New Thai laws to 'protect farms from Gulf buyers'

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Reuters |  3 September 2009

Thailand, the world's biggest rice exporter, is cracking down on foreign ownership of its farmland following reports of rich Middle East food importers snapping up vast tracts of land in poorer countries.

The Agriculture Ministry is drafting legislation that would impose new zoning regulations to prevent farm areas across the country from being switched to new purposes, such as exporting to a specific country or region, or to be developed for industries such as tourism, Nikorn Jamnong, adviser to the Agriculture Minister, told Reuters.

Thailand's decade-old Foreign Business Act forbids foreigners from owning a farm business. But critics say there are loopholes. For example, foreigners can participate in joint ventures in which Thais must own at least 51 percent.

Many Thais express concern that those joint ventures will be exploited by Gulf states, which have spent billions of dollars of oil money on buying foreign farmland in recent years in a quest for food security following protests sparked by higher prices and food shortages in the Middle East.

Bahrain-based Islamic bank Al Salam, for instance, signed an agreement with Thai agriculture and food company Charoen Pokphand Foods in June to jointly invest in agricultural businesses.

That raised concerns among Thais whether foreigners would eventually run farm businesses for their own benefit on Thai soil through nominees. This should force the government to tighten its regulations on farm issue, Nikorn said.

Nikorn said the Agriculture Ministry would press for an amendment to the Foreign Business Act to close any loopholes.

'We have finished drafting,' Nikorn said. Farmers would be allowed to switch to grow other potentially lucrative commodities, according to the draft. The government would set up local sub-committees to oversee what plants are suitable for each area, the draft said.

'The law should be endorsed by the House of Representatives very soon, as the government has a very clear policy that farm businesses are not allowed to be owned by foreigners.'

Thai farms are largely a family-run industry. Individual families or small businesses sell their crop to local millers who then sell the finished product to exporters.

'The Foreign Business Act, itself, should be amended and we (the Agriculture Ministry) will propose our intention of the law amendment very soon,' he said. Nikorn said the amendment should include more serious punishment for Thai nominees who help foreigners who take advantage of Thai farmland.
Original source: Reuters
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