Ombudsman urges parliament to close loopholes on foreign nominees
Ombudsman Songsak Saicheua has proposed measures to the government to amend laws and close loopholes allowing foreign nationals to use Thai nominees to acquire land, especially in areas with high economic potential.
He explained that foreign nationals have been using Thai proxies to circumvent legal restrictions, including entering into marriages with Thai nationals or establishing companies where Thais hold nominal shares while foreigners actually manage the operations.
This practice is seen as an attempt to exploit gaps in the Foreign Business Act and other regulations, especially in provinces such as Bangkok, Chiang Mai, Surat Thani, Phuket, Krabi, Phang Nga, Prachuap Khiri Khan, Chonburi, Rayong, Trat, and Chanthaburi, where the economic potential is significant.
The situation, according to Songsak, has led to widespread consequences, including national security concerns, economic disruptions, criminal activities, and the expansion of grey-market businesses such as call centres and drug trafficking.
In response to this issue, the Office of the Ombudsman has formed a working group to gather data across the country, collaborating with local and central agencies to prepare comprehensive recommendations for proactive action. The proposed measures include the following:
- Department of Business Development (DBD): To take the lead in investigating and preventing the establishment of companies with Thai nominees holding shares on behalf of foreign nationals. Additionally, it suggests updating the Foreign Business Act to address these issues and introducing an executive regulation to tackle covert transactions conducted by foreigners.
- Ministry of the Interior: To direct provincial governors to form proactive teams to inspect urban areas, tourist spots, and agricultural zones. The Ministry also recommends amending land laws to include tougher penalties, including imprisonment, fines, and land confiscation.
- Ministry of Agriculture: To bolster the capabilities of Thai farmers and establish mechanisms to monitor the use of Thai nationals as nominees in the agricultural sector.
- Internal Security Operations Command (ISOC): To support academic and budgetary needs for ISOC Region 4 and expand these efforts to Regions 1-3.
- Royal Thai Police: To collaborate with relevant agencies to enforce laws across all sectors comprehensively.
- Lawyers Council of Thailand: To set ethical standards prohibiting lawyers from assisting in nominee-based transactions, with severe penalties for violations.
- Cabinet: To consider creating a dedicated law on nominees and establish a central task force to address the issue sustainably.
Songsak further mentioned that 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 Ministry of Commerce is working on issuing relevant regulations, and the DBD is developing AI systems to detect risky corporations and track trends in business practices.
Additionally, the Ministry of Commerce is drafting an MOU to exchange data with the Department of Lands and is considering making violations under the Foreign Business Act subject to the Anti-Money Laundering Office's (AMLO) jurisdiction.
In the Cabinet meeting on June 24, the government acknowledged the recommendations and tasked the Ministry of Commerce with coordinating with relevant agencies to expedite progress.
Songsak concluded that the Ombudsman’s office and the legal committee will continue to monitor and push for improvements in key areas, including the introduction of new laws and amendments to existing regulations, to protect the national interest and address the nominee issue effectively.
He also noted additional complaints, including foreign nationals using nominees to purchase coconut shells in several provinces and to open retail stores using illegal labour in areas near Southern Bus Terminal in Bangkok.
Further consultations will be conducted with relevant agencies to address these issues in sectors such as construction, retail, tourism, and law enforcement.
“If the issue of nominees persists, it will have long-term effects on national security, the economy, and society. Thailand must adopt decisive legal measures and efficient mechanisms to resolve this issue seriously,” Songsak concluded.
