A spark of excitement and controversy swept through the Kingdom of Thailand recently when the government announced plans to allow foreigners to buy land in Thailand – something that has been impossible for many years.
Naturally, many foreigner investors were ecstatic about the news, with many Thai nationals crying out for the government to reconsider their stance.
In any case, it seems that the government is reportedly backing down on its plan to allow wealthy foreigners to start purchasing land for residential purposes in response to the fierce protest.
But, why the sudden change? Would a plan to allow foreign investors into the country be such a bad thing? In this article, we’ll explore the subject in greater depth…
The U-Turn On Foreign Land Ownership in Thailand
The director of the Department of Land, Chayawut Chanthorn recently announced that the Deputy Prime Minister, Prawit Wongsuwon approved the withdrawal of the Interior Ministry’s draft regulation on foreign land ownership.
This draft regulation was initially approved in principle by the cabinet allowing well-off foreigners with long-term visas to purchase one rai of land for residential purposes, provided they invest at least 40-million THB into the country over three years.
As you can imagine, the policy—which was intended to attract more foreign investment—was met with heavy criticism, accusing the government of effectively “selling off” their precious country and its bountiful land.
Ultimately, the ministry decided that it was in the best interest of the Thai people to withdraw the draft regulation in response to the widespread public concern. If the cabinet agrees, the decision will be dropped from the proposal entirely.
According to Mr Chayawut, they would keep the ministry’s 2002 regulation on foreign land ownership intact.
Why the Sudden U-Turn?
The sudden U-turn on foreign land ownership was in direct response to the widespread criticism from Thai nationals, and we are inclined to agree.
From a foreigner’s perspective, we understand how attractive it would be to be able to purchase land in Thailand and remain in the country indefinitely, however, the withdrawal of this policy is almost certainly the best move – at least until it has been given considerable thought by the government.
The fact is, we are seeing countries all over the world allow foreign investors to snatch up land and one of the biggest and most common issues with this is: land being purchased by wealthy elites and then them sitting on it – leaving it undeveloped.
While waiting for their land investments to appreciate in value, foreign owners will be able to prevent any Thai nationals from purchasing new land and building Thai-owned residential developments in the future.
It’s a risk that many, many Thai nationals feel is unnecessary. It poses a threat to Thai investors and may result in thousands of foreign investors from gaining too much control over their country.
This U-turn is a fine example of a government listening to its constituents’ concerns and putting their wants and needs before foreign investors.
The Government is in Agreement with the Thai People
Mr Supattanapong, the Energy Minister stated that the government has understood public concerns and is more than willing to make improvements.
He has also played down the growing concerns of the impact of the policy U-turn and has stated that the government will do its very best to explain this issue to any foreign investors who begin negotiations.
Property developers have called on the government to clarify the regulations in order to prevent property speculation, as they are firm believers that this policy would highly benefit the economy.
An honorary chairman of the Housing Business Association, Atip Peechanont, also spoke out and said that the government should indeed listen to all public criticism and make the necessary changes to the land policy.
There are many pros and cons to the policy, all of which the government should weigh up carefully.
The chief economist at Kiatnakin Phatra Securities, Pipat Luengnaruemitchai also added that the government should not solely focus on wealthy foreigners alone, as these individuals are not always necessarily investment-oriented.
Does This Mean Foreign Investment is off the Cards Entirely?
It’s important to remember that this U-turn is not a guarantee that foreign land investment will be off the cards entirely. What is more likely is that there will be significant changes to the policy, thus resulting in less control for foreign investors.
One of the biggest concerns many leading business owners in Thailand have claimed is that the 40-million THB investment is too small. Tanit Sorat, vice-chairman of the Employers' Confederation of Thai Trade and Industry believes that if this foreign land ownership policy is to work, the minimum investment should be at least $5-million USD.
Others are concerned about the possibility of opening Thailand up to more “grey” business investments from wealthy foreigners who may only be interested in establishing bars, massage parlours, and gambling dens.
While we can all agree that foreign land ownership would certainly be great for bringing a significant amount of wealth into the country, it is still a risk allowing so much land (which is a precious and finite commodity in Thailand) to be snatched up by non-Thai nationals.
Final thoughts – More control should be retained by the Thai government
Ultimately, a drive to attract more foreign investment is a brilliant way to stimulate the economy and help to prevent future recessions. However, it is abundantly clear that the Thai people have their doubts and concerns.
As such, this policy should indeed be withdrawn and reviewed with considerable care and attention – with the help of the private sector, given their access to data and extensive knowledge of the global property market.
Should foreign land ownership be off the cards entirely? Not necessarily. However, should more control be retained by Thailand? Absolutely.
Only time will tell.
