The Siam Investment Scene: Pros and Cons for Foreign Investors
Thailand attracts millions of tourists every year and is known for its white sand beaches, exquisite cuisine, and culture. However, the country is also known for its foreign investments that have helped the country grow exponentially. With this in mind, let us delve into the pros and cons of investing in Thailand.
Pros of Investing in Thailand
1. Strategic Location
Thailand serves as an excellent gateway for investment opportunities in Asia. It is located right in the middle of the ASEAN region, making it the perfect country to explore investment opportunities in multiple countries.
2. Strong Governance and Political Stability
Thailand has a relatively stable political status, making it an ideal destination for foreign investors. With effective governance, transparent and consistent legal system, and a business-oriented bureaucracy, the country has been welcoming foreign investors and providing tax incentives to help their businesses grow.
3. Thriving Tourism Industry
The tourism industry plays a significant role in Thailand’s GDP and is also one of the primary drivers of foreign investment. Tourists flock to Thailand to take advantage of the accessible air routes, picturesque locations, and affordable roaming services, making it an ideal destination for investors in the hospitality sector.
4. Developing Infrastructure
Infrastructure development is a major component of Thailand’s ambition for sustainable growth. The government has invested massively in developing infrastructure in the forms of airports, ports, roads, and railways. Furthermore, it is an active participant in the “One Belt, One Road” initiative, aimed at increasing trade within the Asian continent.
Cons of Investing in Thailand
1. Language Barrier
Although Thailand has a vibrant tourism industry, English proficiency among Thai locals can prove to be a challenge for foreign investors. Hence, companies that do not have a presence in Thailand will have to spend more on training their employees to understand the Thai culture and language.
2. High Tariff and Restrictions
The Thai Government imposes high tariffs on several imports to protect local manufacturers. Additionally, Thailand enforces strict licensing for foreign entities that want to invest in some sectors, making it difficult for companies to invest in specific industries.
3. Bureaucratic Red Tape
Despite the ease of doing business initiatives introduced by the Thai Government, investors still have to grapple with some inherent bureaucratic obstacles. Permits and licenses can take longer to process, which can prove to be frustrating and time-consuming.
4. Complex Taxation
Tax laws in Thailand can be complicated, which may pose challenges to foreign investors that are not familiar with the intricacies of tax regulations. The country’s tax system can be daunting for companies that are looking to expand globally, and investors are encouraged to receive professional tax advice.
Conclusion
In conclusion, investing in Thailand is a judicious decision as the country offers many benefits such as its strategic location, political stability, tourism, and infrastructure development. Although language barriers, high tariffs and restrictions, bureaucratic red tape, and complex taxation remain major obstacles for investors, the Thai Government is continuously implementing policies to address these issues.
Frequently Asked Questions about investing in Thailand
Q1. Are there any sectors that foreign investors cannot invest in within Thailand?
Foreign investors cannot invest in certain industries such as retail, real estate, and construction. Furthermore, the Thai Government imposes restrictions or caps on the investment limits in several industries such as manufacturing, hospitality, telecommunications, and more.
Q2. Can foreign investors own land in Thailand?
Foreign investors can own land in Thailand, but under certain conditions. Thai law restricts foreign land ownership to a minimum of 10 rai (1.6 hectares), and investors have to pay a leasehold or usufruct fee to own land.
Q3. What is the process of registering a company in Thailand?
Foreign investors can register their companies via the Department of Business Development and the Office of the Board of Investment. However, the process can be time-consuming, taking up to six months.
Q4. What is the current tax rate for corporate taxpayers in Thailand?
The corporate tax rate in Thailand is at a flat rate of 20% of the company’s net profit.
Q5. Are there any tax incentives available for foreign investors conducting business in Thailand?
Yes, the Thai Government offers several tax incentives for companies that are eligible. For example, they offer a four-year corporate tax exemption for SMEs (Small and medium enterprises) investing in specific sectors.
Q6. What is the labour situation in Thailand like?
Thailand has a workforce of over 39 million people. With the labour department currently encouraging the hiring of Thai nationals, foreign investors can only hire foreigners in positions where it is difficult to find a qualified Thai national.
Q7. What is the minimum wage in Thailand?
The minimum wage varies by geographic location, with Bangkok having the highest minimum wage rate of THB 331 and other provinces THB 308 per day.
References
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What Are the Pros and Cons of Investing in Thailand? Retrieved from https://www.transferwise.com/gb/blog/investing-in-thailand-pros-and-cons
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Investment climate in Thailand. Retrieved from https://en.portal.santandertrade.com/establish-overseas/thailand/investing-3
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Thailand Tax Guide 2021. Retrieved from https://www.aseanbriefing.com/news/thailand-tax-guide-2021/
