Transcript of the above video: 

As the thumbnail might not be suggestive, but it is a scene from the movie Burn After Reading - one of my favourite films, it's a Cohen Brothers movie, same guys that made the Big Lebowski - but there's a scene towards the end where they end up, this high level CIA apparatchik, whatever you want to call him Officer is  being talked to by sort of one of his subordinates, and he is being sort of briefed on this situation. It is kind of an absurdist movie. It's really quite funny, but there is a scene where he says, "where is this woman now?" and he says, "oh we have her". And he says, "we have her? to do what with?" I just always loved the tone of that; "we have her? to do what with?" It's sort of like this notion, again I have talked about this a fair bit. 

There is currently an initiative at the Department of Business Development here in Thailand to start looking at what they call the economic substance of certain, or what some have described as the economic substance of certain business set ups. Basically there are concerns about foreigners utilizing nominees, Thai nominees, to act as frontmen in businesses that operate either in direct contravention of Thai law, i.e. they are basically a front for criminal organizations, or they are operating in restricted areas within the Thai economy. And again, I understand the concerns on some of this, but what worries me is we may put off foreign direct investment, and we are going out into some murky waters. I have already done videos contemporaneously with this one where I talk about the economic fallout from some of this as well as the notion that well they're not concerned about “legal form” but more economic substance. What does that mean? That's not a legal interpretation; that's just making it up as you go for lack of a better term. But again if Thailand is viewed as being arbitrary and capricious, especially regulatorily in a corporate context, that could have negative ramifications economically, as it could dissuade people from applying foreign direct investment into Thailand. 

I thought of making this video after reading a recent article from the Pattaya Mail, that is pattayamail.com, the article is titled: Thailand hunts "nominees" - a risky game that ends in prison and corporate erasure. Quoting directly: "Integrated enforcement: from registration to investigation. This shift is led by the Department of Business Development which is evolving from a registration authority into a substantive risk-screening gatekeeper? What? Why? Their exact function is to be a registration authority, and they are there to supposed to develop business, not gatekeep those who want to invest in this economy. It seems to me like there's been a conflation with regard to the raison d'être of DBD to begin with. There seems to be some confusion about what its purpose is. Because again, exactly what risk is being screened for? The risk that a foreigner may invest in Thailand? That's not a risk. As the kids say, "that's a feature, not a bug". That's not something to worry about particularly. Again I understand. I've been vocal about the need for Thailand to protect her economy and protect her labour force, but why not do that get through other enforcement mechanisms that are more in line with the actual law and with the actual structure of these institutions. Again Immigration could deal with this; the Labour Department could deal with some of this stuff on the basis of foreigners engaging in restricted occupations in Thailand. Rather than making folks that would otherwise want to invest here uneasy because our DBD views foreign direct investment as inherently a risk? That seems to be the wrong approach. And again, I understand the desired outcome, I understand the desired goal - both from a policy and practical standpoint - but I think that the approach may be somewhat flawed and I think if may be worth rethinking it for lack of a better term. That said, quoting further: "Supporting this effort is the Department of Special Investigation, along with other economic enforcement agencies forming a coordinated investigative framework."

And again I have seen what DSI has done in the past where they have closed down operations that were clearly acting as fronts for foreigners to come in and do all kinds of things that they're not supposed to be doing in Thailand. I get that side of it, but it seems to me that we may be throwing the baby out with the bath water by - again, further in this article there is a part where it says, "well regulators aren't concerned with legal form, they're more looking at economic substance." I don't even know what that means, because regulators’ sole job is to look at legal form. That's what their name means. They are a regulator. They are in charge; they have authority over the regulations. The regulations stem from the law, therefore the regulations are the legal form, therefore the regulators are the gatekeepers of the legality. Not some vague notion elsewhere. That said, quoting further: "The key development is data integration across agencies, including Corporate registry data, Tax records, Financial transactions, Shareholder movement and relationships. When these datasets are analyzed collectively, structures that appear legitimate on paper are quickly exposed in substance." And that may be true; that may be true. But what I'm concerned about is two-fold. One, this notion that regulators should be concerned with legal form or aren't going to be concerned with legal form, that's antithetical to their purpose to begin with. And secondly, that we may go overboard and end up actually dissuading foreign investment from coming to Thailand; those are my main concerns. That said, it remains to be seen how this plays out and we will certainly be keeping folks updated on this channel as the situation evolves.