The military-run government recently announced it was considering changing the regulations covering joint venture enterprises
BANGKOK – Economic woes continue in Thailand with the news that exports are likely to shrink for the second year in a row, and third quarter growth was less than expected. Foreign investors have also expressed concerns about proposed changes to the Foreign Business Act.
The military-run government recently announced it was considering changing the regulations covering joint venture enterprises giving control to Thai partners instead of foreign shareholders. CCTV America’s Tony Cheng reported this story from Bangkok.
The proposed changes would mean that companies listed as local firms, would have to be under Thai leadership. Currently many joint ventures have majority Thai stockholders, but many of their boards and the major decisions, are comprised and made by foreign owners.
Japanese embassy officials said that if the change takes place the new regulations could force half of all Japanese companies in Thailand to leave, delivering a blow to Japanese investment that’s worth about $57 billion.
It’s not yet clear why the change was proposed. A similar change was suggested in 2007, after the last military coup, and it appears to be in line with a military government more concerned with maintaining Thai sovereignty than attracting investment.
Investors who had been optimistic about the return to order and stability after the coup, are now concerned about the ability of generals to run the economy.
Meanwhile, The Thai Chamber of Commerce warns that Thai exports to China might be affected by the neighboring countries in ASEAN after the ASEAN Economic Community (AEC) comes into force. Rice, electrical appliances and textiles are expected to feel the impact the most.
However, some exports from Thailand are expected to reap benefits from the AEC, including tapioca, rubber, fruits, processed food, wood and plastic.
The academic suggested that Thailand should improve the quality of its exports and increase their values rather than trying to compete with the neighboring countries in terms of price.