The new government appointed by the military junta after the ousting of Prime Minister Thaksin Shinawatra in a bloodless coup in September has added impetus to the drive to crack down on foreign firms, with Tesco one of the highest profile targets.

The company has enjoyed huge success in Thailand where it operates 189 Express outlets mainly in Bangkok, 24 Supercentres in the capital and a further 32 in the provinces. But it has faced repeated criticism over "unfair" competition to local small operators.

Under the Thaksin government the Commerce Ministry had postponed a ban on Tecso's expansion but since the coup, pressure for action has been building from groups such as the Opposition to Multinational Business Union. Co-ordinator Panthep Suleesatira, says "the invasion" by foreign retailers had destroyed communities.

Tesco's future is expected to be considered next week, when the junta-controlled government also votes on amendments to the Foreign Business Act, which could force thousands of international companies to change their shareholding structure.

Thai law demands that foreign firms operating in the country have a majority Thai ownership but many get round the law by using local nominee shareholders.

The government also wants to do away with the preferred share scheme under which foreign firms maintain control of their companies.

Peter van Haren, president of the Joint Foreign Chambers of Commerce in Bangkok, warns that Thailand may lose investment to other Asian nations with less onerous requirements.

The decision comes at a difficult time for Thailand. Rumours abound that there is another coup in the offing and the junta has mobilised troops from neighbouring provinces to come to Bangkok.

It is also still unclear who is responsible for a string of bombings in Bangkok on New Year's Eve. The government blames Thaksin supporters while others say the military junta itself is responsible in a bid to shore-up wavering support.

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