15/02/2019 - Luxury Marketplace

How Much Money Do You Need To Retire In Thailand?

If your retirement dreams include a beautiful climate, new cultural experiences, access to affordable healthcare and a lower cost of living, you may be thinking about retiring abroad. One destination popular with retirees is Thailand, a small country in southern Asia known for its natural beauty, pristine beaches, exotic cuisine, temples and friendly people.

According to International Living, a publishing group that covers living and retiring overseas, Thailand has one of the lowest costs of living in the world, adding to its appeal as a top retirement destination. Here, we take a look at how much money you need to retire in Thailand, plus how to make your retirement dollars last longer.

Good Starting Point
The requirement for a retirement visa is 65,000 baht per month (about $2,000) or savings of 800,000 baht ($25,000) in a Thai bank account. Steven LePoidevin, InternationalLiving.com Thailand Correspondent, says this is a good starting point for a retired couple. “This would provide for a basic but comfortable lifestyle,” he reports.

Like anywhere, it comes down to location; some places in Thailand will be more affordable than others. “[A retired couple] would obviously live a much higher quality lifestyle in Chiang Mai than in Bangkok,” says LePoidevin. “As a retiree, I personally would not want to live here with less than $1,500 to $2,000 per month income. This is assuming you are renting, not living in your own condo or home.” For more on Chiang Mai, see Retire Abroad: Cosmopolitan Cities.

For the Really Budget Conscious
Though $2,000 a month is a good starting point, it is possible to get by with a much smaller budget. LePoidevin points out that the average Thai resident lives on less than $1,000 per month. “If you want to live in a small apartment, eat only local food, never travel, not have any health insurance and rarely take part in any form of entertainment, I suppose anybody could live on this small amount of monthly income,” says LePoidevin. Most expats, however, would have a difficult time living within a $1,000 per month budget and should count on a bit more – even if they are really budget conscious. “I still believe that it is necessary to have a steady income of at least $1,200 to $1,500 per month for a bare minimum,” says LePoidevin.

Living Large
$5,000 per month would give you a very lavish retirement in most of Thailand, according to LePoidevin. “This would be enough money to rent a two-bedroom condo in the heart of Bangkok or in one of the many beach areas. If you purchased a condo, then you could definitely live a very good lifestyle on this amount,” says LePoidevin.

Aside from living in a choice location, a $5,000 budget would allow other perks. “[$5,000 per month] would provide enough money to eat out on a regular basis, employ a housecleaner a couple of times per week, use AC on a regular basis, have high-speed internet and still have more than enough for entertainment expenses,” says LePoidevin.

Factor in Healthcare
LePoidevin notes that healthcare is one cost that is frequently overlooked, but that expats need to plan for it. There is no public health insurance in Thailand for expats. For those older than 60, private health insurance can be quite expensive. “It is necessary to consider your own family history and the risks involved before you begin to seek the best insurance plan for your situation,” says LePoidevin.

“Because of the low cost of healthcare in Thailand, many expats rely on their savings for unforeseen medical emergencies. Others only buy less expensive accident insurance in the hopes that they are more likely to have an accident than a dire medical emergency.” Sometimes it is possible to rely on travel insurance if you are returning back to your home country or traveling on a regular basis. “This is also a less expensive avenue to pursue if it fits your needs,” says LePoidevin.

Stretching Dollars
One of the best ways to make your retirement dollars last longer is to live like a local. “It is easy to find smaller inexpensive houses and apartments throughout the country,” says LePoidevin. “The quickest way to burn through retirement money is to spend it on alcohol and international foods. Both are very expensive in Thailand. Purchasing fresh local produce, eating out in ‘mom and pop’ local restaurants and cutting back on alcohol consumption will result in a much smaller monthly expense.”

The Bottom Line
If you are thinking about retiring abroad, Thailand is worth considering. A substantial expat community already enjoys the country’s natural beauty, exotic cuisine and beautiful climate, plus access to affordable healthcare and one of the lowest costs of living in the world. For more information about making this kind of move, see Plan Your Retirement Abroad and Retirement: U.S. Vs. Abroad.

Note: The U.S. Department of State has issued no specific travel warnings about Thailand. However, in early 2015 it updated its Worldwide Caution to provide information on the continuing threat of terrorist actions and violence against U.S. citizens who travel or live abroad.

The Caution – which pertains to travel in Europe, the Middle East, North Africa, Africa, South Asia, Central Asia, East Asia and the Pacific – states: “Recent terrorist attacks, whether by those affiliated with terrorist entities, copycats, or individual perpetrators, serve as a reminder that U.S. citizens need to maintain a high level of vigilance and take appropriate steps to increase their security awareness.” U.S. citizens traveling or residing abroad are encouraged to enroll in the Department of State’s Smart Traveler Enrollment Program (STEP), which provides security updates and makes it easier for the nearest U.S. embassy or consulate to contact you and/or your family in case of an emergency.

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Thailand and Japan agreed on Saturday to develop the Dawei special economic zone in Myanmar and two train lines in Thailand including a high-speed train linking Bangkok and Chiang Mai.

The agreement was reached in talks between Japanese Prime Minister Shinzo Abe and Prime Minister Prayut Chan-o-cha on the sidelines of the seventh Japan-Mekong Summit meeting.

Mr Abe had already pledged in the summit fresh aid worth 750 billion yen (205 billion baht) in official development assistance to Thailand, Myanmar, Cambodia, Laos and Vietnam over the next three years to spur the region’s development.

Senior government officials of Thailand, Myanmar and Japan countries signed the Dawei memorandum earlier Saturday as Mr Abe, Gen Prayut and Myanmar President Thein Sein looked on, on the sidelines of the summit.

“I’m convinced the signing of a memorandum of intent on Dawei Special Economic Zone will create an opportunity to strengthen economic partnership between Japan and Asean, and Japan and Thailand ahead of the launch of an Asean Economic Community,” Mr Abe said in a joint news conference with Gen Prayut after their meeting in Tokyo.

No details of the agreement were released but Gen Prayut said that when completed, the economic zone 200 square kilometres “will become a new distribution centre of the world”.

Gen Prayut said Thailand and Japan also agreed to embark on a high-speed rail route between Bangkok and Chiang Mai and the Red Line mass-transit system in Bangkok, according to a Government House press release.

But Tokyo stopped short of making a strong commitment on two more rail lines in which Thailand was hoping it would invest. They are a route from the Thai border with Myanmar in Kanchanaburi to Rayong and Aranyaprathet district in Sa Kaeo, and another line from Mukdahan to Mae Sot district in Tak.

The two countries “plan to develop” the two lines “in the future”, the Thai statement said.

The pledge for the Red Line could clear the way for the State Railway of Thailand to receive an additional loan of 38.2 billion yen (10.4 billion baht) from the Japan International Cooperation Agency (Jica).

The Red route will run from Bang Sue to Rangsit. The railway agency needs more loans from Japan to finance the project with the Jica already the main financial source.

Japan on Saturday also pledged a total of 99.85 billion yen (US$812 million) in yen-denominated low-interest loans to Myanmar to help develop infrastructure.

Of the total, 41.12 billion yen ($334 million) will go toward developing a national power transmission network, and 33.87 billion yen ($275 million) toward improving the Myanmar portion of the East-West Economic Corridor that connects the country with Thailand, Laos and Vietnam by road.

The remaining 24.87 billion yen is linked to a project to upgrade the circular railway line in Yangon.

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Under the care of Tourism Authority of Thailand (TAT), every single Elite member will be offering special rights and services to Elite members such as exclusive treatment from the airport. The aims are to generate revenues from foreign visitors; and draw high-end visitors, businessmen, investors and the long stay groups.

The services provided to Thailand Elite’s members are from both public and private sectors, like Visa Privilege, Special Entry Visa, and Privilege Entry Visa, as well as high-end golf courses, spas, hotels, clubs, and medical facilities throughout Thailand. Known for world-class hospitality, we look forward to service Elite members to enjoy their time here to the fullest extent.

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More and more people are choosing to buy properties in Phuket, Thailand. Phuket is one of Asia’s most sophisticated and most established property markets. Over the past twenty years, property developments have been sprouting around the island that heightened the influx of investors. Currently, the demand for properties is high, especially in newly developed areas of Surin, Bang Tao Beach, Layan, Cherng Talay, and the coastal areas in the southern part of the island.

Compared to traditional areas, Phuket boasts an assortment of options to property investors, whether they are looking for apartments, condominiums, villas, or residential houses. Property investors will not run out of affordable options. Although most part of the development in Phuket is designed for the wealthy, there are affordable properties that stretch over the bays of the island’s west coast.

Reasons of Investing in Phuket

There are many reasons why people choose Phuket as a property investment opportunity. Whether they are looking for a permanent home, a holiday getaway, or an investment opportunity, the primary reasons in considering a property in Phuket can be classified broadly as leisure, financial, and social.

1. Leisure and Culture – Phuket is home to some of Asia’s island resorts that boast stunning natural surroundings combined with extraordinary facilities for guests. It is home to idyllic beaches and unscathed rainforests, making it a perfect destination for pleasure seekers, extreme sports junkies, or food connoisseurs. Properties in Phuket have something unique to offer to everyone who wants to imbibe the authentic culture and experience the exceptional relaxation.

2. Financial Opportunity – Phuket is one of the premier tourist destinations in Thailand and is recognized as one of the wealthiest provinces in the kingdom. The Thai government realized the value of Phuket in the kingdom’s entire economy. Phuket remains as one of the commanding presence, in terms of investment opportunities. This makes Phuket one of the leading choices of individuals who want to have a piece of property in one of the fastest-growing economies in Thailand.

3. Social and Economic – The island’s economy is one of the lowest costs of living cited, all over the globe. Compared to other western countries, Phuket has become one of the most attractive choice for people who want to retire because it remain to be the most comfortable and modest place to live. Phuket is the core location for many infrastructure developments in the recent years. Additionally, Phuket offers high standards of healthcare services at very reasonable price.

Prices soar for Phuket’s luxury villas

The limited number of new luxury villas in Phuket has doubled the price of resale units, as demand is relatively strong in this niche market.

Aliwassa Pathnadabutr, managing director of property consultant CB Richard Ellis (Thailand), said top-end villas on the island were part of an exclusive market characterised by a limited number of high-value transactions.

Major players used to be small foreign developers with limited financial backing, but they have been replaced by large operators.

This is positive for the market in terms of reduced risks for buyers and an improvement in the quality of villas and designs.

Most villa sales are in the entry-level segment with prices below 15 million baht. Despite ongoing demand in the luxury segment, buyers face a limited supply.

“In recent years, buyers’ preferences in the luxury sector have shifted towards hotel-branded products that offer quality management, five-star services and facilities as well as the ability to generate rental income,” Ms Aliwassa said.

However, the proportion of completed luxury villas priced above 35 million baht with hotel branding remains limited and accounts for less than 10% of the villa market.

“We’re now beginning to see Western expat groups working in Asia who bought prior to the 2008 financial crisis starting to re-enter the market,” Ms Aliwassa said.

With the completion of Phuket airport’s expansion next year, CBRE expects to see further growth in tourist arrivals having a positive effect on resort property sales.

Price points have clearly shifted in the past 10 years for successful developments.

In 2005, the first phase of Andara Resort & Villas was launched with units priced at US$3-4 million.

Today, resales at Andara are fetching $6-8 million, with some transactions achieving a 100% capital gain.

Launch prices of some luxury projects have also hit the $10-million mark.

Andy Kunz, general manager of luxury villa and hotel project Point Yamu by Como, said 2015 was not proving a good year for Phuket, as the number of Russian and other Western tourists had decreased.

“Tourism in Phuket has been unfavourable since the coup last year, because Phuket was mentioned in negative ways,” he said.

Some four- and five-star and big-chain hoteliers late last year banded together to set up the Phuket Hotels Association.

They held meetings to try to figure out how to restore the tourism market and create a Phuket brand.

The association tried to persuade budget hoteliers to join, but that segment had no problem with their target groups.

Starting operations in late 2013, Point Yamu by Como is is located on Cape Yamu on the eastern side of the island.

The hotel comprises 79 hotel rooms and 27 villas, with rates ranging from 40,000 and 100,000 baht a night.

Of the 27 villas, 20 are offered for sale at prices ranging from 61-175 million baht.

Total sales value of the 20 villas is 1.7 billion baht, with three units sold to Singaporeans after a soft launch early last year.

All villas for sale are required to enter a rental programme in which owners can stay 60 days a year and receive a rental yield.

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Amending the law to allow median prices based on current appraisal prices to be used for the local development tax could be an alternative to generate massive tax income instead of pushing the controversial land and buildings tax, says a source familiar with the subject.

The strategy could help revenue from the local development tax surge by 100 times to 100 billion baht, said the source.

The local development tax charges are based on land prices appraised between 1978 and 1981. A Fiscal Policy Office (FPO) study found a big difference between the prices of land appraised during that period and those evaluated during 2004-07, from four to more than 4,000 times.

Given that the local development tax is regressive, based on outdated appraisal prices and has many waivers, the Finance Ministry pitched the idea of the land and buildings tax bill replacing a revamped local development tax and a house and land tax in order to raise revenue for local administrators, alleviating the government’s fiscal burden in supporting them.

The local development tax charges 0.5% for median land prices worth less than 30,000 baht but only 0.2% for those worth more than 30,000. Moreover, landlords who own land plots of up to five rai, depending on the location, are tax-exempt. Some 90% of Thais hold less than one rai of land.

The house and land tax, which charges 12.5% of annual rental payments, is blamed for the tax disparity as rental appraisal depends on related state officials’ judgements. Some landlords also pass on the tax burden to tenants. The tax contributes 23 billion baht a year to the government’s revenue.

However, the bill has been shelved for months following public outcry for fear of a higher financial burden because of the new tax.

The source said the market value of land plots has soared on average over 300 times the past three decades.

One option is to exempt the value of buildings from the land and buildings tax bill to lower the burden on home and building owners, as only land would be levied, noted the FPO study.

Earlier, former finance minister Sommai Phasee opposed the idea of taxing only the land.

The source said the land value averaged 70% of the price, so taxing it would be feasible.

Luxury real estate prospers

One thing that I love about Phuket is the ability for luxury to live side by side with abject casualness. You could be sitting next to a multi-millionaire or a packaged tourist on the bar stool, as the ties that bind are the flip-flops adorning your respective feet.

Islands tend to have little social stratification, which can probably be explained in a Robinson Crusoe round-about manner. Be it a local eatery, or stepping down the aisles of Villa Market, or indeed sitting in the crowd at a kids’ sporting event at one of Phuket’s many international schools, the pecking order doesn’t much matter at these venues.

All that equality of course does not necessarily apply to where the top end of the market lay down their heads on comfy pillows at night. The history of luxury pool villas has been recanted many times around the local watering holes, so that’s no place we need to go now.

One clear positive sign for Phuket’s luxury real estate is the amount of impressive new product now coming into the marketplace. Just a few days ago, I had the chance to visit one of the newest launches, Avadina Hills overlooking Layan Beach, and once you catch your breath, all of Bangtao Bay and beyond.

Size does matter in what has been a hand-crafted effort of 22 ultra estate villas. One feature that I personally love is the ample plot size with an average of two rai each. With configurations mainly of four bedrooms, built up areas range from 1,700-1,800 square meters and internal built up space of over 709sqm.

Is the price tag, starting from 300 million baht, high? Certainly, but viewing the high level of quality, the artistic framework of architect Sakakura Associates and landscape planner James Hyatt, ultimately the price tag is attuned to the exclusivity, privacy and view overlooking one of the island’s most sensational vistas.

Writing this, I can almost hear the online boo-birds chirping about the demise of Phuket, being overrun by cheap travellers and with a declining trajectory. Yet, looking at the bare facts and quality of investment into the island’s luxury property sector by well-heeled groups and affiliates like Kajima (Japan), Minor (Thailand), HPL (Singapore), and New World (Hong Kong), the reality seems to suggest that, despite a world gone mad, upscale property is continuing to find a global marketplace in Phuket.

Over the next 12 to 18 months, more than US$500 million in new luxury estate villas will enter into the market, including notable projects such as Rosewood, MontAzure and others, joining Avadina Hills, Anantara Residences and Point Yamu by Como. One reality of the sector is that a fresh phase of demand will be induced by the world class product and will generate sales from both domestic and overseas buyers.

If you want a reality check about Phuket’s leadership in real estate, take a drive on Kamala’s Millionaire’s Mile some time, or take a look at the superyachts that can’t find space at the island’s overfilled marinas.

There is little doubt that our island is transforming into an urbanized landscape, and yes – volume is inevitable in all things we do and see. Yet, putting perspective into the real estate sector, and viewing the positive investment sentiment, all indications are that we will continue to move ahead as we enter the next development cycle.

Luxury living is indeed finding more partners to sleep with, given some very spectacular new products that are gracing our shores.

Builders urge tax breaks for buyers

Property developers are urging the government and its new economic cabinet to use tax incentives to help restore housing demand in the remaining months of this year.

They are concerned that already-soft demand will be weakened further by Monday night’s bomb attack.

Cutting property tax and transaction fees would help to stimulate the economy in general and the property market in particular, said Thongma Vijitpongpun, president and chief executive of Pruksa Real Estate Plc.

He proposes the property transfer fee be reduced to 0.02% from 2%, mortgage fee to 0.01% from 1% and special business tax to 0.01% from 3.3%.

The cuts should be applied to housing units priced 2 million baht or lower, which would help low-income earners to afford their own home, Mr Thongma said.

“If these incentives were applied to higher-priced segments, annual tax revenue could miss the target,” he said.

Atip Bijanonda, president of the Housing Business Association (HBA), said the overall economy in the remaining months and full-year GDP growth would depend largely on economic stimulus.

“We’re not worried about new-home transfers in the rest of the year, as those will keep growing,” he said. “But new-home sales are a concern due to unfavourable market sentiment in the housing sector and the weak economy, which is expected to be dampened further by the deadly bombing.”

The HBA has revised down this year’s housing market forecast to only zero to 5% growth from 5-10%.

Mr Atip suggests developers stay more focused on cash flow and be more cautious of new projects being launched between now and year-end.

Theerathat Singnarongthon, assistant chief executive of Property Perfect Plc, said the company recently scaled down the number of new launches this year to 15 projects worth a combined 20 billion baht from 22 projects worth 26 billion.

“Trying to generate sales amid weak market sentiment is exhausting, particularly after the bombing,” he said.

“We need to be more selective in new launches and make sure of demand.”

SET-listed property developer Land and Houses Plc (LH) plans to spend 14 billion baht to build Terminal 21 shopping centres in Pattaya and Phuket.

The investment value of the two shopping malls is estimated at 7 billion baht each, compared with the 3-billion-baht price tag of the first Terminal 21 in Bangkok, LH chairman Anant Asavabhokin said without giving a time frame for development.

The new malls are part of the company’s 20-billion-baht expansion plan over the next six years. Terminal 21 Korat is another project in the pipeline. LH said recently that it would begin developing the shopping mall in Nakhon Ratchasima province next year.

Mr Anant spoke of great potential in the retail business, particularly upcountry, but said LH would use caution next year while awaiting a clearer economic picture.

Apart from shopping malls, the company will turn its attention to hotels and property investments in Britain, he said.

LH will also continue to put money into rental property projects in the US, aiming to invest 15 billion baht over the next several years on top of 5 billion in past spending.

Next year’s investment budget will resemble this year’s amid an uncertain economic outlook, Mr Anant said.

“We will maintain business expansion [in terms of investment budget] next year to be equivalent to this year’s,” he said.

“It is our conservative investment plan in the current economic situation. We need to wait and see if there will be clarity both internally and externally, though local economic momentum is showing better signs.”

The government’s stimulus measures to aid low-income earners and small businesses will ease financial burdens and give a boost to Thailand’s overall economy, Mr Anant said.

In his view, the property market has already bottomed and is on track to rebound.

The property sector avoided big problems but was hit by weak domestic consumption and homebuyers’ difficulty in accessing bank loans, he said.

Next year, LH plans to launch a real estate investment trust (REIT) with shopping mall and hotel projects as the underlying assets, aiming to raise fresh funds for business expansion.

In other news, Land and Houses Bank (LH Bank) is still in talks with potential strategic partners from three Asian financial institutions.

The Asavabhokin family, the founder and major shareholder of property companies Land and Houses and Quality Houses, owns about 75% of LH Financial Group, the parent of LH Bank.

LH shares closed yesterday on the SET at 8.10 baht, up 5 satang, in trade worth 101.15 million baht.

With the island’s real estate market staying strong, some owners could be thinking of selling their property. If so, here are some tips for making this move.

Establishing a Price

Consider what you paid for the property, how long you have lived there, what similar properties have sold for, any improvements added, present condition of the property, ask the agent about the current property climate and arm yourself with the facts.

Signage

Allowing the agent to erect a sign is very important as their brand name and reputation may draw in passers by as they understand the professional nature of the company which can assist with the buying process while also representing their interests.

Qualifying the buyer

A major part of the agent’s job is to ensure that you have a genuine buyer, that he or she is serious and that they actually have the funds available. Many times private sales end in disaster and wasted effort due to misunderstandings between the parties and lack of knowledge of the buying process.

Price Parity

If you are not listing exclusively with one agent, then ensuring that other agents offer the same price is important.

Negotiating

The key to remember is to not get wrapped up in any games. If you keep your goals in focus at all times, you will be better able to respond to offers. You will have three choices when an offer comes in. You can accept the offer, reject the offer or make a counter offer. In the end it is what the buyer is willing to pay that counts.

Sharing costs

In Thailand, it is customary for the seller and buyer to share the transfer costs 50/50, but this is up to you to negotiate. Sellers must understand the costs associated with selling their property and incorporate them into the selling price. Trying to renegotiate who pays what fees after a selling price has been agreed with a buyer will almost certainly lose the sale.

Buyer payment

Let your agent know at the beginning where and how you wish to be paid, as many buyers wish to make payment offshore or outside Thailand and they need to know up front to avoid unnecessary bank and interest charges. Regardless, a percentage of the purchase price must be paid in Thailand to cover transfer and tax fees but the amount depends on negotiation with the seller.

Title Deed

Ensure that there are no complications and that the property is free to be sold with no encumbrances and that the seller is the name on the back of the title deed (or company). If the property was set up through a Thai company, then the company must be ‘clean’ and cannot have been used for other business.

Sellers must ensure that they have all necessary original documentation for their property to complete a sale. A seller should be prepared to provide a buyer with copies of all property documents as soon as a sales price has been agreed so the buyer can complete due diligence on the property. If documentation cannot be provided in time, or is missing, this will delay the sale and could lose the sale altogether.

Incentives

To set your property aside from others, it is a good idea to offer some enticement such as advance rental bookings, thereby effectively giving the buyer a reduction in sales prices; free furniture; maid for a period; and so on.

Reservation deposit

When the buyer makes an offer acceptable to the seller, usually a non-refundable deposit is taken until such time as contracts are exchanged. This is a minimum 150,000 baht or 1 per cent of the selling price, whichever is greater. The reservation agreement allows the buyer 21 to 45 days to review and agree to the contracts. If a deal cannot be reached in that time, the reservation can be extended by mutual agreement.

From offer to close

It is normal once a reservation deposit has been secured for the process to take one to two months or more to the final payment. The buyer first needs a lawyer to do due diligence and for the seller to provide a ‘sale and purchase contract’ which has to be reviewed and agreed by the buyer’s lawyer and any changes made and agreed between the parties.

Once this is completed and contracts are signed, a visit to the land office to exchange title deed and buyer’s final payment is the final stage. In some instances, you may need to first give the land office a 30-day notice period prior to transferring ownership.

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THAILAND: Thailand’s new six-month, multiple-entry tourist visas will become available Nov 13, but will limit stays to 60 days at a time.

New Visa

The six-month multiple-entry visa will allow unlimited border crossings during the validity period. However, to prevent foreigners from basically living in Thailand on tourist visas, each entry will be be limited to 60 days.

The new multiple-entry visa will cost 5,000 baht, versus 1,000 baht for a single-entry, 60-day visa, which can be extended in-country for up to 30 days for an additional fee.

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15/02/2019ZONEZI No commentsNews

JW Marriott Phuket Resort & Spa has once again been recognized by the prestigious world-class travel magazine Condé Nast Traveler in their Reader’s Choice Awards.

JW Marriott Phuket Resort & Spa is only resort on Phuket that has achieved this acclaimed award and recognition for second consecutive year.

The Reader’s Choice Awards are held annually by Condé Nast Traveler by conducting a poll of their readers for the best in the travel industry. More than 128,000 travellers took part in this 28th annual Reader’s Choice survey to choose the best from resorts, spas, cruise ships, airlines and airports.

“We are very thrilled to receive this prestigious award for second time in a row. Among the greatest of accolades a resort could be honoured with. Every single day we strive to provide the finest hospitality and epicurean experience to our guests, and to maintain to be recognized as one of the Best Resort in Asia, granted by Condé Nast Traveler’s readers is extremely rewarding for our associates,” said Oriol Montal, JW Marriott Phuket Resort & Spa’s General Manager.

Since opening in December 2001, JW Marriott Phuket Resort & Spa has clinched more than 200 awards and is highly recognized in Asia for its outstanding Family, Eco-friendly, MICE and five-star luxury resort facilities.

Being on this year’s Reader’s Choice Awards complements other awards that the resort has won, such as The Certified of Excellence Hall of Fame by TripAdvisor, which is granted only to businesses that have won the Certificate of Excellence for five years in a row.

JW Marriott Phuket Resort & Spa has also listed first in the Top 25 Hotel for Families in Thailand as well as fifth in the Top 25 Hotels for Families in Asia category by TripAdvisor,a s well as Smart Travel Asia Reader’s Awards (HK) Best in Travel Poll, Eat Drink Travel (EDT) Top 10 Travel Family Fun Time, by edt guide; and an Award of Excellence for Resort Hotel (80 rooms and over) in the 10th Thailand Tourism Awards by Tourism Authority of Thailand.

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The Thai Government’s push to drive up property sales by making mortgages more accessible to millions of people through transfer and mortgage registration relief has made headlines for months.

Customers seek home loan details from officials of the Government Housing Bank. The bank has offered cheap rate loan under the government’s property stimulus package. Photo: Bangkok Post / Phrakrit Juntawong

However, scores of people have yet to fully understand what the rule changes are, and what the changes mean to them. (See story here.)

The first factor to keep in mind is that the changes so far are only a temporary reduction of Thai real estate transfer and mortgage registration fees, effective October 29, 2015 to April 28, 2016.

Here, the rest of this article aims to explain in simple terms what the changes are:

The relevant details of the three regulations providing for the fee reductions are as follows:

Part 1. UNREGULATED LAND AND BUILDINGS

Law: Ministry of Interior Regulation Regarding Registration Fee under the Land Code for Housing (published in the Royal Gazette on October 28, 2015)

To boost the sale and purchase of immovable property in Thailand, the Cabinet on October 13, 2015 resolved to set the registration fee under the Land Code for the transfer and mortgage of housing property as follows:

Clause 1: Registration fee for the transfer of residential: detached house; twin house; row house, and commercial building, and any of these buildings with land where the building is located and such land is NOT under Land Allocation Act or under any development by the government, and mortgage of the said transferred property, would be at the rate of 0.01%.

Clause 2: This regulation is effective from October 29, 2015 to April 28, 2016.

Note: 0.01% applies to:

– Transfer of any of these buildings;

– Transfer of any of these buildings + land that is not under Land Allocation Act or government’s land development;

– Mortgage of any of the above (if for example Mr A receives a house by gift or inheritance then he mortgages said house, he will not get this reduced rate);

– Not applicable to raw land (that is not in the licensed development);

– Not applicable to land that is not the location of the building even though such extra land is transferred (and mortgaged) at the same time as the house + land.

Part 2. LAND AND BUILDINGS WITHIN A LICENSED DEVELOPMENT

Law: Ministry of Interior Regulation Regarding Registration Fee under the Land Code for Immovable Property Licensed under the Land Allocation Act (published in the Royal Gazette on October 28, 2015)

To boost the sale and purchase of immovable property in Thailand, the Cabinet on October 13, 2015 resolved to set the registration fee under the Land Code for the transfer and mortgage of immovable property that is in licensed development under the Land Allocation Act as follows:

Clause 1: Registration fee for the transfer of land, land and residential building: detached house; twin house; row house, and commercial building, under Land Allocation Act or under any development by the government, and mortgage of the said transferred property, would be at the rate of 0.01%.

Clause 2: This regulation is effective from October 29, 2015 to April 28, 2016.

Note: 0.01% applies to:

– Transfer of land only, or land and any of these buildings in the licensed development project or the government’s development project;

– Mortgage of any of the above (if for example Mr A receives a developed raw land by gift or inheritance then he mortgages the land, he will not get this reduced rate);

– both first hand and resale.

Part 3. CONDOMINIUMS

Law: Ministry of Interior Regulation Regarding Registration Fee under the Condominium Act (published in the Royal Gazette on October 28, 2015)

To boost the sale and purchase of immovable property in Thailand, the Cabinet on October 13, 2015 resolved to set the registration fee under the Land Code for the transfer and mortgage of condominium unit(s) under the Condominium Act as follows:

Clause 1: Registration fee for the transfer of the following condominium unit under the Condominium Act and mortgage of such transferred unit, would be at the rate of 0.01%:

(1) Transfer, and mortgage of all units at once in any licensed condominium under the Condominium Act;

(2) Transfer, and mortgage of any condominium unit in any licensed condominium under the Condominium Act.

Clause 2: This regulation is effective from October 29, 2015 to April 28, 2016.

Note: 0.01% applies to:

– Transfer of the whole condominium building or individual unit;

– Mortgage of the above (if for example Mr A receives a condominium unit by gift or inheritance then he mortgages the condo, he will not get this reduced rate);

– both first hand and resale.

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For several years now, commentators – particularly in the business community – have opined that Thailand is in need of a significant infrastructure upgrade such as its mass transportation, road and railways systems.

Investment in state infrastructure projects may pay off better for some, depending on the understanding of what rights and forms of redress they may have.

The government appears to agree. Despite the differences between Thailand’s two main political parties, both of them have presented proposals for large scale and comprehensive infrastructure projects. Both parties continue to agree that Thailand needs to invest significant amounts to modernize and improve its infrastructure.

In such circumstances it is not uncommon for a government to encourage private sector investment. Such private participation may have several benefits for the government. These may include technical or managerial expertise not available domestically, a larger and more competitive bidding pool for the project and, depending on the type of private participation, project financing.

Where the potential private investor is foreign, a significant consideration will be an assessment of the protections afforded to the investment. Internationally, this is usually provided by substantive rights and enforcement provisions in a public-private contract (“PPC”) between the host State and the foreign private party or under any relevant investment treaty (“IT”) or both.

The following will briefly explain what types of rights and enforcement provisions are commonly available to foreign investors under these two options and conclude with a brief comment on the current investor-State situation in Thailand.

SUBSTANTIVE RIGHTS

The rights afforded to an investor under a PPC are for the contracting parties to determine and may vary with regard to the type of investment. However, a common concern for foreign investors is that the State may enact or change its law relevant to the investment such that it would diminish the investment’s value. Thus, an example of a substantive right commonly included in the PPC for the investor is a provision, which applies the law of the host State – at the time of the investment – to the investment throughout its duration. This is commonly known as a “freezing clause”.

Whereas the investor will need to convince the host State to include investment protection provisions contractually, ITs provide such protections to the investor without such requirement.

ITs take three common but different forms:

Bilateral agreements between two countries (BITs) and to which Thailand is currently a party of at least 34 such agreements;
Multilateral investment agreements between more than two countries (MITs) and of which the 2009 ASEAN Comprehensive Investment Agreement (ACIA), to which Thailand is also party, is a good example; and
Free-trade agreement (FTA), which although not dealing only with investment protection issues, commonly include such provisions. The 2009 ASEAN-Australia-New Zealand Free-Trade Treaty (AANZFTT) is a good example of an FTA and to which Thailand is a party.

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Tourists and foreign residents’ personal security, safety, beach tourism sustainability, jet-skis, taxis and tuk-tuks were all highlighted as ongoing issues of concern by five European ambassadors in talks with Phuket Governor Chamroen Tipayapongtada.

The high-powered ambassadorial delegation comprised Mark Kent of the UK; Brendan Rogers of Ireland; Philip Calvert of Canada; Karel Hartogh of the Netherlands and Peter Prugel of Germany.

Speaking after a 90-minute closed-door meeting, British Ambassador Kent told the press, “We had a good meeting today. We explained that we are ready to support the Phuket Governor in his efforts in making Phuket one of the most attractive tourism destinations in the world.

“There is still work to do but the Governor has set out his attention to work on these issues.”

But that requires focus on three main areas that need attention, Amb Kent noted.

“One of these is safety, whether that be people on motorbikes, jet-skis or boats; and even water quality. We want them [tourists] to be safe.

“The second area is the reputation of Phuket as a tourism destination. It still has a good image for tourists, but some of the behaviour and the prices charged by tuk-tuk and taxi drivers has led to a fall in confidence and a drop in tourists because they’re a little bit scared about what has happened, so we think this needs to be addressed,” he added.

“Third is the areas around the provision of government services such as visas and work permits for residents and some of the issues around property need to be tackled so there is clarity and transparency and no demand for additional fees which are not stipulated.”

“British tourists to Thailand still come here a lot. It is one of our most popular tourist destinations. We have one million tourists come every year, and the number of tourists to Phuket remains high.

“It is beautiful place. That’s why we want to work for mutual benefit with the governor and officials here to ensure that remains the case, that it remains a very good source of economic benefit for the locals who live here and a safe, enjoyable tourist destination for our tourists.”

Regarding jet-skis, Amb Kent noted, “We are aware that there some issues that need to be tackled.

“It is important to not just have the regulations, but to also ensure that the regulations are enforced and that the jet-ski owners act in an appropriate manner,” he said.

Going Dutch

Netherlands Ambassador Hartogh rated beach safety, beach management, accommodations, competitive pricing, including that of taxis and tuk-tuks, and specifically targeted jet-skis as key areas of concern.

“Most people in the Netherlands are not very fond of jet-skis. They want to know if Patong will change its policy. If it will not, then they will look for different beaches.

“Tourism is a very competitive industry. There are lots of other options in this part of the world to find proper beaches without jet-skis.

“Not only behalf of Dutch tourists and expats am I raising these questions, but I am also asking on behalf of the local people here, as this affects the tourism industry – and all these points could be improved on.

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As Japan investment is shifting to services, information technology and trading, which require less capital, Chinese investments are targeting heavy industries, thus surpassing Japanese input in Thailand for the first time.

Chinese investments in Thailand for the past eight months have surpassed Japanese Investments for the first time in history

After the Board of Investment adjusted its foreign direct investment promotional incentives BoI secretary-general Mrs Hirunya Sujinai explained Chinese investments were higher than Japanese investments for the first time because several Singaporean projects were Chinese-funded.

Altogether 332 projects worth 50,267 million baht applied for promotional privileges during the first eight months of this year.

Of these, 51 projects worth 13,100 million baht came from Singaporean investors; 37 projects worth 10,000 million baht came from Chinese investors and 92 projects worth 9,900 million baht came from Japanese investors.

After investigating the sources of investment funds, the agency found that many Chinese companies invested in Thailand via Singapore, so it considered China to be the largest foreign investor for the country this year.

Of the total investments during the first eight months, 39.5 percent were investments on alternative energy development, especially solar energy.

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Ron Paul Warns of Dollar Collapse 100%

Over the past few years, many experts have been warning of a crisis heading our way. More specifically, the concerns have centered on the inevitable collapse of the U.S. dollar. One of these individuals is former Congressman Ron Paul, who has stated that he believes the U.S. financial system is on the road to disaster. In this article, I’ll share some of his views and discuss what could happen if such a crisis materialized.

Currency Crisis

According to Congressman Paul, a U.S. currency crisis is inevitable. At one point in the 1980s, while riding on Marine One with President Reagan, the President said, “No great nation that has abandoned the gold standard has ever remained a great nation.” A few decades ago, former Fed Chairman, Alan Greenspan stated, “In the absence of the gold standard there is no way to protect savings from confiscation through inflation.” Without a gold standard, there is nothing to limit government spending. In short, as long as the government is able to overspend, the national debt will be the norm rather than the exception.

Since the gold standard was abandoned, what is backing our currency? Confidence! Without a hard asset backing up the dollar, it is supported only by the “full faith and credit of the federal government.” If the world lost confidence in the greenback, its value would plummet and life as we know it would be severely and forever altered. How will we know when the next crisis is about to emerge?

The first sign of a currency crisis, according to Paul, will be a precipitous decline in the value of the dollar. A collapse in our currency would result in a spike in inflation. It would also be accompanied by an increase in U.S. interest rates. Paul’s prediction, although rather dire, is for the collapse of the entire U.S. financial system. If this occurs, the systemic risk would be massive. If the U.S. financial system actually did collapse, it would take the entire global financial system with it. Why? Because there is over $18 trillion in U.S. debt outstanding, with China and Japan being the largest holders. A U.S. collapse would devastate the entire globe. Let’s turn our attention to the national debt, an issue which weighs heavily on the minds of millions of Americans.

U.S. National Debt

When the government spends more than it collects, the result is additional debt. From the signing of the Declaration of Independence in 1776 until 2008, the U.S. accumulated slightly over $10 trillion in federal debt. In the past seven years, the debt has nearly doubled to more than $18 trillion. By the year 2019, it is projected to exceed $20.3 trillion. When interest rates rise, the impact will be felt by the federal government as well as everyday Americans. First, it will increase the government’s cost of borrowing, which will cause the debt to rise even faster. It’s entirely possible that even a modest rise in interest rates could cause the debt to spiral out of control. This is because Washington is heavily dependent on borrowing to operate. Next, it will be much more difficult to expand or even maintain the welfare state. This fact alone will lead to mass riots as individuals who are dependent on a government check will take to the streets in protest. Also, the U.S. would have a more difficult time funding its presence (i.e. military bases) around the world. This would lead to a less stable socio-political environment and an uptick in radical behavior. Plus, a shortage in government revenue could result in a rather large tax increase and the eventual demise of the middle class. Finally, and as we’ve already seen, the federal government may decide to target 401ks and IRAs as a source of additional revenue. This could take the form of a tax or fee of some sort. Mr. Paul also mentioned the possibility of a tax on regular savings and other assets. If the government finds itself in a tight situation, as we’ve witnessed in the recent past, the potential intrusion could be severe.

Social Unrest

This discussion wouldn’t be complete without mentioning social unrest. As we’ve already seen, the match is lit and it wouldn’t take much for anarchy to manifest. In essence, there appears to be a significant amount of pent-up frustration among the electorate. For example, who expected the reaction in Ferguson, New York, or Baltimore? And this may only be the tip of the iceberg. A temporary government shutdown is also a distinct possibility. To this author, public protests seem to be on the rise and the bar of what’s reasonable appears to be quite low. Hence, I suspect this is only the beginning of more civil unrest in America.

The Clock is Ticking

Is the problem too advanced to solve? Can a crisis be avoided? These are valid questions. I believe we can still fix this, but as Paul stated, “Real monetary reform will only come after a major currency crisis hits.” Why? Is he just being pessimistic? No, I don’t believe so. What he is saying is that politics will get in the way and prevent a solution until it reaches a crisis point. This is a view I have held for quite a while. Until Congress is forced to find a solution, it’ll be business as usual. The former Congressman also said he believes the majority of those in government do not fully understand economics.

Is the U.S. Losing its Stature?

In the post WWII era, the U.S. dollar has been the global reserve currency. Prior to that, the British Pound filled this role. Recently, China has increased its trading with Germany, India, and others, excluding the dollar as the reserve currency. It seems the world is slowly transitioning away from the dollar. If this continues, the U.S. could lose its position as the world’s reserve currency. This would have numerous ramifications. A discussion on that is beyond the scope of this article. Mr. Paul also stated that 10 countries have already signed a document to begin phasing out the dollar as the basis of trade. Even the IMF has proposed a new world reserve currency system. The days of the U.S. dollar as the world’s reserve currency may well be numbered.

Some argue that the U.S. economy is on the mends and the stock market is near record highs. Therefore, things can’t be all that bad. While there is truth in this, according to Paul, stocks have risen due to Fed policy and political leaders. He also stated that printing money has never solved this type of problem….ever! He cited Germany, Russia, Argentina, Brazil, Chile, Japan, China, Ukraine, Italy, Ireland, Portugal, and Spain as examples of countries that had similar problems to the U.S. and yet none of them was able to use the printing press to escape their problem.

Will the U.S. follow the path suggested by former Congressman, Ron Paul?

Make a Right Investment

2014 started off on a very somber note, with the Thai army seizing power over governance in a coup to right a constitution that had gone horribly wrong. The political turmoil gave rise to an economic slowdown, with the Thai Baht falling and foreign investment reaching an all time low. According to reports, Bangkok and Phuket saw a 32% and 22% rise in room numbers respectively, constituting 54% of a total 18000 rooms in 101 hotels (approx.) that had entered the market by September 2014. The capital (Bangkok) seemed to have come off worse as compared to resort destinations that have direct access to charter flights.Come 2015 and Thailand’s foreign capital investments started to grow once again, with its hotel industry posting occupancy increases of +22.1% to 74.5% & RevPar (revenue per available room) increases of +18.8% to 2,767.99 THB – both were double digit increases. Showing a slight decline on the market however, was ADR (American Depositary Receipt) that had slumped by -2.7% to 715.83 THB in June, 2015 YTD (Year To Date). The city of Bangkok was a major attributer to this massive occupancy increase (+50.4% in hotel occupancies) following the military coup that had ended in May 2014.

Facts state that after the global economic crisis of 2009 and with the military coup of 2014, Thailand’s hotel investments though at times dipping, have predominantly shown a gradually improvement. Thailand’s current favourable hotel investment trend is a direct consequence of lesser capital worth, comparatively inflated yield coupled with the tourism industry’s long term plans, each of which whet investors’ appetites from far and wide.

In 2013 and 2014, Thailand’s hotel transaction volumes, when compared to all hotel transactions in Asia Pacific, amounted to around 4.1% & 5.7% (10.9 THB & 13.9 THB billion) respectively, with Samui, Phuket and Bangkok being the prime investment markets and Khai Lak, Krabi, Pattaya and Chiang Mai a close second.

According to reports, majority of investments made between the years 2012 and 2015 were home grown (58%) while foreign investment was considerably high as well (40%). Let’s take a closer look at the profiles of investors pumping money into this tropical paradise. They comprise of: 1. Corporates whose sole source of income is not hotel investments, 2. Serviced apartment and hotel companies controlled by owner-operators, who claim ownership of the primary assets managed by these companies, 3. Redevelopment driven purchases made by developers, 4. International investors who invest in the country via investment funds, 5. Families and individuals having a HNW (High Net Worth).

60%, 15%, 12% and 10% (approx.) of investment activities accrue to real estate companies/developers, owner operators, corporates and a combination high net worth individuals (HNWI) and investment funds respectively. On the contrary, 10%, 11%, 26% and 35% represent the total transaction amounts that accrue to sellers of hotel assets who take the shape of HNWI, corporates, developers/real estate companies and investment funds respectively.

Bangkok trumps all Thailand destinations when it comes to hotel investments. Travelers visiting this city comprise of both, vacationers as well as business men and women. Being one of the most visited cities in the world, increase in asset demands have driven up asset prices despite the noteworthy growth in hotel room supply during 2013 and 2014. Phuket comes in second, with a strong and consistent growth shown in its hotel and resort market, as a direct consequence of charter flights arriving at its famous Phuket International Airport, thereby safeguarding the market from distractions in Bangkok. Expansion of its airport dimensions, roadway infrastructure and potential to yield greater returns in comparison to the Bangkok, makes Phuket a prime spot for investment in South East Asia. However, Samuiwhen compared to Phuket has an investment market that, though smaller in volume makes up for it with adequate pizzazz. Described by many as a ‘boutique’ holiday destination, Samui’s focus on quality rather than quantity when it comes to its hotel infrastructure, as well as the arrival of the low cost Surat Thani airport, has assisted in the increase in the number of tourists to this part of Thailand.

The deciding factors when assessing opportunities to invest in Thailand’s hotel market may be many, but the foremost one is comparing the purchase price with the projected cashflow generation from the hotel in question’s workings. On the flip side however, passive investors tend to attach a particular growth expectation with the stabilized cashflows generated by the property in question, be it 6-7% or higher in Bangkok or resort markets respectively.

Repositioning, renovating, incorporating additional rooms, and/or hiring of an international manager to oversee the properties’ workings, are just some of the strategies adopted by developers/real estate companies who obtain a property to make it generate additional revenue. Once additional revenue is harnessed, passive investors or REITs (Real Estate Investment Trusts) come into play as prospective buyers once you decide to sell.

Boasting of a reputation of being one of the most sought after tourist destinations in the world, coupled with sound infrastructure and its strategic location, Thailand’s tourism industry is on the ascendency, luring investors from all corners of the globe to plough their money into the area’s hotel industry.

Make a right investment

Panupong Kritchanarat, originally from Bangkok, is currently the CEO of Boat Pattana, Phuket and has been working with its management for eight years. He also has several years of experience in real estate management. He holds a Masters of Business Administration from the Sasin Graduate Institute of Business Administration at Chulalongkorn University.

Here, he talks about business options in Phuket and why it is a good place to invest.

Prime Minister Gen Prayuth Chan-o-cha officially visited Phuket last month in order to chair the grand opening ceremony of the new airport terminal, as well as Startup Thailand and Digital Thailand 2016. His visit was interesting to both Thais and foreigners, as many wondered why he was paying this much attention to Phuket, and especially why he flew down here himself.

The answer is simple. Startup Thailand is one of the country’s most important strategic ventures. It is a mega-trend that people worldwide are interested in. The Thai government has shown great vision by investing in this field. Gen Prayuth even flew to China to meet and discuss the future prospects of Startup Thailand with Jack Ma, the Chairman of Alibaba Group.

Most people I interact with say they want a house in a tourist province such as Phuket, whether they are investors, businessmen or otherwise. While others ask me what is so special about living in Phuket or owning property for investment purposes. Here is what I have to say to them.

What makes Phuket outstanding as compared to other cities, both in Thailand and abroad, are the beautiful beaches. This is why Hollywood celebrities regularly fly to Phuket for their holidays.

In addition, local people are very kind and people in Phuket speak in English, more than most people in the rest of Thailand. Besides the beautiful beaches, Phuket has also been named as a City of Gastronomy by UNESCO. Additionally, the cost of living is not high when compared to other tourist destinations in the world. Moreover, there are two other neighboring provinces that are also beautiful, which makes it an ideal location to travel to.

Phuket is located in the hottest region at the moment. While other countries are trying to keep their economies from falling apart, Asian countries are prospering, particularly those in the Asean Economic Community. There are many foreigners living in Phuket for that very reason. Many families have settled here, or their kids study here while one or both parents work in China, Hong Kong, Singapore, Vietnam or Indonesia.

Phuket has an international airport that is able to support thousands of passengers. Because of the close proximity to Phang Nga, it is easy to deliver supplies to the island, either by land or boat. Phuket is one of the marina hubs in Asia and has caught the attention of millionaires around the world. This is our strongest selling point. We also have experts in yacht maintenance as well as luxury hotels, spas and good food.

Phuket is also on its way to becoming a medical and healthcare hub. We have affordable aesthetic and beauty treatments, and excellent service during and after treatment.

Phuket has several Thai and international schools providing a high standard of education. The culture of these schools is becoming increasingly global, which helps students think outside of the box. So it is an ideal place to start a family.

Phuket is expanding, but one of the problems we face is limited land supply. The only way to expand further is into the sea, Therefore land prices in Phuket are going up rapidly.

Phuket people are capable of moving the island forward. They don’t sit around waiting for the government or anybody else to step in. There are many young and enterprising investors in Phuket, who have a great vision for improving the island and helping it keep up with the rest of the country and the world.

Make a right investment

15/02/2019ZONEZI No commentsNewsApartment|Business Development|Houzez|Luxury|Real Estate

Thailand takes steps to boost FDI

Tax exemptions and other incentives are set to spearhead Thailand’s efforts to boost foreign direct investment (FDI) in targeted areas of the economy.

The initiatives form part of a broader range of incentives and reforms aimed at increasing capital inflows into Thailand, with a particular focus on tapping investment for planned industrial clusters in the eastern economic corridor (EEC) project, an initiative of the public-private Pracha Rath scheme.

However, while efforts to stabilise the Thai economy are beginning to yield results, challenges, such as lower external demand and political uncertainty, remain a concern.

Tapping key markets

Speaking during a visit to China at the end of June, Somkid Jatusripitak, Thailand’s deputy prime minister, said the government’s new incentives and support package would be implemented in the third quarter of 2016.

Somkid was in China to highlight the opportunities for investors in the special industrial zones located throughout the EEC, which encompasses the provinces of Chon Buri, Rayong and Chachoengsao.

“The government is transforming the economy to a higher level,” Somkid told investors. “During this period of change, we need more investment from outside – and China is one of the targets.”

Planned incentives include corporate and personal income tax privileges beyond those already provided by Thailand’s Board of Investment (BoI), Somkid said. The raft of incentives will be bolstered by regulatory and legislative reforms aimed at improving the laws governing industrial management, financial services and investment.

The government has also said it would provide approximately 4160 ha of land as well as key infrastructure, such as the East-West ferry development project, to develop and support dedicated industrial estates – biotech, biofuel, aviation, IT and digital, medicine and medical equipment – throughout the EEC, with an expected total investment of between $55bn and $58bn, according to local media reports.

Thailand is also keen to boost capital inflows from India. During a visit to the country in mid-June, Thailand’s Prime Minister Prayut Chan-o-cha said the government planned to introduce measures aimed at facilitating the flow of investment from India. He also highlighted the importance of speeding up negotiations on a free trade agreement between the two countries.

Targeted investment

While Thailand’s government is still finalising its incentive package, the government has already announced several measures aimed at attracting businesses.

In late June the revenue department announced plans to offer foreign experts operating in key fields tax exemptions for terms of between 10 to 15 years. The proposed waiver is scheduled to come into force in 2017, although details have yet to be made public.

The BoI, meanwhile, approved a personal income tax cut for foreign researchers and experts working in targeted industry clusters. The sectors, which are viewed by the government as key drivers of growth include: next-generation cars, smart electronics, logistics and aviation, biofuels and biochemical, and industrial robotics, among others.

In a similar move, the Cabinet signed off on a proposal at the end of May to double tax breaks for investors who launch or break ground on a new project in 2016.

Tackling shortfalls

Thailand has struggled to attract international investment in recent years, with political unrest and ensuing military intervention dampening overseas interest. Data issued by the BoI showed that applications from foreign investors for new projects fell from 3469 in 2014 to 1038 in 2015.

Local investors also appear to be adopting a cautious approach, according to a statement issued on June 30 by the Bank of Thailand (BoT). The central bank noted that although private investment had increased, the spread across the sectors of the economy was far from even.

While investment in alternative energy and telecommunications in May was up, the BoT noted that inflows “in other sectors stayed at a low level in line with remaining gaps of capacity utilisation in the manufacturing sector”.

“This was consistent with a slower growth in total financing of businesses for real investment,” the BoT concluded.

Stability will be key

In late May, the ratings agency Moody’s noted government efforts to stabilise the economic situation and encourage growth and investment, but warned that ongoing political uncertainty remained a major concern.

“Such risk still weighs on FDI in the kingdom as well as Thai economic performance,” Christian de Guzman, vice-president and senior credit officer for sovereign risk at Moody’s in Singapore, said.

Moody’s caution over the impact of Thailand’s political climate on FDI was echoed in a report issued by the World Bank at the end of June.

“Foreign direct investments are likely to remain subdued, reflecting soft external demand and continuing political uncertainty,” the report said.

The World Bank added, however, that Thailand’s central location in East Asia meant it was well placed to leverage planned reforms in education, competitiveness and skills into trade and investment opportunities.

While acknowledging the concerns raised by analysts, the government remains upbeat about Thailand’s prospects for boosting incoming investment levels next year.

Officials expect political tensions to ease once general elections scheduled for the middle of 2017 have taken place, while the full implementation of incentives and FDI support, which is also targeted for next year, should further enhance the investment climate.

Make a right investment

15/02/2019ZONEZI No commentsBusiness, News

An expanded product range aimed at broadening the client base alongside plans to target new markets are part of Thailand’s campaign to shore up its medical tourism industry, which is coming under pressure from increased competition and weaker economic performance in key source countries.

In early September the Ministry of Public Health unveiled a new series of packages as part of the “Visit Thailand Enhance Your Healthy Life” programme aimed at increasing medical and wellness tourism arrivals.

Under the new initiative – developed in conjunction with state agencies and private health care providers – overseas visitors will be able to undergo standard health checks at up to 70 internationally certified hospitals and clinics, combining a regular medical assessment with their vacation. Additionally, the ministry is introducing a wider range of dental and reproductive health services for foreign visitors.

The government is also looking at shifting its promotional efforts towards newer markets, such as China, Myanmar, Laos, Cambodia and Vietnam, to take advantage of the growing affluence in those countries and the rising demand for professional health care.

To encourage health tourism from these nations, the government has tripled the period visitors undergoing medical treatments can stay in Thailand to 90 days. This would allow for overseas visitors to undergo extensive procedures and to potentially combine treatment with leisure travel.

Uncertain prognosis

Efforts to broaden the base of Thailand’s health and wellness tourism sector are timely, as the market is coming under pressure from a range of external factors.

Last year the medical tourism segment maintained its record of strong growth, with local media reporting foreign patient numbers up 10.2% year-on-year (y-o-y) to 1.8m in in early September, representing 6% of total arrivals in 2015. It is estimated that receipts from medical tourism account for 0.4% of national GDP.

This strong performance, however, could come under threat this year. Local financial services firm Kasikorn Securities has warned that weaker economic growth in key visitor markets such as the Middle East and Russia, a result of lower energy prices, could erode the numbers of foreign visitors making use of Thailand’s medical facilities.

Furthermore, improved service provision offered by clinics in the UAE, a significant market for Thailand’s medical tourism segment, is also draining off client numbers, the Kasikorn report said.

This external pressure has seen a retreat of the health care services index on the Stock Exchange of Thailand (SET), with a number of primary medical services providers posting sharp falls in their share prices this year. However, despite having fallen from highs recorded in late April and still trending downwards as of mid-September, the index is performing better than other industrial groups on the SET.

Though many health services providers are coming under pressure as a result of economic downturn in key markets, most are continuing to post solid earnings results.

Of the 17 health service companies listed on the SET, only one posted a y-o-y loss in the first six months of the year, according to data issued by the market. The SET’s health care service index saw listed firms report a combined 7.4% increase in sales y-o-y, though overall gross profit margins against expenses dipped marginally, down to 33.6% compared to 34.2% in the first half of last year.

While in the short term the weaker performance of Middle Eastern economies will affect the operations of those Thai health care providers that serve the medical tourism industry, the new products and the opening up of new markets should help to sustain growth.

The expansion of economies in countries such as Vietnam and Myanmar, which do not yet have health systems to match that of Thailand, should see the development of a new client base, according to Jintana Mekintharanggur, director of equity investment in Bangkok for Manulife Asset Management.

“In the short term the economic slowdown in the Middle East will weaken some investor’s confidence on earnings growth for domestic hospital operators,” she told international media at the end of May. However, due to Thailand’s ability to compete regionally, the company is still reportedly bullish on the sector.

Health threat to medical tourism

Another challenge Thailand’s medical sector and the broader tourism industry faces in attracting overseas clientele is the recent spike in cases of the Zika virus in the country and, in particular, in the capital. At least 100 cases of the mosquito-borne disease had been confirmed by mid-September.

Thai authorities have said there is no need for alarm as every measure was being taken to combat the spread of the virus. However, Anuttarasakdi Ratchatatat, epidemiologist at the Ministry of Health, acknowledged in mid-September that Zika could deter overseas visitors, when explaining why only broad information about infection rates was being released.

“The information on Zika is quite sensitive because if we say which province has infections then attention will turn on that province, and if that province is popular with tourists it will have an impact on tourism,” he said.

Any downturn in medical tourism arrivals could allow rivals in the sector, such as Malaysia, Turkey and India, to increase their market share at Thailand’s expense.

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An initiative driven by Thailand to develop closer financial integration and cooperation among Greater Mekong Sub-region (GMS) countries could bolster Bangkok’s position as a capital markets and banking centre.

Thailand’s campaign to strengthen fiscal and economic ties with its near neighbours reached a new level in June, with the hosting of a two-day summit for Cambodia, Laos, Myanmar, Vietnam and Thailand (CLMVT). Entitled “CLMVT: Prosper Together”, the event focused on developing a platform to reinforce sub-regional integration and connectivity in matters of trade, investment and tourism.

While much of the media coverage of the event centred around joint tourism promotions and proposals for visa-free travel between CLMVT countries, the seminar’s main focus was on financial connectivity.

Investing in infrastructure

One of the planks in this platform will be developing financial infrastructure to support the greater flow of capital and information. Veerathai Santiprabhob, governor of the Bank of Thailand (BOT) and a keynote speaker at the conference, emphasised that investing in infrastructure will be crucial to allowing CLMVT countries to work together and meet the demands of the changing financial landscape.

“Having adequate infrastructure, including a backbone payment system, a digital network and a credit bureau, will provide a sound basis to develop domestic financial systems and facilitate closer financial connectivity,” he said, noting that the development of regional ties will help reduce costs within the sector and across CLMVT economies, boosting cross-border trade and the broader use of e-payment systems.

Financial integration to mobilise funds

Another key message to come out of the conference was that further integration of CLMVT financial markets would support growth in each of the five countries, as well as cross-border expansion.

Speaking during a session on the roles of banking and finance in regional development, Chartsiri Sophonpanich, president of Bangkok Bank, stressed that while growth in the CLMVT region is set to remain strong in the coming years, in line with the 6.5-8.5% range posted in 2015, this could be increased further through tighter financial cooperation, thereby boosting the appeal of CLMVT countries to foreign investors.

Such a move, Sophonpanich said, would mobilise funding and put in place mutually agreed-upon mechanisms to minimise and more evenly distribute risk.

Strengthening the bond market

As the largest economy among the CLMVT bloc, and with the most developed capital markets and banking system, Thailand is well placed to take the lead on the financial connectivity initiative.

Thailand’s bond market is already gaining traction among CLMVT countries, bringing the region closer to financial integration.

In 2013 Laos issued the first in a series of baht-denominated bonds, with the latest coming out last year. At a total face value of BT28bn ($804m), the funds helped finance the Laotian government’s infrastructure development programme.

At the corporate level, Laotian utilities firm EDL Generation has also tapped the Thai capital markets, raising BT6.5bn ($187.8m) in late 2014 to fund the acquisition of power stations from its parent company, Electricité du Laos.

While Laos has been Thailand’s main customer for bond sales, there is strong interest from other countries launching offerings in Thailand.

In 2014 the Cambodian government indicated it could follow the Laotian example by issuing a baht-denominated sovereign bond in 2018. Consultants advising the Cambodian government said at the time that Thailand represented the best opportunity for a sovereign bond launch, as Thai authorities had put in place mechanisms to support such cross-border issues.

More recently, however, Cambodian officials indicated that any baht-denominated bond would require regulatory reforms, similar to what has been suggested by Thailand in its call to lower financial barriers and boost connectivity.

Thailand’s bond market is also attracting interest from further afield. Year-to-date, four foreign lenders – ANZ Bank of Australia, Central American Bank for Economic Integration, National Bank of Abu Dhabi and Malaysia-based Maybank – were given regulatory approval to tap Thai markets through a baht bond issue.

The Ministry of Finance has also taken steps to boost the bond market’s appeal, announcing that, as of January, it would review applications to issue bonds by foreign issuers on a monthly basis, rather than every quarter, citing increased appetite for baht-denominated issues.

BOT opening doors

The BOT is similarly working to boost CLMVT financial connectivity, including by easing regulations to allow firms operating in the GMS to obtain loans from Thai banks for direct sub-regional investment, without setting a lending cap.

According to Santiprabhob, the BOT is encouraging Thai banks to extend their operations into the GMS to promote trade and investment. As of May, Thailand had at least 30 branches and subsidiaries open in the region. Cross-border money transfers have also been facilitated through the establishing of ATM connectivity between Thailand and both Myanmar and Laos, expanding the reach of Thai banks.

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A stronger-than-expected performance in the first quarter has prompted analysts to revise their year-end growth forecasts for the Thai economy, though some remained cautious in the face of ongoing challenges both at home and abroad.

Data issued in May by Thailand’s National Economic and Social Development Board (NESDB) put year-on-year (y-o-y) growth for the first quarter of 2016 at 3.2%, the country’s highest in three years.

The positive results were attributed to high levels of state spending and a strong showing in Thailand’s tourism industry; however, weak export figures have sounded a note of concern.

State spending proves pivotal

Thailand’s economy expanded by 0.9% during the first three months of 2016, up from 0.8% in the previous quarter.

The results prompted the NESDB to revise its year-end forecast to between 3% and 3.5%, up from its previous estimate of between 2.8% and 3.8% in February. The Bank of Thailand (BoT), the country’s central bank, meanwhile, said it expects the Thai economy to expand by 3.1% in 2016. This comes on 2.5% growth in 2015.

Although the country’s economy has outperformed initial forecasts, growth remained uneven across sectors.

The government pumped BT654bn ($18.5bn) into the economy through direct expenditure and soft loans in a bid to stimulate growth and aid recovery.

Thailand recorded an 8% y-o-y increase in public consumption in the first quarter, while public investment was up 12.4%. The injection of capital helped boost activity and offset more sluggish growth in the private sector, where consumption rose by just 2.3%. Private investment, meanwhile, inched up a more muted 2.1%, according to the NESDB.

Double-digit growth in the construction and tourism sectors contributed significantly to the first-quarter results.

Thailand’s construction sector was up 11.2% y-o-y, supported by strong public investment flows. Increased spending on infrastructure and project development is likely to continue, pointing to a bright outlook for the construction sector and its related industries through 2016 and beyond.

The number of incoming tourists, meanwhile, surged by 15.5% to reach 9m, putting Thailand on track to meet its target of 33m arrivals for the year. The NESDB expects the tourism industry to generate revenues of BT1.68trn ($47.6bn) this year, accounting for 12% of GDP, up from 10% last year.

Hotels and the hospitality industry also benefitted from higher tourist volumes, with the broader services sector recording 15.8% growth.

Setbacks and slowdowns

The first quarter results were more muted for other industries, including manufacturing, agriculture and exports.

Thailand’s manufacturing industry, which accounts for around 30% of GDP, contracted by 0.3% y-o-y, weighed down by declining vehicle output and a slower growth in related industries.

Capacity utilisation in the manufacturing sector remained stagnant at 64% in May, below the historical average of 68%, and could remain at this level due to weak export growth.

Agricultural output, meanwhile, was down for a sixth consecutive quarter, slipping by 1.5% y-o-y on lower demand and adverse weather conditions caused by the El Niño climate pattern, which brought drought to much of Thailand in early 2016.

According to the BoT, exports contracted 1.4% in the first quarter, with the government citing lower commodity and oil prices as well as weak global demand. Among the key segments in decline were industrial goods (7.8%), electronics (5.3%) and agricultural products (2.8%).

A stronger Thai baht, which is up by nearly 2% against the dollar year-to-date, is also expected to curb demand for Thai exports, according to the BoT, which expects exports to decline by 2% over the year – a downward revision from the previous forecast of zero growth.

Fluctuating forecasts

Despite broadly positive early indicators for the year, some experts remain cautious. DBS Bank, for example, warned that weak private sector demand, combined with poor showings in manufacturing and agriculture, could weigh on the country’s full-year growth prospects.

Commenting in a report issued in May, the bank cautioned that ongoing sluggish growth in Thailand’s manufacturing sector could put jobs at risk. The industry currently provides employment for around 16% of Thailand’s workforce.

DBS Bank said full-year growth looked likely to fall short of 3.5%, while also noting that first-quarter growth would have eased to 1.5% if not been for the public sector’s contributions.

The bank’s prediction followed a move in March by the Asian Development Bank to lower its forecast for Thailand’s GDP growth this year from 3.5% to 3%, citing slower growth in key global economies.

Amid continued economic uncertainty, the BoT chose to hold its key one-day repo rate at 1.5% in May. Senior officials at the BoT cited concerns over financial stability, along with the weakened debt service ability of agricultural households and small businesses.

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Thailand Foreign Direct Investment

Foreign Direct Investment in Thailand is expected to be -5480.00 THB Million by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Foreign Direct Investment in Thailand to stand at 20000.00 in 12 months time. In the long-term, the Thailand Foreign Direct Investment is projected to trend around 24000.00 THB Million in 2020, according to our econometric models.

Forecast	Actual	Q4/16	Q1/17	Q2/17	Q3/17	2020	Unit
Foreign Direct Investment	-31178	-5480	-25100	24000	20000	24000	THB Million

Thailand Foreign Direct Investment Forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts expectations. We model the past behaviour of Thailand Foreign Direct Investment using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for – Thailand Foreign Direct Investment – was last predicted on Sunday, October 23, 2016.

Thailand Trade	Last	Q4/16	Q1/17	Q2/17	Q3/17	2020
Balance of Trade	2130	351	2614	2442	1575	135
Exports	18830	16658	17729	18480	16965	19045
Imports	16700	16308	15115	16038	15390	18910
Current Account	3810	5200	4700	4000	1400	5000
Current Account to GDP	3.8	2.66	2.89	3.12	3.35	2.37
External Debt	143135	149251	150779	152133	135538	139000
Terms of Trade	114	113	113	113	113	113
Tourist Arrivals	2874420	2690763	2702194	2700646	2700806	3010000
Gold Reserves	152	152	152	152	152	152
Terrorism Index	7.28	7.35	7.25	7.25	7.25	6.8
Remittances	9545	8452	8299	8230	8193	8149
Crude Oil Production	245	230	220	255	220	250
Foreign Direct Investment	-31178	-5480	-25100	24000	20000	24000