Business In Thailand - Part 1: The Challenge
Posted by: Tim in business, northern thailand, thailand, tags: business, thailandRecently someone asked about business in Thailand. Here is my first post on this challenging topic:
First of all, as background information, I learned the Thai alphabet (script with 44 consonants and 32 vowels) nearly 20 years ago, so I have have a pretty decent foundation for the Thai language compared to most foreigners visting or working in Thailand. I can read (slowly) and speak better than 99.99+ percent of all foreigners in Thailand. For this reason, I thought it was ”the right thing to do” to redirect my career to a “new challenge” in the business climate of Thailand as I continue to improve my foreign language skills. I wanted to help Thailand progress in IT and IT security, so where else would I go but where I have second language skills?
This was no small decision as you can imagine. Your career and life changes quite dramatically when you give up a long established consulting practice in the US and dive into business in a foreign land, seeking a new challenge. I can frankly tell you that it is more difficult to do business in Thailand (as a foreigner) than I expected, for a number of reasons. Here is my first off-topic post on this topic.
First of all, it is not legal for foreigners to directly own land in Thailand. Foreigners can ”own” land using a variety of legal loopholes, proxy owners and shell companies; but all of this is risky and not advised. Many foreigners lose a lot of money coming to Thailand and attempting to buy land via various “structures”. Some get lucky, but the entire process of foreigners buying and selling land is quite risky and not recommended.
Foreigners can legally own condominiums, under certain conditions, but this “foreign market” results in inflated prices for condos in Thailand that are traded in an “artificial market place” designed for foreigners. Condos in Bangkok and major resort areas that are up-to-par with condos in the US can easily cost more than condos in major cities in the US. Hence, the cost of living in Thailand is not as economical as some might believe when you visit Thailand as a tourist.
Second, business in Thailand can best be described as protectionism with discrimination where the government has placed many barriers to entry to foreigners working and competing in Thailand. Every foreigner must have a work permit and these work permits are expensive and time consuming to maintain. If you own a business you must pay high professional service fees for “auditors” to perform annual and semiannual audits regardless of how much income you have (including zero). Firms in Thailand charge thousands of dollars for these ”audits”.
Third, if you operate a business in Thailand, you must have a place of business (you cannot legally work from your condo you bought at high prices!), so you are forced, by law, to lease office space. Foreigners from the US, for example, must be paid a minimum of 50,000 Thai Baht per month, so the government will take 10 percent of that each month as their share of tax withholdings. Startups with no income simply pay income taxes against their personal savings to comply with the law. Therefore, to start a company and maintain the business in Thailand, you are required to pay significant startup, monthly, semi-annual and annual fees, permits, tax, leases, visas, etc.
Forth, generating incoming revenue in Thailand can be quite difficult in a climate of both protectionism and discrimination. In Thailand, it is easy when you are spending money. This is the ”Land of Smiles” that tourists see and experience. However, when you are legally permitted to work in Thailand and trying to generate in-country income, you cannot help but notice the protectionism and discrimination against foreigners working and living here. Many foreigners working in Thailand just “give up” because the barriers to business success are quite high.
Fifth, on top of the challenges of protectionism/discrimination regarding foreigners and foreign investments, which I have only just scratched the surface here, is the overall global business slowdown combined with a climate of political instability which I am sure you have seen in the news. Thailand has seen 18 coups since 1932. Currently, Thailand is under a State-of-Emergency which negatively impacts business even more. Sound challenging?
Most people who live and work in Thailand have the opinion that it is far better to enjoy being a tourist here. Working in Thailand is very difficult for many reasons. Being a tourist in Thailand is completely different than working here. When you are a tourist, foreign currently flows from you into Thailand, so life in Thailand as a tourist is fun and friendly, hence the “Land of Smiles” you have heard about or experienced. However, when you are working in Thailand and trying to generate income from Thailand versus bringing in foreign currency, you don’t see the “Land of Smiles” quite the same anymore.
Without getting into too many details in this post, I can simply say that a foreigner doing business in Thailand experiences both protectionism and discrimination. I came to Thailand hoping to contribute my experience to help the Kingdom. However, sometimes it feels like foreigners are only welcome if you are working for free, giving seminars for free, and bringing in lots of foreign currency here.
In a future post on business in Thailand I will dive into some details on a number of topics that might be of interest to readers who will never have a chance to come and work here.
Reprinted with Permission from: Business In Thailand - Part 1: The Challenge
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