Thailand sought on Wednesday to reassure foreign investors following controversial plans for a new law on company ownership, saying authorities could allow some flexibility.
But Finance Minister Pridiyathorn Devakula, appointed after a Sept. 19 military coup against Prime Minister Thaksin Shinawatra, said the two-year deadline for firms to bring foreigners' voting rights below 50% was not up for discussion. "That is possible on the small details but we cannot entirely scrap the voting rights issue, which is what they have used to skirt the law,"
Pridiyathorn told a Bangkok radio station.
The cabinet approved plans on Tuesday to amend the Foreign Business Act to limit foreign equity ownership and voting rights to less than 50% and give companies up to two years to meet the new rules.
Thailand's stock index was off more than 1% in early trade on fears that foreign businesses, which have been investing in Thailand for the last 30 years in the unofficial but generally accepted grey area of the existing legislation, would sell up and move elsewhere. But the market managed a late rally to close up 0.9%.
Thailand's SET Composite Index, Asia's worst performer in 2006, has fallen more than 10% since the start of the year when a series of bombs killed three people in Bangkok on New Year's Eve, presaging another turbulent year ahead.
The baht, Asia's fastest-rising currency against the dollar last year with an almost 14% rise, was trading lower, down from 35.94 late Tuesday.
The latest comments from Pridiyathorn, whose credibility with investors had already been dented by the government's attempt last month to rein in the baht with capital controls, look set to muddy the picture even more.
The foreign business community has received no official notification of what the new rules are or what they entail. Members of the community are due to have a meeting with Pridiyathorn later Wednesday. "We still don't really know what is going on. I haven't seen any official
information at all," the head of a Bangkok-based foreign business group said late on Tuesday.
Trying to mollify investor anger, Commerce Minister Krirkkrai Jirapaet said a number of sectors, including retailing, insurance, banking and brokerage houses, would be exempt from the new regulations.
The new rules were generated by post-coup probes into Thaksin's political and business dealings, especially his family's $1.9 billion sale of its controlling stake in the Shin Corp telecoms empire to Singapore's Temasek.
Under the changes, which require parliamentary and royal approval, companies whose shares are majority owned by foreigners will have to report to the government within 90 days. They will then have nine months to adjust their equity structures.