November 16, 2024
Last year, many of our clients expressed concerns regarding the Thailand Board of Investment (BOI) regulations on foreign companies' ownership of office and residential land. Clients reported that their land ownership applications were rejected due to various restrictions. However, with the new announcement issued on November 4th this year, many of these issues have been effectively addressed. This article aims to analyze the key adjustments made in the new announcement, highlighting the potential impacts on investors and providing insight into the policy changes.
1. Removal of Land Use and Registered Capital Standards
Under the previous announcement in 2023, the BOI required companies holding a BOI license to comply with specific criteria regarding the relationship between land area and registered capital when applying for land ownership. Specifically, each rai (approximately 1,600 square meters) of land was required to correspond to 50 million Thai Baht in paid-up registered capital. The new announcement, however, removes this requirement, eliminating the need for a specific ratio between land and registered capital. Under the new policy, companies are only required to have a minimum of 50 million Baht in paid-up registered capital and may apply to own up to 20 rai of land for office and employee housing purposes. This adjustment provides greater flexibility in land and capital arrangements, allowing businesses to tailor these aspects according to their specific needs.
2. Abolishment of Housing Standards Based on Employee Type
In the previous announcement, the BOI imposed housing requirements based on employee roles (e.g., management staff, operational staff, etc.). The new announcement eliminates this classification, stipulating that companies are only required to provide appropriate housing space for operational staff, without having to differentiate based on employee position, number, or type. This change offers businesses increased flexibility, particularly in terms of housing arrangements, by reducing unnecessary resource allocation and management complexities.
3. Adjustment of Distance Limitations
The new announcement also revises the distance requirements between employee housing and the company's operational site. Under the previous policy, the distance between employee housing and the business location was not allowed to exceed 50 kilometers. The new policy shortens this distance requirement to 10 kilometers, meaning that companies must now provide employee housing much closer to the production site. This revision may require businesses to reassess their housing strategies in certain locations to comply with the new proximity requirement.
4. Impact on Applications Submitted Under the Previous Announcement
For foreign companies that have already submitted applications under the previous announcement and are awaiting approval, the BOI has stated that these applications will continue to be processed in accordance with the prior standards. However, for applications that were rejected due to non-compliance with the previous requirements, companies may now resubmit their applications under the new policy. This provides an opportunity for companies that were previously unable to obtain approval under the old standards to reapply, reflecting the BOI's flexibility and support in facilitating these policy changes.
As Thailand continues to optimize its investment environment, the new policy is expected to attract increased foreign investment, contributing to the country's economic growth. For foreign businesses, understanding and adapting to the new regulations will be essential for successfully entering the Thai market.
