New initiative is the brainchild of Mr Chayotid Kridakon, former managing director of J.P. Morgan Thailand. It follows a decision taken late last month by the Centre for Economic Situation Administration (CESA) in which all government departments and agencies were tasked with submitting plans to make Thailand a more attractive, friendlier and easier place to relocate for foreign executives, business people and retirees. The initiative also hopes to boost foreign tourism numbers and income.
A task force within the government is set to unveil a raft of plans in May which could see the abolition of the 90-day and other immigration reporting requirements as well as more relaxed property ownership rules for retirees moving to the kingdom and foreign executives associated with startup business concerns. This initiative is particularly aimed at western investors seeking to live and work in Thailand. It aims to make it more friendly and open.
The land of smiles for many foreigners including expats and regular tourists in the last five years or so, since 2016, has been perceived as less than friendly as the junta government initiated a security crackdown to rid the kingdom of undesirable elements among foreigners.
Now, a government task force working on an initiative endorsed by the Centre for Economic Situation Administration (CESA) and the Prime Minister at the end of last month, is zeroing in on the immigration reporting requirements that are currently required for long term foreigners living in Thailand.
Taskforce is zeroing in on immigration rules to make them easier and more user friendly for foreigners
‘Immigration rules are the key pain point,’ Mr Chayotid Kridakon, a key advisor on the initiative to Deputy Prime Minister Supattanapong Punmeechaow told Bloomberg News in New York this week. ‘We want to make it easier for foreigners to live and work in Thailand.’
It follows a radical plan which was approved in principle by the key economic unit on Friday, March 26th last chaired by the PM which set a target of attracting millions of high earning foreigners to Thailand as a new engine for the country’s now ailing economy.
Government preparing a plan to lure millions more expats to come and live in Thailand spurring the economy (Click here to read)
The plan is the brainchild of Mr Chayotid who is a former managing director of JP Morgan in Thailand. It is aimed at high earning foreign executives who may opt to live and work from Thailand as retirees.
Link between foreign tourism and the growing expat community in Thailand has been identified
The Thai government has, since 2019, established a causal link between the expat community in Thailand as well as regular tourists to the kingdom and foreign direct investment.
This led to efforts to streamline the immigration system and make it more user friendly.
Mr Kobsak Pootrakool who was a minister at the Prime Minister’s Office at that time, and part of then Deputy Prime Minister Somkid Jatusripitak’s economic policy team, was a key proponent of this course of action as well as a valuable contact point.
He resigned prior to last year’s cabinet reshuffle.
Foreign investment into Thailand, in real terms, has fallen through the floor or halved since 2016
Despite the government’s flagship and much vaunted Eastern Economic Corridor project which has seen many investment applications from foreign firms including many projects from China, the 53-year-old Mr Chayotid revealed that foreign direct investment into Thailand has fallen through the floor in the last five years plummeting by as much as 50%.
He said the figure for 2020 was only ฿360 billion.
The top financial executive attributes this to chronic problems which are emerging in Thailand such as a rapidly ageing society, a labour shortage acutely felt in relation to skilled workers and underlying political uncertainty.
Intrusive reporting requirements sparked a campaign by foreigners in 2019 which saw some positive proposals put forward but not reform
Since 2019, many within the international community including Chamber of Commerce groups have pointed out to the Thai government the difficulties being caused by the Immigration Act and the tightening of some regulations and strict enforcement since 2016.
It is now being proposed that the intrusive 90-day reporting requirement be abolished as well as other requirements such as TM30 and TM28 which generated controversy in recent years with foreigners among the expat community launching a campaign to have them removed or reformed.
Changes to TM30, an easier visa and work permit system approved by Thai cabinet (Click here to read)
This resulted in an improved online reporting system and a radical proposal from an internal government red tape ‘guillotine’ unit to do away with many of the reporting requirements but this was never fully implemented.
Online reporting for expats and foreigners not working this week on Immigration Bureau website
This week, the online reporting system for both the 90-day report and the TM30 report was not accessible to any expat or foreign resident in Thailand seeking to comply with the law without having to visit an Immigration Bureau Office and running the gauntlet of the Covid-19 virus as well as long queues.
It is understood that the Immigration Bureau system has not been functioning properly now for several weeks with users being diverted by a graphic advertising the agency and a message which declares ‘temporarily closed’ for maintenance.
New campaign to be unveiled in May aimed at high-income western executives and retirees
Mr Chayotid is heading up a special team to fix this problem with an initiative to be launched in May specifically targeting western business talent as well as retirees in a world where it is now not only possible to work online but is becoming both an accepted and preferred practice, something that has been accelerated by the virus pandemic.
It is understood all government agencies have been invited to submit proposals to the high flying new task force and that a way forward or blueprint will be unveiled next month.
The aim will be to make the visa and work permit process easier and more user friendly for those foreigners that are targeted under the government’s plans.
Relaxation of Thailand’s strict property ownership rules and tax breaks will also be part of the proposal
The plan is expected to offer incentives to foreigners moving to Thailand such as tax breaks and most significantly, a relaxation of Thailand’s tight property rules for both retirees and newly set up companies. Currently, unless specifically approved, foreigners may only now own 49% of a Thai company and a proportion of condominiums in any development.
Mr Chayotid highlighted last month that if 1% of high earners currently living outside Thailand could be induced to relocate to the country, their monthly living expenses alone would generate ฿1.2 trillion for the economy or 7% of GDP.
There is, additionally, an overlap and an underlying relationship between those living in Thailand, regular visitors to the kingdom and tourists.
It is one of many other factors, but a significant one, that impacts Thailand’s perceived position as an attractive place to invest for larger firms.
In simple terms, it is called goodwill, something that has been diminished in recent years.
Threat to Thailand is the middle-income trap
The kingdom is struggling to avoid the middle-income trap as it can no longer afford to compete with its Southeast Asian neighbours in terms of low priced labour while not having the proper base to attract higher-level projects to rise to become a higher-income economy.
Within the last decade, many world economic bodies such as the World Bank identified Thailand as one of the countries threatened with this fate which had a higher chance of escaping and rising above it. Other countries caught in the same position include Turkey, Russia, Brazil and South Africa.
The last few years have, however, seen the kingdom’s prospects dim.
Covid-19 crisis has highlighted the expat community in Thailand in a positive light and an economic force
At the same time, the Covid-19 crisis last year demonstrated how deep and intricately involved the expat community is here with many foreigners living in Thailand and using it as a base for international work.
This particular appeal that Thailand has is a unique strength that can only be exploited by an open and friendly door to those choosing to locate and live in the kingdom.
However, it also underscores how vulnerable Thailand may become, in the future, to regional instability in Southeast Asia with flaring tensions now evident between the United States, Europe and China.
Bank of Thailand supports this approach
The new strategy or government tack is also known to have the support of the Bank of Thailand where senior directors including the bank’s governor, Sethaput Suthiwartnarueput, have been highlighting the need to financially support and kick start the foreign tourism industry as well as making the country a friendly destination for incoming investment from foreigners relocating to live as opposed to hot money flowing in from western capital markets into Thai financial instruments and bonds.
Focus on investments in the electric vehicle sector with time running out for an ailing economy
At the same time, Mr Chayotid has announced that Thailand will also seek to upgrade its existing industrial base, particularly focusing on electric vehicles.
He left no doubt about the urgency of what is at stake and the limited time frame the government has following the kingdom’s worst economic performance in 20 years in 2020 and a clearly disappointing start to this year.
‘If we don’t fix this now, it will be too late to upgrade our investment’ the key advisor declared. ‘We don’t want to be left behind and die with old technology.’
Thailand now the ‘sick man of Southeast Asia’
He said this will be a key priority once Thailand finally opens its borders at the end of 2021.
This initiative is coming amid growing acceptance among economic thinkers that the Thai economy, while it still has strong fundamentals and a solid bank system, is now lagging.
It has been referred to by some economists as the ‘sick man of Southeast Asia’.
This new approach, if it brings a more open and friendly welcome to visitors, may just be what it takes to take the dour look off the kingdom’s medium-term and long term economic prospects.
At the end of the day, all economics is about people as well as the synergy and nature of their interconnections.