Enterprise Going Global: The Main Path for Foreign Investors to Acquire Land in Thailand

LABEL： One Belt One Road International LegalBusiness , Corporate and M&A ,

In the previous article of the Thailand series' Enterprise Going Global: Analysis of Thailand's Foreign Investment Access', we introduced the relevant regulations for foreign investment access in Thailand. With the continuous optimization of Thailand's foreign investment environment, Thailand has become the first destination for more and more Chinese companies going global. However, in addition to foreign investment access policies, land ownership issues are also a key issue that Chinese companies must face when making long-term investments in Thailand. Therefore, this article will further introduce potential ways for foreign investors to acquire land in Thailand to support their long-term development plans in Thailand.

According to Thailand's Foreign Investment Law [1] and Land Act [2], land transactions belong to the first category of prohibited foreign investment businesses, and foreign investors are not allowed to own land in Thailand unless specific exemption conditions are met. In practice, some investors will consider establishing Thai companies (foreign investors hold minority shares) with Thai people to participate in project investment ("joint venture mode"). Due to the foreign investors holding less than 50% of the shares in the joint venture company, they are usually not recognized as "foreign investors" under Thailand's Foreign Investment Law, and therefore do not apply to the prohibition of foreign investors holding land. However, the joint venture model may also lead to derivative issues such as corporate governance, control rights, and equity distribution. Therefore, some investors also hope to know if it is possible to legally acquire Thai land by directly establishing a foreign-invested company. The following is a summary of the main path and practical precautions:
1、 Acquiring land through Thailand's Investment Promotion Law

According to the Investment Promotion Act of Thailand, foreign investors may own land for approved investment projects after obtaining approval from the Board of Investment (BOI) of Thailand. In addition, foreign investors holding BOI certificates may apply to BOI for the grant of land for the construction of office and residential buildings for approved projects, provided that certain conditions are met. The specific conditions are summarized as follows:

           

However, it should be noted that whether it is the production and operation land granted by BOI, or the office and residential land, if a foreign investor stops approved investment activities or transfers related investment projects to other parties, or their BOI investment benefits expire or are revoked in advance, the foreign investor must sell or transfer the land within one year, otherwise the Thai Land Management Authority will have the right to dispose of the land in accordance with the law.
2、 Obtaining land through the Industrial Park Authority Act in Thailand

According to the Industrial Estate Authority of Thailand (IEAT) Act, foreign investors who establish themselves in industrial parks regulated by IEAT and enjoy IEAT preferential treatment can obtain land located within the same industrial park for conducting approved business activities. In order to obtain IEAT permission to hold land, foreign investors typically need to commit to fulfilling a series of post investment obligations, such as minimum capital requirements, technology transfer plans, etc. In addition, similar to land obtained through BOI investment incentives, foreign investors must return the land obtained through IEAT preferential treatment to IEAT or transfer it to other parties within 3 years of ceasing business activities in Thailand. Otherwise, the Thai Land Management Authority will have the right to dispose of the land in accordance with the law.

In practical operation, each IEAT industrial park usually formulates detailed industrial plans aimed at guiding and regulating the development path of settled enterprises. Therefore, for enterprises wishing to settle in specific IEAT industrial parks, they should ensure that their business is consistent with the industrial planning of the park. In addition, in order to achieve efficient utilization of land resources, IEAT industrial parks generally set clear regulations on the land use area for enterprises in different industries, such as no less than 1 rai for automobile manufacturing enterprises and no less than 3 rai for warehousing enterprises.
3、 Obtaining residential land through Thailand's Land Act

According to Thailand's Land Act [10], if a foreign investor invests in commercial areas that are beneficial to Thailand's economic and social development or projects that meet the BOI requirements for investment promotion, and the investment period is not less than 3 years, and the investment amount imported from overseas is not less than 40 million Thai baht, with the permission of the Thai Minister of Interior, the foreign investor may own no more than 1 rai of land in a specific area (located in Bangkok city, Pattaya, or other areas planned for residential use) for the foreign investor or their family to live in.
4、 Land leasing

In addition to directly owning land, foreign investors in Thailand can also consider obtaining relevant real estate rights through leasing. Thai law provides foreigners with the same real estate lease rights as native people, but foreign investors should pay attention to the requirements of lease term and lease registration:

The maximum term of land lease is usually 30 years, and it can be renewed after the expiration, but the renewal period should not exceed 30 years. For some commercial and industrial real estate, the maximum single lease term can be extended to 50 years. Therefore, foreign investors should plan ahead when leasing land. For large or long-term projects, try to strive for longer lease terms when unable to own the land; For small or temporary projects, it is important to pay attention to timely updates of the lease agreement.

Any real estate lease contract exceeding 3 years must be registered and filed with the Thai land management department. The mandatory validity of unregistered lease contracts can only be limited to 3 years. Therefore, for foreign investors, if they choose to acquire land through leasing, they should promptly complete the registration and filing process of the lease agreement to ensure the protection of their legitimate rights and interests.

epilogue

The issue of land ownership is often one of the most pressing concerns for foreign investors planning to invest in Thailand. Given that Thai law imposes numerous prohibitions and restrictions on foreign investors owning land, we recommend that investors plan and prepare as soon as possible before purchasing land in Thailand. This not only involves a deep understanding of Thai laws, regulations, and policies, but also a grasp of the actual operational processes. Investors should actively consult professional advisors, communicate with relevant government departments such as BOI and IEAT as soon as possible, explore the possibility of obtaining land through exemption channels, evaluate whether subsequent investment plans can be smoothly promoted, and strive to obtain the most favorable investment incentive policies.