Thursday, April 19, 2007

Deconstructing Thanong: Sorting Out the Foreign Business Act Debacle


Surayud boxed into a corner with FBA amendments

Thanong Khanthong

Last Thursday, prior to the Songkran festival, representatives of the Commerce Ministry held a meeting with the government whip of the National Legislative Assembly on the draft amendments to the Foreign Business Act.

They agreed to harmonise their respective versions of the amendments before forwarding the final draft to the National Legislative Assembly for a first reading next Wednesday.

It is now widely expected that the National Legislative Assembly will accept the bill for deliberation at that first reading. It would then immediately set up a scrutinising committee to review the bill section by section.

The action taken by the scrutinising committee would then be considered the second reading. A legal adviser told me that after talks with a leading member of the National Legislative Assembly, he gets the impression that the bill would pass this second reading in about two months, or before the end of June.

The foreign business community, including the Joint Foreign Chambers of Commerce, has been up in arms against both drafts by the Commerce Ministry and the National Legislative Assembly. Foreign businesspeople and investors have warned that the passage of the bill would further dampen investor confidence in Thailand at a time when the country has yet to establish a democratically elected government.


I actually agree with this column. I don't think major pieces of legislation should be passed under the auspices of a military dictatorship. It should wait until after the election.

Foreigners who got around the rules should have known better than to trust the Thai government, which capriciously enforces or ignores laws whenever it feels like it, or whichever way the political winds are blowing. Caveat Emptor! If foreigner investors don't do their political due diligence, then it is partly their fault. Investing in a foreign country is always a risky move.

However, I don't think foreigners are entirely to blame. The Thai lawyers who helped them circumvent the law are just as guilty. And foreigners should have a right to sue their lawyers for giving them bad advice. The Thai government is also to blame for turning a blind eye all these years. They should have either tightened the screws and enforce the law or they should have liberalized. Enforcing the law after a coup really destroys the credibility of the Thai government

Also, I don't think Singapore should be bullied just because it did business with Thaksin. If Temasek gets punished, then so should all the other companies that set up nominee schemes. If foreign investors pull out because of the way Thais enforce the law in the future, then they should pull out and go somewhere else. It is their money, after all.

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