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Foreign Dominance Notification: a model or a dinosaur? Bob Fox Chair, JFCCT/EABC

Explore the impact of foreign investment and the FBA seminar on Thailand's digital economy and telecom sector. Uncover the development of the Foreign Dominance Notification (FDN) and its relevance to various sectors. Discover the importance of a well-functioning telecom sector for economic innovation. Delve into telecom license categories and foreign equity limits. Examine the 'FBA standard' and its evolution over time. Learn about administrative challenges and departures from the FBA standard in sectors like broadcasting and insurance. Gain insights into the future of the FDN and the Guillotine project aimed at streamlining regulatory processes. Join the discussion on Thailand 4.0 and the need for dialogue in navigating regulatory complexities.

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Foreign Dominance Notification: a model or a dinosaur? Bob Fox Chair, JFCCT/EABC

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  1. Foreign Dominance Notification: a model or a dinosaur? Bob Fox Chair, JFCCT/EABC Digital Economy/ICT Group Foreign Investment and the FBA Seminar circulation version Includes references to the Seminar BOOKLET Foreign Investment / FBA seminar 26 Feb 2019

  2. Agenda About telecoms and the Digital Economy ‘The FBA standard’ of ownership Chronology in development of the FDN and how it could apply to other sectors Elements of the FDN Future of the FDN Foreign Investment / FBA seminar 26 Feb 2019

  3. The Digital Economy is…. “…..all economic activity mediated by software and enabled by telecoms infrastructure….” A well-structured, well-functioning, economically efficient telecoms sector is an essential underpinning for an innovative and economically effective digital economy Foreign Investment / FBA seminar 26 Feb 2019

  4. A typical index 50 countries, 40 indicators ; Thailand at 34/50 Source: Global Connectivity Index (Huawei) at ‘Opportunity Thailand’ 15 Feb 2017 Foreign Investment / FBA seminar 26 Feb 2019

  5. Telecom licence categories Three categories based on GATS Telecom chapter concepts Value added and resale services First cat Second cat (no network) Second cat (w network) Third cat Fundamental and network-based services Foreign Investment / FBA seminar 26 Feb 2019

  6. Telecom licence categories Three categories in Telecoms Business Act based on GATS, but Foreign Equity Limits: Foreign Equity limits under FBA List 3, item 21 - permissive First cat Second cat (no network) Second cat (w network) Third cat Foreign Equity limits under Telecoms Business Act – hard wired Foreign Investment / FBA seminar 26 Feb 2019

  7. The ‘FBA standard’ • Telecom Business Act prior to 2006 – about categories 2 and 3: • 25% FEL • Some control elements • Late 2005 changes made it similar to the FBA standard Foreign Investment / FBA seminar 26 Feb 2019

  8. What happened – 1 (see also BOOKLET p. 14) Foreign Investment / FBA seminar 26 Feb 2019

  9. Timelines to early Oct 2010 Joint deliberations Form NBTC (later=2011) House version Senate version Law Frequency Legislation Foreign Dominance Concession Conversion 3G New policy Not Implemented until 2011 Public hearing 20 August 2010 version Released 4 August 2006 version On-going – deal w b’band also CTC formed ≈ 20 July ‘K2’ CTC reports 24 Aug Stalls Auction – 23 Sep Sup Admin Court - confirms Int’l Roadshow late July to early August New unattractive terms early July Pub hearing – misc items 30 Aug IM issued early June Auction – 16 Sep Admin Court - injunction Public hearing 25 June EOI 30 Aug 1-2 Oct Cabinet Re-engage SOEs 4 Oct BKK Post ed Foreign Investment / FBA seminar 26 Feb 2019

  10. What happened – 2 (see also BOOKLET p. 14) Foreign Investment / FBA seminar 26 Feb 2019

  11. Elements of FDN Indirect shareholding – eg by nominees Preference shares Control / influence in policy, management, board Financing relationship – loans, security IPR arrangements Procurement Joint Business operations Transfer pricing See also BOOKLET p. 15 Foreign Investment / FBA seminar 26 Feb 2019

  12. Administrative challenges How does it work? – proportionality – assuming a minority shareholding, do these elements amount to additional percentages (somehow)? FDN is still with us, is still an administrative burden for government and private sector Foreign Investment / FBA seminar 26 Feb 2019

  13. Departures from the FBA standard Broadcasting – control and nationality factors, which are used by many states. (but new issues in on-line media – improper influence etc – not about ownership) Insurance with some caps at 25% but in practice differently applied FIBA – (see Primer) BoT regulations (eg on money lending) Aviation services from January 2018, relying on a 46 year old Decree – restricts nationality, control, shareholding for an Air Operating Licences (AOL), on safety grounds. See also BOOKLET p. 13 Foreign Investment / FBA seminar 26 Feb 2019

  14. Guillotine www.sslicence.go.th Review and comment: Now 370 items in first batch of 1,000 through May Review / comment on the 370 on SSL site. So far TH only, EN navigation and instructions in development . Foreign Investment / FBA seminar 26 Feb 2019

  15. Future of the FDN • Changes since 2012 • Now: • Thailand 4.0 • Guillotine / Simple and Smart Licence project to remove unnecessary administrative burdens • Telecoms industry changes – all three major operators have foreign partners. • An on-going unnecessary burden; time for dialogue … Foreign Investment / FBA seminar 26 Feb 2019

  16. Thank you Foreign Investment / FBA seminar 26 Feb 2019

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