Two key Foreign business laws
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Both foreign investors and small local retailers await a decision by the new government on the two much-debated draft business laws - the amended Foreign Business Act (FBA) and the Retail and Wholesale Business Bill.

Foreign Business Act

The post-coup interim government initiated an amendment to the FBA following the 2005 Kularb Kaew nominee case. The company was accused of being a nominee shareholder for former prime minister Thaksin Shinawatra.

The amendment has had serious ramifications for foreign investors, as the government seemed to prescribe more restrictive conditions for them. The 1992 FBA allows foreign investors to hold a maximum 49-per-cent stake.


Thai Chamber of Commerce chairman Pramon Sutivong said the chamber fully supports the FBA's amendment, as it would facilitate foreign investment in the long run. "It should be made clear to foreign investors which businesses are open for them." Peter J van Haren, chairman of the International Chamber of Commerce, said the new government should further amend the Act only if it would send a positive signal to foreign investors.

"Foreign investors want certainty, stability, fairness, and transparency in all laws and polices. Any unclear signals from the government would further lower confidence after the setbacks during the discussion on the FBA amendment," he said.

Van Haren said it was time to amend the Act, as much had changed over the years.

The current law is based on the ability of Thai businesses to compete in many sectors. Many of these sectors are now much more developed. Therefore, it may no longer be necessary to have such tight restrictions. Van Haren suggested both foreign investors and the government should work together as partners.

He warned that if the new government insisted on tightening regulations, it could face a similar reaction to the previous government. "Foreign investors have lost confidence to further operate their business in the Kingdom." However, he remains optimistic that the new government will find a smooth way to conclude this issue.

Retail and Wholesale Business Bill


Small retailers say they have only a 35-per-cent share of the retail sector, compared with 65 per cent by the big players. The market share of small retailers will continue to drop unless there are restrictions on the expansion of giant retailers. According to a ministry survey, over the past five years the size of the modern retail-trade business rose by 119.6 per cent, from 1,821 outlets to more than 5,000 currently.

Tesco Lotus has the most branches, with 492 outlets. Also threatening the businesses of local retailers are 7-Eleven convenience stores, which has more than 3,000 outlets. Other large retailers include Big C with 59 outlets, Makro with 45 outlets