You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

November 30, 2012

Commercial Lease Agreements and Thai Law

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Long-term lease agreements in Thailand are generally limited to a maximum term of 30 years and may then be renewed for another 30-year term under Section 540 of the Civil and Commercial Code of Thailand.

Under certain circumstances, however, the Lease of Immovable Property for Commercial or Industrial Purposes Act of 1999 grants a maximum lease term of 30-50 years if the lease has an industrial or commercial purpose. After this initial term, an extension of 30-50 years is possible. Similar to an ordinary long-term lease, this extension term can only be registered after the initial term has already lapsed.

Regional Comparisons

Thailand’s neighbors have similar regulations, but the duration of the maximum lease term is generally longer. In Vietnam, for example, the term for an ordinary lease can be up to 50 years, and even up to 70 years in specific areas with approval from the prime minister.

The lease rules and terms in Laos are slightly more diverse. As in Thailand, the ordinary lease term is 30 years with an option for extension and 50 years with an option for extension for investment and business activities, based on the scale of the project. Laos also allows 75 years in specific economic zones and up to 99 years for diplomatic purposes or international organizations.

In Cambodia, the laws allow for a 99-year lease term, while foreign companies with privileges from the Cambodia Investment Board and the Cambodia Development Council may even be permitted to own the land on which they are building factories. Malaysia also allows a maximum lease term of 99 years. Under Myanmar’s new foreign investment law, foreign companies will be allowed to lease land for up to 50 years, with up to two possible extensions of 10 years each.

Eligibility

Although Thailand’s maximum commercial lease term of 30-50 years falls short of those in some of its neighbors, investors are nevertheless eager to seek such arrangements. To be eligible for a maximum commercial lease term in Thailand, a number of conditions must be met.

The leased property must be located in an area specified for industrial or commercial purposes or in an industrial estate zone. The lessee can be an individual person or a company, either of Thai or foreign nationality.

If the purpose of the lease is commercial, the commerce must show an investment of at least 20 million baht. If the purpose of the lease is industrial, it must be a type of industry that would be eligible to apply for investment promotion under Thailand’s Investment Promotion Act and related laws. Alternatively, a commercial or industrial enterprise that has been announced and published by the Interior Minister as being beneficial to Thailand’s economy and society is also eligible to register a commercial lease.

If a non-Thai person or entity is applying for registration of a commercial lease, the operated business must be one that is not prohibited to foreigners under the Foreign Business Act. Non-Thais are additionally required to provide evidence they brought funds for the investment into Thailand in foreign currency, have funds in a foreign currency account, or have funds in a baht account of a non-resident.

Another important requirement is the work plan that each applicant has to submit to the Land Department along with the application form, a report on environmental impact, and a certificate issued by the Public Works and Town & Country Planning Department. The latter confirms the land to be leased is located in a commercial or industrial area or an industrial estate.

The work plan must contain details about the land exploitation plan, the amount and the source of the capital fund, employment, and a time frame for the business operation. Once the lease has been successfully registered with the Land Department, the lessee must proceed with the work plan within 90 days, under full compliance with the conditions laid down in the registration.

If the plot of land to be leased exceeds 100 rai in size, additional conditions apply: the local council where the land is located must be given the opportunity to comment on the application of the lease, and only businesses that are beneficial for Thailand’s exports, employment situation, or manufacturing technology—or are otherwise necessary or beneficial to the country’s economy and society—are eligible to register such a commercial lease. If the lessee is non-Thai, the minimum investment amount must be 100 million baht or more.

Advantages

Of course, the key advantage that commercial leases have over ordinary leases is the longer lease term. But there are other advantages as well. The lease for commercial or industrial purposes can be mortgaged as a security for financing, which an ordinary lease of property cannot. And if the lessee is an individual person, his heirs are able to inherit the rights and obligations from the lease after his passing.

Download Full Article
Related Professionals

Practices

Corporate/M&A

Real Estate

Location

RELATED INSIGHTS​ 

August 27, 2026
On August 25, 2026, Thailand’s Ministry of Interior issued an urgent circular letter (No. MorTor 0515.2/Wor 19097) to all provincial governors, introducing enhanced enforcement guidelines for the investigation and prosecution of suspected nominee landownership by foreign nationals. The circular letter builds upon a prior circular letter issued on April 19, 2023 (No. MorTor 0515.2/Wor 7665), which first established the framework for provincial-level investigation committees and interagency cooperation on this issue. Under Thailand’s Land Code, foreign nationals are generally prohibited from owning land. To circumvent this restriction, some foreign nationals have historically used Thai nominees, whether individuals or Thai-registered juristic persons, to hold land on their behalf. Various government enforcement measures have been progressively strengthened in recent years. The new circular letter introduces three key measures: Expanded investigation committees. Provincial authorities must add representatives from specialized investigative agencies (such as local police superintendents) to the existing Fact-Finding and Investigation Committees, giving them broader access to shareholding data, tax records, immigration information, financial records, and evidentiary materials. Proactive screening of juristic persons. Provincial Land Offices are now required to actively screen and flag juristic persons (companies, partnerships, etc.) that show risk indicators of acting as nominees for foreign land ownership. The screening results must be referred to the investigation committees, which will determine whether the entity qualifies as a “foreign national” under the Land Code or was set up to circumvent the law. Two-track enforcement actions. Based on the committee’s findings, enforcement may consist of one or both of the following: Land disposal: If a juristic person is classified as a foreign national under the law, the provincial governor sets a deadline for the entity to dispose of the land under the Land Code. Criminal prosecution: If the entity was established specifically to hold land on behalf of a foreign national in circumvention
Read More
August 24, 2026
Myanmar’s Directorate of Investment and Company Administration (DICA) has published the guidelines it uses to assess and approve company names for registration in the country. The guidelines, which were published on May 18, 2026, explain how DICA determines whether a proposed name is identical or too similar to an existing name, and they identify words and expressions that may be prohibited or restricted. Businesses planning to incorporate in Myanmar should expect DICA to scrutinize proposed names more closely than it has in the past. Prohibitions on Company Names The Myanmar Companies Law prohibits company names that are identical or similar to existing company names, and DICA’s internal assessment guidelines explain how this rule applies in practice. Under the guidelines, DICA may reject a proposed company name if the proposed name: Is identical or nearly identical to an existing company name; Differs from an existing company name only in punctuation, capitalization, spelling, or transliteration; Only adds words such as “Group,” “Holding,” “International,” “Myanmar,” or “Family” to an existing company name; Merely rearranges the words in an existing company name; Is pronounced similarly to an existing name; Uses the same brand name as an existing company, even if the company carries out different business activities; or Uses an existing brand name together with an abbreviation of that brand name or a shortened form of the name or business description. DICA may also consider whether a proposed name could give the impression that two companies are related, even if they operate in different business sectors. In addition, DICA may review a company name even after registration. If it later determines that the name does not comply with the Myanmar Companies Law or is otherwise unsuitable, DICA may direct the company to change its name under section 26 of the Myanmar Companies Law.
Read More
August 20, 2026
Vietnam’s Law on Bankruptcy and Rehabilitation No. 142/2025/QH15, passed by the National Assembly on December 11, 2025, does something many regional counterparts do not yet attempt: it instructs parties and arbitral tribunals on exactly what happens to an arbitration once a debtor becomes insolvent. Together with the Law on Commercial Arbitration No. 54/2010/QH12, the new law improves upon what used to be an uncertain area of practice, now providing an explicit, mandatory sequence of procedures. Suspension and Termination of Arbitration Proceedings Under article 40(2) of the law, once a Vietnamese court accepts a bankruptcy petition, any arbitration that concerns the debtor’s financial obligations must be temporarily suspended as soon as the tribunal receives the court’s notification. If the court subsequently issues a decision commencing bankruptcy proceedings, article 59(2) takes a further step: the suspended arbitration is terminated outright, and the underlying case file is transferred to the court handling the insolvency for resolution. The two provisions work as a sequence: first suspension, then termination and transfer, rather than as independent triggers. Meanwhile, article 60(4) reinforces this effect by vesting the bankruptcy court with exclusive jurisdiction over all claims against the debtor from the date the petition is accepted. Notably, this mechanism operates automatically, without the need for the insolvency court to issue a separate anti-arbitration order. The tribunal simply suspends or terminates the proceeding by operation of law once notified; however, Vietnamese law currently provides no procedure by which a party can apply to the insolvency court for permission to continue the arbitration despite the statutory effect. Practitioners with a Vietnamese counterparty in arbitration should treat notification of a bankruptcy filing as something to flag to the tribunal immediately since continuing to arbitrate a claim that has become subject to article 40(2) or 59(2) risks producing an award vulnerable
Read More
August 20, 2026
Thai law contains no provision that speaks directly to what happens to an arbitration when one of the parties becomes insolvent. The interaction between arbitration and insolvency is derived instead from the general operation of two separately drafted laws: the Bankruptcy Act B.E. 2483 (1940) and the Arbitration Act B.E. 2545 (2002). Because Thai courts have had few opportunities to interpret how these two statutes apply together, the practical answer to many questions, such as who represents an insolvent party in arbitration, whether an award will be enforced, and what happens to a foreign proceeding, depends on inference from general principles of insolvency, arbitration, and procedural law rather than on settled rules. Liquidation and Restructuring The Bankruptcy Act governs both liquidation, which winds up a debtor’s affairs, and restructuring (rehabilitation), which aims to preserve a business. The consequences for arbitration differ accordingly. In liquidation, the debtor’s assets vest in the official receiver, who alone can conduct or continue any arbitration affecting the estate; the debtor loses the authority to act on its own behalf. In restructuring, the plan preparer or administrator takes over that role, but there is more room for the debtor to remain involved, since the objective of rehabilitation is to keep the business operational. Restructuring carries an automatic stay that takes effect once the Bankruptcy Court accepts the restructuring petition. This stay can halt an arbitration regardless of where it is seated. In contrast, liquidation does not work through a stay; instead, the debtor’s loss of authority over its own assets and disputes is what constrains the arbitration. Neither proceeding provides a party a formal route to apply for permission to continue arbitrating—the Bankruptcy Act contains no such mechanism—though in restructuring cases the Bankruptcy Court may allow proceedings to continue where doing so will not prejudice
Read More