FARMING AND FOREIGNERS

Writer: CHOOKIAT OPHASWONGSE AND DHEERASAK SUWANNAYOS
Published: 31/08/2009 at 12:00 AM
Newspaper section: Business

The issue of land ownership by foreigners has always been highly emotional in Thailand and other developing countries. The debate has intensified in the last year, with increasing allegations that foreigners are buying up prime land through Thai nominees.

World staple crop prices spiked last year after rising oil prices prompted the diversion of some crops for energy use instead of food. Countries that rely heavily on food imports started looking abroad. Anecdotal reports abound in Thailand, though documentation is scarce, of Middle Eastern interests engaging local brokers to secure large tracts of Thai farmland.

Indeed, Gulf countries are chasing investments in farmland and agricultural businesses in many developing countries to secure food supplies. Sudan has seen a fifth of its cultivated land set aside for Arab governments. The United Arab Emirates and Egypt have secured 400,000 hectares each in Sudan to plant wheat, while South Korea has 690,000 hectares, also for wheat. Saudi Arabia is said to be investing about US$100 million in Ethiopia on leased land to grow wheat, barley and rice. The UAE, meanwhile, has invested in farmland in Kazakhstan with an intention to purchase more land in Africa, Vietnam, Cambodia and South America for food crops.

The Bangkok Post recently asked two prominent figures to discuss the pros and cons of foreign land ownership. We asked each to respond to the following seven questions:

1Do you agree with existing laws prohibiting foreigners from engaging in domestic farming activities? Why or why not?

2Thailand produces more agricultural crops than are needed for domestic consumption. Given the agricultural sector's existing dependence on export markets, why shouldn't we consider liberalising land ownership and foreign business laws to permit direct foreign investment in the sector?

3Over several decades, Thailand has progressively liberalised various industrial and service sectors to allow foreign participation. Is agriculture inherently different than any other sector?

4 Proponents of deregulation argue that allowing farmers to sell their property to foreign investors would help address the long-standing problems of rural poverty. Do you agree or disagree?

5Despite current land ownership restrictions, it is widely known that nominee structures are used by Japanese, Taiwanese and other Asian investors to participate in the local agricultural sector. Considering the country's difficulties in enforcing current law, would it not simply be more practical to rethink our policies?

6Successive governments have urged Thai businesses themselves to invest overseas, particularly in neighbouring countries. Several leading Thai firms have done so, including ventures in the agricultural sector. Is it not hypocritical that Thai companies are seeking to invest abroad while we still restrict foreign investment in the country?

7If foreign investment in agriculture were allowed, should there be safeguards covering the size of land holdings, the scope of activities or the exporting of output?