Five months after a military coup - and the bomb blasts of New Year's Eve - minority-owned foreign companies will be obliged to restructure their shareholdings and reduce foreign company voting rights to less than 50 per cent within the ministry's deadline (2009).
But do non-Thai companies have reason to fret? It seems not, although there are knock-on effects to bear in mind.
"The new, improved Foreign Business Act is aimed at foreign companies which, though they claim to have a minority stake in the business (to enjoy the tax advantage accrued to local Thai companies), in reality hold a majority stake through various groups of nominees possessing a small percentage of the share," explains Chaipranin Visudhipol, managing director of TBWA\Thailand.
"Most advertising agencies in Thailand already have a declared majority foreign ownership. Some are even totally foreign-owned. Therefore, they fall into a different category working under a different - read higher - tax bracket and do not come under the purview of the new Act."
What the Government has attempted to do is, quite reasonably, to correct the illegal conduct of foreign-owned companies that use a nominee structure to qualify as Thai firms.
But it is the Government's continuous revisions of the law that are making foreign investors jittery. Witawat Jayapani, CEO of Creative Juice\G1 and president of the Advertising Association of Thailand, believes the industry could experience its worst downturn in six years, with a 10 per cent fall in adspend growth, because of the unclear policies of the powers that be.
"Many marketers know very well that the Government wants to promote a 'sufficiency economy'. But they remain unclear as to exactly what the phrase means to a Government with such a confused economic policy," says Witawat.
In such an unstable climate, consumers are adopting a wait-and-see attitude. Most are reluctant to splash out on high investment items such as real estate and cars, which presents a further roadblock for marketers looking to concrete business plans for 2007.
"Though most US companies fall out of the new Act's net, thanks to a treaty signed between the two Governments, there are some non-US advertisers which may be affected," says Sohn Chongsrichan, CEO of Y&R Thailand.
Some companies under investigation are Telenor, Hutch CAT Wireless, Thai AirAsia, Siam City Cement, DHL Logistics and Izumi Zenkosha, an event organiser.
"In terms of the media, controls are already in place to prevent outright foreign ownership. There are also controls which mean only a Thai national can become an editor, for example," says Andrew Batt, executive director of Bangkokstation Network.
"Publishers wanting to launch in Thailand need to work with a local, Thai-owned publisher."
A Bangkok-based publishing company, Bangkokstation Network has entered into a licensing agreement to produce a Thai-language edition of BusinessWeek magazine this month. "Licensing would appear to be a viable option, and it's one we are actively promoting to overseas partners."
The advertising industry remains relatively unaffected this time. But given the frequency of dramatic change in Thailand, no one can say what stance a newly-elected Thai Government may take.
