There is concern the new scheme could be used as a vehicle by wealthy Chinese investors to snap up hotel and tourism industry businesses and properties which are currently in distress as the government’s planned refloat of the sector falters and is unlikely to achieve anything like levels seen before the onset of the pandemic crisis in March 2020.
The government is targeting its long term visa programme which will grant residency to wealthy people who invest in the kingdom and high earners with advanced skills, to be up and running from the beginning of next year. It is understood that talks are underway between the Ministry of the Interior and the Finance Ministry on the sensitive issue of amending property ownership regulations to offer such rights to up to 1 million people worldwide that the government hopes to attract to come to live, invest and work in Thailand as part of the economy.
A government spokeswoman, on Saturday, confirmed that officials are speeding up the implementation of a programme designed to attract 1 million affluent foreigners to live in Thailand by 2026.
The plan, according to Ms Ratchada Thanadirek, is that the new long term visa will be on offer to people worldwide from the beginning of 2022.
This will include moves, which will be initiated immediately, aimed at amending Thailand’s highly restrictive property ownership laws which currently prohibit foreigners from owning any land or more than 50% control of condominium developments and limited companies.
Package of measures aims to generate ฿1 trillion in GDP earnings per annum for the economy
The measures, approved in principle by the cabinet last Tuesday, aim to generate more than ฿1 trillion per annum by the end of 2026 and will be monitored by the National Economic and Social Development Council (NESDC).
Four groups will be eligible for the new visas including wealthy investors, retirees moving to Thailand, highly educated and skilled workers coming to work in the kingdom and skilled entrepreneurs with knowledge or valuable intellectual property to power the economy.
Talk underway between top officials on how to allow approved foreigners to acquire land and property
The government spokeswoman said talks between the Ministry of the Interior and the Finance Ministry have already commenced on the question of allowing these specially designated foreigners to acquire land and identifying whatever necessary conditions should be attached to the proposal.
Ms Ratchada appeared to suggest that the scheme may go ahead in January 2022 with the land ownership issue being progressed at that point but not finalised.
She told reporters that she could not give more details although there has been speculation that some concession may also be made to spouses of Thai nationals under this new regime.
Plan is to boost inward investment and widen the tax base as part of a national strategy to transform the kingdom’s economy into a high-income one
The scheme is also aimed at generating increased investment into the kingdom at a rate of ฿800 billion per annum in addition to ฿270 billion per annum in extra income tax receipts from the new residents.
The government spokeswoman told reporters that this was part of the National Strategy which was outlined in 2018 and which aims to see Thailand become a high-income economy between now and 2037.
The problem with that goal is that the kingdom will need to quickly raise annual GDP expansion following last year’s cataclysmic 6.1% contraction of the economy which is due to be followed this year by a further contraction or at best, a GDP gain of under 1%.
Rising private sector debt is the key concern of the Bank of Thailand and tourism industry properties are at the heart of the problem with many in distress
The country also has a chronic problem with rising household debt levels and increased private sector borrowing which the Bank of Thailand identified as its key priority at the start of the year.
The response to this from bank officials includes plans to launch an asset warehousing scheme and an effective support mechanism to deal with business operators within the devastated foreign tourism industry where many loans secured against properties and assets are still on debt moratorium and will need to be restructured.
Many tourism-related businesses and properties are currently in a state of financial distress.
This has long been seen as dependent on the reopening of the kingdom before the end of 2021 to foreign tourism at viable levels, something that increasingly looks very unlikely as the pandemic crisis continues.
Reopening to foreign tourism is faltering
This week, the planned reopening of the country looked increasingly fragile as the Minister of Public Health Anutin Charnvirakul warned that proposed schemes across 26 provinces in October allowing quarantine free access to vaccinated foreign visitors may have to be postponed while the Phuket Sandbox is taking place against the backdrop of a rising virus crisis on the island itself.
Scheme would be for a trial period of 5 years
At Tuesday’s cabinet meeting, it was agreed that the investment scheme would be subject to review every 5 years to be conducted by the National Economic and Social Development Council.
This would include all legal measures which accompany it including the proposed relaxation of the prohibition on property ownership in respect of non-Thai nationals.
Warning from Pattaya hotel industry boss of a Chinese takeover, loss of income to the wider Thai economy
Details of the new scheme came just days after a leading hotel industry leader, Phisut Sae-khu, urgently called for a suspension of debt repayment for hotel owners in Pattaya until the foreign tourism industry recovers and warned that Chinese investors are waiting in the wings to move in.
Thailand’s tourism industry may go the same way as Cambodia and Sihanoukville where 90% of hotels and businesses in the resort are Chinese owned
It is clear that the new scheme would be advantageous to such investors and could see Thailand’s strategically important and valuable tourism economy follow that of Cambodia where Chinese investors have come to dominate the development of the industry.
A 2019 survey and information revealed by Preah Sihanouk provincial authorities in Cambodia showed that 90% of business concerns in the popular tourist resort of Sihanoukville including hotels, casinos, restaurants and massage parlours were owned by Chinese investors.