The Bangkok office of Thaipan Legal has created this article for foreign individuals and companies interested in doing business in Thailand. The guide covers various aspects of the Thai legal system that impact the way business is conducted in the country, including government regulations and incentives for foreign investment, forms of business organization available to foreign investors, and the Thai tax system. doing business in thailand
The guide also provides summaries of various aspects of Thai law that affect most business operations in the country, such as intellectual property, data privacy, competition and consumer protection, labor, import/export, exchange control, and real estate. Additionally, this edition includes information on industries such as FinTech, healthcare and insurtech.
The guide is intended to serve as an overview of certain aspects of Thai law that foreign investors should be aware of when planning a business venture in the country, but is not intended to replace specific legal advice that should be sought before investing. doing business in thailand
Overview of doing business in Thailand
Doing business in Thailand can be an exciting and rewarding experience, but it also comes with its own set of unique challenges. Thailand is a country with a rich culture and history, and it is also a major player in the global economy. The country has a rapidly growing middle class, and a strong focus on tourism and exports.
One of the biggest advantages of doing business in Thailand is its strategic location. The country is situated at the heart of Southeast Asia, making it an ideal hub for businesses looking to expand into the region. This is particularly true for businesses in the manufacturing and export sectors, as Thailand offers easy access to major markets such as China, India, and the ASEAN countries. doing business in thailand
Another advantage of doing business in Thailand is the relatively low cost of labor. The country has a large, well-educated workforce and wages are generally lower than in other developed countries. This makes it an attractive destination for businesses looking to outsource production or manufacturing. Additionally, the government has implemented policies to attract foreign investment, including tax incentives and streamlined processes for setting up a business.
Challenges if you do business in Thailand
However, there are also some challenges to consider when doing business in Thailand. One of the biggest challenges is the country’s legal system, which can be complex and difficult to navigate.
Foreign companies may find it difficult to understand the regulations and laws that apply to them, and there can be a lack of transparency in some areas of the business environment. Additionally, corruption is still a problem in some sectors, which can make it difficult for companies to compete on a level playing field. Another challenge is the country’s infrastructure.
While the country has made significant investments in recent years to improve its infrastructure, there are still areas where it falls short. This can make it difficult for businesses to transport goods or access certain markets. Additionally, the country’s political climate can be unpredictable, which can make it difficult for companies to plan for the long-term.
Despite these challenges, there are many opportunities for businesses to succeed in Thailand. The country’s strong focus on tourism and exports means that there is a large market for businesses in the travel and hospitality sector. Additionally, the country’s rapidly growing middle class presents opportunities for businesses in the consumer goods and services sectors.
Taxation Advantages of doing Business in Thailand
Taxation in Thailand is relatively simple and straightforward, but it can be different for foreign companies. Corporate income tax rate is 20% and value-added tax (VAT) is 7%. However, foreign companies may be eligible for tax holidays and exemptions, as well as double tax agreements with other countries, which can provide significant tax savings.
The Thai government has also been promoting investment in certain sectors, particularly in high-tech industries and renewable energy. The Board of Investment (BOI) provides various incentives such as corporate income tax exemptions, import duty exemptions, and land and building tax exemptions for companies investing in these promoted sectors. doing business in thailand
One of the best ways to succeed in doing business in Thailand is to form partnerships with local companies. This can help companies navigate the local business environment, and it can also provide access to valuable resources and networks. Additionally, companies should make an effort to understand and respect Thai culture, as this can help to build strong relationships with local partners and customers. doing business in thailand
Another important aspect to consider is the language barrier. Although English is widely spoken in Bangkok and other major cities, it may not be the case in other parts of the country, and it’s essential to have someone who can speak Thai. This is especially important for communicating with government officials and navigating the legal system.
In terms of the labor market, Thailand has a relatively flexible labor law, and it’s relatively easy to hire and fire employees. However, it’s essential to be aware of the minimum wage, which varies depending on the region and industry. Additionally, there are strict rules regarding doing business in thailand
Is doing Business in Thailand risky?
When trying to set up a business in Thailand, there are several risks and problems that people may encounter. One of the biggest challenges is navigating the country’s legal system, which can be complex and difficult to understand. Foreign companies may find it difficult to understand the regulations and laws that apply to them, and there can be a lack of transparency in some areas of the business environment. This can make it difficult for companies to comply with local laws and regulations and can also lead to delays in setting up a business.
Another risk to consider is corruption. Although the government has taken steps to combat corruption, it remains a problem in some sectors. This can make it difficult for companies to compete on a level playing field and can also lead to increased costs and inefficiencies. It’s important for companies to have a clear understanding of the laws and regulations in place to combat corruption and to have a plan in place to address any issues that may arise. doing business in thailand
In terms of infrastructure, while Thailand has made significant investments in recent years to improve its infrastructure, there are still areas where it falls short. This can make it difficult for businesses to transport goods or access certain markets. Additionally, the country’s political climate can be unpredictable, which can make it difficult for companies to plan for the long-term.
Another potential challenge is the language barrier. Although English is widely spoken in Bangkok and other major cities, it may not be the case in other parts of the country. This can make it difficult for companies to communicate with government officials and navigate the legal system. doing business in thailand
In terms of the labor market, Thailand has a relatively flexible labor law, but it’s essential to be aware of the minimum wage, which varies depending on the region and industry. Additionally, there are strict rules regarding working hours, overtime, and leave entitlements that companies need to abide by. doing business in thailand
Finally, it’s important to be aware of the cultural differences when doing business in Thailand. Business practices and communication styles can be different from what companies may be used to in their home countries. For example, it’s important to be patient and avoid being too direct, as this can be considered impolite in Thai culture. Additionally, it’s important to be aware of the importance of hierarchy and respect in Thai society, as well as the importance of building personal relationships. doing business in thailand
Therefore, it’s important for companies to have a clear understanding of the risks and potential challenges they may encounter when trying to set up a business in Thailand and to have a plan in place to address them. This may include partnering with local companies, hiring local staff, and seeking out legal and financial advisors who are familiar with the local business environment. doing business in thailand
If you are planing to do business in Thailand, do not hesitate to book a free online consultation at THRUST.
References
- “Doing Business in Thailand.” World Bank, https://www.doingbusiness.org/en/data/exploreeconomies/thailand
“Thailand – Market Overview.” Export.gov, U.S. Department of Commerce, https://www.export.gov/article?id=Thailand-Market-Overview
“Thailand – Investment Climate Statement.” U.S. Department of State, https://www.state.gov/reports/thailand-investment-climate-statement/
“Thailand’s Economic Outlook.” Asian Development Bank, https://www.adb.org/countries/thailand/economic-out
