Doing Business in Thailand

To enhance investment confidence and apparently to facilitate their life the government has established a One Start One Stop Investment Center (OSOS). The primary objective of the center is to help investor to start their business by regrouping up to 18 different administrations under a single roof. Will it help Thailand to regain foreign investors confidence.

A very positive aspect of the OSOS, is that it may be used by any investors whether Thai or foreign, whether big or small. This is a real progress because in the past Thai Governments had a tendencies to reserve this kind of incentives to certain categories of investors only.

This being said, I believe that the OSOS will very be helpful to Thai investors but will not really benefit foreign investment.

Fact is that most foreigners that are investing in Thailand are not handling the administrative formalities themselves but that they will be using lawyers or other professionals to assist them with the implementation of their investment. (The BOI is the only administration that foreign investors will contact directly). As foreign investors very rarely interact directly with Thai administration they do not really care whether Thai administrations are all under one roof or all over the place in Bangkok.

What foreign investors care about is to be able to implement their investment legally. Especially, what they care about would be to be able to obtain a work permit upon incorporation of their company in order to avoid to be arrested for working without a work permit.

Indeed since the government has reinstated the obligation for a company to have four Thai employees in order for a foreign employee (including a director) to obtain a work permit they will have to wait to have hired four Thai Employees, and to have obtained receipts that their company has paid for a period of 3 months the social security due on the employees’ salaries before to qualify to apply for a work permit.

In other words, if they are directors of their company they will be acting for a period of 3 months at least without a work permit. Of course, it is controversial question to know whether a foreign company director should immediately apply for a work permit or not and the fact is that definition of work “exercising a physical or intellectual activity with or without a salary” is so vague that it is very difficult to determine when once start to work or not. A director who start to negotiate with suppliers and customers and start to makes check to suppliers and organizing his business should be deemed working.

What foreign investors would really care about is a review of the Foreign Business Act list 3 to take out from the list of controlled activities businesses for which Thai have been since long time ready to compete (including restaurant, bars, and many other services activities) or for example a lessening of the requirements to exercise some controlled activities (such as submitting the exercise from some businesses listed under list 3 to the issuance of a Foreign Business Certificate instead of a Foreign Business License).

While the government must be complimented for the creation of the OSOS this center will not on the short or long term bring more foreign investment into Thailand because what is constraining foreign investment is not Thai administration (which I personally judge efficient) but all the laws and regulations that said administration is charged to upheld.

Unfortunately, while successive Thai Governments have been aware of what the real issues which are impeding foreign investment are (use of nominees and so on), and are also aware that solving said issues and a more open attitude to foreign investment would overall benefiting Thailand, successive governments are also affraid that to actually facilitate foreign investment too openly would be political suicide.

Note: This post is an excerpt of Rene Philippe Dubout next book: “How to Invest Safely Into Thailand” to be published in January 2010

About the Author:

The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.

http//:www.renephilippe.com

© Copyrights 2009 – Rene Philippe Dubout – This article may be reprinted if information about the author, the websites, and the URLs remain intact

Originally posted 2009-12-02 01:50:44.

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