New Thai investment Act to trigger WTO fight

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Bangkok, Aug 7: Thailand's army-appointed Parliament is expected to approve a new Foreign Business Act on Wednesday that will bar new foreign investors from having control of everything from telecommunications firms to supermarkets.

The law, which represents a major tightening of the restrictions on foreign ownership of companies, will be enacted only when signed by King Bhumibol Adulyadej, a formality that could take anywhere between one and 90 days.

However, foreign embassies were already preparing a challenge in the World Trade Organisation (WTO), arguing that Bangkok would have shifted its foreign investment goalposts from those used during its entry negotiations in the 1990s, diplomats said. "This would be one step closer to formal action being taken on the WTO front," one diplomatic source told Reuters. At face value, revision of the law stemmed from probes into the dealings of ousted Prime Minister Thaksin Shinawatra, most notably his family's $1.9 billion sale of their controlling stake in the Shin Corp telecoms empire to Singapore.

However, it is also about Bangkok's old business elite -- many of whom supported the September coup against Thaksin -- getting payback for having to sell their family firms to foreigners after the 1997 Asian financial crisis, analysts say.

Another diplomat said it was clear that ministers were declaring the new law to be WTO-compliant as part of a plan to allow the interim post-coup government to pass the law during its one-year term, which ends with elections slated for December. Its successor will then have to deal with the fallout. "The law will take a few months to be enacted by the King, so it will be the next government who will have to face the problem of international liabilities," the second diplomat said.

"But they don't care. This is only a political game to satisfy some influential power or families who just want to get revenge for the cheap sales they had to make during the 1997 crisis. They want to get control back." For the last 35 years, Thailand's rules on foreign investment have been defined only in terms of share ownership, allowing foreigners to own just 49 percent of a company's equity but maintain control through preferential voting rights.