Act should not affect logistics services

Act should not affect logistics services.

The new draft of the recently announced Foreign Business Act does not have much impact on the logistics industry, because all types of logistics-related service providers are under the regulation of their relevant laws, say experts.

The draft amendments stipulate that companies that operate under Annexes 1 and 2 and are in violation of the Act will be required to revise their shareholding structure and voting rights to less than 50 per cent within two years.

Transportation services, including aviation services, are included under Annex 2 of the amended law.

Transport Ministry spokesman Chula Sukmanop yesterday said the draft amendments would not affect any joint-foreign businesses that provide transportation and logistics services internationally. The new draft states that the government remains open to foreign investors operating such businesses.

He added that the draft would enforce restrictions only on businesses providing transportation and logistics services within the country. These companies can have a foreign holding of not more than 50 per cent of registered capital. However, many companies in the transport sector have been under the regulation of several relevant laws, such as land, air and marine transportation laws.

Thai AirAsia CEO Tassapon Bijleveld previously said the new Foreign Business Act would not affect its operations in Thailand.

"I can say it is a very small problem compared with some other companies facing this same Act, and I haven't seen any further problems with our business in Thailand," said Tassapon.

He said his company had completed its share proportion to meet the requirements of the new Act by reducing foreign shares from 99 per cent to 49 per cent. The airline received a new investor, Sithichai Veerathamanon, who runs a courier business, to share the main portion of 50 per cent. Tassapon retains his 1 per cent.

Tassapon declined comment on speculation about the voting rights that belong to foreigners.

The Thai AirAsia case has sparked concerns that other Shin Corp subsidiaries -particularly Shin Satellite, iTV and Advanced Info Service - will experience a similar effect.

All of these companies are operating with concessions that were issued only to Thai entities.

Meanwhile, Precious Shipping was recently named by the Stock Exchange of Thailand as one of 14 listed companies that could be at risk once the amended Foreign Business Act was implemented. The company, which provides marine transportation and logistics services, has a foreign holding of 48.7 per cent and foreign voting rights of 53 per cent.

Paiboon Ponsuwanna, secretary-general of the Thai National Shippers' Council (TNSC), said the new draft would be good for the country.

He said foreigners who were interested in investing in the country would do best to enter into the real sector, because the new Foreign Business Act was open to those receiving Board of Investment tax privileges for their investments.

He added that sea transportation had so far been used much more than had air and land transportation. "If the foreign investors want to invest in sea transportation services, why don't they use the subcontract method?" asked Paiboon.

However, he said Thailand might have its own national vessel fleet like other countries like Taiwan and Malaysia.

The TNSC secretary also suggested that lawyers would have to consult with joint domestic-foreign firms about which issues foreign investors should pay specific attention to, such as knowledge transfers.

Business Reporters

The Nation
Friday January 12, 2007