Another benefit of Thai REITs is that they allow for the inclusion
offers tax exemptions, but nothing has been decided yet.
of offshore assets. This is likely to be a major draw for the region’s key players that hold assets outside Thailand – TCC,
How will the creation of the Asian Economic Community
Central and Dusit, for instance – as it will allow them to raise funds for their projects across the region without having to set
affect Thai REITs? I don’t see a direct link between the AEC and Thai REITs.
up multiple REITs in different countries.
While I think the AEC will benefit cross-border trade and foreign direct investment, I don’t see it having any real direct
In terms of taxation, how do Thai REITs compare with those
impact on REITs. Indirectly, however, I assume there will be an
available in Singapore? This is a complicated issue and it’s hard to say whether
effect. The creation of the AEC will see an increase in the
Thailand or Singapore is better in tax terms. For investors
development of more real estate assets, such as hotels,
there is not a lot of difference as unit holders in Thai REITs pay
apartments and factories. It is quite likely therefore that some
a withholding tax of 10%, which is about the same as in
of those assets will be incorporated within REITs.
flow of people across the region and that in turn will spur the
Singapore. For sponsors, however, Thailand is slightly less attractive, as companies that sponsor and sell assets to the trust are subject to capital gains tax, which is currently set at
Which sectors are likely to benefit most from the new REITs? The regulations allow almost all types of property to be
20% of net profits.
transferred into an REIT, which means there will be little
©2013 RAIMON LAND RESEARCH
change from PFPOs in that regard. The exceptions are
14
Is it possible that Thailand REITs might adopt a structure
certain residential projects, including condominiums, which
that exempts sponsors from capital gains tax? This is an interesting idea and one we have already raised.
cannot be included within an REIT, so for them there will be
To make Thai REITs more attractive we must offer some form
income-generating units such as offices, serviced apartments,
of tax benefit. At first we thought about reducing corporation
hospital buildings, warehouses, retail units and hotels, while
tax rather than applying the standard 20% capital gains tax
the holders of other eligible types of assets will need time to
on net profit for sponsors. We also looked at the UK model,
consider the pros and cons of the new structure before
which sets a one-time tax of between 2% and 4% on the
making any decisions.
no change. The properties most likely to be transferred are
transfer of assets into an REIT, and the US format, which also
Investors’ perspectives able to recover and how Thailand’s key industries – automotive and electronics – perform in the coming years. In contrast, Thailand’s tourism industry has remained strong, with some sources forecasting 20% growth for this year. But the risks remain. If people around the world are earning less, it’s inevitable that they will travel less. Also, the appreciation of the baht has made Thailand a much more expensive destination than it was a decade ago. Raimon Land talks to Mr. Gancanapol “Pon” Van Compernolle,
How do you see the Thai economy performing over the next
who co-manages the Private Portfolio Management Department
five to ten years? I think Thailand will be fine. Despite suffering a number of
of SCB Securities.
tragedies and crises in the past decade such as the tsunami, the What was the impact of the global economic slowdown on
bird- and pig-flu outbreaks, floods, the global financial
Thailand? Like all export-led economies, Thailand’s fortunes are interwoven
meltdown, and protests by various colour–coded political
with those of its trading partners. So when the United States,
4% to 5% a year. Thus if you looked at Thailand as if it were a
Europe and China were hit by the global slump, Thai exports
company with an average growth rate of 4%–5%, it has a very
slowed and its GDP and currency were affected accordingly.
clean balance sheet as its debt ratio is only 44% of GDP while
What matters going forward is how those trading partners are
in Japan the corresponding figure is 290%, and in Europe
groups – the economy has still managed to grow on average
