EU joins outcry against further FBA restrictions

“The EU, the second-largest investor in Thailand, would like to continue working with Thailand and contributing to Thailand’s development and technological advancement. We fear, however, that initiatives such as the FBA will only deter further investment and might actually provoke an investment exodus”, a source from the delegation said.

“Restricting FDI in Thailand seems at odds with Asean integration, WTO principles and, more generally, international law commitments of Thailand. The EU and Thailand have over the years established a constructive and fruitful relationship on trade matters that provides significant economic benefits to both sides,” the source added. The EU delegation said it was confident that this relationship would be considerably strengthened in the future through the negotiation of the EU-Thailand Free Trade Agreement. “We fear that this new amendment of the FBA will only make matters more difficult,” the source said.

The European Association for Business and Commerce (EABC) is the latest foreign association to express grave concerns over the announcement that the Commerce Ministry and the Thai Chamber of Commerce would consider further restricting foreign business operations in the country.

The American Chamber of Commerce in Thailand and the Joint Foreign Chambers of Commerce in Thailand (JFCCT) have already made their opinions known opposing any further restrictions of foreign businesses on Thai soil.

The EABC said European investors were “very worried” about the proposed changes, especially one further limiting foreign shareholding, since it comes at a “very bad time” when the economy is “struggling for growth”.

“This is detrimental to the global trend and will certainly have a serious impact on the Thai economy, its labour force and investment from Europe,” Rolf-Dieter Daniel, president of the EABC, said on Tuesday

The JFCCT said it had “grave concern” about any initiative that would further constrain foreign businesses in the country, such as any moves to tighten rules on equity and investment, regardless of origin, since they might “misalign Thailand with other Asean countries”. 

The expanding the definition of a foreign company to those where more than half of the voting rights are held by non-Thais will likely lead to “an exodus” of foreign companies – particularly those in industries such as information and communications technology, healthcare, insurance, transport, logistics and distribution, according to EABC

“While other Asean countries are opening up their service sectors in view of the AEC [Asean Economic Community] integration, Thailand seems to go the other way and thus give a wrong signal to European investors that direct foreign investment to the country remains even more restrictive, especially in services,” Daniel said. 

The EABC also said investors in the European Union were baffled that no consultation with the trading partners of the General Agreement on Trade in Services has taken place regarding the possible amendment of the FBA. “This might have negative implications on the ongoing negotiations of a free-trade agreement between Thailand and the EU.”