He’s back ! Who ? The Foreign Business Act of course.
To follow the saga, please visit my special FBA Dossier (the most comprehensive source of infos about this law).
Okay, let’s try to decipher the article of the Nation.
Four additional restricted businesses – rental, operations leasing, financial leasing and factoring – will be made more open to foreign ownership this week.
“For these four businesses, it will be easier to hold more than 50 per cent in the company,” Kanissorn Navanugraha, director-general of the Business Development Department, said last week.
Great. But the List 3 has 21 entries. And “easier” doesn’t mean “automatic“.
The contract-manufacturing business will be next to be relaxed under the Foreign Business Act, followed by the brokerage, internal trade involving agricultural goods, advertising agency, hotel operating, beverage and food retailing, seed development, computer service, warehouse control service, pawnshop, school and entertainment businesses.
All of them will still be listed in Annex III of the Foreign Business Act, but will receive more flexible conditions to operate here.
Here we go… Previously, with the FBA 2 project, the idea was to remove some items of this famous list 3 (to compensate the fact that FBA 2 was much harder).
This list (“businesses which Thai nationals are not yet ready to compete with foreigners”, basically all the services related businesses) is nothing less than a national shame.
Apparently, the thais are not ashamed to put on this list… “guided tour“, “selling food or beverages“… or “retailing“, “hotels“… and even “production of lime” ! 😉
Plus the famous joker, the item # 21 : “(21) Other categories of service business except that prescribed in the ministerial regulations.” It means… all other services ! Convenient, isn’it ?
You don’t believe it ? Check the text of FBA 1 (here).
So now, the government seems to take another route : no change to the core criteria of FBA (how to define a company as foreign or thai), but some cosmetics changes about the content of the list… and the way the list 3 is working. Hum…
Presently, foreigners who want to operate an Annex III business have to ask for approval from the Foreign Business Act committee. As the new conditions go into effect, foreign investors will no longer be required to ask for the committee’s permission. The application procedure and approval process will be predictable and more transparent.
What does it mean ? No need anymore to ask for a licence, but there would be still “an approval process“… ?
Deputy Commerce Minister Banyin Tangpakorn has instructed the department to set up a committee to come up with a concrete plan on whether to amend the act by next month.
The new amendment should be friendlier to foreign investors, while still ensuring the survival of local enterprises, as the last version was too strict in controlling foreign investors, he said.
First : it’s very good, they officially aknowledge that FBA 2 was a totally lunatic project.
Second : watch out, we are here in a “thai calendar”. A committee is going to be set up. Then, this committee will submit a “concrete plan“… The process will of course take more than one month.
Third : I’m afraid that we are going to see the perfect thai compromise…
I mean a status quo disguised, once again.
“Friendlier to foreign investors“… and meanwhile “ensuring the survival of thais companies“… They need to understand that those 2 aims are antinomic ! 😉
The only solution that would put foreign investors at ease would be to clean up the list 3 and remove many items of it. Period.
Thailand must -officially- open its services sector and stop playing with words (the famous section 8 of FBA, related to List 3 : forbidden, “unless permitted by the Director-General with the approval of the Committee“).
To replace a “licence” with an “approval process” is… like replacing water by ice cubes…
Eventually, the fog of war will remain… Keeping the doors open for corruption, favoritism, and protectionism. Some project will be approved, other not. And we need to look at the criterias.
Anyway : let’s wait and see.