POLITICAL AND SOCIAL RAMIFICATIONS
The proposed plan may increase land tax revenues and benefit Thais fiscally, but its political and social implications deserve careful consideration. Foreigners can freely start investing in real estate, but whether they will reside in the country is another matter. In addition, increasing foreign purchases of luxury homes will reinforce the perception of inequality and rising land prices will exacerbate actual inequality.
These concerns have led the opposition Phuea Thai Party to oppose the scheme. The party argues that nearly 80 percent of Thais do not own land and that allowing foreigners to buy land will benefit the more affluent segments of Thai society who can sell land. It will increase inequality in land ownership.
Phuea Thai’s concerns aside, it’s not clear that easing restrictions on land ownership will be the magic formula to kick-start the Thai economy that the Prayuth government is hoping for.
Thailand would do better to create a healthy investment climate with improved and more transparent regulatory and legal structures to make investors feel that it is worth doing business in the country. That approach is a more promising way to attract investors, technology and ultimately innovation to the country.
Given its flawed design and the potential adverse impact on inequality, the Thai government’s proposal to revive the economy by easing restrictions on land tenure deserves careful scrutiny.
Prem Singh Gill is an adjunct lecturer at the College of Interdisciplinary Studies, Thammasat University, Thailand and a senior researcher at the Research Center for Advanced Science and Technology, The University of Tokyo, Japan.
Ratana Boy is an independent researcher and an undergraduate senior at the Faculty of Global Studies, Thammasat University.
This commentary first appeared on ISEAS – the blog of the Yusof Ishak Institute, Fulcrum.