Because starting a business in the kingdom presents another set of challenges for the foreigner, here are some helpful tips.
by Christopher Scott Dixon.
Dreaming about opening your own beach bar in Phuket, launching a business in Chiang Mai, or running a little coffee shop in Bangkok? The warm smiles from the locals, the even warmer weather and the multiple attractions of the more relaxed Thai lifestyle can be powerfully seductive not only for the thousands of tourists who flock to Thailand’s sun-kissed shores but also for those who are aiming to put down more substantial roots.
Be careful, however, as without researching and receiving the correct advice, it can be like walking blindfold through an administrative and bureaucratic minefield and that’s not even taking into account the cultural and language differences!
Despite the above reservations, once armed with the correct guidance, starting a business is actually not as difficult as you might think. The country is extremely capitalistic and is very receptive to both foreign companies and investment.
There is potential here to develop an idea, but it is important to focus on a number of key areas.
- Have a solid idea and workable business plan.
- Have enough supply funding to begin your business.
- You must have a willingness to comprehend the Thai business mindset, culture, possess an open mind, and have lots of patience.
Those used to the more rapid and direct Western approach to commercial matters and decision making may have to bite their tongues and count to 100 at the way things are conducted here.
Business organizations in Thailand can be classified into partnerships, companies, or sole proprietorships. Other categories include a branch office, representative office, or a regional operating headquarters.
For foreigners, there are two main ways to start a business in Thailand. Either in partnership with a Thai citizen — but because of the complex nature of labor and immigration laws, the alien, which means the foreigner is not permitted to participate in the daily running of the business. A local partner is required to front the operation – or as an alternative, you can form a limited company.
A word of warning: Foreign shareholders are only allowed a maximum of 49 percent, so the owner might, on occasions, be outvoted by the 51 percent majority Thai shareholders. There is also a need to employ a minimum number of Thai staff per foreign employee.
Adhering to the rules of the country before embarking on the process of establishing a business is vital too.
The Alien Occupation Law requires all foreigners working in Thailand to obtain a Work Permit prior to starting work in the kingdom. There is an exception when they are applying under the Investment Promotion Law, in which case they 30 days to apply. In terms of a visa, non-immigrant visas give the holder eligibility to make an application for a work permit. In the interim period while the work permit application is being considered, the holder is allowed to work.
It is interesting to note that the Thai legal system with regard to tax and company matters is quite significantly styled after the USA and a number of European countries including France and Switzerland. As a result, most foreigners do actually find it business founding procedures relatively undemanding and easy to work with. Again though, this is when you have quality and expert advice to take you every step of the way.
There is much assistance available both at national and private level. The Board of Investment (BOI), based on Vibhavadi-Rangsit Road in the Chatuchak area of Bangkok, offers a raft of services and advice for would be entrepreneurs both local and from overseas.
This includes site visits, identifying potential suppliers, subcontractors and joint-venture partners. It also helps to coordinate between the foreign business community and other public agencies (www.boi.go.th/index.php?page=index&language=en).
With the advent of ASEAN and the freedom of movement that community heralds and the burgeoning economies of neighboring Vietnam and Cambodia, which are keen to attract foreign investment, the Thai government is anxious to increase the speed and simplicity at which businesses can be set up here.
The country’s global ranking as to the ease of doing business fell three places last year to 49th, this was due mainly to lower marks for business start-ups and obtaining credit according to the World Bank’s latest report.
The figures show that it takes 27-and-a half days to establish a business in Thailand compared with a world average of less than 20 days. The country ranks 96th for starting a business, declining sharply from 2014’s 75th position.
Climbing back up the table for the stress-reduced process of conducting business is one of the government’s top priorities for 2016 and beyond. There is a recognition too of the shift in Thailand’s economic growth model from export driven toward a more investment-fueled economy.
Knowing just how to invest your money requires not only sound guidance but also trust in what are critical life decisions. Harvey Law Group (HLG) (www.harveylawcorporation.com) is one of the top law firms, not only in Thailand but globally. It was founded in Canada in 1992.
HLG’s focus is in two main areas, pure legal services including employment, company incorporation and commercial law and a category it has been specializing in since 1992-Investment Immigration or mobility. This in essence means that as a return for investing a particular amount of money into a country’s economy. The investor gains the right to permanent residency, to reside, or citizenship in that country.
Integral to HLG’s reputation for sustained quality and wise advice is the core strength of personal interactions with clients from start to completion of whatever process it may be.
A number of other firms provide expert help and a range of services including Siam Legal Group (www.siam-legal.com/Business-in-Thailand/business-in-thailand.php) and Allan & Overy (www.allenovery.com/locations/asia-pacific/thailand/en-gb/Pages/default.aspx).
A good business plan, enough finance, talk to the right people, and Thailand can truly be the ‘Land of Smiles’ for you!