Bangkok Doing Business
Following the Asian financial depression of 1997, Thailand further opened its economy to foreign investment. Manufacturing and professional services, except banking, present few entry problems for the would-be investor. Even so, the government continues to closely guard some industries by limiting to 50 percent foreign ownership of companies in many sectors. As a result, foreign investors partner with law firms and trusted local acquaintances.
Owning land is another tricky issue, although the regulations were eased by land-reform bills passed in 1999. Regulations also vary depending on region. Investing in remote and less-developed areas is rewarded with easier regulations and greater incentives.
The Board of Investment (BOI) offers qualified foreign investors a number of incentives, including tax holidays.
Establishing a business in Thailand may seem daunting with all its regulatory hurdles, but some agencies can be hired to facilitate the registration process. Some of these companies advertise in the classified sections of English-language newspapers such as Bangkok Post and The Nation.
Chambers of commerce, contactable via your countrys embassy, can also offer advice and assistance in finding suitable Thai partners.
Kinds of businesses that foreign investors can set up
Thailand provides for three general types of partnerships:
- Unregistered ordinary partnerships, where partners are jointly and wholly liable for all obligations.
- Registered ordinary partnerships, where the partnership becomes a legal entity, separate and distinct from the individual partners.
- Limited partnerships. Individual partner liability is restricted to the amount of capital contributed to the partnership. Limited partnerships must be registered.
B. Limited companies
- Private limited company. Must submit a Memorandum of Association (Articles of Incorporation) and Articles of Association (By-laws) as its constitutive documents. The registration fee for a private limited company is 5,500 baht per million baht of capital.
- Publicly limited companies may offer shares, debentures and warrants to the public and apply to have their securities listed on the Stock Exchange of Thailand (SET), after complying with requirements, such as the submission of a prospectus. The registration fee for a public limited company is 2,000 baht per million baht of capital.
C. Joint venture
Not considered a legal entity based on the Civil and Commercial Code. The Revenue Code, however, recognizes a joint venture as a single entity whose income is subject to taxes.
D. Branches of foreign offices
For a foreign branch to be granted an alien business license, the working capital brought into Thailand must be equivalent to 5 million baht over a four-year period.
E. Regional head office
Companies establishing regional offices need not register or incorporate as juristic entities in Thailand, and need not submit financial statements to the Department of Commercial Registration. The department assists in the Customs clearing of foreign staffs personal effects, applying for visa extensions, and changing visa types.
As a matter of norm, work permits for up to five foreign staff may be granted, but this can be expanded on a case-by-case basis. The government charges up to 1,000 baht per year for new or renewed permits.
F. Regional trade office and investment support offices
In 1996, the government announced businesses that provide:
- Information services related to sourcing and procurement, but not brokerages or agencies;
- Engineering and technical services, except those related to architecture and civil engineering;
- Testing and certifying standards of products, production and services standards;
- Exporting of all types of products;
- Wholesaling of all types of products within the country, excluding local agricultural products, arts & crafts, antiques, and natural resources;
- Provision of training on the use of machinery, engines, tools, and equipment;
- Installation, maintenance, and repairing of machinery, engines, tools, and equipment;
- Calibration of machinery, engines, tools, and equipment; and
- Computer software design and development
may receive the following incentives:
- Permission to own land for an office;
- Permission to bring in foreign nationals to undertake investment feasibility studies;
- Permission to bring in as many foreign technicians and experts as required;
- Permission to take or remit foreign currency abroad; and
- No limit in the number of shares owned by foreigners.
Things To Know Before Starting Up A Business In Bangkok
Relocating your business to some other city is a strategic decision. It is important to learn the business etiquette of the country one is relocating to at the earliest, for starting up and carrying on the business there. If you are moving to Bangkok, the following information will help you setting up your business there.
Business Etiquette in Bangkok
Keep the following things in mind while doing business in Bangkok
•Business Timings: Business hours in Thailand are no different from what they are in most other countries. The only difference is that people in Thailand work half days on Saturdays unlike other western countries, though conducting meetings on a Saturday is quite unpopular. The business remains closed for fifteen days in a whole year on account of public holidays. Before arranging any important meeting, make sure that no public holiday is falling on that date.
•Traffic Delays: Commuting in Bangkok is highly unpredictable and reaching 30 minutes late from the scheduled time is not a cause of alarm. Lunch and dinner meetings are preferred while meetings at breakfast are uncommon.
•Dress Code: Western style of dressing comprising suits and ties is followed while conducting formal meetings.
•Securing Orders and Contracts: Quite different from other countries, Thais do not make use of English for carrying on their business. They are too skeptical about trying new products even though those products are tremendously successful in other parts of the world. One requires demonstrating the uses of the product to them in order book orders.
•Getting Payments: Securing payments in Thailand on time is a daunting task. Making delayed payments is a common observation. People have fixed payment dates for business payments and do not entertain requests for making payment against invoices on dates other than the fixed ones.
•Office Location: Though offices are spread across the whole of Bangkok, getting an office place in a prime location is important for business. Also, as already mentioned, traffic delays are unavoidable in Bangkok and reaching to a remote office area may delay your work.
One can arrange for an office on rent by logging in to www.moveandstay.com, a premier website that deals in arranging first class office spaces and residential apartments on rent.
Though Bangkok has opened up its economy, a lot more is needed to be done in order to attract business investors. There are certain industries that are well protected by the government of Thailand by restricting the foreign ownership to 50%/. With numerous regulatory authorities present in the system, one requires to take professional help of solicitors and agents to proceed with registration and other statutory requirements.