Thailand's army-backed government has been forced to revise a controversial bill to tighten foreign investment rules after parliament tried to toughen its provisions even more, officials said Thursday.
The draft Foreign Business Act was among the most contentious economic policies proposed by the government, which came to power following a coup in September 2006.
It would limit foreigners to holding no more than 49 percent of the shares or the voting rights in Thai companies, raising concern about a threat from economic nationalism among the foreign business community here.
The junta argued that the law was necessary to close loopholes in Thailand's investment regulations that critics contend have been used to allow foreigners to control key industries such as telecoms and media.
Late Wednesday, the military-appointed parliament added a clause at the last minute that would also prevent foreign investors from choosing managers for companies.
The government decided to withdraw the bill and will later resubmit it after considering the latest proposal, officials said. "We will resubmit the draft after working on the wording about the definition of foreign business operations," said Sakol Harnsuthivarin, secretary to Commerce Minister Krirk-krai Jirapeat.
The commerce minister was quoted by the English-daily Nation Thursday as saying: "Now I can't tell if this government will be able to pass this law within its term."
Thailand is supposed to hold elections later this year, with a new government in place early in 2008. Investors, who had been jittery over the draft, welcomed the development, with the Stock Exchange of Thailand (SET) composite index up 2.64 points or 0.32 percent to close the morning session at 834.28.
"Investors were optimistic that the bill would not pass. The draft was too strict for foreign investors," said Pichai Lertsupongkit, senior vice president at Thanachart Securities.
"They don't believe that this government or a new government (following the planned elections) would implement such drastic measures," he said. The proposed tighter rules stem largely from discontent over a controversial deal between ousted premier Thaksin Shinawatra's telecom giant Shin Corp and Singapore's state-linked Temasek Holdings.
Temasek's 3.8-billion-dollar take-over of Shin Corp last year sparked public protests that eventually led to the military ouster of Thaksin in September 2006.
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