Thoughts On The Edict

Thailand Hotel Guide

• Hin Nam Sai Suay Hotel
• Hua Hin Bluewave Beach Resort
• Hua Hin Grand Hotel & Plaza
• Hyatt Regency Hua Hin

Now that the dust has settled and we are beginning to take stock after the debacle caused by the edict from the Interior Ministry, perhaps it's time to examine the issues surrounding it.

To recap, the Interior Ministry issued an edict to all district governors in the middle of May ordering them to apply the laws governing setting up Thai companies to buy property. If you want to know what the edict said, read these newsletters on my website at:
http://www.holt-realty.com/holt-realty-newsletter-june06-1of2.php
http://www.holt-realty.com/holt-realty-newsletter-june06-2of2.php

The result of the edict certainly wasn't what the Interior Ministry dons living in their ivory tower expected. For a start, the most productive and active property markets ground to an immediate halt. The officers at the Land Offices in Phuket, Samui, Bangkok and Pattaya, as well as to a lesser extent in Hua Hin and Chiang Mai, were completely confused. Worst of all, all the taxes and transfer fees the officers had been so gleefully scooping into the government coffers disappeared overnight.

Various groups, including homeowners, developers large and small, lawyers, and real estate agents, all met to discuss what to do. The phone lines ran hot, and email messages flew into Inboxes like confetti. Many of the discussions I had were about how to continue doing business while staying within the law.

At first, I advised my clients to sit still and wait until things settled down and we could assess what the effects of the edict were and what to do after that. Then, in early June none other than the chief of the Phuket Land Office handed us all a very elegant solution on a plate. In essence, he told us that as long as the Thai company was set up according to Thai law, and that there was a Thai Managing Director in the company, his land office would not see any reason to investigate the company, even if there were also a foreign Managing Director or foreign shareholders. If you have read the law governing foreign property ownership you will see that he was interpreting the law correctly.
http://www.holt-realty.com/houses-in-thailand-ownershiplaws.php

One of the discussions I had was with the publisher of the Pattaya Trader. He maintained that it was wrong for foreigners to set up companies and buy property as it violated the 'spirit of the law'. So I would like to extend that discussion to this forum.

I, and many foreigners, believe that the law prohibiting foreigners buying property in Thailand is wrong. But the Thais don't see this problem as we do. They ask why we should be allowed to own their land. Their prohibition is also grounded in a long and murky history. Perhaps one of the most in-depth analyses I have read on this subject can be found at: http://www.stickmanbangkok.com/Reader2006/reader2728.htm

So, why is it alright for any Thai to go to our countries and buy as much property as they like and own it freehold in their own name? Yet we are not allowed the same freedom here.

I believe that if a law is bad for a vast majority of the people, or it is an unjust law, then we have a moral responsibility to oppose that law as strongly as we can, provided we do not break the law in doing so. The law prohibiting foreigners owning property is bad for us, but it is much worse for Thais.

I took part in the Viet Nam war with the Royal Australian Air Force at Ubon Ratchathani, Esarn. After seeing what I did, I returned to Australia convinced it was an unjust, wrong war. I joined a growing number of people who were demonstrating against it. When so many protested, we made the politicians rethink their plans and end the war.

By adhering to the law here in Thailand and setting up completely legal Thai companies to buy property, I believe we are doing much the same thing. We are showing the government that if it is good enough for foreigners to bring their money into Thailand to invest in property so that we can live here in comfort, it should be good enough for us to be given the simple right to own our own small piece of land and house.

Of course, we can do that already, as long as we are married to a Thai. But the law stipulates that we must invest 40 million baht into approved investments such as government bonds or stocks. How many people are going to tie up that much money for a very low return on investment? This is an unrealistic and insulting requirement, in my opinion. By opening up the law to allow foreigners to buy their own homes on a small piece of land without this ridiculous restriction the benefits would be tremendous.

If foreigners want to come here and set up companies to invest in large-scale property development projects, then they can incorporate as public Thai corporations with majority Thai shareholders. This is what some of the biggest companies like Laguna Resorts & Hotels (LRH) and Raimon Land have done and they are benefiting thousands of Thai people as a result.

Since the edict, I have received emails from clients telling me that they have changed their mind about buying property here in Thailand. Instead, they are going to countries like Panama, Belize, Chile, and the Baltic countries in Eastern Europe to buy. These countries welcome property buyers with open arms and even offer them incentives to go there.

Compare that attitude with what we see here in Thailand. Foreigners see the current policy like this. "Welcome to Thailand. Bring your money, spend it here, but don't stay. We don't like you!"

If the laws were to change to a more enlightened policy, billions of investment dollars would flow into this country like water. That money would immediately benefit the Thai economy and Thais.

Ah! But wouldn't this open the floodgates and we would have thousands of foreigners streaming in to buy up property, and deny Thais as a result?

Let's be realistic here. How many foreigners want to move to Thailand and stay here forever? A very small number. Moving here is difficult. You have to learn a new language, a new culture, and find ways to support yourself. There is no security blanket either. Very few people are going to take the risk, and even fewer want to. Many of the people we see coming to live here these days are on a retirement visa. They are mostly old men with only a few years left to live. You can't even get a retirement visa unless you can prove you have money from overseas to support yourself so that you are not a burden on the Thai people.

Where do these retirees choose to live? They come to places like Phuket, Samui, Pattaya and Bangkok. With the exception of Bangkok, very few Thais want to live where the retirees do, unless it's to make money off them.

So these retirees are not making it difficult or impossible for Thais to buy their own homes. Quite the opposite. Many of them find a Thai girl, get married, buy a house and then bequeath it to the wife when they die. Quite a few Thai women today own expensive homes and cars as a result of marrying foreign retirees. So where is the danger?

No matter what happens, Thais who cannot buy and own their own homes now cannot do so because they do not have the money and the Thai banks won't lend it to them. It doesn't have anything to do with foreigners buying property here. In fact, the Thais will have a far better chance of buying and owning their own homes if the foreigners are allowed to buy property, because we bring in so much investment capital that trickles down to even the poorest Thais. As we have seen, as soon as those investment dollars are cut off the property market collapses, construction workers lose their jobs, materials suppliers lose a large chunk of their business, and so on down the line.

I have heard upper class Thais prattle on about 'National Security Issues' when we have discussed why foreigners cannot buy and own property. This is utter nonsense. What possible danger to national security can a few foreigners pose? Even at a very generous guess, I would say the number of Western foreigners in this country is far less than 1% of the population. Does that sound dangerous? How dangerous can a few old men and men married to Thai women be?

Perhaps the Interior Ministry edict may have opened the eyes of those in power. It's time the government sat down and gave this question some serious thought. And if they are not willing to compromise, perhaps we foreigners should all start lobbying our governments back home to give Thais the same property owning rights as they give us. It's time for a change!

An excellent submission and one which I reckon most will nod in agreement with. How can one disagree with this wisdom?