Important Things To Consider When Setting Up A Business In Thailand
Once you successfully get through the complexities of starting a business in Thailand, everything will be a breeze then. But the most challenging part of all is ensuring the success of your business. Yes, how exactly do you get that done when you are in a country with culture and politics different from your own? Where exactly do you start?
Start on the right footing….
What exactly do I mean by this? I am stressing the importance of beginning the business right by ensuring that your business is following the law by meeting the legal requirements. The key to this is understanding Thai laws and how it affects foreigners.
There are three areas of concern you need to familiarize:
1. Foreign Ownership of Limited Companies
ALL Thai companies must be majorly owned and controlled by Thais. (You can refer to the Treaty of Amity and Economic Relations for more information on this.) So what most foreign investors do to protect their investment is to use a dummy Thai investor. Very clever. But take note that the Ministry of Commerce is putting foreign-owned companies in strict scrutiny. It may check your company’s shareholder’s capability to invest, so make sure you don’t just use anyone; otherwise, suffer the consequences.
Expert legal advisers have a better idea though. Establish a 100 percent Thai owned company then transfer 39 percent to 49 percent of the share to your name later. Having genuine Thai shareholders who are committed in your company is advantageous compared to using a dummy.
2. Foreign Ownership of Land
Currently, no foreigners can own a land in Thailand, but you can circumvent the law by forming a 100-percent Thai owned property then forming a second company to buy the 49 percent of ownership. This is a bit risky though, not to mention complex and expensive to maintain. So you might as well consider buying a land in the name of a Thai you can trust (your Thai girlfriend or wife for instance), and then ask that person to issue you a renewable 30-year lease of the property.
3. Visa Requirements
American planning to open a business in Thailand need to secure a Thai business visa from the Thai Consulate or US embassy, and these are best obtained before going to the country.
You have two options for this: 1) a 90-day visa, which is initially issued to allow you to process the work permit and all other requirements, 2) one-year visa, which is issued if you want to frequently travel in and out of the country.
“When in Rome, do as the Romans do.”
Or shall I say, “When in Thailand, do as the Thais do.” Learn the Thai business culture and etiquette!
Key points you need to remember
1. Presentation Matters (A LOT). Dress well, dress smart, and dress politely because Thais respect well-mannered people. This is especially important when you are dealing with Thai customers and government people. You will be treated respectfully if you dress properly.
2. Building Relationship Is the Best Business Style. Thai businessmen only do business when they are comfortable with the person (or company) they are dealing with, and they often trust people slowly. The key to establishing a good relationship with them is by being patient, by showing respect to others, and by being calm no matter the situation.
3. Respect to the King and Buddhism Is a Must. All Thais have a deep love and respect for His Royal Highness King Bhumibol and the Royal family. This is due to the King’s decades’ of good leadership. So don’t be surprised to see his photos and posters framed inside business premises. Also expect to see a spirit house in the workplace.
4. Communal Ceremony with Buddhist Monks Is the Tradition – Before launching the business, it is customary to invite a monk for communal ceremony. This is to get rid of the bad and unlucky spirits and to set the business on the right path.
Additional Guides
The same with starting a business in any other location, you will best succeed in doing business in Thailand if you:
• Have studied the market well and has drawn a realistic business plan
• Have enough capital to keep your business rolling within 2-3 years
• Have the open-mindedness needed to understand and adjust to the Thai culture and their mentality
As someone who is a Thailander, I have curtailed some pros and cons of doing business here. I hope that this will not discourage you but instead make you fully ready for the challenges of setting a business in Thailand. After all, it just depends on how you look at it as the more challenging an undertaking is, the more fun it will be to get to the top!
The Cons
• The majority of their infrastructure is poor but government efforts are slowly turning this around especially that more foreigners are eyeing to invest in Thailand and bring their business there.
• Finding staff who is fluent in English can be difficult
• Dealing with different staff culture along with communication issues
• Shares of the company can only be owned up to 49% (also applies to land)
• Potential government bureaucracy
The Pros
• Very low cost of employment which offsets higher profit
• Cheap office rental, storage or other necessary business space
• Very affordable cost of living (provides a lot of savings compared to being based in the US)
• An amazing social life after working
Also, do not immediately decide on a spur-of-the-moment just because you got enamored by the thought of staying in Thailand longer. You must get a better feel of what you will get yourself into so observe thoroughly and ask a lot of questions to American nationals who have already done or opened a business in Thailand.
Unless you have a lot of spare capital to spread around, proceed with caution before opening any type of venture in the Land of Smiles. Most importantly, you have to learn the Thai language and read it if possible whether you like or not so that your business will have the potential to successfully grow.
Lastly, assess your goals efficiently and go through with your business plan. If your dream is to be an owner of a small business with a limited capital, you have to be realistic in accepting that it will not make you a millionaire back home in the US. But if your business gets a steady growth every month, you can look forward to enjoying a very comfortable lifestyle while getting the most of what Thailand has to offer.
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