Stickman Readers' Submissions January 6th, 2004

So You Want To Do Business In Thailand?

I have been here for some years and have worked both as an employee and as the owner of a small Thai company. I have an MBA from a foreign University but best of all I have a wife who is determined and hard working. Our business makes a profit and keeps my wife away from the shops, what more can a husband want?

My comments are aimed at those serious individuals who want to make a life and successful business in Thailand. You have to be committed to a small business and if you do not like putting in 12 to 16 hour days 7 days per week then you are probably better off finding a job.

He Clinic Bangkok

It takes capital to start up a business or buy an existing one. If you start a new one you may well not see any profits you can take out of the company for several years. In the meantime your living expenses will be minimal as you will live your business and if you work out of a shophouse you probably will live IN your business.

Forget getting a bank loan, you have no collateral and no permanent base in Thailand and a bank would be mad to lend you even one baht. (Maybe after 12 months successful trading they will let you have a credit card). Therefore budget wisely and find the capital before you start, most business failures are due to under capitalization, a poor business model or lack of effort.

It is a decided advantage to be able to speak Thai to your staff and customers. Unless you really are a one man band then your staff will be able to read and write Thai and deal with the mail but you need their confidence and trust. It is very frustrating to not be able to talk to people directly and rely on an interpreter.

CBD bangkok

It is of course perfectly possible to run an unregistered business and avoid all taxes but you will be relegated to a cash business which will be difficult to sell when you want to move on as you will have no history, no credit, no audited accounts etc.

It is advisable to set up a company with 2 million baht fully paid up capital because then you can get a work permit and be legit. If you do not then you can visit the premises and attend board meetings but not sign letters, stack shelves, work the till, type memos etc. As you will be working every hour God sends this will be somewhat inconvenient.

The requirement for company registration is that there be a minimum number of seven shareholders and a maximum foreign ownership in certain sectors. You may be better off registering your company with an overwhelming majority Thai ownership but do include yourself as a minority shareholder as it will assist later with bank accounts etc.

If you do not know six Thais with ID cards who would willingly sign up as shareholders then you may as well give up now, you do not know enough about Thailand and enough people to be successful.

wonderland clinic

You would be well advised to keep within the laws of Thailand as you expose your investment to attack from an increasingly nationalistic government, which may wish to garner a few votes by attacking farang interests.

This especially holds true in property companies set up to invest in real estate. The regulations have recently changed and the government is no longer investigating companies which buy property with substantial minority farang shareholdings, anything up to 49% is for the moment OK. If it is proven the company is a mere shell to get around foreign ownership prohibitions then you will be closed down and the property confiscated. IT CAN AND DOES HAPPEN!!

There are many details to be sorted including registering your premises which are visited before your company is registered. Your company will need a registered address with photographs, maps, office furniture and employees which means you will have to rent some offices, a shophouse whatever and you will need a copy of the house registration. You will also need a certain ratio of Thais to farang workers but it is debatable as to whether this is really checked and a bit of grease will make the wheels turn.

This is a lot of work already but you still have to go to the bank. My experience is that Thai banks, telephone companies, agencies etc. are very suspicious and difficult to deal with as a foreigner and rightly so given the aberrant behavior of many wannabe farang company owners. You need determination, patience and charm.

Even I have been reduced to a gibbering wreck by dealing with these people. Expect at every turn to be asked for copies of your passport, visa, work permit, company registration, minutes of your general meetings, board resolutions etc. etc. etc.

If, God forbid, I started another small company in Thailand I would not touch the paperwork. It is even worse than getting a shipment out of Klong Toey port. I would employ both a company to handle the registration and an admin clerk to handle all the other paperwork. A good one is Asianna Oriental at which is actually a Thai company and very efficient.

You may before you complete the start up wish you had never started!!!!

Once this is all complete which could take several months you would be ready to start business, but what business? If you thought hairdressing, building construction or a bar were your thing then you would be disappointed to find it is Thai only. You can do it anyway if you are a majority Thai company but you may be plagued by government officials and police, who will see you as fair game for a few baht.

Some of the ideas floated on this website for business ventures could be examined but the rules are the same the world over. Research your market, stick to what you know, be careful who you employ, pay your taxes on time, work very hard, make lots of local contacts, watch the till like a hawk, keep proper accounts, hide the profits.

If you should ever make a profit then you are in the minority of farang start ups in Thailand.

The highest failure rate is in bars and restaurants but as an experienced barkeep or restaurateur you would know that, wouldn’t you?

Stickman says:

No doubt it is very tough and I bet most farangs cut a few corners here and there. I must admit that I know few farangs who are successful in business here and the ones that are tend to be very evasive about how well they are doing, or even just what they are doing. Wise.

nana plaza