LAND MARKETS

Land Trusts in Thailand:

Current Issues and Prospects
Nimnual Piewthongngam
 1. The context

2. The Issues

3. The Mechanisms
Content 4. Lessons learnt in terms of challenges faced/ success and non success factors

5. Similar case studies (at least 2) around the world.

THE CONTEXT

• To provide a tool to manage and

protect private financial assets and
real properties efficiently and
according to the property owners’
true intentions,
• To prevent outward remittance for  A juristic person can come into existence only by virtue of the Civil and Commercial Code.

properties in Thailand to be
managed overseas.
• The Trust Act does not allow an
individual or a private company to
undertake a trusteeship.
• To establish an effective tool for
private asset management to
reduce transferring liquid assets for
management overseas.
 The Convention defines trust as “the legal relationships created—inter vivos or on death—by a person, the
settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a
specified purpose.”
 Two important new laws, the Land and Building Tax Act B.E.2562 (2019) and the Entitlement over Immovable
Property (Sap-Ing-Sith in Thai) Act B.E. 2562 (2019).
 Land Trusts for Better Use of Land.
 Land Trusts for Land Acquisition in Infrastructure Projects.
 New Entitlement over Immovable Property: Future Trust Property.
 Due to the coronavirus (COVID-19) pandemic, the Thai government announced in June 2020 the land and
building tax applicable to property owners will be reduced by 90%.
THE ISSUES

• If banking laws change, banks can

change their role from being 1. Termination of Trust
financers of infrastructure projects 2. Transactions in Capital Markets
to becoming land trust managers.
3. Compensation during land acquisition
• Thailand does not have a special
4. Difficulties to property owner as well as person own’s right to use under Land &
trust bank or company yet because
building tax act.
private trust creation remains
5. Assessment & payment of steep taxes
prohibited to the present day.
• In the absence of a private trust, 6. Lacking in Private trust law

landowners and smallholders use 7. Private trust creation is prohibited to the present day.
Sap-Ing-Sith to enter into 8. Familiarity about private trusts of any kind, such as family trusts and land
commercial contracts with private trusts, is not well shared among the general public yet. Even though private
trusts are not allowed in Thailand yet.
developers or infrastructure
projects while awaiting the
enactment of the Private Trust Bill.
CASE STUDY- Land Trust in Japan
• In Japan, trust business can only
 Land Trust Structure
be carried out by entities licensed
under the Trust Business Act and
financial institutions licensed
under the Act for Financial
Institutions' Trust Business.
• Until the early 1990s, trust
business was monopolized by
eight financial institutions, of
which seven were known as trust
banks.
• Today over 200 financial The entrustee must manage the trust asset by following the three rules stated below:
• Due care of prudent manager Entrustee must manage the trust asset with care as a prudent manager.
institutions and entities are
• Duty of loyalty Entrustee must manage the trust asset for the beneficiary following the purpose of the trust.
licensed to carry out trust Entrustee must not use the trust asset for benefit of himself or a third party.
business in Japan. • Obligation to separately manage trust assets Entrustee must manage the trust asset apart from the beneficiary’s
property or any other properties.
CASE STUDY- Land Trust in Japan
• Commercial Banks:
Banks deal with deposits, lending
affairs and other money-related
businesses.
• Trust Banks:
✓ In a limited sense, receive trust of
the money trust of movable
property and real property other
than the trust of bonds and funds
or money.
✓ They take a role in real estate
brokerage or appraisal when they
are entrusted with the trust of real
property.
✓ They may deal with inheritance
affairs, too.
 Commercial Bank & Trust Bank
From a functional perspective, there are four distinctive types of commercial trust in Japan, and applying the basic
principles recognized under the Trust Act to any of these types would lead to unwarranted results.
(1) Trusts similar to deposit taking and lending: e.g., loan trusts.
(2) Trusts for asset management: e.g., money trusts and securities investment trusts.
(3) Trusts for securitization: e.g., money claim trusts.
(4) Trusts for business: e.g., land trusts.
 Trust of Real Estate
• In cities like Tokyo, individuals who live in small houses may increase the utility of their land by consolidating the
land and building apartments or office buildings on it.
• To do so, those individuals will need help from a trust bank or trust company.
• The landowners entrust their land to the trust bank, and the trust bank builds a large building on the land to realize
the effective utilization of the land.
• And those landowners can live in apartments within the building and receive part of the profit as dividends from the
trust bank.
• Individual landowners can gain more profit by this method.
• It can be applied not only to commercial buildings but also to infrastructure such as roads, electricity and railways.
CASE STUDY- Calgary Community Land Trust (CCLT)
• Non‐profit Entity (2002)
• Managed by the Calgary
Homeless Foundation.
• Purpose:
• The CCLT acquires and manages
land through donation or
purchase.
• Land is held in trust and leases
on 99 year terms to other
charitable and non-profit
organizations.
• Leased only to organizations with
the goal of providing shelters,
transitional housing and
permanent affordable housing.
 Kootenay Lodge
• Third project, completed in 2007.
• Land purchased and renovated using over $1 million from the Government of Canada’s Homelessness Fund.
• Targeted towards aboriginal persons with disabilities-first of its kind in western Canada.
• Combines housing and social supports.
 Calgary CLT: Challenges
• Difficulty obtaining charitable status-CLTs are relatively new in Canada, and the Canada Revenue Agency
evaluates CLT applications on a case-by-case basis.
• Difficulty obtaining land from the private sector due to tax disincentives for donations.
• Competition between the CCLT and the very organizations that it supports for a limited supply of affordable land
and government funding.
 Calgary CLT: Successes
• Has board of Directors with experience in housing development, community development and business
development.
• Support from all three levels of government, other organizations and private sector.
• Attained Charitable status.
• Developed a sustainable non-profit financing model.
REFERENCES

1. Urban Community Land Trusts: Case Studies From Calgary, Susannah Bunce, Assistant Professor
Department Of Geography, University Of Toronto.

2. Land Trust Law & Its Importance for Both Public & Private Use, by Dr. Naoyuki Yoshino is Dean and
CEO of the Asian Development Bank Institute (ADBI) and professor emeritus of Keio University,
Tokyo.
THANKYOU ALL FOR YOUR ATTENTION!