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Thailand: An Attractive Business Environment
A 2006 survey conducted by the Japan External Trade Organization (JETRO) showed that Thailand was the “most optimal location for establishing a production/sales base in the coming 5-10 years”
There are many reasons why Thailand is a favorable choice for the investors:
Economically, this country of 64 million people is characterized by steady growth. Abundant natural resources and a skilled and cost-effective work force helps attract foreign investment, enables them to prosper and help develop industry in Thailand.
Social and Political Stability
Thailand is a welcoming country. The country’s form of government – constitutional monarchy – allows democratic processes and reforms, and is balanced by the Thai people’s peace – loving nature, of the people in Thailand are Buddhist, all religions are welcome, and His Majesty the King is the patron of all religions.
Thailand has good infrastructure for foreign investors. Improved and modernized transportation facilities, as well as upgraded communications and IT networks, ensure optimum business and living conditions. State-of-the-art industrial estates boast sophisticated facilities and superior services.
Government Support and Incentives
Numerous government agencies support investors. Through the Board of Investment, the government offers a range of tax incentives, supports services and import duty concessions available to an extensive list of business that are regarded as priority or promoted activities.
Through the Board of Investment, there are no foreign equity restrictions in the manufacturing sector, no local content requirement, and no export requirements as Thailand’s investment regime is in total compliance with WTO regulations.
The Board of Investment also coordinates the activity of the One-Stop Service Center for Visas and Work Permits, which enables foreign staff of BOI-promoted companies to obtain work permits and long-term visas within 3 hours or less.
Other government organizations, like the Department of Export Promotion, and international chambers of commerce, provide invaluable support and a host of other important services.
The country’s well-defined investment policies focus on liberalization and encourage free trade. Foreign investments, especially those that contribute to the development of skills, technology and innovation are actively promoted by the government. Thailand consistently ranks among the most attractive investment locations in international surveys, and a 2006 World Bank report indicated that Thailand was the 4th easiest country in Asia in which to do business, and the 20th easiest in the world.
Gateway to Asia
Thailand enjoys a strategic location at the heart of Asia – home to what is regarded today as the largest growing economic market.
Thailand serves as a gateway to Southeast Asia Greater Mekong sub-region, where newly emerging markets offer great business potential. From Thailand, it is convenient to trade with China, India and the countries of the Association of Southeast Asian Nations (ASEAN), which has a cumulative population of more than 500 million.
Hub of ASEAN
Thailand was one of the founding numbers of ASEAN and has been instrumental to the formation and development of the ASEAN Free Trade Area (AFTA). As a member of ASEAN, Thailand has forged closer economic cooperation with ASEAN member nations, and Thai manufactured products and services have access to the markets of ASEAN, which includes all 10 ASEAN countries. ASEAN is home to more than half a billion people, GDP in excess of US$700 billion and intra-ASEAN trade of more than US$ trillion per year.
Thai Trade Figures
Regulations on Foreign Land Ownership in Thailand
The Acquisition of Land for Residential Purpose by Alien
An Alien bringing money not less than Baht forty million as specified in the Ministerial Regulation into the Kingdom for investment may apply for acquisition of land for residential purpose not more than one rai in area, provided also that permission must be obtained from the minister. Under section 96 bis of the Land Code, the application for such acquisition of land shall be in accordance with rules, procedures and conditions, prescribed in the Ministerial Regulation as follows:
1. In the case of an alien, who brings money for investment and wishes to apply for permission to acquire land for residential purpose, shall lodge an application (Alien 4 Form) to the competent official under section 71 of the Land Code together with the following documents:
1.1 An alien identification card issued by the Police Station in whose jurisdiction the alien is domiciled or a certificate of residence issued by the Immigration Division, National Bureau of the Royal Thai Police Force or a passport indicating the nationality of the alien.
1.2 Evidence of an investment in the business or activity that falls under Ministerial Regulation prescribing rules, procedures and conditions concerning the acquisition of Land for residential purpose by aliens B.E. 2545:
1.2.1 Letter of investment confirmation from bond seller and bonds of Thai Government, bonds of Bangkok of Thailand, bonds of State Enterprise or bonds which the Ministry of Finance secures the capital or interest;
1.2.2 Letter from the Asset Management Company confirming that an alien has invested in property mutual fund, property mutual fund or mutual fund for resolving institution problems established under the law on Securities and Stock Exchange, and an evidence of investment in such fund;
1.2.3 Evidences concerning investment in share capital of a juristic person who is granted promotion of investment under the law on promotion of investment, certificate of registration as a juristic person, name list of the juristic person’s share holders, and a certificate indicating that such juristic person is granted promotion from the Board of Investment;
1.2.4 Evidences of engagement in an activity that entitles for being granted promotion of investment under the law on promotion of investment according to the announcement made by the Board of Investment, certificate of registration as a juristic person, name list of the juristic person’s share holders, and the Board of Investment’s letter indicating that an activity being operated entitles for being granted promotion of investment.
The evidences mentioned in para. 1.2.1 to 1.2.4 either the evidence in once para. or one combined with the other(s) can used but the total amount shall not less Baht forty million.
1.3 Evidences of bringing a foreign currency into the Kingdom or the withdrawal of the money from a foreign currency account or from a non-resident Baht account for investment.
Either one or more of the above mentioned evidences can be used but the total amount shall be not less than Baht forty million.
1.4 In the case of the land to be acquired is not located in Bangkok Metropolis, Pattaya City or Tessaban (Municipality); the letter of confirmation from the Provincial Officer of Town and Country Planning is required certifying that the land to be acquired is located within a residential zone under the law on Town Planning.
1.5 Letter of Ministry of Defense or of the agency concerned confirming that such land is not located in a military zone under the law on Military Safety Zone.
1.6 The sketchy map showing the location of land seeking for permission.
1.7 In the case where an applicant has already had right on land by the time the application is being lodged, an applicant shall produce such land right document.
2. A person who is granted permission shall maintain the investment period not less than five years. He/she is required to produce the evidence of possession in the investment in 1.2 as the case may be as current, which shall be not less than Baht forty million, to the competent official according to section 71 once a year, on five years and each year shall be no later that the date making the acquisition registration of the aforementioned land.
3. A person who is granted permission shall utilized such land for a residential purpose of his/herself and the family in a way that is not contrary to the local custom or good living of the local community.
4. A person who is granted permission shall inform such land utilization for residential purpose to the competent official of land office according to section 71 within sixty days as from the date of utilization.
5. A person who is granted permission shall facilitate the competent official supervising the use of such land to ensure that the utilization is in accordance with rules and conditions prescribed in the law once he/she receives a written notification from the competent official under section 71.
6. If a person granted permission withdraws in investment in the business or activity before the due date of investment in 2, he/she shall inform in writing to the competent official according to section 71 within sixty days as from the date of making the withdrawal.
7. A person granted permission shall utilize such land for residential purpose within two years as from the date of the land acquisition registration.
8. If a person granted permission does not comply with the rules and conditions in 2-6, the Director General shall have the power to order such person to dispose of the land in a portion of his possession within the period of not less than one hundred eighty days and not more than one year. If the time limit elapses the Director General shall have the power to dispose of such land. Also, if the person does not comply with the condition in 7, the Director General shall have the power to dispose of such land.
9. Any foreign language document shall be translated into Thai language. The translation shall be certified according to the Ministerial Regulations (B.E. 2540) issued under the Purview of the Administrative Procedure Act B.E. 2539. (Phrarachabunyat Vithipratibut Ratchakarn Thangpokkhrong B.E. 2539)
10. In case of a person bringing money into the Kingdom to the amount of Baht forty million for investment and has bought the land less than 1 rai, if later and within the period of investment, that person wishes to buy additional land, in this instance, the documents attached to the current investment can be used along with the application for acquisition of the additional land.
Application for Acquisition of Land or Condominium Units by Aliens and Persons Connected with Aliens
1. Application by Aliens for Acquisition of Land
Nowadays, an alien may apply for acquisition of land in Thailand in three cases as follows:
1.1 Receiving inheritance as a statutory heir under section 93 of the Land Code, in this instance, the total area including the land which has already been acquired ( has not yet been acquired) shall not exceed that specified in section 87 of the Land Code, i.e. not more than 1 rai for a residential purpose.
1.2 Bring the money into the Kingdom for investment to the amount as prescribed in the Ministerial Regulation, which shall be not less than Baht forty million. In this instance, the land to be acquired must be for a residential purpose and must be of not more than 1 rai in area, provided also that permission must be obtained from the Minister. Under section 96 bis of the Land Code, the application for such acquisition of land shall be in accordance with rules, procedures and conditions prescribed in the Ministerial Regulation.
1.3 Applying for acquisition of land under other laws such as the Promotion of Investment Act, B.E. 2520 (1977), the Industrial Estate Authority of Thailand Act, B.E. 2522 (1979), the Petroleum Act, B.E. 2514 (1971). Detailed information regarding the Promotion of Investment Act and the Industrial Estate Authority of Thailand Act can be obtained from the Board of Investment (BOI) at tel. +66-2537-8111 and from the Industrial Estate Authority of Thailand at tel. +66-2253-0561 respectively.
2. Application by Aliens for Ownership in a Condominium Unit
An alien or a juristic person deemed by law as an alien may have ownership in a condominium unit in Thailand when 2 following conditions are satisfied. In the absence of either condition, the alien is not permitted to have ownership in a condominium unit.
2.1 Being an alien or juristic person deemed by law to be an alien under section 19 of the Condominium Act in any of the following prescribed categories viz:
(1) Being an alien permitted to have a residence in the Kingdom under the law on immigration, in the instance, the evidence required to be produced shall be passport indicating the nationality of the alien, and the certificate of residence (either TM.11, TM.15 or TM.17 Form, as the case may be) issued by the Immigration Division, National Bureau of the Royal Thai Police Force. In the case of an alien who possesses an alien identification card issued by the Police Station in whose jurisdiction the alien is domiciled, such card can be used as evidence for the purpose of applying for acquisition of ownership in a condominium unit in this case without production of passport;
(2) Being an alien granted permission to enter into the Kingdom under the law on promotion of investment, in this instance, the evidence required to be produced shall be passport indicating the nationality of the alien, and a letter of the Office of the Board of Investment certifying that the person is an alien granted permission to stay in Thailand under the law on promotion of investment;
(3) Being a juristic person deemed by law to be an alien under section 97 and 98 of the Land Code and has been registered as a juristic person under the laws of Thailand, in this instance, the evidence required to be produced shall be the evidence indicating the registration as a juristic person under the law of Thailand, i.e. a certificate issued by the corporate Registrar of Department of Commercial Registration, Ministry of Commerce must be produced in the case of a limited company, a public limited company, a limited partnership or a registered ordinary partnership;
(4) Being a juristic person that is an alien under the Alien Business Operation Act B.E. 2542 (1999) and that is granted a certificate of promotion of investment under the law on promotion of investment, in this instance, the evidence required to be produced shall be a letter of the Office of the Board of Investment certifying that the person is granted promotion of investment under the law on promotion of investment;
(5) Being an alien or juristic person deemed to be an alien, who brings a foreign currency into the Kingdom or withdraws the money from a non-resident Baht account or from a foreign currency account, the following evidence must be produced;
2.2 The ownership in condominium units by the alien and juristic person in 2.1 shall not be a higher proportion than forty nine percent of the total space of all units in that condominium at the time of the application for condominium under section 6 with the exception that:
a. A condominium in which the condominium units are to be owned by the alien and/or the juristic person specified in 2.1 in a higher proportion that forty nine percent must be located in the area of Bangkok Metropolis, municipality or the City of Pattaya and the Land on which the condominium is situated shall not, when combined with the land provided for common use or benefit of all co-owners, be more than five rai in area. Also, the condominium units in such condominium shall not be less than forty units and the condominium shall already be registered not less than one year prior to the date of application for the alien to own the condominium units in the proportion higher than forty nine percent, and such condominium shall not be situated in the area of military safety zone under the law on military safety zone.
b. It is provided in section 9 of the Condominium Act (No.3) B.E. 2542 that at the expiration of five years as from the date of the entry into the force of the Condominium Act (No.3), B.E. 2542 (28th April 1999) the provisions as set forth in a. shall be repealed and the alien or juristic person having obtained the condominium units under a. or the alien or juristic person specified in 2.1 to whom the condominium units are transferred from the aforesaid alien or juristic person may continue to have ownership in such condominium units although in the higher proportion than forty nine percent of the total space of all units in that condominium.
3. Application for ownership in land by a Thai national who has an alien spouse or ex-spouse or by a Thai national who is a minor child of an alien.
3.1 In the case where a Thai national who has an alien legitimate spouse applies for permission to purchase land or accept a transfer of land in a similar case during marriage or cohabitation as husband and wife with an alien, as the case may be, if after the inquiry the applicant and the alien spouse have given a joint written confirmation that the money which that Thai national will expend on the purchase of the land is wholly the separate property of that Thai national and not the community property or joint acquired property, the competent official will proceed with the registration of rights and juristic act.
In the case where a Thai national whose spouse is an alien intends to purchase land or condominium unit but fail to give a joint written confirmation to the competent official as the spouse is being abroad, in this instance, an alien spouse shall make the statement declaring in written at the Royal Thai Embassy, Royal Thai Consulate or Notary Public that the money which that Thai national will expend on the purchase of the land or condominium unit is wholly the separate property of that Thai national and not the community property or property which the alien spouse has co-ownership in it. The competent official shall declare that the alien is an actual spouse of the Thai national and then submit to the competent land official who will proceed with the registration of rights and juristic act.
In the case where a Thai national whose spouse is an alien, after marriage, has already purchase or possessed the land and informed or submitted a false document declaring the married status of a Thai national as single or had not been married to an alien to the official prior to the date the letter of Ministry of Interior, most urgent no. MOI 0710/wor 792 dated 23 March 1999 was issued, or has already purchased or possessed the condominium unit after marriage and informed or submitted a false document declaring the married status of a Thai national as single or had not been married to an alien prior to the date the letter of the Department of Lands no. MOI 0710/wor 34167 dated 6 October 2000 was issued, such alien spouse, whether legitimate or illegitimate, and a Thai national shall together give a joint written confirmation, which later to be filed in the case-list (or dealing package), to the competent official that the money which that Thai national will expend on the purchase of the land or the condominium unit is wholly the separate property of that Thai national and not the community property or jointly acquired property. If an alien spouse is being abroad and not be able to come to give considered in accordance with the case that a spouse of a Thai national who intends to purchase land or condominium unit is being abroad, then an applicant shall consign the statement, after completion, to the competent land official for filing the case-list.
3.2 In the case where a Thai national, who has an alien spouse, whether legitimate or illegitimate, applies for permission to accept a gift of land during marriage or cohabitation as husband and wife. If the inquiry reveals that the acceptance of the gift is made with the intention that the land will become the separate property or personal property of the done without resulting in the alien having co-ownership in the land, the competent official will proceed with the registration of rights and juristic act.
3.3 In the case where a Thai national with an alien ex-spouse who is divorced or has ceased to cohabit or a Thai national who is a minor child of an alien applies for entering into juristic act for the purpose of acquiring land, if an inquiry reveals no circumvention of law, the competent official will proceed with the registration of rights and juristic act.
4. Application for ownership in a condominium unit by a Thai national whose spouse or ex-spouse is an alien or by a Thai national who is a minor child of an alien.
4.1 In the case where a Thai national who has an alien spouse, whether legitimate or illegitimate, applies for permission to purchase or accept a transfer of ownership in a condominium unit with the intention that the property will become separate property or personal property of the former, (for this purpose, it is deemed that a condominium unit is owned by a Thai national) or in the case where a Thai national with an alien ex-spouse who is divorced or has ceased to cohabit or where a Thai national who is a minor child of an alien applies for acquisition of ownership in a condominium unit, the application shall be considered in accordance with 3.1 to 3.3 mutual mutandis.
4.2 In the case where a Thai national who has an alien spouse, whether legitimate or illegitimate, expends money which forms the community property or the jointly acquired property, as the case may be, for the purpose of purchasing a condominium unit, whether the purchase is made in the name of that Thai national alone or jointly in the name of the alien spouse as well, consideration shall principally be made of the alien. In this instance, the alien must be an alien within the meaning of section 19 (1), (2) or (5), as the case may be. The Thai national spouse is therefore entitled to purchase a condominium unit in accordance with the entitlement of the alien spouse and it shall be deemed that such condominium unit is wholly owned by that alien because the ownership is a condominium unit is indivisible and governed by section 19 bis.
4.3 In the case where a Thai national who has an alien spouse, whether legitimate or illegitimate, applies for permission to accept a gift of a condominium unit, such gift being made with the intention that the property will become the community property or such gift resulting in the alien having co-ownership therein, the alien spouse of that Thai national must be an alien within the meaning of section 19 (1) or (2) and it shall be deemed that the condominium unit is wholly owned by the alien and governed by section 19 bis. In contrast, a Thai national who has an alien spouse under section 19 (5) is not allowed to accept a transfer of a gift which is made with the intention that the property will become the community property because the case under section 19 (5) is one involving the application by an alien for permission to acquire ownership in a condominium unit in a manner of safe, in respect of which payment therefore must be made.
Hire of Immovable Property for Commerce and Industry by Alien
In general, an alien may hire land in Thailand as provided by the Civil and Commercial Code and the contract of hire cannot exceed thirty years thereof. Once the contract comes to an end, it can be renewed, but it must not exceed thirty years from the date of renewal.
Later and according to the Government policy focusing on boosting industrial and commercial investment, the Hire of Immovable Property for Commerce and Industry Act B.E. 2542 was enacted and subsequently put into force on May 19th 1999. The Act at providing specific rules and conditions in respect of the hire of immovable property for commercial and industrial purposes whereby an alien can choose either from hiring land not exceeding one hundred rai or more than one hundred rai. Provided that the following rules for hiring land not exceeding one hundred rai must be satisfy.
1. The duration of a hire of immovable property shall exceed thirty years but not exceed fifty years. In this instance, the letter and the hirer may take an agreement to renew the contract but it shall not exceed fifty years from the day the agreement is made;
2. The contract of hire shall be made in writing and registered by the competent official;
3. The letter shall have possession in such immovable property;
4. The right of hire can be used as suretyship for performance of obligation by mortgage;
5. The right and duty of hire are devolvable upon the heir and the hirer can sublet or transfer his right of hire to the third person unless otherwise provided by the contract of hire;
6. Immovable property to be hire registered by the competent official under this Act shall be located in either area of the following;
6.1 the area specified by the law on Town and Country Planning as for commercial or industrial purpose;
6.2 the industrial estate zone provided by the law on Industrial Estate of Thailand.
7. A commerce or industry applied for a registration of fire shall obtain prior to the registration, either of the following appearances;
7.1 Being a commerce with an investment cost not less that Baht twenty million;
7.2 Being an industry that is eligible to be granted a certificate of investment promotion under the law on Investment Promotion;
7.3 Being a commerce or industry which benefits the economic and social of the country as declared by the Minister of Ministry of Interior and endorsed by the cabinet.
8. The type of commerce and industry whereby an alien can apply for registration must be a commerce upon which an alien can make business under the law on Business Operation of an Alien.
In the case of hiring the land more than one hundred rai, besides the satisfaction of the aforementioned rules, either of the following rules must also be met:
1. The operation of such commerce or industry shall add value to an exportation and support employment in the country;
2. Such operation shall never be operated in the Kingdom, unless otherwise inadequate;
3. Such operation shall incorporate state of the art production process or technology development;
4. Being in high benefit to the country’s economic and social as declared by the Minister of Ministry of Interior and endorsed by the cabinet;
5. In the case where an alien is a hirer, sub-hirer or a transferee of the right of hire, an investment in an operation of such commerce or industry shall not be less that Baht one hundred million excluding the cost of hire. Also, the total amount of money invested shall be foreign exchange into the Kingdom or withdrawn from the foreign currency deposit account or withdrawn from the non-resident Baht account.
Things to Know Before Starting Hotel Business
Realizing the obstacles that hotel business owners are facing due to the closer relationship between environmental management and hotel business development, the Senate Sub-Commission on the Study of Laws which are Obstacles to Tourism Industry would like to provide advice to persons who have engaged or wish to engage in hotel business in Thailand as follows:
If you are interested in opening a hotel, but do not wish to face with problems such as…
Tremendous amount invested but stuck with EIA!
Sea in front is strictly conserved due to endangered animals and corals!
Construction of a small pier caused the hotel beach to collapse!
Hotel development is stuck due to land use restrictions!
If known about Green House earlier, the hotel could have attracted a lot more guests!
Sea turtle egg laying zone, no night parties allowed on the beach!
An environmental study can help solve these problems.
It should be undeniable to say that hotel business mainly depends on environmental resources. Good locations are not only difficult to find but are also strictly controlled by laws, rules and regulations, such as those of building control, town planning, environment and public health. Even with the absence of such restrictions, business owners would not wish to destroy the beautiful surrounding nature with their innocent mistakes anyway, since doing so is comparable to destroying their own gold mines.
The Environmental Impact Assessment Report (EIA Report) is what the environmental law requires a project owner to conduct if the owner wishes to construct a hotel with 80 or more rooms. Under the EIA Report process, the project owner must hire a juristic person authorized by the Office of Natural Resources and Environmental Policy (ONEP) to conduct the report. As a benefit, the project that has undergone an environmental impact assessment study will be able to respond to all relating environmental issues. Then, the project owner can utilize the suggestions received after the report submission to help develop the project.
As for hotel projects with less than 80 rooms, even though the EIA Report is not required, but however, if the owner wants to ensure that there will be no environmental problems later on, for instance, collapse of the beach or destruction of sea animal’s habitat nearby (which may help attract tourists) due to the hotel development, an advice of a competent environmental consultant is recommended to be sought. Being non-governmental professionals, the environmental consultants do not only conduct EIA Report, but they are also able to provide environmental consultations to project owners in every aspect. Since before the project initiation, the consultants can answer questions such as: What are the laws, rules and regulations to be considered for running the project in a certain area? Are there any natural resources to be utilized to attract customers? The consultant can also help the owner plan the construction by advising methods to best conserve the surrounding natural resources both while constructing and running the hotel, since to the owner, surrounding natural resources are like breadbaskets.
As for the EIA Report process, hotel project owners are recommended to have environmental consultants involved since the location selection period. Later on during construction design, the consultant can recommend the architect on important environmental restrictions while studying the environmental impact at the same times to ensure that the project goes according to the environmental standard and to also clarify and speed up the EIA Report.
To seek for a competent environmental consultant is not a difficult task. Project owners are welcome to see the list of registered environmental consultants at the Environmental Impact Evaluation Bureau (EIEB), Office of Natural Resources and Environmental Policy (ONEP) 60/1 Pibunwattana 7, Rama VI Road, Bangkok 10400, tel: 0-2265-6500, or through the website: http://www.onep.go.th/eia.
Thailand’s Economic Factsheet (2010)
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