NEWS ALERT Thailand Expands Hotel Foreign Ownership Incentives

Last updated: Sun 6 Dec, 2009 12:35 pm | Viewed: 607 times

Good news for hotel grade investments as Thailand's BOI (Board of Investments) has expanded the incentives allowing 100% foreign ownership in a move aimed at spurring overseas investors. Previously the threshold for applicable projects was 100 rooms and over but the amended guideline ( BOI notification 10/2552) allows developments with an investment of over THB 500 million excluding land cost and working capital. This is good news for projects in Phang Nga where specific restrictions are in place limiting hotel development to 79 rooms within 300 meters of the ocean.

The basic tenant of the BOI program as it applies to District 2 (Phuket Province) allows for 100% foreign ownership including land, greater allowance for fast tracking of foreign work permits and remittance of currency abroad. The incentive applies to hotel only projects and not mixed use or residential developments. For Phang Nga and Krabi Province which fall into District 3, an additional incentive is in place with the ability to import machinery on a tax free basis from overseas.

For foreign investor's who are institutions the ability to obtain 100% foreign ownership allows them greater control of projects, the ability to leverage debt with foreign lenders and if there in the intention to exit the investment it makes the asset disposition proposal considerably more effective.

This is great news – especially for smaller developers - no longer tied to a local partner who might or might not rip you off. Having been in a situation in Indonesia where 100% foreign ownership was not allowed I know full well the benefits of this law change. Bt500 m is still a far whack of change though and at a bit more than $US15 m rules out most people looking to set up something for their retirement. At least it's a step in the right direction.

John L, Sat 28 Nov, 2009 6:59 am

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