Disadvantages of Starting New Business in Thailand as Foreigner

Disadvantages of starting new business in Thailand

Start-ups can be tricky especially when you consider starting up a company in a foreign country. Here we will go in-depth about all the problems you might face. Furthermore, we will point out the disadvantages of company registration in Thailand. As an entrepreneur, you must take note of the cons as much as you take note of the pros. However, if you take on these disadvantages as challenges you will surely get fruitful results.

Company registration in Thailand is increasing daily. Thailand is known to have good economic growth. For this, there is a big demand for foreign company registration in Thailand. Doing business in Thailand opens lots of opportunities. This country has good policies, social and political stability, and the country is in a suitable place in Asia.

Initial Problem for Starting a Business

No matter where you decide you start your business, you must go through a long process of registration. However, consultancy firms make this process very easy. It only takes proper consultancy and some steps to register your business. The time required will be different for every country but the proves is somewhat similar. We will be focusing on Thailand in this article. So, the problems of starting a business in Thailand (initial problems) are:

· Registration of company name

· Deposit of funds into a bank

· Obtain a necessary business license

· Obtain a corporate seal

The above-mentioned points are not really problems but are challenging tasks for some people.

Why Start a Business in Thailand Regardless of the Disadvantages?

Apart from a lot of advantages, there are some disadvantages that might make you think twice. For example, the high corporate tax rate. If there are these big disadvantages, then why start a business in Thailand at all? These are the key reasons why foreigners still choose Thailand for setting up a business:

· A strong consumer base of 67 million population

· Highly efficient and developed business infrastructure

· Cost-effective workforce

Disadvantages of Starting Business in Thailand

Although Thailand has a lot of advantages of setting up a company and doing business, there are a few disadvantages that need to be noted. Such disadvantages are provided below:

Rising Tax Rates

You will start a corporate business in Thailand. You must be aware of the high corporate tax in Thailand. The tax is around 30%. Corporate tax is rated among the highest taxes in the country. If you start your business in Thailand, you must know this information.

People setting up a business in Thailand will face some complications and interferences from the government’s side. Compared to other countries, registering your business in Thailand will take a longer time and more tasks. However, consultancy firms make these steps easy for your new business registration in Thailand. If you are a foreigner, then everything will be very new to you.

Complications With Construction Permits

When you register your business in Thailand you will find that the construction permits are really complicated. The average time to get a construction permit in Thailand is 157 days. The time is not certain. 157 days is a long time considering you will lose a lot of potential revenue in that time. The delay will cause revenue loss. The local metropolitan authority will process your permit. This will include the approval for the construction business.

Overtime Payment of Workers

In Thailand, people follow the policy of working 8 hours a day or 48 hours per week. Maybe you need some tasks to be done which require more than 8 hours. In Thailand, you must pay three times more salary than the normal rate.

Language Barrier

In Thailand, people prefer their own language to others. The same goes for all the legal documents and forms. All the forms and documents will be in the Thai Language. This is a big disadvantage as you must learn the Thai language, or you must find someone educated who can read both your language and Thai language. This can be a huge problem. There is a matter of trust as you will be depending on the goodwill of the translator. Fortunately, consultancy firms can help you remove this barrier. They can convert your native language into the Thai language wherever necessary.

Employment Requirement for Thailand

In Thailand you must be aware of hiring ex-pat as for every ex-pat you hire, you must provide jobs to 4 Thai employees. This is a requirement in Thailand according to the law. This can be really challenging to find jobs in your company. You might require the tasks of just one ex-pat, but you must hire 4 Thai employees too.

Bank Account Issues

Opening a bank account in Thailand is challenging. If you want to open a bank account in Thailand, they might refuse to open your account. You may end up opening a savings account. The corporate bank account is hard to create. The bank will provide personal bank cheques only upon request. This is a time-consuming process. When you will deal with your clients you must either pay in cash or deposit the funds into their accounts in the bank. Furthermore, loans are hard to get as well. If you start a business in Thailand, then it will be close to impossible to get a bank loan from Thailand banks.

Investor Requirement

If you are a foreigner and want to do business in Thailand, then you must find a local investor in the country. This is a requirement in Thailand. Finding a local investor is a difficult task. Many times, people decide not to invest. However, consultancy firms can help you in finding a local investor for the startup of your business.

Foreigners Restrictions

In Thailand, there are certain business fields where foreigners are not allowed to work. You are not able to get 100% ownership. However, if you are a US citizen then you are allowed to own a 100% foreign-owned company. Such business areas are provided below:

  • Media
  • Land trading
  • Agriculture
  • Any business that is related to art and culture.

Conclusion

Anywhere in the world, you will find complications. If you can make those complications your challenges and overcome them, you will have a fruitful outcome. The hassle you must go through for business registration in Thailand can be tough and time-consuming. In either case, consultancy firms can help you in every step. They provide all the necessary help you will ever need.

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