Bangkok: Violators of Thailand’s new foreign investment law could face up to five years in prison, under a revised version of the proposed amendments approved by the cabinet on 10 April.
The changes, originally proposed in January, would limit foreigners to holding no more than 49% of shares or voting rights in Thai companies.
The original proposal would have punished violators with only a fine of up to 100,000 baht ($2,870 but the revised version raised the fine five-fold and also threatens five years in prison, according to Commerce Minister Krirk-Krai Jirapaet. Companies would also have three years rather than two to adjust to the new regime, he added.
The cabinet agreed to raise the penalty for violations both in fines and imprisonment. Those who violate the law would face five years in prison and a fine of five times the amount in the earlier draft.
“We added the criminal penalty in order to promote good corporate governance in the business sector,” Krirk-Krai said, saying the draft would be submitted to parliament later this week.
The amendment is unlikely to affect foreign investment in Thailand or investor confidence because direct investment usually focuses on the rate of return and the investment opportunity.
However, the latest draft needs approval from the military-installed parliament before taking effect. It allows for broad exemptions, including the service sector, which is governed by a separate law. Companies operating under bilateral trade deals would be exempt.
The international business community has warned that the changes would dampen the investment climate in Thailand, where confidence has already suffered due to a series of abrupt policy changes.