Business in Thailand: Business Climate Review

The “Land of Smiles” attracts foreign investors not only by the hospitality of local people, but also by its successful location in Southeast Asia. The tourist potential of this country has already been well researched, but not yet fully realized. In addition to tourism, there are other areas where business in Thailand looks like a very attractive idea.

Prospective areas for cooperation

Looking for an answer to the question of how to start a business in Thailand, decide on your needs. If the Indochina Peninsula beckons you with its coastline, warm climate, magnificent views and delicate attitude towards human weaknesses, the atmospheric lifestyle business in the form of a small restaurant or hotel is ideal. On the other hand, the opportunities of this country are not limited to tourist resorts. Currently, a new model of economic development, called “Thailand 4.0”, has been launched. There will be modernization of the industrial sector, promotion of Thai brands to the international market, as well as the development of special economic zones. With the government’s consistent policy to liberalize foreign investment, business in Thailand is becoming an interesting strategic investment.

The most superficial analysis of imports and exports suggests that in the coming years Russian companies will supply medical equipment, aircraft equipment and components for the power industry to Thailand. Oil products, fertilisers for agriculture and rolled metal products will also continue to be supplied.

Investment climate

In general, opening a business in Thailand is not that difficult. A clear procedure for registering a company, the ability to apply electronically, “One Start One Stop” centers designed to help foreign investors – all this makes this jurisdiction very pleasant for business. But there are also some difficulties.

There is no separate legal form for legal entities with foreign capital in Thailand.

However, as a general rule, only 49% of shares can be owned by a foreigner.

Exceptions to this rule are made only in special cases. Therefore, we will have to look for either reliable Thai partners or resort to schemes that are legally questionable. Approximately the same difficulties exist with the ownership of land and real estate – only rent is available for foreigners.
Some difficulties arise due to language and cultural barriers. Thais, especially those who live far from tourist resorts, speak English quite mediocre, and in a disputed situation may deliberately refer to misunderstanding or misinterpretation of words. And all legally significant papers should be in Thai. Therefore, business in Thailand for foreigners is possible only with a qualified translator.

Government regulation of business in Thailand

Thailand is part of ASEAN and WTO. The norms adopted within these international organizations define many issues of customs regulation and import duties. In addition, the government restricts access to the market for products whose availability may violate the interests of local producers. This is mainly done through anti-dumping duties.

There are also non-tariff methods of regulation of certain branches of imports, which consist in requirements for mandatory certification or the need to obtain licenses. There is a system of certification and internal technical regulations for technical means, foodstuffs and household chemistry. The procedure for obtaining these documents is not as simple and transparent as we would like it to be, and all necessary studies must be conducted by laboratories located in the country. It is hoped that in the future these difficulties will be eliminated and certificates issued under international agreements will be taken into account.

Legalization of court decisions

The important information concerning everyone who is going to start a business in Thailand is the procedure of legalization of foreign court decisions. The courts are not divided into civil and arbitration courts – there is a single system. A decision made by a foreign court will not be valid in Thailand.

It will be necessary to initiate another trial under the laws of the country where the foreign decision can at best serve as evidence.

However, this does not apply to awards obtained through international arbitration.

Such decisions, if they are subject to an international convention, will have legal force in Thailand, even if they are made in another country.

Due to the difficulties with court decisions, it is necessary to pay particular attention to the choice of partners, or to order the verification of the counterparty in advance.