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May 24th, 2008 by eyal | Filed under Asia, Investing. |
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Thailand is one place where the abundance of petrodollars of oil rich Arab countries won’t buy everything. Seems like ex-PM Thaksin went a little too far in wanting to augment his billions. I estimate, conservatively, that 99.9999% of Thais will fiercely oppose any such plans to sell land, particularily large rice farming land, to foreigners - at any price. And that’s something worth respecting.
Bangkok Post : Saudi investment in rice sector opposed
According to Mr Prapat, the proposed investment involves a joint farming project with Thai farmers, renting farmland, and a joint rice export venture.Mr Somsak said the ministry would definitely reject any plans that ignored the importance of the agricultural sector and threatened the farmers’ way of life.
”Rice farming is an occupation that is reserved for Thai nationals only according to the foreign business law. So, don’t look at it only as a business or for profits and don’t put your own interests first,” the minister said.
”How have they initiated such an idea to hire academics and farmers to grow rice for a 5,000 baht per rai wage? They couldn’t care less about farmers.”
”This kind of idea is tantamount to selling off the nation, aiming to take farmers away from their motherland,” he said. Mr Somsak added, however, that he did not know whose idea it was.
Prasit Boonchuey, president of the Thai Farmers Association, said the proposed investment would not benefit Thai farmers.
”If the government lets foreigners invest in rice farming in our country, the occupation of farming will become extinct, leaving only hired hands and Thais will then have to buy rice from foreigners,” said the farmers’ leader.
They’re just paranoid to the bone. As long as its Chinese-Thais exploiting the farmers and basically anyone who can’t afford a lawyer, its pefectly fine, but if a foreigner wants to own 1 rai of land in the most rural corner of Issan, its “selling the nation”.
Yes I thought about the implications in the context of the individual foreigner. On the one hand not selling land to someone who just wants to build a house on a rai or two seems way too restrictive and paranoid. On the other hand there is an argument that allowing sale of even small land or house+land to foreigners will have a significant impact on land and housing prices. You can see this happening in Phuket to some degree despite limitation and difficulties. I guess if they wanted to they could find some way to allow long term individual foreigners who are married or some other such criteria to buy land.
The Chinese-Thai’s power and other types of cronyism is a problem across the entire system. Not likely to change for a very long time.
Rising prices in Phuket indeed occur, however the main reason isn’t foreigners, it comes from the propsperity of tourism in the area. The same thing happens in every succesfull tourist attraction elsewhere in the world, regardless of foreign investors. There is enough local money in thailand for a plenty of development where money can be made, and the result is that Phuket today is the richest province in Thailand.
Of course, one can claim that this development comes on the expense of the simple locals who need to pay higher and higher prices, for example when their families naturally expand. Well, true supporters of this claim should ask to limit any kind over-development, both by major Thai companies and foreign ones. How come the foreigners are always those who are blamed for the rising prices, even when billions and billions are invested by Thai-owned, Bangkok origin companies?
Going back to rice fields, well, if almost all Thais oppose to selling rice farming lands, why do they need this law? Who will do the selling? :-)
In my opinion, it is not the farmers but rather the large rice corporations / exporters who really oppose to the purchase of rice farming lands by foreigners - they don’t even need to buy the lands themselves, it is much simpler to exploit the poor farmers and enjoy large margins.
From talking to property agents in Phuket and the type of developmens I saw there the main driving force behind the growth is foreign investment. Typical houses in many developments there go for 20-30M now. Without foreign investment I think it would be highly unlikely that the place would have developed the way it did, even given growth in tourism. That said, I don’t have hard stats on it so it’s mostly anecdotal evidence.
I think there is a difference between “organic”, paced development and development driven by external forces. So it’s not either freezing development or break-neck speed development with foreign investment. There are middle ways. Which is what I *think* Thais would prefer.
That’s a good point about the law. Which then makes me wonder why would Thaksin who is suuposed to represent the interests of the rich middlemen in the rice business would want to sell farming land to foreigners and by that lose control over the farmers and change the status quo.
Btw, I think the not selling 1 rai to a foreigner with a family in Thailand is a by-product / nationalistic / populistic “add-on” to the power struggle. And I think it may change in the futuere. There are some new rules being introduced even now like for example it’s possible now for a foreigner to get a mortgage from Bkk Bank, something that was never possible before.
If by foreign investment they mean buyers of condos then I agree, however I’d call those “spenders” or “consumers” rather than “investors”, just like tourists. It can’t happen without serious Thai developers.
Regarding Thaksin, he never represented any other interests other than his own. When that meant gaining political power by appearing to be socialistic and “helping the poor” by giving them endless loans (read: buying their votes) he did that, when that meant chasing personal gains by selling the number one Thai telecom company (which he was not supposed to own in the first place), including control over satellites and sensitive info to Temasek, he did that.