To end questions over whether it breached the Foreign Business Act, GGF Thailand recently submitted a letter cancelling its commitment to sell 2 million tonnes of government rice.
The move came after questions were raised about whether the Commerce Ministry's Public Warehouse Organisation (PWO) was acting as a nominee for the Malaysian-based GGF Group to trade rice locally under GGF Thailand.
The local unit was formed as a joint venture between the PWO and the GGF Group in September with registered capital of Bt1 million. It has been accused of being a Malaysian nominee designed to allow that country to trade in rice locally, an activity that is restricted to Thais under the FBA.
"GFF Thailand wants to avoid any appearance of impropriety regarding the FBA, so it has cancelled its commitment to trade 2 million tonnes of government rice," said Thanaporn Sriyakul, an adviser to Commerce Minister Porntiva Nakasai.
The PWO signed a concession agreement with GGF Thailand allowing it to buy government rice and store it in company warehouses before selling it to millers and exporters.
It was previously appointed by the PWO as an authorised representative, allowing it to sell up to 2 million tonnes of rice a year from government warehouses under a 30-year contract.
This has sparked questions among Thai rice traders as to whether it is suitable for the government to sign deals for foreign firms to trade in Thai rice.
The attorney-general is deciding whether GGF Thailand can trade rice locally. Since the subsidiary has cancelled the contract before a judgement has been reached, the attorney-general's ruling will be used as a guideline for the PWO to use when considering future partners, said Thanaporn.
The letter, dated December 4, said the firm decided to cancel the deal as it did not want to be responsible for starting a conflict over the government's operation. It will retain its contract to build 40 silos in 10 provinces to store 2 million tonnes of rice for the government. It also said while GGF Thailand was a joint venture with a Malaysian stakeholder, it was majority-owned by Thais.
Source: The Nation
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