Type II property

[DaveT]

Guys,

Just read another thread in this section about 2 British investors now moving their money to Vietnam and Cambodia.

The quotes mentioned in the article state that in Thailand they had their properties/finance in "Type II property fund which allows foreign ownership".

Anyone know what this is? JW, maybe you'll know. Without knowing the details, on the face of it this method allows foreign ownership!! Surely can't be that easy, can it?

[STEVE G]

Maybe they are investing in the condominium market; I'll try to find out in the morning if I have the time.

[gaijin]

Don't know the answer to your question but I did come across an ad for a low rise villa development for foreigners in Ho Chi Min city, and which could be bought by foreigners.

[Bamboo Grove]

Last March when I was in Vietnam I got some contradictory answers to this. Our local tour guide in Ho Chi Minh said that it would be possible for foreigners to buy condos there and actually showed me couple of projects when we went past them. On the other hand her collegue in Hanoi said that it was still impossible for foreigner to buy. Maybe they will let it happen in the south first. It is and always has been more commercial and free wheeling than north anyway.

[da]

Its supposedly not possible unless your Viet Kieu, or married to a Viet lady and then she would own it.

I believe viable real companies can own but again it may be through the Veit partners.

There is draft regulation allowing foreign ownership that must now be reviewed before it becomes law with a possible chance of getting approved in the next year.

[DaveT]

My original post was asking about Type II in Thailand.

I realise that you can buy condos in Thailand if the rules are right, i.e. 49% a condo building can be sold to farangs but I am interested to know if by structuring in Type II, whatever that is, farang can buy land/house. The implication in the article is that you can, but perhaps these Brits were dealing only in condos.

[Guess]

My original post was asking about Type II in Thailand.

I'm glad you clarified that. People were going off on a Vietnam tangent. From your first post it suggests to me that they may be referring to investment management rather than bricks and mortar itself. As building is a big business at present it would be viable for such a company to be formed. They would be very keen for foreign investment.

For those who are not familiar with investment banking, it basically means that you, along with many others own large quantities of something. Some plans don't give you a choice (pension plans for example) where others do. You could for example invest in rubber but you would not have any right to one single tree. If the group as a whole makes money you get your share and vice versa. Depending upon the agreement you should be able to pull out at any time. Some schemes are perpetually rolling anyway so you have to pull out if you want to see the return yourself.

These schemes have been used in the old eastern bloc and longer ago in the developing Asian countries. I have heard about Chinese opportunities recently nut nothing specific about Thailand.

[STEVE G]

From an Investment bank website:

On 23 April 1997, the Securities and Exchange Commission ("SEC") issued the
Notification No. Kor.Nor. 19/2540 in order to establish the immovable
property mutual fund for the purpose of mobilizing funds in the form of new
capital inflows from both domestic and overseas institutions for investment in
immovable properties for commercial purposes.
Subject to current laws, regulations, and legal and official interpretations, the
investment units of the Fund may be held by foreign unit holders (alone or in
aggregate) of up to 100%, provided they comply with the existing SEC
regulations or an exemption from the SEC is given. Furthermore, regardless of
the foreign shareholding in the Fund, the Fund is not treated as a foreign entity
and may therefore be invested in property and other assets as set forth in the
existing SEC regulations. Therefore, foreigners are in this way able to indirectly
own land or invest in property.
Further SEC regulations have permitted the establishment of other similar
property funds, types II; III and in particular, type IV which allows investment in
the following:
• Property (real property and rights in real property, e.g. leasehold right);
• Secured and unsecured claims bought from financial institutions and
companies set up to manage the NPLs of financial institutions (so-called
"Asset Management Companies" or "AMC") and the shares of AMC; and
• Other assets which can be proven to help solve problems within the financial
institution system.
All of the funds receive a range of tax privileges. New funds of any of these types
may not now be established as the deadline before which each type must be
established has passed. Units may however be bought in existing funds.

[DaveT]

From an Investment bank website:

On 23 April 1997, the Securities and Exchange Commission ("SEC") issued the
Notification No. Kor.Nor. 19/2540 in order to establish the immovable
property mutual fund for the purpose of mobilizing funds in the form of new
capital inflows from both domestic and overseas institutions for investment in
immovable properties for commercial purposes.
Subject to current laws, regulations, and legal and official interpretations, the
investment units of the Fund may be held by foreign unit holders (alone or in
aggregate) of up to 100%, provided they comply with the existing SEC
regulations or an exemption from the SEC is given. Furthermore, regardless of
the foreign shareholding in the Fund, the Fund is not treated as a foreign entity
and may therefore be invested in property and other assets as set forth in the
existing SEC regulations. Therefore, foreigners are in this way able to indirectly
own land or invest in property.
Further SEC regulations have permitted the establishment of other similar
property funds, types II; III and in particular, type IV which allows investment in
the following:
• Property (real property and rights in real property, e.g. leasehold right);
• Secured and unsecured claims bought from financial institutions and
companies set up to manage the NPLs of financial institutions (so-called
"Asset Management Companies" or "AMC") and the shares of AMC; and
• Other assets which can be proven to help solve problems within the financial
institution system.
All of the funds receive a range of tax privileges. New funds of any of these types
may not now be established as the deadline before which each type must be
established has passed. Units may however be bought in existing funds.

Well, I think I understand that . . . ish . . .

It was ok until the last paragraph - looks like they can't be set up any more. I wonder if this is another recent change to prevent farang owning land.

[STEVE G]

From what I’ve read today, it seems like these types of funds were specifically formed to help rectify the 1997 financial crisis, so are perhaps not relevant anymore. Mind you if the Government doesn’t sort things out soon they might have another financial crisis to solve!

[Nereus]

Mind you if the Government doesn’t sort things out soon they might have another financial crisis to solve!

Lets hope that they do! It may bring the Baht under control and help bring the place back a little nearer to what it used to be.

[PeteC]

Mind you if the Government doesn’t sort things out soon they might have another financial crisis to solve!

Lets hope that they do! It may bring the Baht under control and help bring the place back a little nearer to what it used to be.

For sure. Today I was checking and my USA bank ATM is still giving me 34.3 to the USD and HSBC Hong Kong is offering a wire transfer rate of 31.29 (not including fees). HSBC is a great bank but I've never found them to be exchange rate friendly, even when your trading currency internally between accounts. Pete

[Guess]

From what I’ve read today, it seems like these types of funds were specifically formed to help rectify the 1997 financial crisis, so are perhaps not relevant anymore.

I would think that further measure would be needed to overturn it whether by the Thaksin Government or by the SEC themselves.

I would like to see a definition of the property types. I remember some issue post '97 with Carrefour or another French company (maybe Big C) of land rights that need governmental intervention.

I have also heard rumors of larger companies, some of whom were far from legitimate, bypassing the ownership laws with these type of clauses.

It still does not really explain the ownership versus rights to occupy and develop questions though.

If the Guiness Book of Records gives an award for the most unintelligble but grammatically correct English then the writer of that statement should get the award.

[STEVE G]

Guess wrote:

If the Guiness Book of Records gives an award for the most unintelligble but grammatically correct English then the writer of that statement should get the award.

I was hoping you were going to explain it all for us!

[Guess]

Guess wrote:

If the Guiness Book of Records gives an award for the most unintelligble but grammatically correct English then the writer of that statement should get the award.

I was hoping you were going to explain it all for us!

It's a load of pretentious tosh saying that if you have loads of money to buy land in Thailand and you can afford to take the Finance Minister and his entourage for a weekend orgy your company can 100% own and develop the land for "business purposes". You will probably find that Nana Plaza and the old Nana Square are/were in this category.