DEVELOPERS EVADE THAI LAW
Foreign firms juggle fine print to sidestep property regulations
Foreign land developers have resorted to a series of ''tactics'' to circumvent Thai law and reap real estate windfalls on the resort island of Samui, say local businessmen.
Foreign investors started developing property on Samui about 10 years ago, but their activities have only intensified in the last few years, locals say.
Projects initially involved building homes for tourists who wished to settle down on Samui. The development industry quickly grew, and soon large plots of land were being bought from locals and divided into plots for sale, a local developer said.
As land prices skyrocketed resulting from the tourist boom, large property development firms with huge investment funds stepped in, he said.
Since Thai law prohibits foreign entities from owning property, many foreign investors attempted to evade the law by setting up local entities with Thai nationals acting as proxies who would hold more than 51% of the company and its property assets without having true control.
Almost 90% of foreign investors doing business on Samui have resorted to such practices, the source said.
People involved in the property business also tried to evade taxes on land sales by creating legal arrangements to make the sales look like asset transfers between a company and its subsidiary so the seller and buyer would not be taxed, they said.
Meanwhile, a provincial land official said almost all property development firms had violated the Land Department's land-allocation regulations, which require land owners occupying more than 10 land plots to seek official permission.
The official said only five of more than 800 companies running real estate businesses on Samui had legally obtained department permission to occupy more than 10 land plots.
As the property business grew, and all beachfront land was occupied by hotels and resorts, investors turned to mountain and forest land. Investors are also keen on developing less popular beachfront land at Bo Phut and hilly property near Chaweng and Lamai beaches.
Rapid growth of the land development business has raised concerns among local businessmen, who fear this could damage tourism as the natural environment is degraded and freshwater runs short.An adviser to Samui municipality said the local administration did not have legal tools to limit expansion of land development, except for building design control measures under Samui's city planning law, which came into force on July 25.
He said land use conflicts on Samui will get more complicated as tourists switch from the tsunami-hit beaches and resorts on the Andaman Sea coast.
''I think Samui will change a lot from now on,'' he said. ''If the situation continues like this, native people will sell their last pieces of land and leave Samui.''
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