Investor confidence is essential to attract investment. Many investors have had second thoughts after recent policy changes.
Photo of Map Ta Phut industrial estate that has large foreign investments and was also shut down for a long period of time, giving some investors second thoughts about investing in Thailand (Photo: AFP - Nicolas ASFOURI).
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INVESTMENT: Walter Bau case ultimately a plus by Nareerat Wiriyapong
Thailand's ongoing court case against Germany's Walter Bau AG will have a positive impact on investor confidence and give the government second thoughts about changing regulations that affect foreign investors' rights in the kingdom, says a leading law firm.
Instead of focusing on the negative sentiment the case created, partners at Baker & McKenzie see the legal dispute between the Thai government and the bankrupt German construction firm as setting a standard in terms of foreign investment protection.
The case stems from a Thai government contract with the German builder more than 20 years ago to build and operate a tollway to Don Mueang airport.
Courts ruled that the Thai government breached several contractual obligations and must pay US$42 million it owes the company.
The case became a major diplomatic incident earlier this year when the liquidators of Walter Bau seized a passenger jet belonging to His Royal Highness Crown Prince Maha Vajiralongkorn in Germany in order to enforce their claim. The jet was subsequently released when it was established that the Crown Prince and not the Thai government was the plane's owner.
"The Walter Bau case has brought about positive results because the firm won the case against the Thai government," said Wynn Pakdeejit, a partner in the dispute resolution group at Baker & McKenzie.
Anything that affects investment protection, if the government breaches, it has to pay the compensation.
The Walter Bau case was applied under bilateral investment treaties between Thailand and Germany.
Such agreements between two countries cover promotion and protection of investments in each other's territory by companies based in either country.
Thailand has signed such agreements with 40 countries, including Germany, China, England, Canada, South Korea, Laos, Cambodia, India, the Philippines and Indonesia. Of the total, 35 have come into effect, according to the United Nations Conference on Trade and Development data as of June 1 this year.
The treaties ensure that foreign investments in Thailand are afforded a degree of protection and so are Thai investments in other host countries.
A number of incidents in recent years raised concerns about investment protection in Thailand, such as the political protests that led to temporary closures of international airports and the Ratchaprasong intersection.
Thus far, no cases have been initiated by foreign investors under the treaties, said Mr Wynn.
Even so, some international investors have approached Baker for consulting related to investment protection. Pisut Attakamol, also a Baker partner, said the Walter Bau case could be a lesson for the Thai government about major policy backtracking.
"The case indicates that before a significant change of policy, the government should have a second thought," Mr Pisut said.
Thailand has seen some recent policy changes by the government concerning foreign investments, led by policies to promote ethanol production and eco-cars.
The Map Ta Phut impasse, which prompted a court ruling to halt operations of 76 industrial projects in Rayong on environmental grounds, is a major concern of foreign investors here.
"Laws must have stability and then effective enforcement, both of which have seen an improvement in Thailand," Mr Wynn said. "But there's room for improvement in both stability and enforcement.
At the same time, Thai companies should be aware of protection under bilateral investment treaties before investing abroad.
Large Thai corporations have been spreading out their investments overseas. There are also growing investments in neighbouring countries such as Laos, Cambodia and Vietnam.
(Source: Bangkok Post, INVESTMENT, Walter Bau case ultimately a plus, 19/09/2011, Nareerat Wiriyapong, link)
Bankruptcy and Liquidation Vocabulary (also Foreign Investment)
Walter Bau AG - a German construction company that went bankrupt in 2005 (See Wikipedia)
Walter Bau case - 20 years ago Walter bau was hired to build and operate a tollway to Don Mueang airport in Thailand, German courts ruled that the Thai government broke the construction contract and must pay the company US$42 million
Walter Bau case ultimately a plus - in the end, positive results from the case
Map Ta Phut - one of Thailand's largest industrial estates located in Rayong (See interactive map)
industrial estate, industrial park - a special area especially for factories with special facilities (roads, transportation, water, electricity, waste disposal) (See Wikipedia)
second thoughts - when something causes you to think a second time about something you did (the second time thinking about why maybe you shouldn't do it)
positive - good ที่ดี
results - what is produced in the end by an activity or task
positive results - good things that happen (resulting from some activity or task)
impact - an effect or influence ผลกระทบ
positive impact - a good effect (that some action has)
negative - bad ที่เป็นด้านลบ
sentiment - feelings; an attitude or belief that people have based on their thoughts and feelings อารมณ์ทางความคิด กระแส, แนวความคิด, ความคิดเห็น
negative sentiment - negative feelings, bad feelings
ultimately - finally, after a series of things have happened ท้ายที่สุด, ตอนสุดท้าย, ในที่สุด
in the end - same as "ultimately"
ongoing - happening at the present moment; continuing ไม่หยุดยั้ง, ต่อเนื่อง
ongoing court case - a court case that is continuing (happening right now)
investor - a person or organisation that puts money into a company in exchange for a future profit นักลงทุน
confidence - trusting and believing in something, being certain or sure of something ความมั่นใจ
investor confidence - when investors feel sure that their investment money is protected from fraud, cheating or sudden unpredictable policy reversals
regulations - rules made by the government to control how some activity is done กฎระเบียบ ระเบียบปฏิบัติ ระเบียบ ข้อบังคับ
rights - something you are legally or morally allowed to do or have สิทธิ์ (See Wikipedia)
foreign investors' rights - the legal rights of companies from other countries investing in this country
firm - a business or company บริษัม
law firm - "a business entity formed by one or more lawyers to engage in the practice of law. The primary service rendered by a law firm is to advise clients (individuals or corporations) about their legal rights and responsibilities, and to represent clients in civil or criminal cases, business transactions, and other matters in which legal advice and other assistance are sought" (See Wikipedia)
leading law firm - one of the largest and most important international law firms
partners - partners at a law firm, top lawyers at the firm, who also own a part of the firm
Baker & McKenzie - an international law firm, with more than 3,800 lawyers spread over more than 69 offices in 41 different countries, the lawyers come (See Wikipedia)
partners at Baker & McKenzie - "Law firms are typically organized around partners, who are joint owners and business directors of the legal operation; associates, who are employees of the firm with the prospect of becoming partners; and a variety of staff employees, providing paralegal, clerical, and other support services. An associate may have to wait as long as 9 years before the decision is made as to whether the associate "makes partner." Many law firms have an "up or out policy" ... associates who do not make partner are required to resign and join another firm, go it alone as a solo practitioner, go to work in-house in a corporate legal department, or change professions (burnout rates are very high in law)" (See Wikipedia)
dispute - a serious disagreement; a conflict ข้อพิพาท
legal dispute - a serious disagreement or conflict (being faought in a court of law)
bankrupt - when a business fails and the assets are sold off by a court (liquidation) (See Wikipedia)
construction - the work of building or making something, especially buildings, bridges, etc. การก่อสร้าง
construction firm - a company that builds buildings, homes, roads, etc
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
foreign investment protection - laws that protect foreigners when they invest money outside their own country
X stems from Y - Y caused X, X was caused by Y
contract - a written (or oral) agreement that is legally binding สัญญา
toll - a small amount of money that you pay to use a road, bridge or expressway
tollway - a road or expressway that you must pay money to use
obligations - things you must do; duties หน้าที่ที่พึงกระทำ ข้อบังคับ (such as debts, liabilities, money that must be paid in the future to another person)
breached several contractual obligations - did not do what they promised to do in the contract
diplomatic - relating to relations between countries เกี่ยวกับการทูต
incident - an unpleasant event
diplomatic incident - "a seemingly relatively small or limited action or clash that results in a wider dispute between two or more nation-states. International incidents can arise from unanticipated actions involving citizens, government officials, or armed units of one or more nation-states, or out of a deliberate but small provocative actions by espionage agents of one nation-state, or by terrorists, against another nation-state," also called an "international incident" (See Wikipedia)
liquidation - "the process by which a company (or part of a company) is brought to an end, and the assets and property of the company redistributed ...
Liquidation may either be compulsory (sometimes referred to as a creditors' liquidation) or voluntary (sometimes referred to as a shareholders' liquidation, although some voluntary liquidations are controlled by the creditors, see below)" (See Wikipedia)
creditor - a company or person that your company owes money to (borrowed money from them, have not paid back yet)
liquidator - the company that sells a company's assets and pays its debts, after the company has failed and gone bankrupt, so that it can be closed, oversees the legal process of "liquidation" of the failed company (See Wikipedia)
liquidators of Walter Bau - the company that is selling off the assets of the failed company Walter Bau to give to the creditors
seized - taken by force (here: following the order of a court of law)
subsequently - after that
subsequently released - after that
legal claim - a request for money that you believe you have a legal right to (from a company, the government or other organization)
enforce their claim - when a court and the police take away assets (to support your legal claim)
established - determine, find out, discover that something is true
established that the Thai government was the plane's owner - determined that the Thai government was the plane's owner (according to law)
resolution - solving a problem
dispute resolution - solving the problem behind a disagreement
compensation - money that someone receives because something bad has happened to them, money paid for damage or loss that you caused caused (as a penalty for breaking agreement, for example) การจ่า่ยเงินชดเชย
bilateral - involving two groups or countries สองข้าง, เกี่ยวกับกลุ่มทางการเมืองสองกลุ่ม
treaty - a written agreement between countries (agreeing to do something or help each other if they need it (in war, for example)
bilateral investment treaties - an agreement between two countries about investment (by companies in one country in the other country)
territory - an area of land controlled by a particular country, leader or army อาณาบริเวณ อาณาเขตประเทศ
data - facts or information used for making calculations or decisions ข้อมูล
ensure - to make certain that something happens or is done รับรอง ให้ความมั่นใจ ให้การยืนยัน
Thai investments in other host countries - when Thai companies invest in other countries
incidents - events which are either unpleasant or unusual เหตุการณ์
concerns - worries ความกังวล
raised concerns about - said they were worried about
protests - meetings, sometimes forceful or violent, or public statements by people who strongly disagree with something ชุมนุมประท้วง
temporary - existing, done or used for only a limited period of time i.e., not permanent ชั่วคราว
temporary closures - closing for only a short period of time
intersection - a place where roads, lines, etc., join or cross each other สี่แยก
initiate - create; start ริเริ่มโดย
initiate legal cases - start a legal case
consulting - giving expert advice on a subject (for example: how to run a business or how to build a building) หารือ
policy - a set of plans or action agreed on by a government, political party, business, or other group นโยบาย (See Wikipedia)
policy backtracking - changing policy
significant - large enough to be important or have an effect ที่สำคัญยิ่ง
significant change of policy - a big and important change in policy
ethanol - "ethanol (ethyl alcohol) is the same type of alcohol found in alcoholic beverages, it can be used as a fuel, mainly as a biofuel alternative to gasoline, and is widely used in cars in Brazil, because it is easy to manufacture and process, and can be made from very common materials, such as sugar cane, it is steadily becoming a promising alternative to gasoline throughout much of the world" (See Wikipedia)
eco-car - a car that uses some fuel that is more environmentally friendly than the usual gasoline (See Wikipedia on ethanol-gasoline mixtures or hybrid electric-gasoline vehicles)
policies to promote ethanol production and eco-cars
impasse - obstacle; when progress cannot be made, cannot move forward (because none of the people involved are willing to change their decision) ทางตัน
Map Ta Phut impasse - the closing of the Map Ta Phut industrial estate south of Bangkok (1. before the court closed the industrial estate there was an "impasse" because local people did not get their pollution problems resolved; 2. after the closing it took a year for some resolution to be reached and the industrial estate reopened; 3. even after the reopening, it is not clear whether all stakeholders, both locals and factories, are satisfied)
court ruling - a decision by a court of law คำตัดสิน คำชี้ขาด
prompted a court ruling - caused or lead to a legal decision by a court of law
halt - to stop หยุด หยุดนิ่ง
halt operations - stop work at a factory (so that the factory stops producing goods)
prompted a court ruling to halt operations
grounds - reasons for what you say or do บนมูลเหตุว่า บนพื้นฐานว่า
halt operations on environmental grounds - close factories and stop production because of pollution (factories failed to stop or control pollution)
concern - a worry ความกังวล
a major concern - some issue people are worried about the most
stability - not changing suddenly and unpredictably; a situation in which things happen as expected without a lot of surprising changes (impossible to plan for in business) ความมีเสถียรภาพ ความมั่นคง
effective - works well, gets the job done; producing the result that was intended ได้ผลดี
enforcement - making sure a law or rule is obeyed and punishing people if it is not obeyed บังคับใช้กฎหมาย
effective enforcement - when enforcement is not enough to make people obey the law (the typical "crackdowns" from time to time mean that people continue to break the law, because they are unlikely to get caught)
improvement - when something gets better or when you make it better การปรับปรุง, การทำให้ดีขึ้น
there's room for improvement - there are more opportunities for improvement (more improvements are possible)
aware - knowing that something exists, or having knowledge or experience of a particular thing ทราบ
corporations - a large company (registered with the government as separate legal entity, owned by many shareholders) (See Wikipedia)