28 March 2007
We now have 3 different drafts for a new Foreign Business Act - what next?
The Foreign Business Act B.E. 2542 (1999) ("FBA") controls the areas of economic activity in which foreigners may take a majority interest.
Over the last 9 months following the Temasek deal between then PM Thaksin and the Singapore Government, there has been considerable debate about how the provisions of the FBA have been unfairly exploited.
This culminated in the Cabinet of the transitional Government sponsoring a Bill to amend the FBA. (This was the subject of an earlier JSM Email Legal Update entitled "Thailand: Draft Foreign Business Bill (11 Jan 2007)".
On 14 March certain members of the National Legislative Assembly ("NLA") drafted an entirely different proposed bill, which conflicts in significant terms with the earlier Bill.
Just this week we have been advised that the Council of State, who are tasked with re-drafting all proposed legislation, have indicated an intention to depart from both the above documents, and have suggested, in broad terms, a third approach.
Since the initial release of the official Bill, many clients have been seeking advice on how they might restructure ahead of the introduction of any new, possibly draconian, measures.
Although we have no way of predicting the ultimate form of the new legislation (if indeed any new law is passed) we have consistently advised it would be premature and unwise to restructure without a clear legislative framework.
The appearance of 3 markedly different approaches to the FBA issues within 2 months of each other simply confirms that pre-emptive action without certain knowledge of the new law would be wholly inappropriate.
For your information the process to create new legislation under the temporary Constitution of Thailand is as follows:
1. Cabinet approval of the Bill;
2. Review of the draft Bill by the Council of State;
3. Three readings by the NLA;
4. Passing of the Bill by the NLA;
5. Endorsement by His Majesty, the King;
6. Announcement in the Government Gazette.
The timeline for the process is approximately 4 months.
However this assumes that the NLA meets regularly which, as a matter of practice, is not the case.For further information, please contact:
|Name: Gary Biesty|
|Phone: +66 2 677 7588 x173|
|Fax: +66 2 677 7599|
|Name: Nipaporn Weskosith|
|Phone: +66 2 677 7555|
|Fax: +66 2 677 7599|