Disclaimer: This article was accurate at the time of publishing. To obtain the most up-to-date information, please get in touch with our local experts.
A founding member of ASEAN and the ASEAN Free Trade Area (AFTA), Thailand enjoys strong trade agreements with Singapore, Malaysia, Indonesia, Philippines, and Brunei, and will soon enjoy the same privileges with Cambodia, Laos, Myanmar and Vietnam when the countries cement their commitment to the region in 2015. For businesses looking to expand their presence in Asia, these integral relations, as well as its strategic location, make Thailand a logical choice.
Economically, Thailand’s 67 million-strong population forms a healthy consumer base. Steady growth, strong exports, an abundance of natural resources and a skilled and cost-effective workforce help attract foreign investors and enable them to prosper and develop industry in Thailand. There is sound infrastructure and a modern business environment, which also increases the country’s appeal to internationally expanding companies.
However, starting a business in an overseas country presents several legal, taxation and regulatory challenges, which is why having local help is essential if the venture is to succeed.
Starting a Business
Starting a business takes almost a month on average in Thailand, with four procedures to navigate. Start-ups are required to register the company name, deposit funds into a bank, obtain a corporate seal and complete the several steps required to register the company as a legal entity.
Dealing with Construction Permits
There are eight procedures involved with obtaining construction permits, taking an average of 157 days to complete. Inspections, permits and approval are all processed by the local Metropolitan Authority, before the required connections can be carried out. Companies are also required to request the approval of a building controller.
Getting Electricity
Electrical connection is a relatively straightforward task, with the entire process being handled by the Metropolitan Electricity Authority (MEA).The government body gives an initial estimate, conducts external connection works, inspects the connection and installs the meter.
Registering Property
The Ministry of Commerce and the Land Office are the two government authorities which deal with property registration. The procedure should only take a couple of days to complete.
Getting Credit
Thailand is ranked in 70th place in the world for ease of getting credit, according to the World Bank and International Finance Corporation (IFC). This is a drop of three positions on the previous year.
Protecting Investors
Investor protection is something that Thailand prides itself on, particularly given that the country is used as a ‘test centre’ for many products, meaning strong intellectual property rights are a key part of the country’s strategy.
Paying Taxes
Fiscal obligations are by far the most laborious aspect of doing business in Thailand. Corporate income tax - flat rate of 30% - and VAT take the most time to complete, but other business-specific levies can land a company with 264 hours of tax work to be done.
Trading Across Borders
Cross-border trade is a very cheap process in Thailand, although it can be quite time-consuming and bureaucratic. It can take up to two weeks to export goods and roughly the same amount of time to import.
Enforcing Contracts and Resolving Insolvency
Enforcing contracts takes 440 days and involves 36 procedures. Resolving insolvency can take around 2.7 years, with a low rate of recovery.
Culture
Thailand has quite a mix of cultures which has led to a complex way of thinking. It is a collectivist society which means the needs of the group are placed over those of the individual, and subtle and indirect communications are valued during negotiations.
TMF Group
We have the local knowledge to help you navigate these minefields. Whether you want to set up in Thailand or just want to streamline your Thai operations, talk to us.