The protection is the illiquidity

More than a million Thai households now hold a document with the word โฉนด on it — title deed — for land they cannot sell.

Both halves of that sentence are accurate, and neither is a trick. The document is real, it was issued deliberately, and the prohibition is still in the statute. This article is about the space between them, because that space is where a large part of Thai rural borrowing actually happens.

What the land is

In 1975 Thailand passed a land reform Act, and its stated reason is worth reading before anything else, because it explains every restriction that follows.

The Act’s own explanatory note says that farmers were losing their rights in land and becoming tenants, paying rents unreasonably high, on land that went unmaintained, with yields low as a result. The remedy was for the state to take land — its own, or land bought or expropriated from owners above a ceiling — and put it in the hands of farmers who had none.

The ceilings are in section 29. Above fifty rai held by one family farming it themselves, ALRO may buy or expropriate the excess; a hundred rai where the farming is large livestock; twenty rai where the owner is not really farming it at all. Section 35 says compensation is paid a quarter in cash and the rest in government bonds at not less than eight per cent, redeemable within ten years.

So this is land the state assembled, at a price, to stop farmers becoming tenants. Hold onto that. It is the reason for everything that makes the land hard to use.

Section 39, which is the whole article

Here is the provision, and it has not moved. Read it in ALRO’s own published text of the Act.

Land in which a person has acquired rights through land reform for agriculture may not be subdivided, nor may the rights in that land be transferred to another person, except by devolution by inheritance to statutory heirs, or by transfer to a farmer institution or to ALRO for the benefit of land reform for agriculture, in accordance with the criteria, methods and conditions prescribed by ministerial regulation.

Read what the exceptions are. You may leave it to your heirs. You may hand it to a farmer institution. You may give it back to the state. There is no fourth door, and none of the three is a sale to a person who wants to buy it.

And for a large share of the land there is a second lock. Section 30 deals with state land inside a reform zone, and its words are flat: such land may be let on long lease to farmers or farmer institutions, but the rights in that state land may not be transferred. Land the state bought or expropriated can be let long-term or sold on hire-purchase terms. Land it already owned cannot be transferred at all.

Section 37 closes the last gap: no one may raise adverse possession against ALRO. You cannot acquire this land by occupying it for long enough.

Why that makes the land invisible to a lender

Now the mechanism, and it is not complicated.

A lender takes security because it can sell the security. That is the entire function. A mortgage is not a moral claim on a borrower’s seriousness; it is an arrangement under which, if the money does not come back, the lender takes the thing and sells it to somebody else and is made whole.

Land nobody is permitted to buy cannot do that job. It does not matter how fertile it is, how long the family has worked it, or what it would fetch if the law allowed a sale. The only buyers section 39 permits are a farmer institution and the state, and a commercial lender cannot plan a recovery around either.

So the largest thing most of these households own produces no borrowing capacity whatsoever.

Article 106 It asks about the object found the opposite case and it is worth putting side by side. A state pawnshop asks nothing about you — no payslip, no employment record, no credit history. It asks about the object. Collateral is the one eligibility test that nobody fails for being the wrong kind of person: you do not have to qualify, you have to have something.

These families have something. It is just something the law has made unsaleable, which is the same as having nothing, at the counter.

And that is not an accident or an oversight. It is the protection working. The transfer bar exists precisely so that a bad season, a hospital bill or a persuasive buyer cannot end with the family landless again — which is the exact outcome the 1975 Act was written to stop. You cannot have land that is safe from being lost and land that can be pledged. They are the same property viewed from two sides.

Then in December 2023 the state issued a title deed

The Land Reform Committee made a regulation — number two of B.E. 2566 (2023) — which came into force on 9 December 2023 and created a new document: โฉนดเพื่อการเกษตร, a title deed for agriculture. Read the regulation. Applications opened on 15 January 2024. More than 1,066,643 plots have been converted, against a target first stated as 22 million rai and later reported as revised to 17 million.

Here is what the regulation actually requires.

Five years. Under the new clause 53/1, ALRO issues the document to a farmer who has been permitted to use the land for not less than five years. Time worked alongside a spouse, child, relative or heir counts toward it.

Two years, and then not a sale. The new clause 29/1 says a holder who has had the document for not less than two years may apply to relinquish their rights, wholly or in part, so that ALRO may allocate the land to another farmer. That is the transfer mechanism the programme added. It runs through the state, to a person the state selects, under the same criteria as an original allocation.

Borrowing stays inside the panel. The amended clause 36 recognises debts owed to ALRO, to financial institutions participating in ALRO’s own scheme, and to farmer institutions in the reform zone. It does not open the land to lenders generally.

Inheritance is set out properly, which it had not been: spouse first, then children, then other heirs, with the Civil and Commercial Code’s ordering applied where it runs out. And there is a service standard — ninety days to process, extendable thirty at a time.

A committee cannot amend an Act

This is the sentence the article exists for, and it is a point of legal hierarchy rather than of politics.

The โฉนดเพื่อการเกษตร was created by a regulation of the Land Reform Committee, made under section 19 of the Act. Section 19 lets the Committee set criteria, methods and conditions. It does not let the Committee repeal section 39, and the regulation did not try to.

So the position after the programme is the position before it, on the decisive question. The land still may not be subdivided. The rights still may not be transferred to another person. The exceptions are still inheritance, a farmer institution, and the state. What changed is the paper, the clarity of the inheritance route, the existence of a defined way to hand the land back, and a deadline for the office to act.

Those are real improvements and this article is not going to pretend otherwise. A household that knows exactly who inherits, and can get an answer in ninety days, is better off than one that does not and cannot.

But a document called a title deed, for land the Act says cannot be transferred, will be read by some of the people holding it as a title deed. That is not a criticism of anybody’s honesty. It is a prediction about what a word does.

What would actually change it

Only an amendment to the Act, or a mechanism that makes the land bankable without making it saleable.

The second is not fanciful and Thailand already has pieces of it. The regulation’s own recognition of ALRO-panel lenders is one: a lender that accepts a recovery route running through ALRO rather than through an open-market sale. A guarantee fund is another — the lender is made whole by a third party rather than by seizing the land. Both keep the protection and buy back some of the credit.

Neither is a title deed, and neither is what was issued.

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Common misconceptions

“ส.ป.ก. land can be bought and sold now that it has a โฉนด.” No. Section 39 of the Act still prohibits subdivision and transfer to another person. The 2023 regulation is a committee regulation and did not amend the Act.

“So the โฉนดเพื่อการเกษตร is meaningless.” No. It clarifies inheritance, creates a defined relinquishment route after two years, and puts a ninety-day deadline on the office. It is a better document. It is not a transferable one.

“You can mortgage it to a bank.” Not to lenders generally. The regulation recognises debts to ALRO, to financial institutions participating in ALRO’s scheme, and to farmer institutions in the reform zone.

“The restriction is a bureaucratic accident.” It is the point. The Act was written because farmers were losing land and becoming tenants; the transfer bar is what stops that recurring.

“Occupying it long enough makes it yours.” Section 37 says adverse possession cannot be raised against ALRO.