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|PHLIP VON MEHREN, J.D.||
TIM SAWERS, J.D.
HODGSON, RUSS, ANDREWS, WOODS & GOODYEAR
Analysis of the Relationship Between Title and Commercialization
In this chapter we shall show the interrelationship between (1) areas in Thailand where secure ownership rights exist, (2) the availability of credit for investment in agriculture, and (3) the commercialization of agriculture. Our analysis will emphasize that, for most of the arable land in Thailand, the traditional tenurial system still survives; mere occupation coupled with the possession of one of the several non-title documents is considered sufficient to prove "ownership" of land. Yet the lack of secure ownership rights essentially relegates these farmers to credit from traditional sources. Conversely, for those farmers that have secure ownership rights, commercial or institutional credit is available that provides the farmer both with more total credit and lower interest rates than traditional mechanisms.(1) As a result, these latter farmers have an ongoing advantage as the commercialization of Thai agriculture proceeds. Our central thesis, again, is that the development of a formally rational legal system, especially the introduction of the legal concept of title, helped to spur the process of commercialization of Thai agriculture by fostering more efficient credit mechanisms.
The first section of this chapter explores the early spread of title and shows the close association between access to ports and the initial spread of title documents. The second section describes the differences between--and the relative importance of--various types of land "ownership" in Thailand. The third section, argues that a strong correlation exists between those regions that have the highest percentage of rai titled and those that have the highest yield per rai for rice. The fourth section describes how secure ownership rights foster commercialization by providing the farmer with access to greater amounts of cheaper credit than is available from traditional sources. The fifth section evaluates this case study in terms of what it shows about the relationship between law and development and of its contribution to the revitalization of the law and development movement. We conclude with a discussion of the utility of the Weberian approach in the context of this case study.
II. THE EARLY INTRODUCTION AND SPREAD OF TITLE
As we saw in the last chapter, the Thai legal system in successive decrees grappled with the problem of "ownership" of land inherent in the traditional tenurial system. These efforts led to King Chulalongkorn's 1901 "Proclamation on the issuance of land title deeds."(2) At this point in Thai history one might have expected that, within a matter of decades, all farmland in Thailand would be surveyed, registered and a title deed issued to the owner. Yet this did not occur. Instead, only in some areas were lands registered, and title deeds issued.
The different rates of title issuance for various areas in Thailand is probably best explained by the relative abilities of some areas to take advantage of the world market demand for rice. Those areas near to or with access to Bangkok and, to a lessor extent, Phuket, were able to export rice more economically than other areas due to high transportation costs within Thailand. Yet the acceptance of title in areas where commercialization of agriculture was feasible probably indicates that title served, as Weber thought it would, a useful legal and economic purpose: the clear description and definition of what land was owned and by whom added a significant degree of calculability to what the mortgagor was pledging and what the mortgagee was securing. As a result, more credit became available for investment in the agricultural sector. Thus, the legal concept of title helped to further a process of commercialization which had already begun in the aftermath of the Bowring treaty.(3)
The early Thailand Yearbooks show the limited geographical spread of titles during the first half of this century. By 1933, only 645,906 titles had been issued in Thailand.(4) The 1932-33 Thailand Year Book mentions only six areas--Bangkok, Ayuthya, Prajinburi, Rachaburi, Phitsanulok and Phuket--in all of Thailand where title was issued by the governments.(5) Thus, more than thirty years after King Chulalongkorn's attempt to create a registration system and to introduce title, the Thai Government had issued few titles, and those were concentrated in a geographical location with access to Thailand's major ports.
By the 1940's, the Thailand Yearbooks began to report issuance of titles in all the regions of the country.(6) Yet the total amount of titled land still only accounted for a small percentage of all land in Thailand. The slow spread of title was probably due to a combination of interrelated factors. In many areas of Thailand land was still plentiful. As a result, new land was constantly being cleared, creating additional demands on the already overburdened administrative capacity of the Thai government. Secondly, the expense of the ground survey could be justified only for land ripe for commercialization. Farms without access or any prospects of access to commercial markets had less to gain from receiving title because they had a lower demand for capital. In sum, the main benefits of title, access to larger amounts of capital and to lower interest rates, were not as important to noncommercialized as to commercialized farms. Yet, as the growth of the internal market incorporated more areas of Thailand's agricultural sector, the demand and need for clear ownership rights grew.
III. A DESCRIPTION OF THE PRESENT TENURIAL SYSTEM
The landholding system in Thailand is characterized by a several different types of documents embodying a spectrum of rights, running from full title to mere occupation. On one end of the spectrum, are farmers who occupy government land, called forest reserves, without any documentation except a tax certificate. As much as 30 million rai (5.3 million hectares) of the forest reserves are occupied by Thai farmers.(7) On the other end of the spectrum, are the farmers who occupy the roughly 20 million rai (3.2 million hectares) who hold "title deeds." Between these extremes, are several other types of documents that give the holder greater or lessor "ownership" rights.
A description of the various types of "ownership" rights in Thailand is difficult because of disagreement among commentators as to the exact rights which a specific document confers on a holder. As is developed below, these differences may be due to the geographical scope of specific studies or simply reflect a change over time in the acceptability of certain documents. What then are the various documents in use, and the rights embodied in them?(8)
The "Land Title" (NS-4) or chanot thi din gives the holder unrestricted title to the land. The holder has a legal right to sell freely, transfer and, most importantly for our purposes, mortgage the land. The document has its origins in King Chulalongkorn' s 1901 "Proclamation on the Issuance of Land Title Deeds." It was reaffirmed in the Land Code of 1954. The title deed is granted on the basis of a cadastral survey which marks the land by a stone boundary. The deed is registered by the holder in the provincial land registry.(9)
The "Certificate of Use" (no so 3 & no so 3k) or nor sor sarm gives the holder something slightly less than "Land Title" and something more than mere occupation. The Land Code of 1954 created the "Certificate of Use" and saw it as a transitional document which would lead to "Land Title" ownership. Nonetheless, a substantial amount of land never completed the transition from "Certificate of Use" to "Land Title". These documents were issued on the basis of tape surveys until 1972; thereafter they were issued on the basis of unrectified aerial photographs.(10) In view of the less systematic quality of the surveys on which these certificates are based, a transferor must advertise a transfer for thirty days prior to a transfer at the District Office.(11)
(1) Throughout this chapter, when we speak of title or secure ownership rights we are referring to land held with a "Full title"document or a "Certificate of Use." We explain our reasons below for categorizing these right as secure. See pp. 44-45.
(2) See supra, pp. 44-45.
(3) See supra, at p. 40.
(4) 1932-33 Thailand Year Book, 429 (table unnumbered). Unfortunately the early Yearbooks do not present any data on how many rai of land was covered by the titles issued.
(5) Id. Except for Phuket, which served as a port for trade with India at the time, all of these areas are in close proximity to Bangkok, the major port for rice shipments.
(6) The Thailand Yearbook 1954-55 at 185. This is the first yearbook which contains data on the number of titles issued outside the Central Region (near Bangkok) and the Phuket areas.
(7) G. Feder, T. Onchan, Y. Chalamwong and C. Hongladarom, Land Policies and Farm Productivity in Thailand 14-15 (The Johns Hopkins University Press 1988). (Hereinafter referred to as G. Feder.)
(8) The following description of "ownership" rights in Thailand is based on the works of Kemp, "Legal and Informal Land Tenures in Thailand," 15 Modern Asian Studies 1 (1981); Yano, "Land Tenure in Thailand," 8 Asia Survey 853 (1968); Lin and Espisito, "Agrarian Reform in Thailand: Problems and Prospects," 49 Pacific Affairs 425 (1976); and G. Feder, id..
(9) G. Feder, supra note 7, at 11.
(10) G. Feder, id. at 15.
(11) Id. at 14. Land held under a "Full Title" or a "Certificate of Use" that is left fallow for more than either 10 years or 5 years respectively is subject to an ownership challenge by another farmer wishing to utilize the land. This form of challenge is reminiscent of the traditional Thai concept of "use it or lose it" and differs from Western, common law concepts of land ownership, which stress--through the doctrine of "adverse possession"--an attitude of "protect it or lose it." Thus, at least to this extent, an important continuity exists in traditional and modern Thai concepts of land ownership. See supra, at p. 43.