Thai foreign dominance law takes effect

Thai foreign dominance law takes effect

Don Sambandaraksa  |   July 24, 2012
Thailand’s controversial foreign dominance notification that governs the ownership structure of telecom companies comes into effect today.
While many academics and industry experts say the rules are vague, subjective and break Thailand’s international trade commitments, the regulator has made voluntary acceptance of the FDN a prerequisite for any company wishing to take part in the 2.1-GHz 3G auction in October.
In its simplest form, the FDN allows the regulator far-reaching powers up to revoking of a licence if a telco is foreign-dominated. The definition of dominance includes shareholding through proxies and shell companies which is widely used in the Thai industry.
Key to the argument against the FDN is that it goes far beyond the foreign business act, beyond the telecoms business act, allows the telecom regulator too much sway and is a sudden and arbitrary change in the industry less than three months before a major 3G auction.
The FDN prohibits eight categories of foreign dominance.
1) Dominance of telcos by foreigners or their representatives through control of shares.
This point has been most discussed as it would consider the aggregate shareholding, including that of companies that hold shares in each telco, and the shares of each company holding shares in the telco, ad infinitum, applying the 49% foreign ownership limit to the aggregate amount.
2) Dominance where foreign shares have a preferred status over domestic shares.
3) Dominance where a foreigner directly or indirectly controls policy, management, operations, appointment of directors and management (the FDN goes into detail listing roles from president, CEO down to purchasing manager and head of HR).
4) Dominance through funding and loans, guaranteeing of loans, provision of loans at lower than market rates or any funding mechanism that is discretionary and controlled by a foreigner.
5) Dominance through control of intellectual property, franchises, sole distributorships where that relationship involves transfer of money or other remuneration to a foreigner.


TelcoStrat 288

May 7-8, Jakarta
Join telco CxOs from around Asia to discuss:
• Changing the way telcos operate
• New service offerings
• Restructuring for innovation
See the conference agenda >>

Transmode's Sten Nordell explains why Asia is ahead of the game in mobile fronthaul, and how WDM-PON’s time has finally come


Frontpage Content by Category with Image

Activists petition for the withdrawal of the Newborn-to-Toddler Apptivity Seat full website

© 2012 Questex Asia Ltd., a Questex Media Group company. All rights reserved. Reproduction in whole or in part is prohibited. Please send any technical comments or questions to our webmaster.