"I have read recently of plans to establish Phuket as a
tax free zone. What impact will this have on the local property market?"
The Kra Isthmus Canal, Bangkoks Second Airport, a solution to Bangkoks traffic, land ownership for foreigners .... and Duty Free Phuket seem to have been on and off the political agenda for time immemorial. The Kra Isthmus canal discussion dates back to the last century, and I can personally remember the Phuket tax free discussion as being well established when I first came here in 1980. The principal objection then, was that the Customs department would never allow it because they would be unable to control the smuggling that would inevitably occur. They have a point - if the customs department cant control the smuggling of tanker loads of tin (outward bound) and refined petrol and diesel fuel (inward bound) - how are thy going to stop duty free watches, cameras, Johnny Walker Black and other small size, high value, goods making it across Phang Nga Bay, filled as it is with thousands of fishing boats and pleasure craft engaging in legitimate business.
Well, never say never. Custom duties have fallen considerably on many
good (reducing the incentive to smuggle) and the once mighty Customs
department now carries less political clout than it used too. Popular
perception also has it that so many government bigwigs (in both coalition
and opposition) have such significant land holding in Phuket that there
is no one left to opposes such a move.
Planning the details of implementation of a duty free Phuket and balancing the interests of finance, tourism, industry and the environment, will certainly not be easy and is fraught with possibilities of detrimental results - but the people of Phuket seem generally to favour the concept of duty free status and the financial benefits that it promises.
Bangkok land investors, speculators and agents who seem convinced that this issue is as good as a certainty, are already scouting the ground for properties and businesses that could see growth in a duty free zone.
My own view is that I am more inclined to take a rather more wait and see attitude, I have seen it too often before.
A hi-tech export zone will require a lot more than tax free status to be viable - until all the necessary other incentives and services are in place, that concept is likely to remain, what the software industry so aptly calls, vapor-ware. Phuket already has plenty of potential for tourism and tourism related property growth without a duty free status, adding it, with so many existing low and no tax centers all over the world, will do no more than add a little icing on an already fruit rich cake.
John asks "Would the closure of the Phuket branches of the 42 finance companies have an impact on the local property market?"
Most property financing in Phuket is from banks rather than the finance companies and most foreigners purchasing property in Phuket are sufficiently discouraged by the high local interest rates either to pay cash or seek funds overseas. Cash does however remain very tight - even from banks - which is a bit odd
considering the huge flight of cash from finance companies and small banks to the big banks. I expect this cash squeeze to be resolved during the next few months, but for the immediate future, cash is king.
Guenter Bellach asks - "What is the latest on the cabinet resolution that foreigners married to Thai wives can buy up to 1 rai of land, and that long-term leases will be extended to 99 years? I suppose they will submit it to the House when they are good and ready, and with the current turmoil on the financial scene, no-confidence motion looming and the constitution debate it will get side-lined again. Perhaps you want to enlarge on that in the Gazette".
This is a very frequently asked question and one that I have in fact discussed twice in the last five months, but it gets asked so often that I suppose it is still newsworthy. The short answer, as you correctly surmise, is that these amendments don't seem to be going anywhere at the moment - the government really has more important issues on it's agenda - which begs the question (much as I would like to see a positive resolution of both proposals) as to why the P.M. and half the government are taking time off (as I write this story) to attend a meeting in Phuket to discuss the islands future as a duty free port, tourist haven and hi-tech export zone.