Doing Business in Thailand as a foreigner

Thai Schools offering English program or classes require foreigner teachers. To teach legally in Thailand foreigners are required to obtain a work permit and part of getting this work permit is proof of a university degree in their home country. I have personally known over 40 foreigners teaching in Thailand and none of them had work permits, not even the teachers that have taught at the same school for 3 or more years.  If it was not for this corruption there would be no English teachers in Thailand. The schools get paid for their foreigner teachers from the Thai Gov’t Dept. of Education who requires a work permit from Thailand immigration. Yet the schools are getting paid so they can, in turn, pay their foreigner teachers (average $1000 U.S. for foreigner teacher far below the minimum legally required $1,600 U.S. to be paid to them) and very few foreigner teachers ever receive a work permit.

Chef LeeZ Thai Cooking Class Bangkok is registered and licensed with our local district office and does file its annual financials with them and does pay the related taxes and thus when the police came around for their ignore money we simply pointed to our licenses and the officers involved never came back.

(added May 2018) Most recently and since the military coupe, the Military Gov’t has introduced a new corporation.  It has been labelled Thai Foreigner Company. It is deemed to be a branch of an existing Foreign Company. This Thai Foreign Company allows the foreigner to hold up to 98% of the shares with 2 Thai National partners.  It also, for the first time ever, allows the company to own Thai real estate property (land). The capital injection required is 3 million baht. You can name your company manager and that person if foreigner will need to obtain 1st a non O visa then a work permit all available because of this new business option.

Prior to this foreigners could own only 49% of a Thai corporation the other 51% must be cash invested Thai nationals exceptions exist for Americans and huge multinational corporations. Your cash invested needs to be a minimum of around $2,000,000 Baht. You need to employ 4 Thai nationals for each foreigner work visa. Watch out for workaround corporate setups as they are just that and you could lose it all just like that anytime the Thai Gov’t should choose your corporation to review. If you are legally married to a Thai national then the 51% ownership issue is solved so long as the marriage stays together. Remember a cross-cultural and cross-language marriage is far more fragile than a marriage of the same culture and language. In a Thai marriage, a foreigner must be aware of the use of phrases common in the home country. Phrases such as “I Don’t Care” meaning it’s not important but to a Thai, with a limited vocabulary, it means literally you don’t love them anymore. What is the failure rate of the same culture same language marriages in your country? I’ll bet it’s around 80% in 5 years.

You, as a foreigner and all your foreigner staff, will be deemed to earn a minimum salary of 50,000.00 baht per month and taxed accordingly approximately 10% on the first 500,000 annuals. (Thailand minimum wage (2017) is 9,000 baht for 30, 10 hr. days).

You will require a work permit which requires a specific type of visa to be in place which requires a pile of paperwork including proving you are financially independent and actually don’t need to work while in Thailand before you can apply for a work permit which is a separate application with its own pile of paperwork. If your staff is heavy on foreigners your operating expense will be much higher than that of your Thai national corp. competition as they will have a “functioning working relationship” with Thailand immigration allowing them to operate without the proper foreigner staff visas in place and they will not be paying their foreigner staff the minimum monthly 50,000 required by law and that is something you will not be able to arrange.

To start a Thailand restaurant all you need to file an intention and related paperwork with the local district office. Approval is almost always granted. There is very little regulation on restaurants.  No need to file for a business permit first. No need to meet minimum kitchen requirements or bathrooms or flooring. Even being clean is pretty much overlooked as inspectors tell you when they are coming. Thus there is a very high rate of food poisoning and intestinal problems in Thailand especially so among foreign tourists.

Foreigners cannot own land so land development also involves Thai nationals as your 51% partner and the land is registered in their name (2018 see Thai foreigner company above).  There is a special filing for the foreigner to be able to control the land if the Thai partners are not capable of doing so (death or illness), but you can never own the land. Much of foreigners land use is arranged by way of 30-year renewable leases. Most foreigners living here buy condo’s for this reason and or foreigner development compounds as the land ownership issue is properly handled.

Most foreigners rent their business venue and  two huge differences exist here:

1) the landlord, owning fewer than 15? units will charge you up to 700% more for your utilities than he pays for the Gov’t provided utility and

2) the landlord usually requires “key money” this is on top of your rent and deposits and for it, you get the key to the door. The key money is never refunded.  We found key money to be a common number near 2,000,000 baht (in our case the key money represented 12 yrs of rent or our total operating costs for many years) and was one of the reasons why for the first two years we looked for partners with existing locations before finding a location without key money. Landlords charging key money actually hope you will fail so you leave and they can collect key money from the next tenant.  There are stories where the landlord owned property next to one rented out as a restaurant and having collected the key money moved a pig farm on the next door property, restaurant of course fails and pig farm is moved away before renting the property to the next tenants for the key money (so you can see how key money works).

There is a Thai con artist for every business scheme and hundreds of stories where foreigners have lost everything.

If your business is website reliant, as is a cooking school business or any tourist-reliant business, you will not run a blog on it as the Thailand Gov’t is extremely sensitive to website conversation content.  Chef LeeZ, in our first 6 months of business added a blog to our website and the first day of the existence of the blog someone asked us about the redshirt yellow shirt conflict and general safety in Thailand to which we replied not to worry and the next day our website was not visible from any search engine within Thailand for the next 6 months.

If your Thailand business is tourist-reliant you will need Thai National staff with English skills and that in Thailand is a rare commodity and you will need to have a financial plan in place to respond to say a military coup that causes foreign countries to warn their citizens to not go to Thailand and tourism drops by 80% for perhaps a year.

Liability Insurance. Thai courts consider each person to be responsible for themselves and Thai culture is Non-Confrontational and as such lawsuits for injury are virtually non-existent.  Example being sidewalks will have all kinds of hazards that do not exist in North America. Hazards such as broken sidewalk blocks, loose sidewalk blocks, holes in the walkway, awnings hanging at head level, tree stumps and roots in the middle of the sidewalk (left there because some deceased relative resides within the roots).   Food poisoning is never taken to the courts and the restaurant owner is seldom if ever confronted so it’s perpetrators continue their poor habits and learn of their error by sudden lack of customers.

In our case our Thai cooking class students, being foreigners, are here for a limited time (vacation) and are for the most part coming to us on the last day of their vacation so if they were injured in class (10,000 + students with only 3 band-aide finger cut injuries) there is simply no way our customers would stay around to pursue an international lawsuit.

Superstition and Culture … Thai’s are extremely superstitious… Your Buddhist staff will need a place within or near the business to make their daily incense and food and water offerings to Buddha. All Thai Nationals will require a picture of their King and or Royal Family be put where they can also place water and food offerings and not doing so will cause you staffing problems. Your staff will not work well with people of black or dark skin as white skin is beautiful and black skin cannot be beautiful. Dark skin is also demonstrative of a person working outside and outside work is minimum wage work. In our new school location, we had a tamboon (a celebration) including some 30 priests who came to bless the new school location and have the ghosts residing in the on-premises tree stumps find their way to the next place before we dared remove the tree stumps.  Even today superstition is preventing me from having doors placed in the school where I want them as they can not be across from each other and there can not be two doors on the same wall as that will cause money to go out faster than it comes in. Windows cannot be in sets of 3 frames as the business will then fail.

Staff – As an employer, you are in control – your employment application will include a picture and ask questions on age, sex, religion, skin color and any other question you desire and you can toss any application you don’t want to interview for any reason without fear of being sued. Most staff will come as a referral from someone you or some Thai person you trust and their suggested staff come vouched for and that means they will very likely be honest and hardworking for you ( a face thing).  Having said this you will, as a foreigner, notice in such places as national grocery store chains there being 3 staff to every staff required in a North American grocery store. Wages are low here at $1 US an hour but requiring triple the staff is a headache. You need triple the staff as Thai’s don’t work well alone. They literally get lonely and go to work where they can chat half the day away. Thai nationals are pretty much a lazy bunch of people and as a result Chef LeeZ arranges work permits for Cambodians as contract labor so we do not have to deal with deductions and taxes and all that crap.  We pay well above minimum wage and include extras like 4 paid days off a month, paid vacation days, paid for a 10 hour day every day even when they work only 6 hours and include a meal of anything they desire from within the kitchen (usually excesses from the class). Our staff have to work during class. There’s no chewing the fat once class starts until it ends the goal of every class is to deserve raving Trip Advisor reviews as T A reviews are what drives our business. Chef LeeZ is Trip Advisors Thailand #1 cooking class every day since 2011 and holds Trip Advisor’s Earth 4 year cooking class review record.