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Public Resentment Over Financial Liberalization

The proposal by the Commerce Ministry to liberalize the Alien Business Law has unsettled the opposition as well as the public to the extent that the proposed amendments were omitted in the Cabinet's October agenda. The Cabinet was to deliberate on the proposed move which will allow non-residents to do business in 20 areas of financial services without obtaining a license or any regulatory approval. These services include banking and insurance, securities sales and marketing, as well as investment banking and financial services.

Currently, a special approval from the authorities is required for non-residents to work in the financial-services sector. With the removal of such special approvals, the opposition cautioned that Thai professionals in financial services risk losing the industry to the non-residents who would be able to operate the businesses entirely on their own.

Key Issues Untouched in Fifth Round
US-Thailand FTA Talks

The fifth round of free-trade talks between the United States and Thailand has concluded in Hawaii in September and both governments have pledged to draw the negotiations to a close by next year. During this round of talks, however, only some technical issues were sorted out. Crucial issues including investment liberalization and satellite services were not touched on by the Thai negotiating team, thus leaving the discussions in the hands of the government. Technical barriers to trade were agreed upon, and negotiators have consented to setting up a workshop to assist Thai exporters on issues regarding restrictions on Thai exports to the US.

On intellectual property rights issues, Thailand seeks cooperation and support from the US for small and medium-sized Thai companies in getting intellectual property protection in the US . Both parties also agreed, in principle, that internet service providers (ISP) should play an important part in copyright protection but details on how to proceed will only be discussed at a later date.

Gold and Gem Traders to Comply with New AMLO Rule

The Anti-Money Laundering Office (AMLO) announced on 10 November that a new reporting rule on gold and gem deals will be put into effect as a Finance Ministry regulation next year. The new ruling would require gold and gem traders nationwide to disclose any business transactions which are more than Bt1 million with non-regular customers. The secretary-general of the AMLO informed that more than 6,000 gold shops and 1,000 gem traders will need to comply with the new ruling. However, this new ruling will not be required for transactions with regular clients as prior records would have been made available with the traders.

Come next year, traders would have to submit information on the business transactions and identities of their new clients to AMLO through fax, post or its website. The AMLO is also pushing for another ruling which will compel pawnshops, insurance companies and stock traders to report any business dealings that seem improper. Violators of this ruling would face a maximum penalty of Bt300,000 for each failure to submit a report.

Tighter Credit Extension by Banks
for Hostile Takeovers

At a Senate committee meeting in September to investigate the stock acquisition of Post Publishing and the attempted takeover of the Matichon group by GMM Grammy, a senior official from the Bank of Thailand said that there are currently no rules for hostile takeovers being enforced by the central bank. He added that the enforcement of tighter regulations pertaining to cases where banks extend credit for hostile takeovers is likely from now on. When it comes to extending credit, the official added that banks should observe ethics and moral principles.

Thailand and Singapore -
Two-Fold Increase in Trade and Investment

The governments from Thailand and Singapore have agreed to increase trade and investment through special incentive packages worth US$30 billion by 2010. The agreements were announced at the end of a two-day meeting of the Singapore and Thailand Enhanced Economic Relationship (Steer) held in Bangkok this November, where 12 MOUs were also signed.

Both governments believe that the two-fold increase in trade and investment should kick-start the creation of the Asean single market. This bilateral single-market plan would pave the way for Southeast Asian countries to eventually come together and form the Asean Economic Community (AEC).

Senior officials have been asked to form a task force to explore joint ventures between Singaporean and Thai companies for investing in third countries in areas including the Pearl River delta in China and the Greater Mekong sub-region. The two countries plan to jointly promote tourism to attract one million Chinese tourists, within a period of three years, to visit Thailand, Singapore and other Asean destinations.

Public Health Ministry Seeks Tobacco Act Amendment

A bill to prohibit the display of cigarettes in retail shops has been proposed by the Public Health Ministry in November in its effort to seek for an amendment to the Tobacco Act. The Cabinet will consider the proposed amendment of Article 21 of the Tobacco Act concerning cigarette displays. The amended Act, if approved, would render it in line with the Ministry's guidelines. The guidelines disapprove the display of cigarettes by retail shops in visible areas to attract attention as well as the placement of products in specific locations requested by the tobacco manufacturer.

New Law for CD Product Manufacturing

The Ministry of Commerce has announced a new act this June to govern CD product manufacturing in Thailand. The act stipulates that anyone who wishes to manufacture CDs must file a report to the Ministry with information including the name and address of the manufacturer, the name and location of the place of manufacture, and details on the machinery used. The manufacturer must also file individual reports for every place of manufacture he owns. Failure to report could result in a penalty of imprisonment as well as a fine of up to Bt200,000. The CDs produced must also display the manufacturing certification mark issued by the Ministry.

AMLO Wants Changes to Bankruptcy Act

An amendment to the 1940 Bankruptcy Act to allow debtors to be declared bankrupt has been proposed by the Anti-Money Laundering Office (AMLO) this August. The AMLO Secretary-General said that the amendment would permit debtors to submit a request of bankruptcy to the Civil Court, thus granting them a period of three years to default on debt payment. During the three years, creditors would not be allowed to demand any payments and they will have no right to take away the debtors' assets. The AMLO also proposed amending the Justice Ministry's regulations which disallow a bankrupt person to continue working as a government officer or state enterprise worker.

Extension of Emergency Decree
for Troubled South

Insistence from the Prime Minister over the situation in the South has resulted in the Cabinet extending the controversial emergency decree which is due to expire on 20 October. This decree also allows the government to declare a state of emergency renewable every three months.

Since the state of emergency was declared, lawmakers and civic leaders have voiced their objections over the granting of absolute powers to security officials. These powers include imposing curfews, forbidding public gatherings, keeping suspects in custody without charge for 30 days, confiscating property, and wiretapping telephones. A clause in the legislation which grants immunity to officials against civil, criminal, and disciplinary action for acts carried out under the decree's provisions has also riled them.

More than 1,000 people have been killed since the violent clashes between insurgents and security forces first emerged in the South in January 2004.

Tax and Quota Exemption for NZ Imports Under NZ-Thailand Agreement

In an effort to promote trade between New Zealand and Thailand , the Commerce Ministry has lifted import tax and quota restrictions on a list of items agreed under the Thailand – New Zealand Closer Economic Partnership Agreement this July. Items in the list include soya bean seeds and oil, coconut and palm oil, coffee bean and instant coffee, rice, pepper, garlic, tea, granulated sugar, raw silk, potatoes, onions, and skimmed powder milk.

BOT's Management to Widen with New Bill

Drafts of the new Bank of Thailand (BOT) bill and the Currency bill are being deliberated by the Finance Ministry. If final approval is obtained from the Parliament, the new bill will widen the authority of the central bank in managing international reserves, thereby enabling the bank to invest in a broader variety of foreign financial instruments.

Commenting on the proposed BOT bill, the governor of the BOT said that the purpose of the bill is to make the central bank's reserve management more efficient and up-to-date with the new financial products currently available in the global market. He added that this extended authority would also be in line with other banks' reserve-management policies.

Japan – Thailand Reached Free-Trade Pact

Thailand and Japan has reached an agreement this September on a free-trade deal which will expand the market for Japanese auto and steel exporters and give Bangkok more access to Tokyo’s heavily protected farm sector. Japan is the second-biggest export market for Thailand, particularly in terms of agricultural products. At the meeting with the Japanese prime minister held in Tokyo, Prime Minister Thaksin Shinawatra said only some minor areas have to be worked out and that he hopes to sign a complete accord by next year.

BOI: Bt40 Billion Incentives Granted

Investment promotion incentives worth more than Bt40 billion has been granted by the Board of Investment (BOI) for 15 projects. The biggest beneficiary is Bangchak Petroleum Plc, receiving incentives worth Bt10 billion for its new cracking unit and cooking-gas plant project. The BOI will also set up a sub-committee to work on making the incentives more appealing to foreign investors.

Law Amendment Sought by Juvenile Court

The Central Juvenile and Family Court is seeking a law amendment this August to increase the authority it has over young offenders in order to reduce the number of young offenders ending up in juvenile detention centers. The Justice Ministry is opposing such an amendment as it would result in the reduced authority of the ministry.

Some of the court’s proposals include allowing police to detain under-18 offenders for up to 24 hours; requiring the police to hand over young offenders to the juvenile court within 24 hours; and giving the children the right to legal counseling right from the beginning of the investigation process.

According to the court’s spokesperson, the changes proposed would ensure judicial involvement at every stage and the equal treatment of young offenders throughout the country. He added that the court would use different rehabilitation programs to reform young offenders, thus avoiding sending them to detention centers as well as going through a trial.

Supreme Court Opinion No. 678-680/2548
Kunvisal v. HSBC Co Ltd

Re: Labor

The Plaintiffs in this case are employees of the Defendant. They were hired for the maintenance of a new building with high-technology facilities which the Defendant has moved into. The lessor of this building was responsible for the maintenance of telecommunications and communal property while the Defendant is required to maintain the leased property only. Not long after the move, the Defendant’s office building was sold to another party. As a result, the Defendant has to move to another location and maintenance work was no long required. As the Plaintiffs were under-qualified and lack proficiency in handling the systems at the new location, it was deemed reasonable and justifiable for the Defendant to dismiss the Plaintiffs without any compensation. (January 2005)

Supreme Court Opinion No. 547/2548
Taptimthong v. Taptimthong

Re: Family, Civil Procedure, Legitimacy

The Plaintiffs in this case are the biological children of the Defendant. Since 1937, the Defendant and the mother of the Plaintiffs have cohabited under the old version (Book 5) of the Thailand Civil and Commercial Code (TCCC). They did not register their marriage nor register the legitimacy of the children. Therefore, the plaintiffs are considered the illegitimate children of the defendant. Under the current TCCC Section 1562, a legitimate child is prohibited from suing his/her ascendants in civil and criminal cases. However, since the Plaintiffs are not legitimate children of the Defendant, they possess the legal right to sue the Defendant, which is not prohibited under TCCC Section 1562. (January 2005)

Supreme Court Opinion No. 887/2548
Neotech Impacts Co Ltd v. Janvieng

Re: Labor

The reduction or extension of time according to the Act for Establishment of and Procedure for Labor Court, Section 26, does not specify that the party should file the motion to the Labor Court before the end of the pre-determined period. Although the period of filing the appeal in the Labor Court has expired, the Plaintiff still possessed the right to file the motion for the extension of time to the Central Labor Court. Whether the Central Labor Court grants the extension of time or otherwise is dependent on necessity consideration, cause of necessity, and fairness.

Since the Plaintiff filed the appeal motion for the extension of time after the pre-determined period, the court dismissed that motion without considering fairness and the cause of necessity in the Plaintiff’s motion. Hence, it was not deemed as the right judgment. (January 2005)

Supreme Court Opinion No. 252/2548
Ministry of Defense v. Keawlek

Re: Contract, Government, Scholarship Civil Procedure

The Defendant had obtained a scholarship from the Plaintiff to pursue overseas studies, and he had voluntarily signed an agreement with a breach-of-contract clause. If the clause is violated, the Defendant would have to return to Thailand immediately or be discharged from the Ministry. The Defendant is also liable to repay three times the amount of the scholarship, including all expenses. However, as the clause has been included in the agreement prior to the breach of contract, it was deemed as a fine instead.

Under Civil Code Section 383 clause 1, the court can reduce the amount as it deemed appropriate after considering all the damages of the creditor. Hence, the court settlement was deemed to be the amount of damages including the fine. Besides having the right to demand for interest payment from the principal amount paid by the Plaintiff, the Plaintiff also has the right to calculate the interest rate at 7.5% per annum accrued from the default date under Civil Code Section 224 Clause 1. (January 2005)

Supreme Court Opinion No. 410/2548
Nakasiri v. Lee Pattana Co Ltd

Re: Interest, Default on Loan

When the bank refused to clear a cheque issued by the Plaintiff for the Defendant, the Plaintiff became liable to pay the cheque amount and the interest accrued from the day of the bank’s refusal. However, the Plaintiff only paid the principal amount to the Defendant and not the interest. A trial court judged that the Plaintiff must accept liability following a counter-claim file of interest by the Defendant, but that the Plaintiff was only liable for the principal amount and not the interest. The Defendant had no right to claim for the compounded interest rate of 7.5% per annum. This was not in agreement with the Civil Code Section 224 Clause 2. (January 2005)

Supreme Court Opinion No. 256/2548
Weangnak v. Government Housing Bank

Re: Labor

In this case, the Plaintiff worked as the head of loans for the Defendant. He was responsible for releasing loans following the Defendant’s strict banking regulations, instructions and operating procedures. However, the Plaintiff had released a loan and gave his approval hastily, without giving it due consideration. Moreover, the loan amount approved was more than the amount requested. His negligence and failure to comply with the Defendant’s regulations has caused the Defendant to suffer huge losses. Although the Plaintiff has shown no intention of profiting from the loan himself or with third parties, his lack of job responsibility and negligence has given the Defendant sufficient reasons to terminate the employment contract of the Plaintiff. (January 2005)

Supreme Court Opinion No. 470/2548
Government Housing Bank v. Sawangampai

Re: Interest, Civil Procedure, Appellate Procedure

After due consideration, the Court of First Instance concluded that the Plaintiff had no right to request for an interest rate of 19% per annum from the Defendant as this was higher than the rate declared by the Defendant. However, the court gave a judgment order for the Defendant to repay the amount of 1,300,031.26 baht, including the interest amount of 300,394.17 baht which the court has previously ruled out. As such, the Court of First Instance was inappropriate in its judgment, for the Defendant had to pay the interest which was more than the amount he was liable for according to the law and the motion.

According to the Plaintiff’s appeal to the Supreme Court, this matter concerned the provision of the public order whereby the Appeal Court Region 5 could apply to this case pursuant to The Civil Procedure Code Section 142(5), Section 243(1) and Section 246. The judgment of the Appeal Court of Region 5 to dismiss all the issues of the Plaintiff’s appeal was inappropriate. Moreover, the Supreme Court thought that it was proper for it to consider the case without sending the case back to the previous court.

The Plaintiff did not have the right to enforce the interest rate pursuant to the agreement because the court has previously ruled it out. However, as there is a debt involved, the Defendant is liable for the interest rate of 7.5% per annum accrued from the date of default, under the Thai Civil Procedure Section 224 paragraph 1. (January 2005)

Supreme Court Opinion No. 406/2548
Shiewchanvisawakhit v. Tangtrongvechakhit

Re: Contract

In this case, the Plaintiff and the Defendant agreed to execute the agreement to sell or buy the land along with three units of a commercial building, of which the Plaintiff shall retain the sole ownership of the land. The duties of the Defendant included dividing the land into sub-plots according to the area of the commercial building which the Plaintiff had intended to purchase, and registering the transfer of land ownership to the Plaintiff.

On the registration day, the Defendant did not divide the land accordingly to complete the registration for the transfer of ownership and he had also confiscated the money that the Plaintiff had paid pursuant to the agreement. The fact that the Plaintiff was absent on that day and whether he could afford the payment of the remaining plot or otherwise was not the issue - the Plaintiff did not breach the contract. The agreement was still a binding contract between the Plaintiff and the Defendant. Subsequently, the Plaintiff had informed the Defendant in writing regarding the date of registration but the Defendant failed to show up.

As such, it was the Defendant who has breached the contract and therefore he should return the confiscated amount to the Plaintiff according to Thailand Civil and Commercial Code (TCCC) Section 378 (3) and the Plaintiff possessed the right to claim for the penalty for such a breach of agreement. (January 2005)

Supreme Court Opinion No. 516/2548
Nonthaburi Province v. Muangthai

Re: Jurisdiction, Criminal

Both Defendants were residing in Bang Kwang at the time this case was filed under the Thailand Civil and Commercial Code (TCCC) Section 41. However, the Defendants were in the jurisdiction of the Court of First Instance pursuant to The Criminal Procedure Code Section 22(1). The Court of First Instance thus held the discretion to accept or deny the filed case.

The ground of action was in the jurisdiction of the Phuket Provincial Court and the Phuket Police has also investigated this case. There was no evidence that the jurisdiction of the Court of First Instance was more suitable than the jurisdiction of the Phuket Provincial Court. If both Defendants were to be sent to the Phuket Province Court for the case proceedings, the Penitentiary Department has to provide safety measures for the transportation of the Defendants. Hence, there was insufficient reason for the Court of First Instance to accept the case. (January 2005)