Page 82 - Introduction to Investment Laws in Thailand

purpose. The Act transforms the traditional land and financial law in
Thailand. According to practice under the Thai Civil Code section, only
the land owner can use the land to request mortgage loans from banks.
Nevertheless, by the passage of the Act, the land renter who hold the land
trust would request the bank mortgage by using the land trust. The renter
who holds the land trust can then utilise the land trust for his/ her
commercial benefit, while the landowner retains the land right.

An example of how the Act provides land use improvement is on the
cases on property development of the apartment and commercial building.
The property projects in inner-city areas normally incur many land areas
with many landowners. The landowners may not easily decide to sell their
land for property projects due to their consideration of their ancestor's
land heritage. The landowners may also consider inheriting the land to
their family generation. The property developer can resort to the land trust
as the tools to negotiate the land use and secure the loan from banks. The
landowners will retain the right over the land and receive rent fees
according to their rent agreement. In Japan, various land developments are
under the land trust that harmonises on the needs between landowners and
land developers. The high-rise apartment and commercial buildings in
Japan are increasingly under the methods of the land trust. In
consideration to Thailand, which has issued the land trust law, land trust's
legal arrangements are expected to increase due to the potential benefits
for landowner and property developers.

In addition, by the Right Over Property Act, infrastructure projects
can be implemented by the land trust between the government and
landowners. Instead of having to appropriate lands from the owners, the
government coordinates with the landowners to establish the land trusts.
The landowners can keep the land title with lease benefits while the
government can assure that it can build the infrastructure projects for
economic developments. An example is that landowners agree on the
lease terms with the government and set up the land trust for the
government. The government, as the trustee will be able to manage the

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