border aircraft 
financing, thereby saving airline companies millions of 
dollars. Korn responded that, generally speaking, he supports 
initiatives of Thai Airways President Piyasvasti Amranand. 
(Note: The Embassy will send the Minister's staff background 
information on the Cape Town Treaty as part of our efforts to 
seek Thailand's eventual ratification. End Note). 
 
¶3. (SBU) The Ambassador also sought from Korn updates on 
economic and commercial issues of continued concern from the 
U.S. perspective (i.e., customs reform, Map Ta Phut, telecom 
concessions, and shares of insurance firms). Korn was quick 
to provide the Ambassador his news and views on the latest 
developments from his perspective. 
 
Customs Reforms Moving Ahead 
---------------------------- 
 
¶4. (C) Korn told the Ambassador that draft amendments to 
Thailand's customs law will be sent to the cabinet shortly, 
hopefully as early as next week (ref c). Korn stated the 
amendments, which make the customs regime more transparent 
"will look good from your perspective." (Note: Foreign 
Chambers of Commerce in Thailand had not yet reviewed the 
most recent changes to the draft amendments as of February 4, 
although they had seen earlier versions. After initial 
review, Chamber members were pleased the drafts called for 
binding arbitration decisions by the Customs Department, 
thereby alleviating third-party interference from other 
 
BANGKOK 00000320  002 OF 003 
 
 
agencies. End Note.) He also explained that subsequent to the 
submission of the draft amendments to the cabinet, Korn 
intends to focus on the controversial customs reward-sharing 
system through which informants and customs officials can 
receive up to 55 percent total of penalty revenue on an 
individual case. As an aside, the Minister revealed he 
selected new Customs Director General Somchai Sujjapongse 
largely because he is considered "clean." 
 
¶5. (C) Minister Korn pointed to a case in which the 
Ministry's Customs Department made specific efforts that 
assist U.S. firms Coca-Cola and Pepsi. He noted the Customs 
Department's decision to penalize a Peruvian soft-drink 
company for improperly declaring its ex-factory costs and 
thus paying lower excise taxes.  In addition to the penalty, 
the firm will be required to sell its product at prices in 
line with those of market competitors. Korn also told the 
Ambassador that Prime Minister Abhisit reaffirmed that, if 
requested by Coca-Cola, the government should not disallow 
the U.S. company from increasing its prices. Korn went on to 
say that, in his opinion, Coca-Cola's complaint on this issue 
is spurious since the firm knows the price of soft drinks is 
elastic and therefore has no intention of increasing the 
price of its product. 
 
Exploring Options at Map Ta Phut 
-------------------------------- 
 
¶6. (C) "The Prime Minister is handling himself" the Thai 
government's efforts to resolve as expeditiously as possible 
the Map Ta Phut impasse (ref b), said Korn, informing the 
Ambassador that Prime Minister Abhisit met February 2 with 
representatives of the Japan External Trade Organization 
(JETRO) (Note: Korn also mentioned a March visit by senior 
Thai government officials to Japan to meet with Japanese 
firms, although it was unclear who would lead the delegation. 
End Note.) Korn acknowledged the Thai government is in 
discussions with the firms whose petitions to be released 
from suspension were rejected by the Central Administrative 
Court on January 22. The Court ruled that their 30 projects 
in Map Ta Phut had yet to comply with constitutional 
requirements (ref b). Under consideration is a possible 
umbrella appeal of the Court's decision by the Thai 
Government's Office of the Attorney General (OAG) on behalf 
of the firms, or the OAG's cooperation with the firms on 
appeals they will file individually. At the same time, Korn 
confided that the Prime Minister does not have full 
confidence in the Office of the Attorney General's 
understanding of the Map Ta Phut issue. 
 
¶7. (C) Korn also explained the Thai government is assisting 
Ford Motor Company with an appeal to allow for its purchase 
of land from a project affected by the court decision since 
Ford does not intend to use the land for any purpose that 
could be harmful to the community in terms of health or the 
environment. 
 
Korn's Telecom Deal 
------------------- 
 
¶8. (C) Korn provided the Ambassador an explanation of his 
effort to broker a deal that will allow for Thailand's 
auction and licensing of third generation (3G) 
telecommunications services. He noted the trick will be to 
broker a concession conversion deal that will satisfy 
industry stakeholders while preserving for the Thai 
government remittances from existing concessions (ref a). 
Korn laid out his basic strategy: convert the existing 
concessions into long-term licensing agreements that will 
ensure greater revenue for the Thai government over the 
long-run and provide operators with greater security to 
maintain their networks. Korn noted his optimism that he will 
be able bring the various stakeholders, including the 
powerful state-owned enterprises TOT and CAT Telecom, on 
board.  Korn also mentioned an "important side issue" will be 
whether the proceeds from an earlier telecom concession deal 
given to former Prime Minister Thaksin's company, AIS, will 
be included in the upcoming Supreme Court ruling on Thaksin's 
assets. (Note: In 2001, when Thakins's Shin Corporation still 
 
BANGKOK 00000320  003 OF 003 
 
 
owned AIS, the government-owned TOT lowered the concession 
fees for AIS from 25 percent to 20 percent. Corruption 
allegations emerged that Thaksin had forced the decision. End 
Note.) 
 
Insurance 
--------- 
 
¶9. (C) The Ambassador told Minister Korn that several 
American insurance companies have approached the Embassy with 
concerns that they may have to sell down their shares of 
their Thai businesses in order to comply with new 
requirements under the 2008 Insurance Acts. Korn, who did not 
appear aware of the concerns, stated he would look into them. 
He suggested (off-the-cuff) that perhaps one workaround would 
be to allow the affected insurance firms to maintain shares 
above 50 percent if the assets were acquired before the law's 
implementation (i.e., grandfathering), and only enforce the 
new restrictions on new capital acquired. (Note: The 
Minister's comments do not track with our understanding of 
the Insurance Acts, which state that the companies have five 
years to restructure and reduce their foreign shareholdings 
to 25 percent. The Finance Minister can approve higher levels 
of foreign ownership. The Embassy will engage the Minister's 
staff directly to continue advocacy on this issue.  We will 
also report septel on our engagement with the affected 
American companies. End Note). 
JOHN