Doing Business in Thailandadmin
As global business continues to grow, mature, and evolve, increasing numbers of international businesses and entrepreneurs enjoy the option of pursuing their business from an international location. This opportunity can also be expressed as a challenge: With such a wide variety of potential overseas locations, growing firms need to choose one that provides the best possible fit for the optimal chance at succeeding in an increasingly competitive marketplace.
Thailand’s national Board of Investment (BOI) has collected a host of useful information about Thailand’s competitive place within Southeast Asia and the rest of the world. The BOI is tasked with facilitating foreign investment in, and attracting suitable businesses to the Kingdom. Its findings provide evidence for what many have suspected, that Thailand represents a unique opportunity for overseas investment and expansion due to a combination of regional and global access with an encouraging economic and political climate.
Within the region and the rest of Asia, Bangkok and Thailand offer a unique combination of convenience and global reach to Asia’s mature and emerging markets. With the establishment of the ASEAN Economic Community, Southeast Asian countries have entered a common market with a free flow of investment capital, goods & services, and human capital. Thai businesses and the national government have pivoted to make Thailand a desirable destination for international investments and companies, improving Thailand’s business infrastructure while remaining a competitive tax jurisdiction.
Thailand has built up a vital infrastructure to take advantage of its location within the global marketplace. The Financial Times ranked Thailand the twelfth-best economic zone in 2012, with more than seventy industrial estates. Information technology and communications infrastructure in Thailand have grown rapidly in recent past, with one-hundred percent of the population enjoying mobile coverage and over fifteen percent annual growth in Internet accessibility, according to the National Statistical Office and National Broadcasting and Telecommunications Commission.
Bangkok takes full advantage of its position as an emerging hub of international business. For traditional import/export businesses, Thailand connects global ports on the Gulf of Thailand to a transportation network connecting the Asian mainland. Eight deep-sea ports provide access to the Pacific and Indian Oceans, with one currently expanding to a capacity of eighteen million TEUs (twenty-foot equivalent units). Rail and highway systems are high-quality and reach Thailand’s neighbours and beyond, to China and India. Additionally, Bangkok’s leading airport was rated fifth-best worldwide by SKYTRAX, and Thailand’s airports transported more than one million tons of air freight per year.
At attractive prices.
Most of the time, “the cost of doing business” is just that: In order to take advantage of the most rewarding opportunities, firms have to undertake significant expenses. Here, Bangkok and Thailand offer an opportunity to participate in the global marketplace at a lesser cost than at other global hubs. Thailand has made it a priority to accommodate international firms doing business in the country, including through competitive rates of taxation. Thailand lowered its corporate income tax rate to 20%, which is tied for second-lowest in the ten ASEAN nations, behind only Singapore’s 17%.
In addition to accommodative tax policy, the private marketplace in Thailand still offers tremendous economic bargains to global companies. Thailand’s economy has managed to combine growing economic opportunities with price levels that still remain low compared to other business destinations. CBRE ranked Bangkok first in the Asia-Pacific region for most affordable prime office space in 2015. Prime office space in Bangkok was reported as more affordable than other Asian cities like Hong Kong, Shanghai, and Singapore, but also Jakarta, Hanoi, and Manila. For new and growing businesses, Bangkok offers a unique combination of world-class technology and infrastructure at prices literally unmatched across Asia.
In addition to the low cost of doing business, Bangkok has long been a leading destination for international ex-pats, in part due to the attractive cost of living. Thailand was ranked first internationally for ex-pat affordability and cost of living by HSBC in 2014. Ex-pats living in Thailand have access to high-quality healthcare and education: Thailand is the leading destination for medical tourism in Asia, with more than two million international patients treated; and private and public hospitals employ internationally trained doctors and international accreditation.
Of course, life in Thailand offers more than just economic benefits, and the country’s intangible attractions continue to attract travellers of all backgrounds. Bangkok consistently ranks at or near the top of the list of international tourism destinations, and life in the Kingdom is a selling point in itself for millions of ex-pats doing business or working within Thailand over the years.
For foreign businesses seeking to expand their global operations while controlling costs, the BOI itself is another important consideration. As the branch of the government responsible for attracting high-quality international investments and encouraging Thailand’s development as a major Asian hub of commerce, the BOI has various legal and regulatory powers to assist ex-pats moving their businesses to Thailand, as well as regional or international companies thinking about expanding their presence in the country.
The BOI can lessen or relieve the corporate tax burden for new companies, either by providing a tax holiday or reducing the taxation rate for a period of years. Import duties can be reduced or exempted for necessary equipment and raw materials, and accommodative tax deductions can be granted for capital investments including construction and installations. Additionally, the BOI can offer regulatory assistance to foreign companies by providing land rights, business licenses, and visa and immigration assistance. The BOI has a mandate to support certain growth industries, and its statutory powers increase for companies in these targeted sectors.
Internationally business continues to be a fast-paced, continually evolving marketplace. As new companies emerge, thrive, and grow, the business world changes to accommodate them, and to provide new challenges. The most successful businesses of tomorrow will be those that make the smartest choices today, including the decision of where to call home. The Kingdom of Thailand and the City of Bangkok are making a push to become tomorrow’s home for global business.