Looking For Gold In Thailand
A few months ago a survey with only 1 question : “Could you please give us your opinion about the scarcity of food in the rest of the world ?” was conducted worldwide. This survey led to chaos and meaningless discussions and therefore was a complete failure because :
– in Africa nobody understood the word ‘food’.
– in Western-Europe nobody understood the word ‘scarcity’.
– in Eastern Europe nobody understood the words ‘your opinion’.
– in South America nobody understood the word ‘please’.
– in the US nobody understood the words ‘the rest of the world’.
– in Asia everybody filled in the word ‘yes’ and left the room smiling.
Before you start reading, please go to your CD Player and program it to play Jethro Tull’s ‘Aqualung’ 3 times (without playing any other song in between), each time the song starts again, you should increase your volume with 20%).
Imagine the following : you have spent a nice vacation in Thailand and you consider relocating to this country so you want to know what you should earn in order to have a nice life over there. Sounds familiar ??? On a lot of internet sites (including Stick’s) you can find a lot of information about the cost of living in Thailand (mostly about BKK). Usually these ‘guides’ mention that the money you need in the big mango is +/- 35,000 – 45,000 THB per month, but that this figure depends on your (previous) life style.
I believe this is only partly true, and quite honestly most guides don’t mention that the money you need over there is mostly determined by your family status. This may be obvious to people coming from countries with selfish ways of living (I don’t mean anything bad with this) such as the US, the UK and Ireland, but not to people coming from countries with extensive social security systems such as Germany, France, the Netherlands etc…
For that reason I have almost never found any good overview about the real costs of living for families coming to live in LOS. There are some good articles about this but they are usually meant to be for extremely high paid executives (salaries of 350,000 THB and/or much more) so this may also not be representative.
I am not going to focus in this article on writing a guide for (sex) tourists desperately looking for a job (any job will do) and in need of some information about the cost of living. This submission is meant to provide information on the social security cost of living for expats or non-expats but mostly for people with children.
Quite honestly if so many low paid teachers in BKK complain about their low salary and hard life, I still don’t understand why they don’t try to become a tourist guide for package tours. (This is actually illegal – the Thai government doesn't allow non-Thais to work in the tourism field and they are fairly strict on this too! – Stick) But for this they have to apply in their home countries. If you are good at this you can easily make around 60,000 – 80,000 THB (after taxes), on the condition that you can sell some extras to your guests. But again I don’t want to elaborate on this issue.
This article is never meant to be about politics, even though I may critic some political systems. I also recommend to use the services of some specialized agencies; use at least 2 agencies (from different countries, because their advice can be completely different (due to cultural differences )) in order to know how much money you need a month in order to be able to meet the expected needs.
I once stayed for 4.5 months in BKK (in 1994) and up till now I am looking to find a decent (and well paid) job over there. I have received some great offers but since they never included international schooling, I have not accepted any of them. I couldn't live with myself when I would be enjoying myself while my children are receiving a lousy education.
I am not desperate so that's why I never accepted such an offer. But I still keep myself updated from information from my friends living in BKK, from information received from one of my best friends who is a consultant specializing in giving advice on companies about how much senior staff should be paid in South East Asia (and all the relevant tax issues) and from looking on the net (just wishful thinking ??) just in case a new offer was available.
2 Brief history of expat migration to Thailand
Abound 12 years ago, there weren't so many foreigners working in Thailand (I don’t take into account the NGO workers). These people who were lucky to be there, usually were well paid and everything (housing, international schools, medical costs, pension funds, …) was taken care off. Usually those people stayed for an average of 4 or 5 years.
In the nineties, more and more educated people came to Thailand, both working for foreign companies as for embassies or governmental economic aid and co-operation agencies. At around 1995-1996 a lot of western countries started to lower the amount of economic aid they were giving to Thailand (since Thailand wasn’t that poor anymore) and a lot of companies started to lower their investments and their presence in LOS for several reasons.
This led to a significant number of redundancies of highly educated farangs of which a lot did not want to return to their ‘cold hearted’ country in the West any more. The crisis of 1997 and 1998 even led to a lot more redundancies and ‘ex-expats’ desperately looking for work.
A lot of those ‘ex-expats’, who had already fallen in love with LOS, were willing to accept far worse conditions and some parts of their salary package could easily be cancelled without them really (immediately) feeling it :
– ‘ex-expats’ moved to cheaper places in this way they did not require the western
company to pay for a big villa anymore.
– pension funds provisions and health care were no long provided.
– no international school fees were required anymore.
– a car was no longer needed.
Unfortunately there were many companies, both western and Thai, that have understood that those people were that desperate to drop the above mentioned requirements on top of a salary cut and since then salary negotiations for people voluntarily looking for work in LOS have been seriously ‘disturbed’. This bad situation has even worsened due to the fact that each year more and more educated people coming to the LOS want to stay there and are therefore willing to accept inferior jobs and/or good jobs at inferior pay levels.. Unless a company really needs you to go working over there it is almost impossible for people with a wife and children to voluntarily relocate to Thailand (assuming you want (at least) maintaining your western life style).
Even if you don’t have a wife and children you still need to take a lot of issues into account before deciding to relocate to LOS. If you are desperate or only intend to work here for 2 or 3 years before you will settle down in your home country, then this article is of no importance to you. But if you have a good (or even an average) job in the West and are considering to give everything up to come and live here permanently then you need to think a lot about what you can really earn in LOS from (honest) work.
3 Social security in Thailand for foreigners
A lot of people get tricked into coming to work in BKK after they have been informed about their salary offered by their western company. In a lot of cases this is a little bit higher or equivalent to their salary (after taxes) in the west. No surpluses for going to work in Thailand? No, according to their company, life in Thailand is much cheaper so having the opportunity to work over there at a western salary is more than enough. Usually people having spent 2 weeks in Thailand (during their first trip over here), remember that everything was very cheap in LOS, so the offer of having a western salary will blind their eyes.
For a non-married western male between 25 and 35 years, the above is an excellent offer. Usually they don’t care a lot about social security; only ‘I’ and ‘now’ counts. I wonder what they may do once they start to settle down in LOS and have kids.
For married males (or females of course) with children, accepting the same salary you have in the west may look attractive at first sight, but the lack of other social security benefits may lead to bad surprises the moment their children start going to school.
4 Some big expenditures to watch out for
I only intend to mention a few (but according to me the most important ones).
In this article the following is assumed : 1 USD = 1 EUR = 40 THB.
4.1 International schools
For US and UK nationals having to deal with private schools and their expensive fees may be normal. I don’t want to start a discussion with this submission, but the bulk of public schools in the UK and the US is way below standards provided by public schools in a lot of European social security countries. On the other hand many good expensive private schools exist in the UK and the US whose standards are a bit higher than the standards obtained in continental European public schools. But those schools are only for the happy few (15-25% of the population). Whether I like a society with dual education standards is not important and beyond the purpose of this article.
In a lot of West European countries good schools are free and private schools sometimes get a negative connotation. With the exception of boarding schools or international schools for the children of diplomats, usually private schools/universities are used by parents whose children can’t pass (entrance) exams at good government schools/universities.
In social security countries it is, generally speaking, considered normal for the government to organize quality public education and to control the quality of education, and having to pay for education at a private school is almost equal to paying for your degree which sounds really negative (corruption ???).
Education for Thais is partly similar to the US system and partly similar to the continental European system. On top of this there is a lot of corruption (bribes being paid in order to obtain entrance permission).
Almost all Thai students want to study at Chulalongkorn University and/or at Thammasat University. These 2 can be compared to Cambridge and Oxford or Harvard and Stanford.
I don’t want to insult anybody in Thailand but all the other universities are considered to be inferior to those 2 (BTW Chulalongkorn has the best reputation). There are no others (no equivalents of Yale, Chicago, Warthon, …).
However a lot of the rich, whose children can’t pass the entrance exam at C.U or T.U. send them to expensive private universities (such as ABAC) where entrance is much easier or send them to ‘inferior’ Thai universities. Rumour has it that sometimes bribes are paid to get into good universities !!
Again I don’t want to insult anybody, but I sometimes notice a difference between C.U. and T.U. students and students from other Thai universities. So those 2 government universities are, in my opinion, the best. Unfortunately entrance is not cheap (but still much cheaper than private universities).
As far as schools are concerned, a lot of Thais send their children to expensive private Christian Schools (in Thai language) so that's probably why they have a much better chance of passing the entrance tests of C.U. and/or T.U.
As far as international schools are concerned, they are all private (with the exception of the French school and some others). There is a huge demand for those schools that's why prices are high.
There are also cheaper schools (but probably with less quality), but during the last 6 years rich Thai people are also starting to send their children to those schools in this way also pushing prices up.
And there are a few very cheap (???) international schools (+/- 10,000 THB per child), but they also get a lot of attention from the less rich Thais.
So even though schools are expensive don’t expect that those schools are desperately waiting for your money. They are not; some schools even have waiting lists.
I don’t want to discuss the price of every international school in detail, but broadly speaking, the average price for a high standard international school in BKK (per month) for the first child is :
– +/- 35,000 THB (aged between 16 and 18)
– +/- 30,000 THB (aged between 13 and 15)
– +/- 25,000 THB (aged between 10 and 12)
– +/- 20,000 THB (aged between 7 and 9)
– +/- 15,000 THB (aged between 3 and 6)
There usually is a 10% discount for the other children.
Some schools are more expensive, some are a little bit less expensive, but I believe the figures below (which included registration fees, tuition fees, campus development fees, English as a second language fees or fees for a supplementary language French or German) are close to the amounts that expats pay.
Some of the best schools even have the nerve of charging 40,000 THB up.
Unfortunately most of those schools also squeeze extra baht out of you by making you buy school uniforms, lunches at noon, special books, … (all with a big profit margin).
So sending 3 children (less than 12 years) to an international school will cost you around 50,000 – 60,000 THB per month. For 2 children this will be close to 35,000 – 40,000 THB.
4.2 Private health care
For US (and to a lesser extent) UK nationals it is normal to pay a lot of money for private health care since the government facilities are lousy and close to situations in less developed countries. Public hospitals in social security European countries are much better than their counterparts in the UK and the US even though they are much cheaper (this is because the government is paying the bulk of those medical costs).
On the other hand private hospitals in the US and the UK are well equipped and better than the public hospitals in western continental Europe. If possible, insurance for private health care is highly recommended in the US and the UK.
As far as Thailand is concerned, the contrast between private and public hospitals is even bigger. I once went to a public hospital (of Thammasat University); it is not something I recommend.
The last 2 years the government is trying to improve the quality of public health care, but again I don’t recommend you to try the ’30 baht scheme’ if you have a problem (not even for a minor one).
Examples of the price of private health care : an average ‘baby delivery package’ costs around 55,000 THB in a good BKK hospital. This amount is exclusive of a caesarian operation and/or an epidural injection (in the back of the woman to reduce the pain) but inclusive of 2 overnight stays in a nice room.
The cost of an operation at your knee (meniscus) costs around 150,000 THB.
The cost of a decent dentist is +/- 3,000 THB (for standard services).
Also the price of medicine is much higher than in Western Europe. For instance a standard injection for children <1 year against “rubella + hepatitis B + polio + …” costs around 40 USD.
So, in my opinion, there is no discussion about this issue possible : you need a good medical insurance for private health care (probably world wide insurance covering both hospital as medicine and dental care is the best).
I am not going to discuss all prices, because this depends on the company, on your age, on your status (family or only you), on the fact whether you are a boy or girl, on the fact that it only covers hospital costs and not the costs of medicines when you are just only sick or whether it covers all medical costs (including dentists).
I know for my case (1 adult +/- 30 year, 1 wife +/- 29 year, and 3 young children (less than 6 years old)) that the cost of excellent insurance is +/- 10,000 THB per month with a deductible (franchise) of THB 10,000 per year for all the costs of my family. Some companies allow a reduction in fees if it excludes certain diseases and events (f.i. pregnancies,)
I have a friend who took out a local insurance and only paid 19,000 THB per year. Last year he had an operation at his knee and had to pay 150,000 THB. He was in a bad mood when he found out that this kind of operation was not covered by his insurance policy.
When I worked in London my company took an insurance policy and paid 25,000 THB per quarter (but at that time I only had 1 child and pregnancies were not covered). So my company had to pay the costs of my wife’s pregnancy because I simply refused to use the services of the NHS.
So insurance in Thailand is expensive when compared to continental Europe but not when compared to the UK or the US.
4.3 Private pension provisions
Again for UK and US nationals it is considered normal that the government only provides you with a little pension (just enough to buy food for your dog), so those guys are already used to paying money to private pension funds. For nationals of continental European countries this is not the case. The bulk of their pension is paid by the government and a surplus is paid either by them or by their company.
In Thailand “nothing creates nothing” (this is the most important advice I always give to friends) : you will have a high salary after taxes but you don’t get any pension, unless you paid for it yourself.
Let’s assume you start working in LOS at the age of 30 and want to receive at your age of retirement (= 60) 60,000 THB (NPV) per month for 30 years (assuming you believe you die before 91), annually corrected with 3% for inflation.
Then you probably need to pay approx. 22,000 THB a month to a private pension fund (which only invests in AA-bonds and short time deposits). An insurance policy covering your death for your family members is usually provided for in this price. Of course investing in shares can lead to a higher pension but this is more risky.
4.4 Hidden social security charge
A very small social security charge is levied on a (higher) farang’s income in Thailand, but don’t expect to receive anything from this.
Don’t expect to receive money when you are absent for a long time due to sickness, don’t expect any pension or good health care, or unemployment benefits either.
Generally speaking it is almost impossible to buy a house in Thailand (an apartment is easier, but only if you don’t want an apartment with a private garden). I know there are some legal constructions possible, but the Thai government may change its mind (once more) and may prohibit the extension of the lease of the land on which your house is built. I am still waiting for the first person telling me the correct way to own a house with a decent piece of Thai land in your own name without any legal/political risk.
One can also not be completely sure about the future of Thailand in case some important figure may die. Also some potential future conflicts with neighbouring countries like Burma and Malaysia (and last but not least Vietnam) are leading to general uncertainty about Thailand's future. There simply is too much uncertainty as far I am concerned to even consider buying a house.
On the other hand it is very positive that at several locations in LOS the rent is much lower when compared to houses with the same purchase value in Europe or the US. So renting may be worthwhile. (usually the quality of the houses is lower, so why buy it anyway ?)
But due to this uncertain political climate you may be forced to rent your dream house (instead of owning it) so you just loose some of your money forever.
I guess a modern medium sized house with A.C. and with a small garden and 3 bedrooms (1 big and 2 small ones) rents at +/- 22,000 THB at a location +/- 8 km away from the business center (of course at Silom Road rents are higher). Probably 10,000 THB of your rent is lost a month because you will never own your house (if you buy a house, you have to pay interest on the loan, which is also lost, but your redemption of capital is usually not lost). Also in LOS, tax advantages for a mortgaged loan are usually not available for foreigners.
Prices of cars are much higher in LOS so you have to take this into account if you plan to buy a car over here.
5 Cost of food
For a tourist Thailand is a paradise because of its cheap delicious food. For a lot of expats food is not that cheap. If you want to buy a lot of important goods such as chocolates for your children, a medium quality bottle of wine, good coffee, you pay 40% more than in your home country. Of course this rule does not always apply, but believe ‘Murphy's law’ on this issue.
Another thing that bothers me is that people always compare the price at foodstalls or cheap Thai restaurants with restaurants in the west. I am sure that most of the people in the West don’t go to a restaurant 2 times a day every day, especially not if they have some children. So I believe you should compare the price of cooking yourself at home in the West using ingredients bought at Tesco, Albert Hein Carrefour, with the price of going to a medium quality A.C. restaurant in Thailand (given the fact that cooking yourself in Thailand will almost not lead to saving money).
If you (just like me) like drinking a bottle of medium quality wine 2 or 3 times a week (it’s good for your health right ??), then food is not that much cheaper in Thailand.
Western children don’t always like eating rice everyday, so a lot of expats may end up going to McDonalds and Pizza Hut, in BKK quite more often than they did in the West.
6 An example of a salary received in Thailand and in Western Europe
Below I shall make a comparison (using chapter 4) for the same salary and social security received in Thailand and in Western Europe. I have worked and lived in the UK, the Netherlands and Belgium, so for this article I’ll use Belgium since it is quite close to the Netherlands and Germany and France.
Assume the following :
– gross salary cost (= total cost) of 200,000 THB (paid 12 times a year)
– married couple
– 1 child of 3 years
– 1 child of 6 years
– 1 child of 8 years
6.1 the Thai situation
Again this submission is not the best salary calculator guide but my calculations have been checked by my friend who is an expat consultant. What is mentioned below is the result of detailed calculations) :
In Thailand you can’t deduct large sums (from your taxable income) because you have a wife who is not working and dependant (for tax purposes) children.
– monthly net salary : 149,000 THB
– cost of pension : – 22,000 THB
– good health care : – 10,000 THB
– good school : – 50,000 THB
? real net salary 67,000 THB
In case of only 2 children (no child of 8 years), real net salary will be close to 89,000 THB.
Taking into account the fact that 10,000 THB of your rent is lost, your financial situation is even worse.
6.2 the European situation
In the Netherlands you probably have a higher monthly net salary than in Belgium but a lower child allowance so the result at the end of the day is almost the same.
In Belgium you can deduct large sums (from your taxable income) because you have a wife who is not working and dependant (for tax purposes) children.
A salary cost of 200,000 THB per month equals a gross salary of +/- 160,000 THB per month.
– monthly net salary : 102,000 THB
– child allowance paid by the government 17,000 THB
– cost of pension : – 4,000 THB
– good health care : – 1,000 THB
– good school : – 3,000 THB
? real net salary 111,000 THB
In case of only 2 children (no child of 8 years), real net salary will be close to 100,000 THB.
For a family with 3 children the Thai situation is showing a real net monthly income of 57,000 THB (67,000 – 10,000), whereas the same salary cost in Western Europe will show a real net monthly income of 111,000 THB. In other words : you loose 54,000 THB or approx. half your monthly income by relocating to Thailand.
For a family with 2 children the difference is approx. 21,000 THB (= 100,000 – (89,000-10,000).
6.4 what if you are single and have no children ?
Assume the following :
– gross salary cost (= total cost) of 200,000 THB (paid 12 times a year)
– single male
– no children
– no ownership of property (and no desire to own it) in the West
A the Thai situation
– monthly net salary : 147,000 THB
– cost of pension : – 20,000 THB
– good health care : – 5,000 THB
? real net salary 122,000 THB
Taking into account the fact that 10,000 THB of your rent is lost, your financial situation is a little bit worse than the one mentioned above.
B the European situation
In Belgium a salary cost of 200,000 THB per month equals a gross salary of +/- 160,000 THB per month.
– monthly net salary : 87,000 THB
– cost of pension : – 4,000 THB
– good health care : – 1,000 THB
? real net salary 82,000 THB
For a bachelor the Thai situation is showing a real net monthly income of 112,000 THB (122,000 – 10,000), whereas the same salary cost in Western Europe will show a real net monthly income of 82,000 THB. In other words : you gain 30,000 THB or approx. 35% of your monthly income by relocating to LOS.
As can be seen in the above examples the salary needed in LOS is much more determined by your family status than by your previous spending pattern in the West.
Of course you could always send your children to a local school, but hey do you really want to do that to them????
I am convinced that this submission will get the disapproval of many readers, desperately looking to find a way to stay in LOS, but I stand by my opinion that you should not destroy the ‘Thai expat labour market’ by accepting inferior salary packages. Come on, think again, you can’t have a decent life over here for a long time living on <50,000 THB a month.
On the other hand I can understand why companies prefer to hire non-married expats; the difference in costs is usually not justified.
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I very much enjoyed this article and agree with a lot, but there are a few small issues I would contend. Firstly, the medical prices you quoted did seem awfully high. I know people whop have gone through many of these procedures and paid much, much less – and been very satisfied with the service they received. A friend spent 9 nights in one decent Thai hospital and the total bill at the end was 22,000 baht. Not cheap, but not outrageous either.
I know some people who spend a total of 20,000 baht a month and are very happy and others who insist that they simply cannot get by on 150,000 baht a month. The degree of happiness of these folks would be about the same. Thailand is an odd place in that you can spebnd a huge amount of money if you want to and have an absolute ball, but if you are prepared to go somewhat native – and are happy doing so – then you can live on lot less.
However, as you clearly state, one should not shirk their future and should not overlook retirement plans.