BANGKOK -- A protest movement is growing in Thailand against companies from China, Israel and other countries for allegedly circumventing ownership rules, as sluggish economic growth leads to a shift in the nation's traditionally open approach toward foreign business. Around 500 protesters gathered outside the Israeli Embassy in Bangkok's Asok district on Sept. 10, chanting "take back Thailand" and other slogans.

Thailand is in a severe economic situation, but opaque businesses run by foreigners are operating freely, said Doogdik, a self-employed businessman who took part in the protest.

Veteran political activist Sondhi Limthongkul, who organized the protest, read out a letter addressed to Israel's ambassador to Thailand, Alona Fisher-Kamm, which said: "The patience of the Thai people has reached its absolute limit.

We will no longer tolerate anyone exerting undue influence or displaying disdain toward their hosts." Sondhi also criticized the government of Prime Minister Anutin Charnvirakul, saying that authorities have failed to crack down adequately on illegal activities involving foreigners.

Sondhi is known for leading anti-government protests in the 2000s against then Prime Minister Thaksin Shinawatra. He is regarded as a key figure in shaping the political climate that led to the 2006 military coup and the removal of Thaksin from power.

Activist Sondhi Limthongkul speaks to media at a protest in front of the Israeli embassy in Bangkok.

Thailand's real gross domestic product grew just 1.9% on the year in the April-June quarter, lagging behind other big Southeast Asian economies as it struggles to develop high-value industries like semiconductors. The slow growth has increased scrutiny of foreign businesses, particularly Chinese companies.

Thai law generally prohibits majority foreign ownership in sectors such as agriculture and food services. But in recent years, Chinese companies involved in the coconut industry were found to haveed their businesses as domestically owned by having Thai nationals formally hold a stake of 51% or more on paper.

Such "nominee" ownership gives foreign companies de facto control through local individuals whose names are used as legal shareholders. The practice has expanded alongside growing Chinese investment in Thailand and has become increasingly sophisticated.

More recently, Israeli investors have come under investigation for allegedly using Thai nominees to acquire land and other real estate. Protests have also grown against the establishment of facilities affiliated with Jewish organizations, reflecting a rise in anti-Israel sentiment among some Thais.

Thailand has traditionally maintained relatively good relations with the West, as well as China and Russia, and has long been regarded as welcoming to foreign residents and investors. While isolated protests against foreigners have occurred before, campaigns explicitly targeting specific nationalities remain unusual.

"It is difficult to tell whether the movement will gain momentum," said Napon Jatusripitak, a visiting fellow at Singapore's ISEAS-Yusof Ishak Institute, adding, "Popular discontent with the government is growing, and there is no obvious leader to harness it." This is why Sondhi has latched onto the issue, according to Jatusripitak.

"To underestimate this would be a mistake, for the Yellow Shirt movement, after all, helped pave the way for the 2006 coup that toppled Thaksin," Jatusripitak said.

Thailand's Ministry of Commerce has stepped up efforts to combat nominee ownership, adding procedures to the company registration process in April requiring founders to certify that nominees are not involved. Violations can result in prison terms of up to three years and other penalties. That crackdown may begin to affect Japanese companies, about 6,000 of which operate in Thailand.

For example, foreign-owned restaurant operators are generally required to have Thai shareholders constitute at least 51% of the company's ownership. But some Japanese small- and medium-sized companies have relied on services in which local consulting firms or other parties serve as shareholders on paper, helping them satisfy the ownership requirement while retaining effective control.

The use of such services, including by Japanese companies, may constitute a legal violation, a senior Commerce Ministry official told Nikkei. Authorities have not actively enforced the rules in the past, but will strengthen enforcement in coordination with relevant agencies, the official added.

An executive at a Japanese consulting company that provides such services in Bangkok said, "some Japanese firms are already facing scrutiny from authorities over suspected violations." A former Thai economic minister said that as economic growth slows, economic nationalism favoring tighter restrictions on foreign capital is gaining strength. The government has little choice but to bolster enforcement against improper practices.