Thailand to limit foreign stake in firms to 50% (Shin Corp)
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Think Temasek's investment in Shin Corp will be badly affected, a forced sale to reduce stake to 50% will definitely affect the share price adversely, I wonder how much did our dear Ho Ching loss in the Shin Corp deal.
BANGKOK : Thailand will limit foreign investors to holding no more than 50 percent of the shares or the voting rights in companies here under legal changes approved Tuesday, officials said.
"Foreign investors who altogether hold more than a 50 percent stake in a company must lower their stake within a year," Finance Minister Pridiyathorn Devakula said after a nearly five-hour cabinet meeting about the changes.
"Foreign investors who hold more than 50 percent of voting rights must also reduce their voting rights within two years," he added.
The 50-percent cap will only apply to companies that deal with areas considered important to national security, or that have an impact on natural resources or Thai culture, he said.
Stocks tumbled on the news, with share prices falling 2.03 percent after the announcement. The Stock Exchange of Thailand (SET) was down 12.84 points to 620.98.
The cabinet approved the changes to the Foreign Business Act "in principle" on Tuesday but army-installed Prime Minister Surayud Chulanont said the new regulations would not take effect for "some time," as the country tries to reassure investors about their impact.
Surayud said the government's top panel of legal advisers would continue to work on the details of the law to ensure precision and transparency.
"The Council of State is authorized to work on the details to make the law precise and transparent, without any need to be resubmitted for cabinet approval again," he told reporters.
"It will take some time for the law to take effect," he added.
"We think that it needs to be worked out in detail for the law to be more transparent, and to make investors more confident," Surayud said.
"If we explain clearly and allow investors to participate, they will agree that the law is open and transparent at a certain level."
Companies have traditionally set up operations in Thailand so that the local subsidiaries are nominally owned by Thais but controlled by foreigners.
Analysts fear the revised law could force foreign companies to sell off huge amounts of stock to Thai investors, who might not be able to absorb a large number of shares over a short period.
Investors were already nervous about Thailand, especially after last month's sudden introduction and reversal of capital control measures, which sparked a stock market crash.
The market had just recovered from that crash when the deadly New Year's Eve bomb blasts in Bangkok sent share prices plunging again last week. - AFP /dt
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/251434/1/.html -
continue in existing shin corp or sth thread
hmm shincorp got to pay 4 billion sgd right? den plus this... tsk -
ha hahahaa....
haiz...
and yet they (PAP) won't admit their mistakes.... -
never mind, gst juz add 2 more % sure can clear one.
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Will Asia Crisis start from Thailand again!!!! -
Look how our elites messed up other pple's country
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The way our gov is doing things, worries me...
... they might cause another Asian Financial Crisis...
That will surely screw things up for all of us... -
Stocks take another confidence beating
[NOTE: See main story under Top Stories, below]
(dpa) - Thailand's stock market took another beating on Tuesday, shedding 2.69 per cent in value in response to the cabinet's approval of amendments to the foreign business act.
The Stock Exchange of Thailand (SET) index ended at 616.75, down 17.07 points from Monday's close.
Brokers blamed the tumble on the government for not delaying the passing of a draft amendment to the Foreign Business Act by the cabinet Tuesday afternoon.
"Investors thought the government would delay the amendment but when they didn't there was a lot of selling," said Mongkol Phuangpatra, a broker at Atkinson Securities.
The amendment promises to block a loophole in the law that allowed foreign companies to set up 49 per cent foreign-owned joint ventures with 51 per cent Thai "nominee" partners who had no voting rights, effectively allowing foreign investors to control Thai entities.
The Joint Foreign Chamber of Commerce in Thailand - representing foreign investors from the United States, Europe and Japan - on Monday urged the Thai government to delay the changes by six months to allow for a proper review of its potential impact on foreign direct investment in the country.
Despite the appeal, the government pushed the legislation through the cabinet on Tuesday.
The SET has been on a fairly steady slide since last Wednesday, the first day the Bangkok bourse opened for business after eight bombs shook the capital on New Year's eve, killing three people and kicking off the new year on an uncertain note.
"The market is already sick. This was like taking a sick man into the operating room," said Monkol of the government's decision to push through amendments to the Foreign Business Act.
17:43 Jan 09, 2007 Bangkok Post -
It's 'the end of investment'
The chairman of the Federation of Thai Capital Market Organisations warned Thailand to brace for a halt in new foreign investment and the gradual withdrawal of foreign investment because the amendments to the Foreign Business Act passed by the Cabinet Tuesday are construed as unwelcoming signs.
Dr. Kongkiat Opaswongkarn added that foreign-invested companies operating in the retail, automobile and telecommunications sectors will be those hardest hit by the amendments which restrict foreign ownership and voting rights to 50 per cent.
The federation executive said the changes -- subject to final approval by the military-appointed National Legislative Assembly -- are deemed "unwelcoming" signals from Thailand to foreign investors.
"I believe foreigners won't put more money in Thailand as a result of apprehension over these new rules. At the same time, those already here would have to leave to comply with the cap and there will be very few Thai investors who are financially capable of filling those gaps," he said.
Dr. Kongkiat said the Thai currency and the stock market are likely to bear the brunt of the move as a consequence of such moves seen as hostile to foreign investment.
Equity research analyst Thanomsak Saharatanachai of Pattanasin Securities said a host of negative factors, including the bombs during New Year and the latest move on the Foreign Business Act are likely to slow the country's economic growth by up to one per cent this year.
Operating profits of listed companies are also likely to fall. Yet even these projected profits could disappear in the light of political certainties, including the constitution drafting being completed on schedule to pave the way for general elections. (TNA)
23:08 Jan 09, 2007 Bangkok Post -
'Some investors' may pull out: FTI
(TNA) – Foreign investors are likely to withdraw certain Thai investments which they believe offer unattractive returns because of amendments to the Foreign Business Act, according to the Federation of Thai Industries.
FTI Chairman Santi Vilassakdanont said the amendments will impact foreign investors, particularly new players, who will need to consider more carefully to see if they will benefit from investments.
He said he believed foreign investors already involved in Thailand will not withdraw. Those who do will probably leave because they believe their investments are not attractive - but not a significant number.
Metha Chanchaemcharas, President of Plus Property Co, said the amendments might affect foreign investment in the property business in the short run.
It might make investment slower as investors consider details of the amendments and see whether it is worth investment and the measure would be adjusted later.
He projected the investors would not withdraw an existing investment amount immediately because they had to wait and see clarity of the amended Act.
Mr Metha said the investors had not only paid attention to a shareholding portion and managerial power, but also considered economic conditions and investment atmosphere for their decision to invest in Thailand.
He added the investors would need to take time to adjust themselves to the new regulations under the amended Act.
14:31 Jan 10, 2007 Bangkok Post -
The undemocratic military appointed government in Thailand is seeking to destroy their own economy. That may be good news for Singapore actually...remove the pressure on Singapore and give us some breathing space. Under Thaksin, the Thai economy has become an increasing threat to our competitiveness.
But now they cannot even get their policies straight. Wipe 20% of theor share values overnight with an ill-conceived policy which they reverse in less than 24 hours
And now they reverse yet again:
Govt reverses again: telecoms exempt
(Bangkokpost.com, Agencies)
Economy czar Pridiyathorn Devakula made a stunning policy U-turn on Wednesday, reversing a Tuesday claim and saying that telecommunications companies are exempt from new regulations limiting foreign ownership of Thai companies.
The new statement on Wednesday to representatives from Joint Foreign Chambers of Commerce by M.R. Pridiyathorn, who is both deputy prime minister and finance minister, was a jaw-dropping reversal from comments he made on Tuesday, when he specifically identified telecoms companies as one of the business categories facing the proposed restrictions.
M.R. Pridiyathorn said today he had misspoken.
M.R. Pridiyathorn further backed away from the supposedly strict new guidelines when he said that the govenment would be "flexible" in applying the law.
On Tuesday, the cabinet passed regulations to limit foreigners' shareholding and voting rights in sectors deemed vital to national security to less than 50 per cent would be flexible. The new laws must pass a bureaucratic approval process, which is expected to go smoothly, and then will go into effect.
"The amount of business effected by this law is very minimal," said M.R. Pridiyathorn.
Reports that have stated as many as 10,000 businesses will be effected are "not true." About 2,400 companies are effected by the law, mainly in the service sector and including hotels, but of those about 1,060 have BoI (Board of Investment) privileges that override the law, he said.
M.R. Pridyathorn was surprised by the reaction that sent the Stock Exchange of Thailand (SET) down 2.7 per cent Tuesday, although it climbed back up 1 per cent Wednesday.
President of the Joint Foreign Chamber of Commerce Peter van Haren called the amendments a disappointment that "will have a negative effect. We're quite sure on that."
Before the abrupt turnaround by M.R. Pridiyathorn, Telenor of Norway, which owns a controlling stake in Thailand's second-largest mobile telecoms operator known as DTAC, said it intends to remain in the country despite new rules that increase restrictions on foreign investors.
"We have a long-term perspective, and we will of course behave in accordance with the law if and when it will be changed," Telenor spokesman Esben Tuman told Reuters.
"We have been in Thailand for a long time... and we have every ambition to stay there," he added.
Tuman declined to comment on the potential impact, if any, of the planned regulation on Telenor's activities in Thailand.
Peter Van Haren, the chairman of the Joint Foreign Chambers of Commerce said he understood why Thailand decided to amend the Foreign Business Act but said he was still not happy with the proposed amendments.
"We still hold on to our previous opinion even after the government explained to us," he said.
Van Haren said on Tuesday the members of the Joint Foreign Chambers of Commerce were "very disappointed with the move."
16:24 Jan 10, 2007 Bangkok Post -
I will get in 3 months later... see how it goes
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look what temasek's affair with thaksin has caused:
Temasek 'The top target'
Financial Times.
Jan 10, 2007
The overarching purpose of the changes to ThailandÂ’s foreign laws is to force Temasek to reduce drastically its 96percent stake in Shin Corp, The Financial Times reported.
The military-installed government said the changes were to "clarify" ambiguous rules and close loopholes that have for decades had allowed MNCs to operate businesses that were supposed to be reserved for Thais.
Telenor of Norway, which controls Total Access Communications, Thailand's second largest mobile phone operator, could be the other significant casualty, the British financial daily reported.
It owns 32 per cent of the phone company directly, but has financial exposure to about 73 per cent of the company through its indirect holdings.
Foreigners who have purchased holiday homes in Phuket or other Thai beach resorts in recent years might also be in for anxious times.
The corporate structures that many of them used to circumvent the Thai restrictions on foreign land ownership have, in effect, been abolished.
However, many incumbent companies, which were considered Thai under the old law but will be considered foreign-owned under the new, more stringent definition, will be allowed to remain in operation in sectors ostensibly reserved for Thai businesses, it added.
The arrangement reinforces perceptions that the entire exercise has been primarily intended to target Temasek.
Tesco and Carrefour, the foreign hypermarket operators, might have escaped the spectre of a forced sell-off, though their size and their ownership of land for their stores could prove touchy.
The government is still drafting a new retail law that could have an impact on their businesses.
Krirk-krai Jirapaet, the commerce minister, said yesterday that the revised law would boost investor confidence in Thailand by providing transparent guidelines in contrast to the ambiguity of the past.
"This law will help improve investor confidence in Thailand because it will show that Thailand has a clear policy," said Mr Krirk-krai at a press conference after the Cabinet endorsed the proposal.
Analysts, however, say that the law will in effect restrict fresh foreign investment in a wide range of service sector businesses in which overseas companies could engage when the definition of what constituted a "foreign-owned company" was narrower.
Vikas Kawatra, head of institutional sales at Kim Eng Securities, wrote: "At a time when many nations are welcoming foreign investments, by tightening the rules in this manner the present government has sent a wrong signal to foreigners."
Until now, Thailand has only looked at actual shareholdings to determine whether a company was Thai-owned or foreign-owned.
The practice allowed many international companies to use preference shares in effect to control local businesses that were technically Thai-owned under the old law.
However, the new law requires Thais to have 51 per cent of the votes deemed Thai.
Companies will be given two years to adjust their voting rights in line with the new rule, but only a year to sell down actual equity holdings that exceed 49 per cent.
(Financial Times) -
lotus...your news outdated la...
"Economy czar Pridiyathorn Devakula made a stunning policy U-turn on Wednesday, reversing a Tuesday claim and saying that telecommunications companies are exempt from new regulations limiting foreign ownership of Thai companies."
What it means nobody knows...the Thai government is changing the rules almost as fast as they make them up... -
At the rate they are going, I think Thaskin can win the elections if he makes a comeback
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I believe Thaksin is playing his cards right, waiting for others to make a mess of it then he comes in and clears everything up.
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Exactly what many think he's doing...the military coup leaders are terribly worried about that now...businessmen who lost money in the stock market crash are turning against them. Ultimately, whoever brings in money and prosperity for them will get their support. They were unhappy with Thaksin who accumulated more wealth than others, but Thaksin did not cause them to LOSE money whilst this coup has resulted in millions of bahts being wiped off their shares. Investors are pulling out and moving their funds to Hong Kong and Singapore.Originally posted by ditzy:I believe Thaksin is playing his cards right, waiting for others to make a mess of it then he comes in and clears everything up.
It will take a long while to recover investor confidence again...and Thaksin might well be brought back. -
A different perspective if you think from the angle of the Thai people.Originally posted by oxford mushroom:Exactly what many think he's doing...the military coup leaders are terribly worried about that now...businessmen who lost money in the stock market crash are turning against them. Ultimately, whoever brings in money and prosperity for them will get their support. They were unhappy with Thaksin who accumulated more wealth than others, but Thaksin did not cause them to LOSE money whilst this coup has resulted in millions of bahts being wiped off their shares. Investors are pulling out and moving their funds to Hong Kong and Singapore.
It will take a long while to recover investor confidence again...and Thaksin might well be brought back.
Thai baht appreciated nearly 20% last year.
What Thailand did was necessary to curb excessive speculation.
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Uncertainoutlook for exports as baht rises
Published on January 3, 2007
Fears mount over oil price, slowdown
Local exports, a core engine driving economic growth, may face a gloomy future due to three factors: the strengthening baht, rising oil prices and a global slowdown.
Exporters are hoping for baht weakness to strengthen their competitiveness.
The Chamber of Commerce predicts the baht would strengthen to above Bt34 to the dollar this year. The Bank of Thailand's lifting measure, announced on December 18 last year, had weakened the baht by Bt36.53 to the dollar on December 21. Exporters would like the baht to trade between Bt38-40 to the greenback.
Exporters have been suffering from the strengthening of the baht. They also foresee flat business growth if the currency keeps escalating against the dollar, making Thai products more expensive for global players.
"The baht should not be stronger than our export rivals. Otherwise, Thailand may lose export markets" one exporter said.
According to a recent BOT report, the baht has appreciated by 14 per cent against the dollar since last year. However, it was stronger by 9.3 per cent when compared with early 2005. The strong baht has prompted the country's competitiveness to ease by 8.6 per cent, which is the same rate as other Asian countries.
But major export rivals - China, the Philippines, Taiwan and Malaysia - have a slight edge as their currencies have not gained as much as the baht to the dollar.
The fear is that Thailand might not reach its export target of US$145.22 billion (Bt5.18 trillion) this year, an increase by 12.5 per cent, as projected by the Commerce Ministry.
Katiya Greigarn, chairman of the electronics and electrical-appliances sector of the Federation of Thai Industries (FDI), said the strengthening of the baht had hurt Thai exporters. Exports of electrical appliances, for example, will face flat growth this year because of high competition, particularly from China.
He said exports of electronic goods, the country's major export product, will confront a tough situation. Exports in this sector were expected to grow by 20 per cent to Bt1 trillion last year. However, exports this year may grow 15 to 19 per cent because Thai goods may become more expensive.
Another factor that may reduce export growth is a shortage of skilled labour. Katiya said about 50,000 labourers are needed to supply the expansion of the electronics industry in the next three years.
Somsak Borrisutanakul, chairman of the plastics sector of the FDI, said this year and next year plastic exports will remain unchanged at Bt70 billion in value.
Although plastic exports performed quite well in the first half of last year, the baht's appreciation had lowered exporters' competitiveness.
He said the federation predicted that the strengthening baht will cause flat growth this year.
"The problem will also carry on and affect export growth next year," he said, adding that exporters are trying to increase their competitiveness, but the fluctuating baht is beyond their control.
He added that other negative signals include a projection of a global economic slowdown.
This will create a domino effect upon Thailand's major importing countries such as the US and the European Union.
The International Monetary Fund projected that global trade will grow by 7.6 per cent from 8.9 per cent last year, while the world economy is expected to rise by 4.9 per cent from 5.1 per cent.
The economies of Thailand's trading partners will also show a slowdown in growth in 2007. The US economy is predicted to grow by 2.9 from 3.1 per cent; Japan's by 2.1 from 2.9 per cent, and the EU's 2 per cent from 2.4 per cent.
Chookiat Ophawongse, president of the Rice Traders Association, said the baht's appreciation had directly hit agricultural goods the most. Traders and manufacturers have had to shoulder higher production costs while the stronger baht has made imported raw materials cheaper than using local content.
The association forecasts that rice exports may not perform as well as previously projected, although Vietnam, the country's major export rival, announced that it would temporarily suspend white-rice exports.
Chookiat said the rising gap in rice prices will lower Thailand's export competitiveness. Exports are predicted to reach about 8 to 8.5 million tonnes, down from a previous estimate of 10 million tonnes.
Pornchai Chuenchomlada, president of Thai Gems and Jewellery Traders Association, said despite the rising value of the baht, exports of jewellery are expected to grow by 15 per cent to Bt172.5 billion this year, thanks to the recent US announcement to renew duty-free privileges for two more years.
He said the continuation of the Generalised System of Preferences (GSP) for two years until December 31, 2008, will maintain the country's competitiveness. However, the baht's strength was still a negative factor for the industry's exports which would affect its targeted growth of 15 per cent this year.
Thavorn Chalassathien, chairman of the auto parts sector of the FDI, said exports of auto parts seemed to be one of the few sectors that was suffering less from the strong baht because it also relied on raw material imports. Some 30 to 50 per cent of production involves imported goods. Although income from exports will be decreased, lower costs of production will lessen the problem for auto parts' exporters, he said.
Auto parts exports are expected to increase by 15 per cent to Bt280 billion this year from this year's figure of Bt240 billion.
Other negative factors to slow down the country's export growth include the suspension of bilateral trade negotiations with trading partners, the rise of non-tariff barriers and new import standards by major markets.
Export Promotion Department director-general Rachane Potjanasuntorn said the two export products that would be hardest hit by the baht's appreciation are shrimp and canned fruits and vegetables, both of which rely mostly on domestic raw materials.
Other exports that will face tough competition next year are textiles and garments, rubber, chicken, furniture and leather goods.
Petchanet Pratruangkrai
The Nation -
Originally posted by ObviousMan:
Sudden currency appreciation and depreciation is always a risk when there is freedom of currency exchange...that's why Dr M in Malaysia introduced curbs during the last Asian crisis.
A different perspective if you think from the angle of the Thai people.
Thai baht appreciated nearly 20% last year.
What Thailand did was necessary to curb excessive speculation.
Trying to control the rising baht is necessary but the way the BOT did it was frankly stupid. What were they thinking of? A sudden drastic move so soon after a military coup that has already shaken investor confidence? Too much, too soon....
What's even worse was to reverse the decision again and again....now the military coup government has shown itself incapable of making long-term plans and there is no constancy on their policies. You cannot invest in a country where the rules keep changing....better park it in Singapore where it's the government you know for the past 40 years.