Poor timing and backtracking by Thailand over amendments to its foreign ownership rules could damage both the economy and the government's credibility, analysts warned.
Amendments to the Foreign Business Act limiting foreign investors to holding 50 percent of the shares and 50 percent of the voting rights in companies here were approved by the post-coup government on Tuesday.
But the next day Finance Minister Pridiyathorn Devakula made an apparent U-turn and said that the telecom industry, originally thought to be the target of the amendment, would not be affected, causing confusion among investors.
"The government rushed to amend the act without cautious consideration, and without listening to strong concerns of the foreign investors," said Suthiphand Chirathivat, head of the Economics Research Centre at Chulalongkorn University.
"Then, the policy U-turn made investors wary, and they again questioned the credibility of the government's policy," Suthiphand told AFP. The amendment apparently stemmed 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 on September 19.
The Commerce Ministry has declared the deal illegal, and other investigations into the sale are still underway.
But the amendment came at a fragile time for the Thai economy.
Investors had earlier panicked after the Bank of Thailand unveiled draconian capital control measures on December 18, sparking a record 15 percent sell-off in stocks the following day.
Just hours later, the government backtracked and the market recovered much of the lost ground within a week, but investors were left nervous about the outlook for Thailand.
Business sentiment suffered another blow on New Year's Eve when eight bombs ripped through Bangkok. The government and the junta blamed political enemies for the blasts, which killed three and injured dozens, and Prime Minister Surayud Chulanont has warned of more possible attacks.
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