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Problems of setting up business in Thailand
Problems of setting up business in Thailand
There are different types of problems of setting up business in Thailand. Setting up a business anywhere in the world is an arduous task and potential risk will often obstacle your route to success, especially when you are in a foreign country. Starting a business in Thailand is not quite different as well. Economically, 67 million-strong population of Thailand forms a strong consumer base, which is appealing to internationally expanding companies. Steady infrastructure, strong exports, an abundance of natural resources and educated, cost-effective workforce attract foreign investors and enable their business industry to burgeon in Thailand. However, starting a business in an overseas country is often associated with several legal, cultural, taxation and regulatory challenges that is why having local help is more than necessary if you want your business to succeed.
Starting a Business
Starting a business includes four procedures which take almost a month on average in Thailand. Register the company name, deposit funds into a bank, obtain a corporate seal are some of the initial steps required to register the company as a legal entity.
Dealing with Construction Permits
Eight procedures, which take a minimum of 157 days to complete, are involved with obtaining construction permits. The local Metropolitan Authority processes all inspections, permits and approval, before the required connections can be carried out.
A foreigner can own a highest of 49% share in a Thai company. This is why the importance of a good lawyer and sound business partner is emphasized, as effectively you will be in the minority. Make sure that voting rights are fairly setup to ensure that you still maintain control over your business. 100% foreign ownership can be obtained in specific cases with the BOI, and there are also treaties that allow Americans and Australians to own their businesses – subject to a number of criteria that must be met.
Not permitted to explore all fields:
There are fields in which foreigners are not allowed to work. However, most of these are generally low skilled fields and not of interest. The majority of fields that expatriates are interested in, almost all of them are open to be explored.
The Thai language is another obvious obstacle. An issue that everyone must face is that the rules, instructions and forms are all written in the Thai language. This requires a lot of adjustment for almost all foreigners who are illiterate in the Thai language, so they have to depend upon someone else to read the rules, instructions and forms, and then tell you in plain English. Nevertheless, you have to make sure that all documents are properly translated and proof-read by an educated, trustworthy, deft and sincere person. Thailand is full of ‘helpful’ people who will say that can do things that they cannot. Do not make the mistake to handover this task to a helpful amateur. Thais in general do not have good spoken English, including in most government offices. The vocabulary for doing business requires having a very rich vocabulary, quite different from ordinary socializing and talking among vendors on the street.
Undoubtedly, Thai culture is very different from ours. To do business in their country, you need to follow their rules and their customs.
A Thai accountant must be hired
You will need a knowledgeable and competent accountant to handle all the communications (both spoken and written) and tax matters with your clients’ accountants and all officialdom. All documents will be in Thai so make sure that the accountant is expert as you may have great difficulty understanding what is required. Any problems or errors they make will be your problem and you will be liable for the penalties. They may also have to explain some accounting things to your employees.
When you first open your company accountant if your company is small, then the bank may not give you a checking account. You may get only a savings account, from where you can only withdraw cash. You will not get an ATM card with a company account. The bank will write up individual bank cheques upon request, which is a time consuming process. You often pay your clients in either cash, or transfer/deposit funds into their account at the bank. Not only that, loans are very difficult to obtain. If you are setting up a business, it will be nearly impossible to get a bank loan from within Thailand. The only option you can avail is private loan.
8 hours a day or 48 hours per week– Thailand abides by this work policy. In case of over time workers must be paid at between 1.5 and 3 times the normal rate. This is something to keep in mind in your business plan – your costs may be higher than you estimated.
Political and economic turbulence
Even though the Asia Economic Crash of 1997 was a long time ago, it dug a very deep hole for Thai banks to recover from, and the amount of debt is still very large. It also deeply affected Thai law and regulations. However, the economy restructured and recovered since then.
One final thing you should think about is that Thailand has a clamorous history of political instability with military coups since a couple of decades. It is also quite evident at this moment that foreigners living in Thailand for a long term will not be granted full rights as a Thai in near future. Thai immigration laws can be vicissitude, limiting the duration of a foreigner’s stay in the country or create more legal red tape. So foreigners planning to set up a business here should also formulate a back-up plan before investing.
Along with plethora of promising aspects there is a lot of uncertainty as well in the business field of Thailand. However, there’s a website named www.thaienglish.com which help newbie foreigners in translating of documents, doing research in the Thai language web and other media, getting information over the phone, receiving calls for you, going to meetings with you as an interpreter, and other such matters where language is the main limitation. No risk equals to no gain. So if you want to prosper in a foreign land with your business you need to take bit hassle for greater prospects.