Revised FBA expected to impose tighter controls
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All investors in Thailand to be asked to seek Commerce Ministry approval
Retail and wholesale busi-nesses are likely to face tighter controls under the Foreign Business Act of 1999 once the Commerce Ministry completes a review of the law for the first time.
“We are revising the law to keep it updated and increase regulating efficiency,” Deputy Commerce Minister Siriwat Kajornprasart said last week.
More stringent rules lie ahead for retailers and wholesalers, following the widening gap in competitiveness between local and foreign operators, he said.
At present, Annex III of the act gives a free hand to any operator to expand its business if its initial capital is above Bt100 million. Those with lower capital can ask the Business Development Department’s FBA committee on a case-by-case basis for the green light to invest in Thailand.
The strict control of the retail business was in response to the hopeless outlook for the enactment of the Retail and Wholesale Business Act.
A source from the Thai Retailing and Wholesaling Association has said it is too late to initiate legislation to control the rapid expansion of modern retailers as more than 8,000 of them are already widely established in the country, while the government has no specific regulation to slow down the aggressive march of foreign players.
Siriwat said the ministry now plans to have all investors, regardless of capital, subject to a single rule – they must ask for the ministry’s consent to open a business in Thailand.
The law has been criticised for too loose a grip on foreign retail operators in Thailand. Modern trade outlets, under highly capitalised operators, are now mushrooming all over the country, smothering many mom-and-pop shops. It was just recently that tougher zoning was applied to the operators, forcing them to open smaller branches in highly populated areas.
The amendment, while clamping down on some businesses, will ease up on others.
For instance, the types of businesses that would likely be liberalised include trading in the agricultural futures market, tourism, warehouse operations, life insurance, non-life insurance, commercial banking and trading in the stock market.
The government plans to continue protecting the tour guide business for Thai companies, as they are not yet ready to go head to head with foreign investors.
The Business Development Department will propose the draft amendment to the commerce minister before it is passed on to the Cabinet for approval and then to Parliament for ratification.
