The Tourism Ministry has introduced a new regulation empowering the government to terminate lease agreements for stalled resort development projects without granting further extensions.
Under the "Regulation on Stalled Tourism Development Projects" published in the gazette, the Ministry will apply uniform standards to projects regardless of whether their construction periods have already been extended.
However, immediate repossession without further opportunity will only apply to properties meeting specific criteria. While some developers will be granted a final grace period, the Ministry retains the discretion to decide on extensions or enforcement actions for others.
Lease agreements will be terminated without further notice under the following circumstances
- Projects where eight years have passed since the development deadline and outstanding rent and fines exceed $10 million.
- Projects where no physical development work has commenced.
- Unfinished projects where the construction period has been extended beyond 60 months following the initial grace period.
- Projects where eight years of the lease term have elapsed or where less than 15 percent of development work is complete.
The Ministry will offer a final opportunity to unfinished resorts that have exhausted their grace periods but have not yet reached eight years of their lease term. If these properties are not completed and brought into operation within the newly granted timeframe, their lease agreements will be terminated.
For projects with active construction periods where work has stalled, the Ministry is authorized to take regulatory action. In cases where more than 50 percent of the project is complete, the Ministry maintains the authority to decide on further construction extensions.
Even if an agreement is terminated, the developer remains liable for all outstanding fines owed to the state. For properties held as collateral or where permission for mortgage sale has been granted, the Ministry may terminate the agreement after notifying the mortgagee.
While the government has always held the legal power to terminate agreements for non-development, this new regulation details the specific procedures for repossessing stalled sites. Historically, successive administrations have prioritized granting concessions and extensions over repossession in hopes of seeing resorts eventually open.
Despite this lenient policy, the desired results have largely failed to materialize. The Ministry's list of resorts under development remains dominated by projects that have been stalled for decades. As new properties are leased by each administration, the list of unfinished projects continues to grow annually.
