Thai Government Pushes for 99-Year Land Leases to Attract Investment

 

The Thai government is fast-tracking amendments to the Rights Over Leasehold Asset Act, seeking to extend real estate lease terms from 30 years to a significant 99 years.

 

This move is designed to inject fresh life into the economy by stimulating investment and enticing high-net-worth individuals and skilled professionals from overseas to settle in Thailand.

 

The proposed legislation is currently undergoing public consultation before being presented to the Cabinet. The Pheu Thai-led administration has been examining this initiative since the tenure of former Prime Minister Srettha Thavisin.

 

Under the current government led by Paetongtarn Shinawatra, the bill has gained momentum, particularly after a recent cabinet reshuffle saw the Pheu Thai Party assume control of the Interior Ministry.

 

The core of the draft amendment involves extending the maximum leasehold period for assets from 30 to 99 years. This extension is intended to revitalise the economy and attract investment, especially from foreign nationals seeking long-term land leases.

 

The proposed changes are under review by relevant government agencies, with the Interior Ministry championing the bill and the Finance Ministry overseeing its broader implications.

 

 

 

Parliament Expected to Pass Bill by 2025

Manaporn Charoensri, Deputy Minister of Transport and an advisor to the government whip, stated that the government aims to see the amended Leasehold Asset Act approved by the House of Representatives and enacted into law by 2025.

 

 

Chusak Sirinil, a Minister Attached to the Prime Minister's Office and a government legal expert, confirmed that while the Leasehold Asset Act has not yet been formally tabled for a Cabinet meeting, preliminary discussions have taken place, and it is on the government's priority list for expedited legislation.

 

Sources within Government House indicate that the government is pushing for swift consideration of the draft amendment to the Rights Over Leasehold Property Act B.E. 2562 (2019).

 

The goal is to bring it before the legislature as quickly as possible, with expectations for it to be enacted into law by 2025 – ideally within three to four months of parliamentary consideration.

 

The legislative process, once the bill clears Cabinet, is expected to follow this accelerated timetable:

• Submission of the bill to the Speaker of the House for agenda inclusion: 14 days.
• First reading in the House of Representatives: 1-3 days.
• Consideration by the Extraordinary Committee: 30-60 days.
• Second reading, clause by clause: 1 day.
• Third reading and final vote: 1 day.
• Consideration by the Senate: Up to 60 days.
• Prime Minister to submit the bill for Royal Assent: Within 20 days of parliamentary approval.
• Publication in the Royal Gazette: Within 30 days.

 

 

 

Paving the Way for Major Investment Projects

Former Prime Minister Thaksin Shinawatra previously highlighted the necessity of unlocking laws to foster new investment and cultivate a fresh economic ecosystem for the populace.

 

During a recent special lecture titled "Unlocking Thailand's Future: Facing Global Crises, Turning the Tide of the Thai Economy... Towards the Future," he specifically championed the 99-year land lease provision within the Leasehold Asset Act.

 

 

This measure is intended to encourage private sector investment, particularly given the public sector's budgetary constraints. Several government policy projects stand to benefit, such as land reclamation for flood prevention.

 

In such schemes, private entities would invest, and the government would grant long-term land lease rights, potentially adding hundreds of thousands of rai of land. This also includes utilising state land for ventures like solar farms on Sor Por Kor (agricultural reform) land.

 

For instance, 140,000 rai ( approximately 55,351.6 acres) could generate 40,000 megawatts of electricity with 24-hour storage, forming a green energy project.

 

If implemented in the Northeast with transmission lines to economic hubs like Bangkok, electricity costs could be as low as 3 baht per unit, thereby supporting investments in areas like data centres.

 

 

 

Benefits of the 99-Year Lease Extension

The Leasehold Asset Act's key principle is not to facilitate the selling off of the nation. On the contrary, it incorporates mechanisms designed to prevent the uncontrolled selling of national assets seen in the past.

 

This draft legislation aims to prevent land from being transferred to foreign ownership via nominees or through various investment promotion schemes.

 

It stipulates that any assets entering this programme will revert to the state upon the expiry of the maximum 99-year contract term, becoming part of the nation's sovereign wealth and generating future benefits for the country.

 

The expected economic advantages of the Leasehold Asset Act include:

Attracting Investment: This will catalyse large-scale foreign investment in the real estate market, including the construction of buildings, infrastructure, housing developments, and high-end hotels. Such investment will inject capital into the Thai economy and prevent wealth from flowing abroad. Moreover, it will support the country's long-term economic restructuring policies, such as the entertainment complex project, the Land Bridge initiative, housing for Thai citizens, and the establishment of a financial hub – all key government priorities.

 

Combating Illegal Practices: The law seeks to diminish the incentive for using nominees in asset acquisition, thereby enhancing transparency. It will reduce inconsistencies in asset ownership by foreign nationals under various laws, including the Eastern Economic Corridor Act (EEC), the Investment Promotion Act (BOI), and the Industrial Estate Authority of Thailand Act. Furthermore, once enacted, it is expected to curb illegal activities facilitated by hard-to-trace nominees, who are often not the primary perpetrators.

 

Supporting Thailand as a Global Talent Hub: This legislation aims to draw highly skilled professionals from across the globe to reside in Thailand, effectively integrating them into the workforce and boosting the Thai economy. Access to long-term real estate lease rights will provide a crucial guarantee, encouraging these high-calibre individuals to contribute to Thailand's sustained economic growth.

 

 

"Not a Sell-Off of the Nation," Srettha Affirms

Former Prime Minister Srettha Thavisin told Krungthep Turakij that the essence of the Leasehold Asset Act amendment lies in extending real estate lease terms from 30 to 99 years, a practice already common in many countries, with the UK even supporting leases of up to 999 years.

 

From a legal standpoint, for a company or business to sell assets to foreign entities – be it residential properties, office buildings, or shopping centres – those assets must first be transferred to the Treasury Department.

 

They then enter the 99-year leasehold asset programme, after which, upon the completion of the 99 years, the assets revert to the state.

 

"Therefore, the notion of selling off the nation is unequivocally false," Srettha asserted, adding that if assets are not transferred to the Treasury Department, they will not qualify for the new terms and will remain under the existing 30-year lease.

 

"The law is designed to refute accusations of a national sell-off. Upon closer examination of the details, such accusations are unfounded because while the lessee gains long-term rights, they do not hold direct ownership. Furthermore, after 99 years, any assets entering this programme will become state property," Srettha clarified.

 

The programme will encompass not only real estate but also commercial buildings, offices, and other assets for both large and small investors.

 

This law is expected to unlock various sectors, including alignment with the "housing for Thais" project, the Financial Hub policy, and efforts to attract highly skilled individuals to Thailand.

 

Beyond the real estate sector, numerous other businesses stand to benefit. For instance, if the original owners of an international school no longer wish to manage it, they could sell it to foreign investors, using the 99-year Leasehold Asset Act to grant long-term ownership and management rights.

 

"The previous 30-year lease period was considered too short. Extending it to 99 years and having the legal framework in place will significantly boost confidence for those looking to invest or reside in Thailand," Srettha concluded.

 

 

 

Agricultural Land Excluded

The legal process will involve a two-week public consultation period, followed by Cabinet approval before the bill proceeds to the House of Representatives. Previously, this legislation stalled due to political issues, not other factors.

 

This law is not exclusively for the benefit of foreign businesses; Thai citizens can also utilise it.

 

However, there are exceptions, such as agricultural land, which is excluded, and there may be other stipulations for certain types of land or assets that cannot be included in the programme.

 

Furthermore, several government policies are contingent on this law's passage, such as "housing for Thais," which aims to reduce the cost of living for urban residents by capping BTS fares at 20 baht per line.

 

This would enable individuals earning 20,000 baht per month to live in central city areas. Long-term investment projects of this nature require laws that provide long-term assurance to investors, as a 30-year land lease might not be sufficiently attractive.

 

 

 

Boosting the Economy by Attracting Foreign Talent

Srettha noted that another pertinent issue related to the Leasehold Asset Act is Thailand's projected population decline to 37 million within 50 years. In 2024, Thailand recorded the second-highest population decline rate globally.

 

This demographic trend is concerning, and the solution lies in attracting talented and high-potential individuals to help develop and enhance the economy.

 

The 99-year leasehold asset law will be a crucial factor in drawing these groups to Thailand, as it allows them to acquire residences with land rights for up to 99 years – a significant consideration for high-quality labour and investors.

 

"If there is opposition, it must be explained that extending lease rights from 30 years to 99 years is not selling off the nation. Instead, it is contributing one's assets to the nation, because upon the completion of 99 years, the assets will revert to the state," Srettha emphasised.