Tag: Property and Real Estate

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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.

people sitting on gang chairs

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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Thailand’s BOI Incentives: Driving Business Competitiveness

Thailand’s Board of Investment (BOI) has introduced targeted incentives aimed at boosting the competitiveness of eligible businesses across various sectors in the local market. Here is a breakdown of the key programs and their benefits:

  • Upgrading Automotive Industry (BOI’s Notification No. 2/2566)

Existing BOI-promoted automotive projects can reapply for a 3-year corporate tax exemption if their previous benefits have expired. They must invest at least 1 million THB in automation and robotics manufacturers (excluding land and working capital). The new investment project must support the domestic industry by 30% of the total automation system and robotics value to qualify for a 3-year corporate income tax exemption.

  • Community and Social Development (BOI’s Notification No. 1/2567)

Active projects and new investment projects must have a minimum capital investment of 5 million THB (excluding land and working capital costs). Additionally, they must invest a minimum of 500,000 THB in supporting local organizations, such as social enterprises and unions, to qualify for a 3-year corporate income tax exemption.

  • Retention and Expansion Program (BOI’s Notification No. 2/2567)

Businesses with a long-standing presence of not less than 15 years and a significant investment history of not less than 10,000 million THB from at least 3 projects can get benefit from this program. Expansion projects with an investment value of at least 500 million THB (excluding land and working capital costs), will receive corporate income tax exemptions of 3 up to 13 years depending on the business’s category. The range of tax exemptions varies depending on the businesses categorized by the BOI office.

person in welding mask while welding a metal bar
  • Comprehensive Relocation Program  (BOI’s Notification No. 3/2567)

To encourage foreign investors in relocating integrated businesses, including manufacturing facilities, regional headquarters, and research and development centers, new investments that are eligible to receive BOI incentives of 3 up to 8 years of corporate income tax exemption under this promotion must submit manufacturing projects applications for investment promotion of the International Business Center (IBC) and an applicant must undertake the substantial functions of regional headquarters and/or R&D centers as indicated.

  • Economic Recovery  (BOI’s Notification No. 4/2567)

The activities categorized in group A such as businesses related to public utilities or the automotive industry are entitled to receive corporate income tax exemption not exceeding 8 years with the additional rights and benefits of 50% reduction from the standard corporate income tax rate applies to net profits derived from the investment for a duration of 5 years after the expiration of the corporate income tax exemption.  

Author: Panisa Suwanmatajarn, Managing Partner.

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Accommodating Foreigners Coming to Thailand: Proposed Amendments to the Immigration Act

The current Immigration Act B.E. 2522 (1979) is considered outdated and in need of revision to better accommodate the needs of foreigners seeking to enter the country. The proposed draft of the Immigration Act (No…) B.E. …. (“Draft”) aims to address these concerns by streamlining procedures and reducing bureaucratic obstacles for foreigners and relevant individuals.

Proposed Amendments

1. Notification Requirements for Foreigners Staying in Thailand

The Draft proposes the elimination of certain notification requirements for foreigners staying in Thailand. Specifically, the requirement for foreigners permitted to temporary stay in Thailand, but not engaged in occupation or employment, to notify the competent officer of their residing address leaving only for foreigners wishing to extend their stay beyond 90 days to notify the competent official at the Immigration Bureau of their residence. additionally, the Chief of the National Police will be granted the authority to specify the procedure, method, and duration for this notification.

2. Residing Notification Duties

Under the Draft, the duties for notifying the address of temporary residents will shift from the owner, possessor of dwelling, or hotel manager to notify a competent official in-person at the local Immigration Bureau or local police station to be by an online mean as an option. This is to facilitate the notification process and reducing the need for in-person visits to immigration offices or local police stations.

low angle photography of high rise building

3. Quota for Annual Residence in Thailand

The Draft includes provisions for amending the quota of foreigners eligible for annual residence in Thailand. The Cabinet will have the authority to specify the number of foreigners permitted to have annual residence in Thailand, not exceeding 100 people per country per year, and 50 people per year for stateless individuals. The determination of the number of foreigners eligible for annual residence will be made in consideration of mutual support principles and the necessity and security of the state.

4. Changes in Liabilities for Non-Compliance

The Draft also include changes to the liabilities for non-compliance with notification requirements. Rather than criminal fines, the draft introduces disciplinary fines for any foreigner, owner, or possessor of a dwelling, or hotel manager who fails to notify the competent officer.

The Draft proposed amendments to the Immigration Act B.E. 2522 (1979) was passed the process of public hearing and will need to be passing the process of consideration by the parliament before becoming into force.  

The proposed amendments to the Immigration Act B.E. 2522 (1979) in Thailand seek to modernize and streamline the immigration process, while also addressing the needs and concerns of foreigners seeking to stay in the country. It is an important step towards ensuring a more efficient and transparent immigration system that aligns with the current realities and requirements of all parties involved.

Author: Panisa Suwanmatajarn, Managing Partner.

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Modernizing Hospitality: An In-Depth Look at the Proposed Amendments to the Hotel Act

Introduction:

The proposed amendments to the current Hotel Act (B.E.2547, 2004) aim to revolutionize the hospitality industry by streamlining and modernizing the responsibilities of hotel managers. These changes primarily focus on the documentation and reporting processes related to guest information, as well as the electronic submission of the lodger registration card. Additionally, the bill includes provisions to establish guidelines for the development of electronic systems. This article delves into the key points of the proposed amendments, shedding light on their potential impact.

Amendment of the Duties of Hotel Managers:

One of the main aspects of the bill involves amending the duties of hotel managers regarding the recording of guest information, as stipulated in Section 35 of the current Hotel Act (B.E.2547, 2004). Specifically, the proposed amendments advocate for the adoption of electronic methods to record guest details, with a primary focus on the “Lodger Registration” (Form Ror. Ror.4). This shift aims to minimize unnecessary burdens on both guests and hotel managers. Additionally, the bill seeks to eliminate the requirement for guests to fill out the “Lodger Registration Card” (Form Ror. Ror.3), which will relieve hotels from completing the lodging registration card within 24 hours and retaining it for at least one year.

man covering face with frame

Electronic Submission of Guest Information to the Registrar:

The bill proposes significant alterations to the responsibilities of hotel managers outlined in Section 36 of the current Hotel Act (B.E.2547, 2004). These changes primarily pertain to the submission of guest information to the Department of Provincial Administration, known as the Registrar. The proposed amendments advocate for the adoption of electronic means to transmit guest data within a 24-hour period. Moreover, the Registrar will be entrusted with forwarding information related to foreign guests to the Immigration Bureau, aiming to simplify legal compliance and promote inter-agency data sharing. This amendment seeks to relieve hotel managers from the direct obligation of sending information regarding foreign guests to the Immigration Bureau. Furthermore, the bill proposes expanding the legal provisions that outline the roles of the Registrar in collecting, aggregating, and disclosing guest information received from hotels. This expansion aims to ensure that the government can effectively utilize the data for security and research purposes related to tourism and the development of the hotel industry, in line with relevant laws and principles set forth by the Digital Government Development Agency (Public Organization) (DGA).

Change of Administrative Fines to Disciplinary Fines:

To streamline the legal framework, the bill also proposes amending the administrative fines associated with Sections 35 and 36 of the Hotel Act (B.E.2547, 2004), replacing them with disciplinary fines.

Conclusion:

In conclusion, the proposed amendments to the Hotel Act (B.E.2547, 2004) place a strong emphasis on leveraging electronic systems, reducing administrative burdens, and promoting efficient data sharing among government agencies. The objective is to enhance the overall effectiveness of the law while aligning it with contemporary technological advancements and administrative practices in the hospitality industry. Furthermore, the bill updates its penalty provisions to include the adoption of disciplinary fines, streamlining the legal process of imposing penalties. As of now, the bill is undergoing a public hearing process until January 31, 2024. These amendments have the potential to shape the future of the hospitality industry, fostering efficiency and innovation while ensuring compliance with relevant laws and regulations.

Author: Panisa Suwanmatajarn, Managing Partner.

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Proposed 4th Revision of the Bangkok Unitary Town Plan and its implications

Introduction

Town planning, a crucial aspect of urban and rural development, plays a significant role in shaping cities and communities. In Thailand, the Town Planning Act B.E. 2562 (2019) (“Town Planning Act”) defines the process of town planning as the formulation and implementation of development plans that align with national, regional, provincial, and local economic and social goals. Its objective is to enhance living conditions, infrastructure, safety, and welfare in both urban and rural areas while preserving cultural and natural assets for sustainable community development. This article explores the implications of the Town Planning Act on the changing landscape of urban planning in Thailand, with a particular focus on the proposed revisions to the Bangkok Unitary Town Plan.

Understanding of Unitary Town Planning

According to the Town Planning Act, unitary town planning encompasses a comprehensive framework for urban development. It involves the formulation of a territorial map that details topography, altitude, and geographic coordinates, along with specific plans categorized by land use, open spaces, communication and transport projects, public utilities, and environmental considerations. Additionally, the unitary town planning provides guidelines for the floor area ratio (FAR) bonus rate. The FAR bonus rate is a zoning incentive that increases the size of individual construction projects by allocating a higher floor area ratio, which reflects the total square footage of the building divided by the area of the lot. The plan also incorporates supplementary particulars and stipulations related to land use, ensuring compliance with the objectives of the Town Planning Act.

aerial shot of road and buildings

The Proposed 4th Revision of the Bangkok Unitary Town Plan

Currently, the 3rd revision of the Bangkok Unitary Town Plan, enforced since 2013 by the virtue of the Ministerial Regulation to Enforce the Unitary Town Plan of the Bangkok Metropolitan Area B.E. 2556 (2013), is being scrutinized for proposed updates. The Bangkok Metropolitan Administration (BMA) has put the 4th revision of the Bangkok Unitary Town Plan, as the existing plan has been in force for over 10 years without necessary updates in many areas. The proposed revision aims to address this issue and adapt to changing urban dynamics.

Notable Changes in the 4th Revision

The 4th revision of the Unitary Town Plan introduces several significant changes. Notably, the Rattanakosin Island area, which encompasses most of the Phra Nakhon District, will be reclassified from a Thai art and cultural conservation zone to a high-density residential zone, commercial zone, and government agency zone. Additionally, the FAR bonus rate is expected to increase by up to 20%. Several areas, such as the Ratchayothin area in the Chatuchak Sub-district/District, where the red, green, and yellow train lines pass through, will transition from a medium-density residential zone to a high-density residential zone.

Status of the Proposed 4th Revision

As of now, the 4th revision of the Bangkok Unitary Town Plan is undergoing a public hearing process until February 29, 2024. The BMA anticipates that the new plan will be enforced by 2025.

Conclusion

In conclusion, town planning in Thailand, guided by the Town Planning Act, is a vital process that involves the formulation and implementation of development plans. The proposed revisions to the Bangkok Unitary Town Plan reflect a proactive approach to adapt to changing of urban dynamics and optimize town planning strategies. By reclassifying areas and modifying density regulations, the plan aims to address the evolving needs of the city. With the proposed 4th revision currently in the public hearing stage, the landscape of urban planning in Thailand is set to undergo significant transformation in the near future.

Author: Panisa Suwanmatajarn, Managing Partner.

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Proposed Rehabilitation Processes for Small and Medium Enterprises (SMEs)

In 2016, the regulation concerning small and medium enterprises (“SMEs”) was initially introduced to aid SME owners in managing their debts through rehabilitation processes that safeguard the interests of both debtors and creditors.

However, as of 2023, there are over 3 million SMEs in Thailand, playing a critical role in driving the country’s economy. Recognizing this, the Legal Execution Department has expressed a keen interest in ensuring the well-being of SMEs. To this end, they have conducted a public hearing on the draft amendment of the Bankruptcy Act B.E. 2483 (1940), specifically focusing on the business rehabilitation processes for SMEs. Consequently, active efforts are underway to formulate regulations.

In the past, debtors seeking to manage their debts through rehabilitation processes were required to adhere to the provisions outlined in the Bankruptcy Act B.E. 2483 (1940). These requirements included being insolvent and indebted to one or multiple creditors. However, the recent introduction of business rehabilitation proceedings for SMEs has brought about a new rule by eliminating the requirement of being an insolvent person. This means that anyone, regardless of their solvency status, can now initiate the rehabilitation processes.

The recent amendment to the Bankruptcy Act B.E. 2483 (1940) aims to simplify the business rehabilitation processes, making it more accessible for small debtors. This simplification is driven by the current economic and social conditions, and it offers several benefits for debtors. Notably, it introduces a new section that includes an accelerated business rehabilitation processes.

The key summary of the amendments is as follows:

  1. Broadening the definition of debtors in Section 90/91: Previously, the term “debtor” was limited to those specifically prescribed by the Office of SMEs Promotion (OSMEP). The amendment expands the definition to include any juristic person, regardless of the legal classification of SMEs. This change provides SMEs business owners with the opportunity to participate in business rehabilitation, enabling them to restructure their debts and maintain the continuity of their businesses.
  • Revision of the debt threshold in Section 90/92: When a debtor is unable to pay one or several creditors in aggregate, they may file a petition with the court for business reorganization. For individual debtors, the debt threshold has been lowered from 2 million baht to 1 million baht. For juristic persons, the threshold has been revised from not less than 3 million baht to not less than 2 million baht, with an upper limit of 50 million baht. These changes apply regardless of the debtor’s financial status or the number of creditors involved. However, both types of debtors must demonstrate a reasonable cause and prospects for the reorganization of their businesses.
  • Extension of the Business Reorganization Plan (“Plan“) period in Section 90/96(9): Recognizing that a 3-year plan may be insufficient, the amendment extends the Plan period from 3 years to 5 years. This extension aims to enhance efficiency and provide debtors with more opportunities to effectively proceed with their reorganization efforts while ensuring that creditors receive full payment of their debts.
  • Removal of certain rehabilitation processes in Section 90/95: Prior to the draft amendment, individuals seeking business reorganization has to wait for a court order granting absolute control over their property and approval of the Plan before filing a petition for reorganization. This process involved strict legal requirements, such as providing reasons for business reorganization, detailed asset information, and principles and methods, as per Section 90/96 of the Bankruptcy Act B.E. 2483 (1940). These requirements often proved time-consuming and costly. The draft amendment has eliminated some of these processes, allowing debtors or legally authorized individuals to initiate the plan. This change allows both debtors and one or several creditors of the debts arising from a business operation to take the necessary steps toward rehabilitation.
low angle photography of glass buildings

However, the recent amendment to the Bankruptcy Law B.E. 2483 (1940) is currently pending approval from the Council of Ministers. After this, the next stage will involve the draft amendment proceedings to the Members of the Parliament for consideration and approval before proceedings to the King’s endorsement and publish in the Royal Gazette.

Author: Panisa Suwanmatajarn, Managing Partner.

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