Parliament urged to seal gaps in foreign candidate legislation

Parliament urged to seal gaps in foreign candidate legislation

Thailand is taking decisive action to prevent foreign nationals from acquiring land, particularly in economically strategic areas, through the use of Thai nominees. The government's strategy involves a series of legal reforms, stricter enforcement measures, and the promotion of alternative legal ownership structures.

The proposed changes, which are being spearheaded by departments such as the Department of Business Development, Ministry of the Interior, Ministry of Agriculture, Internal Security Operations Command, Royal Thai Police, Lawyers Council of Thailand, and the Cabinet, aim to address this issue head-on.

One of the key proposed amendments is to the Land Code. These changes include increased fines and imprisonment for illegal landholdings, a ban on compensation for confiscated land due to nominee arrangements, and stringent penalties to deter violations. Furthermore, a standalone Nominee Transactions Act is being considered to establish national and provincial oversight committees, empower an independent authority to investigate and annul past nominee transactions, and set tiered penalties to enhance accountability.

In parallel, reforms to the Foreign Business Act (FBA) seek to redefine “foreigner” to include those who control companies through Thai nominees, close existing loopholes by clearly defining "nominee" and "nominee transactions," and classify certain companies with foreign control as foreign entities subject to stricter rules. These reforms also plan to enhance capital transparency requirements, increase penalties, and shift the burden of proof onto suspects in nominee-related cases.

Enforcement agencies, notably the Department of Business Development, will gain broader investigative and enforcement authority, with nominee practices also becoming predicate offenses under Anti-Money Laundering laws, allowing asset seizures linked to illegal nominee transactions.

On the operational level, the Land Office has implemented guidelines requiring verification of Thai shareholders in partly foreign-owned companies before property registration and transfers are approved. This is to ensure that the shareholders are genuine, not nominees, and the law prohibits the use of Thai nominee shareholders to circumvent foreign land ownership restrictions.

Alternative legal methods for foreign land use, such as long-term leases (proposed to be extended to 99 years), usufruct rights, superficies, and condominium purchases within foreign quota limits, are being promoted to provide lawful pathways for foreign investment while complying with ownership restrictions. The draft 99-year lease legislation aims to strike a balance by allowing long-term foreign use rights without transferring outright ownership, thereby reducing incentives to use nominee schemes.

These measures, including the proposed legal reforms, strict regulatory oversight, enhanced enforcement powers, and promotion of alternative legal ownership structures, form a multi-pronged government strategy to close loopholes and prevent illicit use of Thai nominees by foreign nationals in high-economic-potential land acquisitions.

The practice of foreign nationals using Thai proxies to circumvent legal restrictions, including marriages with Thai nationals and establishing companies where Thais hold nominal shares, has led to national security concerns, economic disruptions, criminal activities, and the expansion of grey-market businesses.

Ombudsman Songsak Saicheua has proposed measures to the Thai government to amend laws and close loopholes allowing foreign nationals to acquire land using Thai nominees. Some actions have already been initiated, such as submitting the issue to the House of Representatives' legal committee for review and collaborating with the Department of Lands to amend land laws. The Office of the Ombudsman has formed a working group to gather data and prepare comprehensive recommendations for proactive action.

The practice is most prevalent in provinces with significant economic potential, such as Bangkok, Chiang Mai, Surat Thani, Phuket, Krabi, Phang Nga, Prachuap Khiri Khan, Chonburi, Rayong, Trat, and Chanthaburi.

In conclusion, Thailand is taking significant steps to address the issue of foreign nationals using Thai nominees to acquire land, particularly in economically strategic areas. The government's multi-pronged strategy involves a series of legal reforms, stricter enforcement measures, and the promotion of alternative legal ownership structures, aiming to close loopholes and prevent illicit activities.

1. The government's strategy to prevent foreign nationals from acquiring land in economically strategic areas of Thailand includes amendments to the Land Code and the Foreign Business Act (FBA), as well as stricter enforcement measures and the promotion of alternative legal ownership structures.
2. One of the key proposed amendments to the Land Code is an increase in fines and imprisonment for illegal landholdings, a ban on compensation for confiscated land due to nominee arrangements, and stringent penalties to deter violations.
3. The proposed Nominee Transactions Act aims to establish national and provincial oversight committees, empower an independent authority to investigate and annul past nominee transactions, and set tiered penalties to enhance accountability.
4. The reforms to the FBA will redefine “foreigner” to include those who control companies through Thai nominees, close existing loopholes, and subject certain companies with foreign control to stricter rules.
5. The Department of Business Development will gain broader investigative and enforcement authority, and nominee practices will become predicate offenses under Anti-Money Laundering laws, allowing asset seizures linked to illegal nominee transactions.
6. The Land Office has implemented guidelines requiring verification of Thai shareholders in partly foreign-owned companies before property registration and transfers are approved, to ensure that the shareholders are genuine and not nominees.
7. Alternative legal methods for foreign land use, such as long-term leases, usufruct rights, superficies, and condominium purchases within foreign quota limits, are being promoted to provide lawful pathways for foreign investment while complying with ownership restrictions.
8. The practice of foreign nationals using Thai proxies to circumvent legal restrictions has led to national security concerns, economic disruptions, criminal activities, and the expansion of grey-market businesses, and is most prevalent in provinces with significant economic potential.

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