Reporting from: Bangkok, Thailand
Growing up, my father always had a pair of galosh overshoes for keeping his shoes dry when it rained or snowed. I always wondered what happened to such galoshes; they seem to have become irrelevant in today’s society.
Yet, I was wishing for just such a pair of overshoes this morning as I headed out of my apartment in Central Bangkok. The water level in the street came up to my mid-shin as I tip-toed to the middle of the road where flooding was minimal.
You see, for the last two days, it’s been a torrential downpour here — literally non-stop. While Thailand excels in world-class health care and has some of the region’s best nightlife, they haven’t completely fine-tuned their infrastructure. To be honest, the flooding here in Sukhumvit is worse than any flooding I saw in Cambodia. And yet, Thailand is a popular destination for expats wanting to start a business overseas.
Which brings me to the question I get asked more than any other: “How can I start a business in Thailand?” (Replace Thailand with the Philippines or any other country.)
I spent much of yesterday sitting with a grizzled veteran of Thailand business. He’s been here for nearly two decades and has seen Bangkok rise from the likes of what Phnom Penh, is today to a huge city with a serious skyline.
And, over the course of our five-hour meeting, he repeated something I’ve heard from business brokers, investors, and expats alike: starting a business in Thailand isn’t for the faint of heart.
Specifically, to start a business in Thailand requires serious capital. Unlike an emerging frontier market like Cambodia, a more developed market like Thailand doesn’t make it as easy for just any entrepreneur to come and start just any business on a shoestring.
One expert suggested that you should have at least $100,000 to invest in your business. Another said $250,000. And my new contact yesterday stated that the general rule is to have enough to invest so that you have a huge cushion left over.
Unlike the frontier markets I gush about because they are easily accessible to fresh entrepreneurs, Thailand presents other challenges.
And that means the failure rate is high. I keep hearing about the idea of “running out the clock”, which basically means that your average expat has a set time left in Thailand before he goes home with his tail between his legs. Many foreign entrepreneurs have come to start a business in Thailand and met with great resistance.
Perhaps that’s because Thailand is no great secret and hasn’t been for some time.
A man got angry when my producer contacted him to be a guest on my radio show; he suggested I was in Thailand just to meet “boom boom girls”. While my youthful naivety keeps me from understanding his point, Thailand does have a largely unearned reputation as an expat paradise.
That means you’ll be competing against a lot of people who moved here for the weather, beaches, and women. Unlike the Philippines, where foreigners are encouraged to open outsourcing businesses targeting customers back home, most Thai businesses cater to the local and tourist markets in Bangkok and tourist cities like Pattaya and Phuket.
If you’re ready for the competition, here is an overview of the steps.
How to start a business in Thailand
If you’re an American, you can begin by using the Amity Treaty, which allows US persons and companies to own 100% of a Thai corporation without many hassles. Due to a highly-touted and longstanding friendship between the two countries that dates back to the Civil War, Americans have a leg up when doing business in Thailand.
That means US citizens are exempt from foreign ownership requirements set forth by the Alien Business Law of 1972 and can operate in the same manner as a Thai-owned company without Thai partners. Americans can’t start their own bank or take part in the telephone business, but they have a lot of other options as long as a majority of owners and directors are Americans.
However, starting a business in Thailand may not be cheap if you’re a bootstrapping entrepreneur on a tight budget. Amity Treaty companies must still abide by other foreign business laws, including a minimum paid-up capital of two million Thai baht (about US$65,000). Certain licensed businesses will have to cough up about $100,000 to get started.
While that’s not a huge chunk of change, it could discourage a small-time entrepreneur from coming here, especially considering that Cambodia next door (which, as you can probably tell, is my favorite investment destination in Southeast Asia) allows foreigners to fund a business with $1,000…
… and Cambodia is actually one of the most laissez-faire countries for business in the world. Most people couldn’t even tell you what the regulations are, let alone be bothered.
In Thailand, however, that’s a different story. There’s a decent amount of paperwork to set up your Thai corporation. Lawyers can handle it for about $3,000, but Amity Treaty companies must pay an extra 42,000 baht (US$1,350) to be properly certified.
Doing business in Thailand under such a process also requires you to hire several Thai workers and to have a place for them to work. That means renting a cheap commercial space for your workers to report to (the Thai government hasn’t caught on to location-independent work yet).
Typically, your investment will get you one work permit to live in Thailand and manage your business. I’ve heard rumors that an investment in the eight figures Thai baht (a couple hundred grand) could allow the government to ease up on their policies and allow you to import more foreign workers, but you can’t be certain about that. Amity company or not, you still have to hire Thais.
That said, Thailand is certainly one of the most popular destinations for location independent business owners. If you’re willing to take a class or two to learn Thai or any number of other languages, you can get a Thai education visa for (well) under $1,000 a year while you run your business by laptop or phone.
However, while Thailand has been hyped by many foreign tourists and short-term expats, you should know that the learning curve for doing business here is steep. Thailand has a unique business culture that you’ll have to learn, and the advisable target market of tourists (at least English speaking ones) is saturated.
Make sure you’re committed to doing business in Thailand before you take the plunge. It’s not cheap.