Foreign Companies Investigated

4 September 2009

The Department of Special Investigation is investigating several foreign companies for violations of the Foreign Business Act through the use of Thai nominees enlisted on behalf of the companies for rice farming related activities as reported by a newspaper source.

The nominees are alleged to have acquired more than 1,000 rais of farmland in the North and Central regions of the Kingdom. The DSI has not revealed the names of the foreign companies.

Under the Foreign Business Act, rice farming and livestock are protected business activities and reserved for Thais. Foreigners can hold no more than 49 percent of companies engaged in these activities.

In the companies’ memorandum lodged with the Business Development Department, the companies stated that they intend to engage in rice farming.

The Department is examining the financial statements, balance sheets, and shareholding structures of the companies and will file a complaint if the companies are found to be using nominees.

However, the ministry and the Board of Investment have declared that they are not discriminating against foreign businesses.

Some farmers have claimed that local government officials are becoming middlemen and contact persons for foreign investors seeking contact with local landlords. The foreign investors promise large sums of money for renting farm land to landlords which seem more attractive to the land owners than renting to local farmers, especially when they must struggle to earn a living for their families.

The former president of the Thai Rice Growers’ Association Suwan Kathawuth recommended that the government provide measures of increasing farmers’ earnings.

Countries concerned with food security, such as Middle Eastern countries, are looking to invest in Southeast Asian farmland. Pramote Vanichanont, president of the Thai Rice Millers’ Association, stated that the government must clarify to these countries and any other country wishing to farm in Thailand, that rice farming is reserved for Thais under Thai real estate law. However the government may increase exports to these countries to ensure their food security.

Phuket Investigation of Foreigners Using Thai nominees

4 September 2009

An investigation was ordered by Phuket provincial governor Wichai Phraisa-ngob to ascertain the illegal use by foreigners of Thai nominees in businesses.

In harmony with this, a newspaper source reported that the local revenue office will examine tax payments by foreigners, the treasury office will inspect condominium ownership, and the immigration police will check visa and residence status.

Patong Municipality major Chairat Sukbhal disagreed with allegations claiming that foreigners owned most hotels on the island. He stated that most hotels were operated as joint business ventures between Thais and foreigners and that some foreigners were employed in high-level positions in hotels.

Thailand law allows for foreign ownership of not more than 49 percent in joint business ventures with Thais.

Moreover, the provincial business and trade office reported that a regulation requiring proof of a predetermined amount of funds deposited in a bank account for a joint business venture has been repealed as the regulation could not produce evidence of the true financial funding status of the company.