Nominees will need to find "real" Thai partners, says JFCCT

       Foreign firms using Thai nominees to hold property should restructure their holdings and seek Thai partners to legalise their investments, said Patima Jeerapaet, chairman of the property committee of the Joint Foreign Chambers of Commerce in Thailand (JFCCT).
       The Thai partner should be a "real investor" that will withstand scrutiny by authorities, said Mr Patima, also the managing director of the property consultant Colliers International Thailand.
       The Commerce Ministry will scrutinise the financial position of any Thai partner in an investigation, he warned.
       "If the government takes serious action on nominee scrutiny, it should give the wrongdoers a grace period to adjust. It might take up to two years as six to 12 months is too short for thousands of [suspected] nominee firms," he said.
       There are an estimated 10,000 nom-inee firms nationwide in all businesses.A number of nominee firms exist in the property market, said Mr Patima.
       "Just imagine how many nominees there are for condominium projects where the foreign quota is full, or for villas, in which foreigners cannot hold land, in tourist destinations. Each unit has a shell company to hold it for a foreign buyer," he said.
       The Department of Business Development (DBD) began checks on sus-pected nominee firms in 2008 but only at random in the first year to get an overview. Now it is preparing to do more in-depth checks, working with the Lands Department, the Department of Special Investigation (DSI), provincial governors and Commerce Ministry offices in 20 major provinces and tourist destinations.
       Mr Patima said the checks would be a problem for current nominee firms,not new ones.
       "If nominee firms holding a property cannot find a Thai investor, they need to sell that property. Forced selling might mean 30-40% lower prices. Therefore,the sooner the restructuring, the less risk of legal action. In the worst-case scenario, property will be seized by the Lands Department," he said.
       "Foreigners now are really panicked.But they need to familiarise themselves with the changes. Everybody always resists change, so the beginning could be a struggle."
       However, the government should facilitate foreign property investment by extending the leasehold period from 30 years to 30 plus 30 years during registration, he said. Penalties for nominee firms should be strengthened with a minimum fine of 20,000 baht and a jail termwithout probation, he added.
       The JFCCT this week presented a paper to the government explaining why the leasehold period should be extended and how it would be easy to change.