Thailand's foreign investment laws should be revamped and relaxed if Thailand is to strengthen its long-term competitiveness and continue to draw investment, according to local economists.
A growing investigation into the use of nominees, prompted by the takeover of Shin by Singapore 's Temasek Holdings, has rattled the business community.
Economists say Thailand's Commerce Ministry investigation raises important questions about the application, and suitability, of existing law.
Somkiat Tangkitvanich, a research director at the Thailand Development Research Institute, said the 1999 Foreign Business Act represented a compromise of sorts between 'globalization and anti-globalization forces'.
Under the Foreign Business Act, a company with less than 50% foreign ownership is considered Thai and excluded from the requirements of the law.
Somkiat said this classification of nationality was based on a simple review of immediate shareholders, not an aggregate of holdings across different tiers.
The law does, however, ban Thais serving as nominees and holding shares on behalf of foreigners.
Sompop Manarungsan, an economist with ChulalongkornUniversity, meanwhile said corporate governance figured in questions about nominee holdings.
'At the same time, one should also ask whether limiting foreign ownership to less than 50% remains relevant,' the economist said. 'Personally, I believe we need to stipulate what sectors we are ready to liberalize, with consideration for our competitive position.'
China, for instance, allows 100% foreign ownership in manufacturing but maintained strict limits for banking, he said.