Tag: Property and Real Estate

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Sharing Economy Update: Refining Thailand’s Accommodation Act to Meet Modern Tourism Trends

Following the previously published article “Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends” (Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends – The Legal Co., Ltd.), which provided an overview of the first draft of the Accommodation Act (“Act”) and its efforts to modernize regulatory frameworks in response to emerging tourism models and sharing-economy platforms, the second draft of the Act has now been released and is currently open for public hearing. Whereas the first draft focused primarily on updating definitions, easing certain regulatory burdens, and recognizing new forms of accommodation, the second draft aims to enhance regulatory clarity, balance consumer protection with business flexibility, and address concerns raised during the initial hearing process.

Key Revisions in the Second Draft

The second draft introduces the following substantive revisions:

1. Electronic Systems and Electronic Transactions

The second draft establishes a clear one-year deadline for implementing the required electronic system, ensuring timely and practical deployment. It also expands the scope of electronic transactions by permitting applications, notifications, all complaints, and any other relevant issues under the Act to be submitted electronically. This enhancement improves accessibility, reduces administrative delays, and safeguards operators’ rights during system transitions.

2. Enhanced Control Over Registrar Discretion

Registrars are now explicitly prohibited from refusing registration when applicants satisfy all legal qualifications. This provision minimizes the risk of arbitrary decision-making, reduces opportunities for misconduct, and strengthens overall transparency in the registration process.

3. Exclusion of Monthly Condominium Units from the Accommodation Framework

The second draft excludes monthly condominium rentals from classification as an accommodation under this Act, thereby preventing regulatory overlap with the Condominium Act. This exclusion eliminates unnecessary regulatory burdens on long-term residents and resolves ambiguity regarding whether monthly units should fall within the definitions of hotels or accommodation.

4. Enhanced Protection for Accommodation Service Users

A new chapter introduces comprehensive consumer protection measures, including formal recognition of platform services (e.g., Agoda, Booking.com, Airbnb), fair-contract requirements preventing unilateral amendments by operators, and strengthened safety and information disclosure standards. These provisions reflect contemporary digital-era booking practices and ensure greater transparency and fairness for users.

5. Restructured Penalties and Expanded Director Liability

Penalty provisions have been reorganized to clearly distinguish criminal penalties from administrative fines, creating a more systematic enforcement structure. Director liability has been expanded to prevent avoidance of responsibility for corporate violations, while enhanced penalties have been introduced to incentivize operator compliance.

Conclusion

The second draft of the Accommodation Act, currently undergoing public hearing until 3 December 2025, reflects the government’s continued commitment to modernizing Thailand’s accommodation regulatory framework. The draft seeks to enhance regulatory clarity, balance consumer protection with business flexibility, and address stakeholder concerns raised during the initial hearing process.

Overall, the revised draft demonstrates a forward-looking approach that aligns with evolving tourism trends and supports a more efficient, transparent, and adaptable accommodation system in Thailand.

Related Article: Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends – The Legal Co., Ltd.

Author: Panisa Suwanmatajarn, Managing Partner.

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Sharing Economy: Modernizing Thailand’s Accommodation Legislation for Evolving Tourism Trends

The tourism industry in Thailand has undergone significant transformation in recent years, driven by economic shifts and evolving consumer preferences. Previously dominated by mass tourism, the sector is now witnessing a surge in niche tourism categories, including luxury tourism, creative tourism, slow tourism, solo tourism, medical and wellness tourism, and sports tourism. This shift has fueled steady growth in Thailand’s tourism market, with small-scale accommodations such as homestays, tents, campsites, and rafts gaining popularity. Concurrently, technological advancements have revolutionized how consumers access and book accommodations, with platforms such as Airbnb, Booking.com, and Agoda facilitating seamless transactions. To address these changes and support the burgeoning accommodation sector, the Thai government is drafting the Accommodation Act B.E. ….(“Accommodation Act”), which aims to modernize and streamline legislation governing accommodation businesses. This article outlines the key provisions of the draft legislation and its implications for the industry.

Redefining “Hotel” as “Accommodation”

The existing Hotel Act B.E. 2547 (2004) defines a “hotel” as a permanent structure with comprehensive public utilities, operated for profit. This restrictive definition excludes many contemporary accommodation types, such as homestays, tents, rafts, hostels, and other non-traditional lodging options, rendering them unable to obtain legal licenses. As a result, many such businesses operate outside the regulatory framework. The draft Accommodation Act introduces a broader and more inclusive term, “accommodation,” defined as any establishment providing temporary lodging to travelers or individuals for payment or monetary benefit. This redefinition encompasses all forms of lodging, including traditional hotels, and enables these businesses to obtain legal recognition and licensing while retaining the term “hotel” within the legislative framework.

Categorization of Accommodations

To accommodate the diverse range of lodging options, the draft bill introduces three distinct categories of accommodation, each with specific regulatory requirements:

1.  Accommodation Requiring Notification: This category includes small-scale establishments with no more than eight rooms and a capacity of up to 30 guests, as well as alternative lodging types such as homestays, tents, campsites, rafts, and mobile homes. Operators in this category must notify the registrar prior to commencing operations. This provision is designed to support small-scale entrepreneurs and legalize popular, non-traditional accommodation types.

2.  Accommodation Requiring Registration: This category applies to mid-sized establishments, such as hotels with more than eight but no more than 40 rooms, and condominium units rented for short-term stays (less than one month). These businesses must register with the registrar before operating.

3.  Accommodation Requiring a License: This category encompasses larger establishments, such as hotels with more than 40 rooms, which must obtain a formal license before beginning operations.

These categories ensure that regulatory requirements are proportionate to the scale and nature of the accommodation, fostering compliance while supporting diverse business models.

Streamlining Business Operations

The draft Accommodation Act prioritizes operational efficiency for accommodation businesses. It introduces an electronic licensing and registration system to simplify administrative processes. Additionally, the legislation proposes a “Super License” system, which consolidates multiple regulatory requirements into a single license. This innovation reduces administrative burdens and redundancies, enabling entrepreneurs to focus on business development while maintaining compliance with safety and operational standards.

Addressing Gaps in Current Legislation

The Hotel Act B.E. 2547 (2004), which currently governs many accommodation businesses, is outdated and does not account for the diversity of modern lodging options. Small-scale accommodations, tents, homestays, and rafts often lack the full amenities required under the existing law, leaving them unregulated and vulnerable to legal ambiguities. The draft Accommodation Act addresses this gap by providing a comprehensive regulatory framework that encompasses all types of lodging while maintaining high safety standards for guests. This legislative update aligns with contemporary consumer demands and the growing influence of online booking platforms, ensuring that Thailand’s accommodation sector remains competitive and responsive to market trends.

Key Takeaways

•  The draft Accommodation Act modernizes Thailand’s regulatory framework to accommodate the evolving tourism industry, particularly the rise of niche and small-scale accommodations.

•  The introduction of the term “accommodation” replaces the restrictive “hotel” definition, enabling legal recognition and licensing for diverse lodging types.

•  Three distinct categories—notification, registration, and licensing—cater to different scales and types of accommodation businesses, promoting compliance and flexibility.

•  The electronic licensing system and “Super License” initiative streamline administrative processes, supporting entrepreneurs and reducing operational redundancies.

•  By addressing gaps in the Hotel Act B.E. 2547 (2004), the new legislation ensures safety standards and aligns with modern consumer preferences and technological advancements in booking platforms.

Author: Panisa Suwanmatajarn, Managing Partner.

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Investment: Government Advances 99-Year Property Lease Law to Boost Investment

The Thai government is accelerating efforts to amend the Right-Based Property Act B.E. 2562 (2019), aiming to extend the lease term for real estate from 30 years to 99 years. This legislative push is designed to attract foreign investment, stimulate economic growth, and support key national policies such as the “Housing for Thais” initiative, the Land Bridge project, and land reclamation efforts. The proposed law introduces a novel legal concept known as “right-based property”, which offers a framework for long-term property leases while ensuring assets revert to state ownership after the lease term expires. This article explores the objectives of the law, the significance of right-based property, and its anticipated economic impact.

Understanding Right-Based Property:

Right-based property, as defined under the Right-Based Property Act B.E. 2562 (2019), is a new category of property introduced to enhance the economic utility of real estate in Thailand. According to the Civil and Commercial Code, “property” refers to tangible objects, while “assets” encompass both tangible and intangible items that hold economic value and can be legally possessed. Real estate, or immovable property, includes land, structures permanently affixed to it, and associated property rights. Movable property covers all other assets, including related rights.

Right-based property, however, is a distinct legal construct that refers to the right to use and benefit from immovable property for a specified period, as stipulated in the Right-Based Property Act B.E. 2562 (2019). Unlike traditional leases under the Civil and Commercial Code, which are limited to contractual rights between parties, right-based property can be transferred, inherited, or used as collateral for debt through mortgaging. This makes it a more flexible and economically viable instrument for long-term investment.

To establish right-based property, the owner of immovable property, such as titled land, land with buildings, or condominium units, must apply to the relevant authority, typically the Land Department. The application requires the submission of documents specifying the lease term, which is currently capped at 30 years but proposed to be extended to 99 years. Once registered, a certificate of right-based property is issued, and the property cannot be subdivided or merged with other parcels during the lease term. Any modifications, such as new constructions, revert to the original property owner upon the lease’s expiration, unless otherwise agreed.

Government’s Push for 99-Year Leases:

The Thai government is prioritizing the amendment of the Right-Based Property Act B.E. 2562 (2019) to extend the maximum lease term to 99 years. The amendment aims to remove legal barriers to foreign investment, encourage large-scale real estate projects, and attract high-income individuals and skilled professionals to Thailand.

The government anticipates that the extended lease term will support transformative projects, including:

an aerial view of a large warehouse with trucks

1.  Land Bridge Project: A mega-infrastructure initiative to connect the Gulf of Thailand and the Andaman Sea, fostering trade and logistics.

2.  Land Reclamation: Private-sector-led coastal reclamation projects to create new investment zones, with long-term leases incentivizing participation.

3.  Housing for Thais: Affordable urban housing schemes integrated with reduced public transport costs (e.g., 20-baht flat-rate fares) to lower living expenses for middle-income Thais.

4.  Green Energy Initiatives: Long-term land leases for projects like solar farms, particularly in the Northeast, to produce affordable electricity (estimated at 3 baht per unit) for economic hubs like Bangkok and data centers.

5.  Talent Hub Development: Attracting high-skilled global professionals by offering long-term property rights, enhancing Thailand’s appeal as a destination for talent.

Economic and Legal Implications:

The proposed law is expected to yield significant economic benefits while addressing legal loopholes. Key advantages include:

•  Increased Foreign Investment: The 99-year lease term aligns Thailand with countries like the United Kingdom, where leases can extend up to 99 years. This makes Thailand more competitive in attracting foreign investors for high-end real estate projects, such as luxury hotels, office buildings, and residential complexes. The influx of capital is expected to stimulate economic activity without funds leaving the country.

•  Enhanced Transparency: The law aims to curb illegal practices, such as the use of Thai nominees to bypass foreign ownership restrictions. By requiring assets under the right-based property scheme to be managed by the Treasury Department and revert to state ownership after 99 years, the government ensures national control over land resources, refuting claims of “selling out” the country.

•  Support for Diverse Industries: Beyond real estate, the law facilitates long-term investments in sectors like international education (e.g., foreign ownership of international schools) and financial hubs, fostering economic diversification.

•  Addressing Demographic Challenges: With Thailand’s population projected to decline to 37 million within 50 years, the law seeks to attract high-skilled foreign workers to bolster economic growth. The extended lease term provides the stability needed to encourage long-term residency.

Safeguards and Conditions:

To address concerns about national sovereignty, the government has incorporated safeguards into the proposed law. Notably, assets under the right-based property scheme will transfer to the Treasury Department upon lease expiration, becoming part of the nation’s sovereign wealth. Agricultural land is explicitly excluded from the program to protect food security and rural livelihoods. Additionally, any property encumbered by mortgages or other rights requires consent from relevant parties before entering the right-based property scheme.

Legislative Timeline:

The government is fast-tracking the amendment process, aiming for parliamentary approval and enactment by 2025.

Conclusion:

Thailand’s push to extend property lease terms to 99 years through the Right-Based Property Law represents a strategic effort to unlock economic potential, attract global investment, and support transformative national projects. By introducing the concept of right-based property, the government offers a flexible, legally robust mechanism to enhance the economic utility of real estate while safeguarding national interests. If enacted as planned in 2025, this law could position Thailand as a leading destination for foreign capital and talent, driving sustainable economic growth in the face of demographic and global challenges.

Author: Panisa Suwanmatajarn, Managing Partner.

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Closing Nominee Loopholes: Thailand’s Legal Reform to Safeguard Property Ownership

On 24 June 2025, the Cabinet formally acknowledged the “Findings and Recommendations of the Ombudsman Regarding the Ownership or Possession of Land or Real Estate by Nominees Acting on Behalf of Foreigners.” These recommendations were submitted in response to growing concerns over the circumvention of land ownership laws by foreign nationals through the use of Thai nominees.

This initiative follows the discovery of widespread land and property acquisitions by foreign nationals, raising significant concerns regarding national security, economic stability, and equality of opportunity for Thai citizens. In numerous instances, foreigners have circumvented legal restrictions by utilizing Thai nominees to bypass requirements such as marriage to Thai citizens, land ownership through Thai children, long-term leases, and company structures that disguise actual control.

One prevalent mechanism involves establishing a Thai-registered legal entity that appears to be locally owned but is ultimately controlled by foreign interests through nominee shareholders or preference shares. This practice not only undermines the intent of existing legislation but also contributes to rising land prices, thereby reducing accessibility for Thai nationals—particularly in high-demand areas such as Bangkok and Chiang Mai.

Key Recommendations

1. Department of Business Development (DBD)

The DBD has been designated to play a central role in preventing and monitoring nominee arrangements, particularly in legal entities with foreign shareholding:

  1. System Development
  • Developing an AI-driven system to process and analyze corporate data to identify high-risk juristic persons potentially acting as nominees.
  1. Amendment to the Foreign Business Act B.E. 2542 (1999) (FBA) to include:
  • A broader definition of “foreigner” to encompass those exercising control or management through Thai nominees.
  • Clear definitions of “nominee” and “disguised transaction” to cover indirect ownership and concealed financial or property dealings.
  • Explicit inclusion of both direct and indirect shareholding in regulatory scrutiny, with enhanced qualifications for the 51% Thai shareholders.
  • Classification of legal entities controlled through preference shares as foreign juristic persons.
  • Updated requirements for registered capital, including mandatory submission of evidence demonstrating actual payment (e.g., bank statements) to prevent false declarations.
  • Designation of FBA violations as predicate offenses under the Anti-Money Laundering Act, enabling asset seizure during investigations.
  • Granting the DBD investigative and arrest powers in nominee-related offenses.
peaceful coast washed by calm water of endless ocean

2. Department of Lands

  1. Enforcement Guidelines
  • Issuance of clear enforcement guidelines and their widespread circulation to prevent land ownership by foreign nationals through nominee arrangements.
  1. Amendments to the Land Code to:
  • Increase penalties for foreigners violating land ownership laws.
  • Forfeit unlawfully held land to the state without compensation to the foreign holder.

3. Lawyers Council of Thailand

  1. Code of Ethics
  • Introduction and enforcement of a binding code of ethics that prohibits legal professionals from advising on or facilitating nominee structures.
  1. Professional Conduct Rules
  • Establishment of professional conduct rules to ensure lawyers do not support arrangements that bypass foreign ownership restrictions.

Implementation Framework

The Ministry of Commerce has been designated as the principal agency to deliberate on this matter in collaboration with relevant agencies and to submit the outcome of such deliberations to the Cabinet Secretariat within 30 days for further consideration by the Cabinet.

The Cabinet has acknowledged the Ombudsman’s findings and recommendations, directing the Ministry of Commerce to conduct a comprehensive review of the issue. The Ministry of Commerce will collaborate with 13 other agencies, including Ministry of Finance, Ministry of Agriculture and Cooperatives, Ministry of Natural Resources and Environment, Ministry of Interior, Ministry of Justice, Ministry of Labor, Ministry of Industry, Board of Investment, Royal Thai Police, Anti-Money Laundering Office, Internal Security Operations Command and Bank of Thailand.

This joint effort aims to reach a definitive resolution within 30 days, with the Ministry of Commerce responsible for submitting a summary of its findings, actions taken, and overall recommendations to the Cabinet Secretariat for further consideration.

Conclusion

The Cabinet’s recognition of the Ombudsman’s findings represents a crucial step in addressing a long-standing loophole in Thailand’s property ownership regulations. While foreign investment remains vital to Thailand’s economy, the misuse of nominee structures has distorted the property market and undermined legal integrity. The lack of unified enforcement and ambiguous legal definitions have limited the government’s ability to effectively regulate foreign participation in land ownership.

With a whole-of-government approach now underway, Thai authorities aim to restore fairness, uphold legal safeguards, and ensure that land and property ownership align with national interests. The forthcoming recommendations from the Ministry of Commerce and its partner agencies will be decisive in shaping future land policies and enforcement mechanisms.

Author: Panisa Suwanmatajarn, Managing Partner.

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Corporate Registration: Upcoming Changes to Verify Premises for Business Head Office Locations

The Department of Business Development (DBD) is set to introduce a new regulation requiring entrepreneurs to provide evidence of the right to use a premise as their business registered address when registering a new partnership or company, or when changing the registered address of an existing entity. Currently, the DBD only requires a map, address, and house code number (13-digit numbers) of the proposed head office location without verifying ownership or usage rights. However, this lenient approach is expected to change soon.

Reasons Behind the Regulatory Changes:

The upcoming changes aim to achieve several key objectives:

  1. Support Economic Analysis and Planning: Accurate and reliable data on business locations is essential for analyzing economic trends. This information will help both public and private sectors make informed decisions, formulate policies, and plan strategically.
  2. Drive Economic Growth: Transparent and credible business registration practices will enhance trust in Thailand’s business environment, making it more attractive to investors and contributing to national economic development.
  3. Prevent Fraud: The new requirements will deter fraudulent activities, such as unauthorized use of properties as business addresses, thereby protecting property owners and stakeholders from misuse.

Key Provisions of the New Regulation:

Under the new regulation, entrepreneurs will be required to submit the following documents to verify the right to use a premise as a head office:

white paper with printed texts
  1. Letter of Consent: A written consent from the owner or authorized user of the premises allowing the business to use the location as its registered office.
  2. House Registration Document: A copy of the house registration showing that the consent giver is the head of the household.
  3. Lease Agreement: A copy of the lease agreement if the consent giver is the lessee of the property.
  4. Other Ownership Documents: Any other document proving that the consent giver owns or has legal rights to the property.

These requirements are not entirely new in Thailand. For instance, the Revenue Department has long mandated similar documentation for value-added tax registration purposes. However, the DBD has been more relaxed until the enforcement of this new regulation.

When Will the New Regulation Take Effect?

The new regulation is scheduled to take effect starting March 1st, 2025. Businesses and entrepreneurs should prepare to comply with these requirements to avoid any disruption during the registration process.

Implications for Entrepreneurs and Stakeholders:

Entrepreneurs, directors, managing partners, and other relevant parties should take note of these upcoming changes and prepare accordingly. Ensuring compliance with the new requirements will not only prevent delays in the registration process but also contribute to greater transparency and credibility in the business ecosystem. By implementing these measures, the DBD aims to modernize corporate registration practices, align them with international standards, and create a more robust framework for supporting Thailand’s economic growth while safeguarding property rights.

Author: Panisa Suwanmatajarn, Managing Partner.

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BOI: Investment Strategy to Become a Global Digital-AI Hub and Bioeconomy Leader

The Board of Investment (BOI) has unveiled a comprehensive strategy aimed at transforming Thailand into a leading regional investment hub by focusing on five key areas that leverage the country’s strengths in innovation, sustainability, and advanced industries. These initiatives are designed to bolster Thailand’s competitiveness amid global economic uncertainties, geopolitical tensions, and climate change challenges.

Strengthening Thailand’s Position as a Regional Investment Hub:

The BOI approved three major investment projects valued at over 170 billion baht, including a TikTok data center, Siam AI cloud services, and potash production by Asia Pacific Potash Corporation. These projects underscore Thailand’s growing status as a digital and AI hub, with expectations of continued investment in Big Data and artificial intelligence. This aligns with the government’s vision of positioning Thailand as a leader in the regional digital economy.

Promoting the Bioeconomy and Sustainable Resource Utilization:

To solidify Thailand’s role as a bioeconomy leader, the BOI introduced incentives for Sustainable Aviation Fuel (SAF) production. Projects using agricultural-based SAF will receive an 8-year tax exemption, while blended SAF projects qualify for a 3-year exemption. Additionally, agricultural and food industrial parks have been reclassified as bio-industrial parks, eligible for a 5-year tax exemption under the Bio Circular Green (BCG) framework. These measures aim to add value to local resources and drive sustainable economic growth.

monochrome photo of triangle shape digital wallpaper

Comprehensive Strategy for Growth: Five Pillars:

1. Enhancing Competitiveness in Strategic Industries:

The BOI is prioritizing investment in five high-potential sectors: bio circular green (BCG), electric vehicles (xEV), semiconductors/advanced electronics, digital technologies, and International Business Centers (IBC). To attract more foreign direct investment (FDI), the BOI plans to expand its international presence by opening new offices in Chengdu and Singapore. These efforts are complemented by targeted promotional activities and collaboration with national boards overseeing EVs, semiconductors, and soft power initiatives.

2. Supporting SMEs and Local Supply Chains:

Recognizing the critical role of small and medium-sized enterprises (SMEs), the BOI will enhance support for Thai businesses to improve production efficiency and integrate into global supply chains. Special attention will be given to the EV and electronic circuit board industries, where measures will encourage the use of locally manufactured components and foster industrial linkages.

3. Developing a Highly Skilled Workforce:

In partnership with the Ministry of Higher Education, Science, Research, and Innovation (MHESI) and private sector stakeholders, the BOI will focus on developing a skilled workforce tailored to the needs of target industries, such as semiconductors, printed circuit boards (PCBs), artificial intelligence (AI), and digital technologies. A clear roadmap will guide these efforts, alongside streamlined visa processes (LTR and Smart Visas) to attract global talent. The One-Stop Service Center for visas and work permits will also be expanded to facilitate smoother entry for foreign experts.

4. Modernizing Infrastructure and Regulatory Frameworks:

The BOI will collaborate with relevant agencies to develop critical physical and digital infrastructure, ensuring it meets the demands of growing industries. Efforts will also focus on land acquisition, regulatory reforms to remove investment barriers, and addressing the implications of the Global Minimum Tax through cooperation with the Ministry of Finance.

5. Advancing Green and Sustainable Investments:

Sustainability remains a cornerstone of the BOI’s strategy. Incentives will be provided for investments in renewable energy, recycling, and eco-friendly products. The BOI will promote the adoption of energy-efficient machinery and reduce greenhouse gas emissions. Furthermore, partnerships with the Ministry of Energy and the Energy Regulatory Commission will facilitate access to clean energy for target industries through mechanisms like Utility Green Tariffs (UGT) and Direct Power Purchase Agreements (DPPA).

blue bright lights

Conclusion:

These strategic initiatives mark a significant advancement in Thailand’s economic development. By prioritizing key sectors, fostering innovation, and creating a conducive investment environment, the BOI is positioning Thailand for sustained growth and an enhanced presence on the global stage. Investors and businesses are encouraged to remain informed about ongoing developments as these strategies are implemented, paving the way for Thailand to emerge as a premier investment destination in Southeast Asia.

Author: Panisa Suwanmatajarn, Managing Partner.

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BOI: New Regulations Governing Land Ownership for Foreign Juristic Persons

On 9 December 2024, the Board of Investment (BOI) enacted Notification No. 16/2567, establishing new criteria for granting permission to promote foreign juristic persons to own land for office and residential purposes. This notification supersedes the previous Notification No. 6/2565, which had been in effect since 2022.

The Investment Promotion Act B.E. 2520 (1977) grants special privileges to BOI-promoted businesses, allowing foreign entities to own land beyond the limitations imposed by general land laws. This amendment aims to facilitate business operations while enhancing clarity and flexibility in the regulatory framework.

Key Provisions of the Amendment

  1. Eligibility
    • Foreign juristic persons with a minimum paid-up registered capital of 50 million baht are eligible to own land.
  2. Land Ownership Limits
    • Office Use: Up to 5 rai.
    • Residential Use: Up to 20 rai for constructing accommodation specifically for operational-level employees in a building form.
    • Land designated for office and residential use may be located within or outside the same area as the business premises.
  3. Special Considerations
    • The BOI may grant exceptions on a case-by-case basis if special reasons or necessities arise.
  4. Land Disposal
    • Foreign juristic persons must dispose of or transfer the land within one year after ceasing to qualify for investment promotion.
  5. Further Regulations
    • The BOI Office has the authority to issue additional criteria such as the type of business, distance from the business site, and residential unit specifications.
birds eye view of a cityscape

Key Amendments from the Previous Notification

  1. Repeal of Provisions for Executive and Expert Accommodation
    1. Clause 1.2 of the previous notification, which allowed land ownership for accommodation of executives and experts, has been repealed.
  2. Restriction on Residential Use
    1. Land ownership for residential purposes is now limited to the construction of accommodation exclusively for operational-level employees, replacing the broader term “workers”.
  3. Supplementary Regulations
    1. Additional criteria will be issued to provide further clarity on business types, land specifications, and proximity to business operations, ensuring compliance with operational and environmental requirements.

Conclusion

This announcement takes effect immediately. Supplementary regulations may be further issued, so promoted enterprises are encouraged to stay informed of any subsequent notices to ensure compliance with the regulations.

Author: Panisa Suwanmatajarn, Managing Partner.

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Reforming Industrial Licensing: New Approach to Factory Regulation and Environmental Compliance

Introduction:

The Department of Industrial Works (DIW), Ministry of Industry in Thailand has initiated a comprehensive reform of industrial licensing and factory management processes, signaling a significant shift towards more stringent environmental and operational standards. This strategic approach aims to enhance industrial governance, protect environmental interests, and promote responsible business practices.

Key Regulatory Reforms:

Licensing Mechanism Transformation

The DIW has implemented a multi-faceted approach to industrial licensing that focuses on:

  1. Streamlined Approval Processes
    • Simplifying factory operation permit issuance
    • Reducing administrative procedures
    • Accelerating permit processing times
  2. Merit-Based Support System
    • Prioritizing and supporting responsible industrial operators
    • Providing expedited consultations and services
    • Creating preferential pathways for compliant businesses

Blacklist Mechanism for Non-Compliant Operators:

The DIW will establish a comprehensive blacklist targeting industrial operators with problematic histories, including:

  • Companies with previous legal violations
  • Entities with environmental pollution records
  • Operators exceeding standard emission levels
  • Businesses with improper industrial waste management
  • Entities previously ordered to implement corrective measures
man walking on roof top

Rigorous Evaluation Criteria:

Blacklisted operators will undergo extensive scrutiny, including:

  • Historical operational performance assessment
  • Facility location analysis
  • Machinery installation review
  • Production safety protocols
  • Pollution treatment system standards
  • Waste management efficiency
  • Legal compliance verification

Focus on High-Risk Industrial Sectors:

Special attention will be directed towards high-risk industrial categories, particularly those involved in waste treatment and processing, such as:

  • Slag melting facilities
  • Industrial waste management plants (Categories 101, 105, 106)
  • Hazardous and non-hazardous waste processing facilities
  • Electronic waste recycling units
  • Chemical waste treatment centers

Regulatory Objectives:

The reforms aim to achieve the following strategic goals:

  1. Ensure clean and transparent industrial establishment processes
  2. Promote environmentally friendly industrial growth
  3. Balance economic development with social and environmental considerations
  4. Create a sustainable industrial ecosystem

Implementation Strategy:

The DIW will:

  • Reduce administrative bottlenecks
  • Implement strict review protocols
  • Provide clear guidelines for industrial operators
  • Maintain transparent monitoring mechanisms
  • Enforce rigorous compliance standards

Key Takeaways:

  1. Proactive Regulatory Approach: Thailand is transitioning from reactive to proactive industrial regulation.
  2. Environmental Priority: Protecting ecological systems and community health is paramount.
  3. Operator Accountability: Businesses must demonstrate responsible practices to maintain operational licenses.
  4. Transparent Governance: All processes will be open to public scrutiny and systematic review.

Conclusion:

These reforms represent a significant milestone in Thailand’s industrial policy, demonstrating a commitment to sustainable development, environmental protection, and responsible business practices.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thai Government Slashes Property Transfer and Mortgage Fees

In a move aimed at supporting Thai citizens and stimulating the real estate market, the Thai government has announced significant reductions in fees for property transfers and mortgage registrations through the end of 2024.

Driven by a Cabinet resolution on April 9, 2024, the Ministry of Interior is set to issue two announcements lowering the government fees and expenses related to real estate transactions under existing laws and regulations.

Reduced Fees for Houses, Land, and Commercial Properties: The first announcement, issued under Article 2(7)(Dor) of Ministerial Regulation No. 47 based on the Land Code B.E. 2497 (1954), reduces fees for registering transfers and mortgages on residential properties, commercial buildings, and land with buildings such as single houses, semi-detached houses, and townhouses.

Specifically, the transfer registration fee has been cut from 2% to just 0.01%, while the mortgage registration fee has been lowered from 1% to 0.01%. However, this reduced fee structure only applies to properties with a purchase price, appraised value and mortgage amount not exceeding 7 million baht. Additionally, the provision is limited to real estate purchases by natural persons of Thai nationality.

high angle shot of suburban neighborhood

Condominiums Also Get Fee Reductions: The second announcement from the Ministry of Interior targets reductions in government fees for condominium unit transactions. Issued under Article 1(77)(Chor) of the Ministerial Regulation related to the Condominiums Act B.E. 2553 (2010), it slashes the fees for condominium units transfer registration from 2% to 0.01% and mortgage registration from 1% to 0.01%.

As with the reductions for houses and lands, the lower fees for condominium units only apply to a purchase price, appraised value, and mortgage amount below 7 million baht threshold. The reducing of condominium unit fees are also exclusively for Thai national buyers.

Temporary Relief Until End of 2024: The Ministry of Interior’s fee reduction announcements for both property types will go into effect once published in the Royal Gazette, with the lower rates remaining valid until December 31, 2024.

This temporary reprieve on transfer and mortgage fees exhibits the Thai government’s commitment to easing financial burdens around property ownership and uplifting the real estate sector during the current economic climate.

Industry analysts expect the fee cuts to provide a substantial boost for prospective homebuyers and real estate investors over the next 8 months. Developers and brokers are gearing up for heightened housing market activity in response to these government incentives.

Author: Panisa Suwanmatajarn, Managing Partner.

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Leveraging the Treaty of Amity: A Gateway for American Real Estate and Entertainment Businesses in Thailand

In the ever-evolving landscape of international business, the Treaty of Amity and Economic Relations between the Kingdom of Thailand and the United States of America (Treaty of Amity), signed in 1966, stands as a testament to the enduring partnership between the two nations. This groundbreaking agreement grants significant benefits to American citizens and companies with American ownership, particularly those operating in the realms of real estate development and live entertainment organization, offering a streamlined pathway to navigate the complexities of doing business in Thailand.

The Treaty of Amity provides a comprehensive framework that ensures a level playing field for American enterprises in Thailand. At its core, the treaty grants national treatment to American citizens and businesses, entitling them to the same rights and privileges as Thai nationals in various economic activities, such as establishing businesses and engaging in professions.

Furthermore, the treaty offers robust protection for American investments in Thailand, ensuring fair and equitable treatment, safeguards against expropriation without prompt and effective compensation, and the right to transfer funds related to investments. This provision instills confidence in American investors, fostering an environment conducive to long-term growth and stability.

Significantly, the Treaty of Amity facilitates American companies’ access to the Thai market by allowing them to operate businesses in Thailand on a non-discriminatory basis. This provision opens up a wealth of opportunities for American businesses to expand their operations and tap into the vibrant Thai market, leveraging their expertise and resources to cater to the evolving demands of Thai consumers.

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To initiate the process of benefiting from the Treaty of Amity, businesses must submit an application to the United States Embassy in Thailand for verification, followed by a submission to the Department of Business Development (DBD) to obtain a Foreign Business Certificate (FBC). This certificate serves as a gateway, enabling American businesses to engage in various economic activities, including real estate development and live entertainment organization, provided they meet the requisite criteria.

Notably, to benefit from the Treaty of Amity, businesses must demonstrate American ownership and adhere to specific eligibility criteria. Companies must have at least 51% American shareholding, and a majority of their directors must be either American citizens or Thai nationals with specific authority. This stringent requirement ensures compliance with Thai regulations while supporting the expansion of American ventures in Thailand.

Upon obtaining the FBC, businesses gain access to a range of benefits that facilitate their operations in Thailand. In the realm of real estate development, the Treaty of Amity enables smoother acquisitions and development projects, fostering growth in this critical sector. Simultaneously, live entertainment organizers can navigate licensing and regulatory hurdles more efficiently, tapping into Thailand’s rich cultural tapestry and thriving entertainment industry.

In conclusion, leveraging the Treaty of Amity presents a strategic advantage for American businesses operating at the intersection of real estate development and live entertainment organizations in Thailand. By adhering to the prescribed process and procedures, companies can unlock a host of benefits that enhance their operational capabilities and market presence. As global markets continue to evolve, harnessing such bilateral agreements is crucial for sustainable growth and expansion strategies. The Treaty of Amity stands as a testament to the enduring commitment of both nations to promote trade, investment, and economic cooperation, fostering mutual prosperity and strengthening bilateral ties.

Author: Panisa Suwanmatajarn, Managing Partner.

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