Violators of Thailand's new foreign investment law could face up to five years in prison, under a revised version of the proposed amendments approved by the cabinet April 10. The changes would limit foreigners to holding no more than 49% of the shares or voting rights in Thai companies.
The revised version raised the fine for violations five-fold to up to five million baht (US$154,000) and also increased possible jail time from three to five years in prison, according to Commerce Minister Krirk-Krai Jirapaet. Companies would also have three years rather than two to adjust to the new regime, he added.
"I personally believe that the amendment will not affect foreign investment in Thailand or investor confidence because direct investment usually focuses on the rate of return and the investment opportunity," Jirapaet said.
The Joint Foreign Chamber of Commerce slammed the government for pushing ahead with the amendments, saying it would "make investment in Thailand more difficult and also make Thailand's economic future more difficult."
"These proposals have led to negative reactions from existing and prospective foreign investors, have created confusion and negativity toward the Thai government's view of (foreign direct investment) and Thailand's intentions of liberalizing its economy," it said in a statement.
Under the existing system, foreign companies frequently get around foreign ownership limits by giving a majority of shares to a Thai proxy, while keeping most of the voting rights. The amendments would end such arrangements. The bill does allow for broad exemptions, including the service sector, which is governed by a separate law. Companies operating under specific legal arrangements, such as automakers, would also be exempt.
Copyright Agence France-Presse, 2007