Irene

Sit back for three months and watch the working of the system. Don't be a loud mouth or opinionated. Queries should be posed with a Thai outside the work place. There is no secret in Thai work place. So be above board and dont take advantage of your employer on small things like excessive expense claims. They will talk at lunchtime. Show your good standard, then you will go far.

Try "Look Maew" shop at MBK. I think it is on the first floor.

Our friend Mr. Neole with his 64 posts, so far, is an interesting read... .....and that's an understatement.

LaoPo

He is also posting from India. Roy percent TROLL in my opinion.

Ha! Ha! I like that. It never crossed my mind.

Check out also Cha-am and Hua Hin.

Prefer both of them any day over Pattaya or Jomtien. New developments are pricey there as well but you can also find good re-sale deals from bit older developments.

Yes, that is the correct alternative. Not that impressed with Cha-am but still OK. If you know of any good re-sale deal, please let us know. I am now in a search for hua hin seafront.

Heck Yeah, I remember, hope for another one soon to cool this old hot strong Baht down.

Nope, not likely because the current crisis is not with Thailand as a key player. The key player is the United States doing something that is worse than Thailand's laxity in lending in 1997. Up to now, they still do not know the extent of the losses from subprime. This is due to those whiz kid coming out with all sorts of derivative scheme in which no one knows the value until their position are closed. Thailand is now at the tail end of the event and also very nicely Thailand does not now depend on exports to US at a high percentage but only 16%.

j_cheung,

Your description brought me a tinkle of sadness to recall of the aftermath of July 2, 1997. As one leading corporate recovery guy from the States told us in September 1997 that Thailand was then in the state of a denial and blaming George Soros for all the faults. After the denial, there would be a depression in 1998 and recognition of our errors in 1999. That guy was spot on.

Some punters who used to go to Mayflower Chinese Restaurant at Dusit Thani after the morning session had to change their venue and moved to a noodle shop for lunch. Lamenting of the losses would go on with "what if" questions. Many went into depressions unknowingly and never wish to read any newspapers again. Children suffered from lack of care. I wish there is a book recording all the incidences. Many never returned back to the market. Strangely enough, I never heard of anyone taking his life because of the fallen value. Most bit their tongues and hope for a better day. So many of them has risen from ashes now.

I consider myself lucky for not refinancing my Thai Baht loans for US Dollar loans in April 1997. It was offered to me on a platter with interest rate at 3% while then I paid Thai Baht loan at 14%. I declined because of the fear of taking unnecessary risk at my age.

wintermute,

I think that cynical views preclude you to make money from this market. SET is definitely not comparable to Hong Kong, Singapore or even Malaysia. But certainly, there are some goodies in the right good corporate governance one can pick from. Don't forget that Thai stocks were under low valuation since the coup, so it is not difficult to rise up to reap on the benefits of a democratic government. Vietnam is now otherwise because of the previous high position and now this year it has started to fall like a leaf.

Believe me, I have been making money above board for a few months now.

GuestHouse,

Thank you, that was well described. The memory came back. Everybody in the finance sector started from the Minister of Finance downwards were all punched drunk of the shock after three months in the sense of denial. They were like aged boxers not knowing what had hit them.

One correction was surprising enough I was unable to find cheap property for sale at that time because all the creditors and bankers simply did not know how to liquidate their debts and sell their collaterised securities.

Irene,

Agree with you regarding a trading approach to the SET.However since 2002 I have been a bit of a yield junkie and therefore buy for yield.Hold MCS CM NNCL TPC TAF RPC MBK SPALI MK DRACO BAT-3k etc.etc.

A stock with a yield of 6% plus ,with good earnings growth is my approach.Never been good at market timing but have good steady money over the years(despite politcal economic turmoil ).Hope we're due another 2003.

Best of luck.

Serene,

I was like you before and burnt myself with quite a few high yield stocks. Their liquidity were unnatural and therefore subject to manipulation by a few. At first, I was excited of the high yield and thought why didn't anyone take notice and believed myself to know of the secret. The stocks you mentioned I had all involved before and now close my eyes to these stocks whether they are good or bad and concentrate on those that matter. I understand the stocks in SET50 far better than before after I ignored those small caps. When there is a boost like 2003, blue chips tend to fare better because of their natural liquidity.

Just to share my thought.

Floating of the baht was on July 2, 1997 and index ended at 568 and came down to the lowest at 297 on Sept. 3, 1998 and in Jan 2004 stood at 780. Today, it is at 848. The last time it ever stood at that height was a decade ago just prior to July 2. (The highest it ever reached was 1753 which was on Jan 4, 1994.). What does this mean? It means that this market can make you rich and poor quickly if your timing is so terrible, i.e. buying when high and selling when low. The plung was not immediate until Sept. 1997. The worse affected was finance and banking and you could pick on bargains like PTT. We lost a lot in 1998 and recovered and made huge gain in 2003 when Thaksin came in 5 times the amount of the 1998 losses.

What were the lessons we learnt? First, we no longer trust the Thai medias and brokers' comments. You will notice that Bangkok Post and Nation no longers publish daily report on stock movements from any brokers. The wild comments as appeared in Thai press were terribly naive and are still so. The best ones now are DBS and Phatra. Second, dont take Thai economists' comments seriously but read a lot on the internet from world leading economists and trust a few Thai economists like Dr. Olarn, Dr. Veerapong and Dr. Ammar. Third, stay away from small and medium cap that can easily be manipulated but stick to blue chips especially PTT groups. Whatever the bad falls, you still hold on to tangible assets of those blue chip companies unlike banking and services industry.

What do I think now? Because of the slide of US economy, interest disparity of US and Thailand and lifting of 30% reserve, baht will have to strengthen further. With that trend, foreigners should come in in a big way next week. Since SET is now guided by the foreign sector, I feel that this could be a short term opportunity. Any change of scenery would prompt me to change my strategy quickly. I have given up long term strategy a few months ago because of the unprecedented dynamism of the Western economy in which up to today one still does not know the extent of the losses from this financial crunch ignited by subprime debts.

MoodaengHK,

An excellent analysis. However, I have the following commend in blue:

Hi guys, I have not posted here before but this House Vs Condo tread is an interesting topic and is quite one sided so far. Poor OP grifriend ! Welcome! Refreshing to read.

People posting here are 1) farangs 2) very focused on condos 2) consider properties in the CBD area only. This is definitely not representative of the market. It also seems a majority of the posters do not have kids, which make their views even more biased. That is correct but property investment is not decided on an average viewpoint held by majority but preference of each individual sector. The OP's gf is the common opinion of the average Thais but OP's position is different from the average Thai.

First, when you talk about houses, you have to move outside of Silom, Sathorn and Sukhumvit, unless you are super rich (or like super small houses ). Actually, most Thais I know would not live there with their families even if they had the choice. Traffic, pollution, low number of schools, in your face naughty nightlife…etc the list is long.There are tons of areas where you get a better quality of life for a family, which are easy to access and even farang compatible (that is another discussion). Again you are right, most Thais view the situation that way.

A house is not the best choice for singles, those not living in BKK all year round ( lot of "kamoi" if you leave the house unoccupied), those going out very frequently and wanting to be right in the middle of the action with a farang dominated environment. I believe this description fits many on this board, and maybe the majority of farangs in Bangkok . However, it is definitely not applicable to Thais, who are the ones driving the market for houses. Houses have the preference of most Thais. Condos are a fashion and lifestyle statement for a happy-few, and a speculation market for others. That is correct.

The young executives who are buying 1-2m bahts "shoebox" condos will eventually move to houses when they start having kids or can afford it. Also middle-class thais are pushed out of the CBD condo market by skyrocketing prices driven by farangs and speculators. If you are outside of CBD, why bother for a condo if a house is better and likely cheaper? Absolutely correct. Hence, when I buy a condo, I don't go for an average condo but I will go for the best in term of location and better chance of higher premium thereafter because of the niche market.

As others said, when you buy a house, once the building is fully depreciated, you still have the land. You are free to build a new house whenever you want, no votes or majority issues. Much less risk on quality of management too, because you are the one in control! You can renovate your condo, but need to rely on others for the common areas and main stucture. Take also into consideration that tearing down a condo is not a cheap and easy task. Condo owners still have the right to the land, though very very small fraction of the total but the price in the CBD should be at a high premium just like Bond Street in London to compensate for a smaller portion. Some taxi-drivers own acres of land in Mookdaharn of the size of a football field, they are still poor.

When you buy a new condo, you are paying for the developer's (fat) margin. I personally consider that the actual value of the condo is the selling price minus the developers' margin. So the day you take possession of your condo, you are already at loss. A strange way of looking on an investment. With that measurement, you would not invest much unless a seller sell at a loss! I invest because I think in future there will be a buyer prepared to buy higher than my current cost. I am not concerned with how much profit the current seller has made from me. I am concerned with the price that a buyer is prepared to pay in a few years time. This also tells you why the secondary market is so illiquid: nobody wants to sell for the fair value and the market is just blocked. I have an expereicne of selling a second hand condo, and that was a real eye opener. That also applies to a house. Thais dislike buying a second-hand house. It is far worse for a house than a condo since a house is not freely salable to foreigners while condos can be sold to both sectors, foreigners are more willing to buy a secondhand unit.

In the long run (20+ years) I see houses to be a better investment than condos, because eventually the real estate market is driven by local demand, and will even more so when it matures. This is a generalised statement but property is not a homogenous commodity. It is a niche market that location plays a bigger part than reading of the general trend of the public. Foreigners are a volatile crowd, which come and go. Who knows if HoChi Min is not going to attract a big chunk of Bangkok based foreigners in a few years ? I cannot see how foreigners in Thailand dwindling down under well-grained capitalist society. The example of Vietnam is not good now. Stock index has come down immensely and their export would be affected significantly becaue of almost exclusive exports to the US while Thailand relies on the US market of only 16% of her total exports.

Yes, farangs have the ownership issue. But this is a personal issue, not relevant to estimate which market will better perform. It is relevant because there is no free demand for farangs to buy houses and Thais dislike secondhand houses while farangs can buy freely condos (especially when the 30% imposition has now been lifted).To conclude: the girlfriend is right, from her perspective. Nobody can be right or wrong. It has to be judged on personal preference and personal strategy. Whatever choice taken, the judgment has to be made on one issue of the potential growth and stable life of a farang. Like many who have said it, why go for a house when you have a chance, (no matter how small it is) to be kicked out of a house that is in gf's name while a condo can be in a farang's name, in which farang's ownership is supreme and unchallengeable.

Absolutely correct to go for places that will be improved by the authority in addition to your personal preference. Chances of continuous constructions on infrastructure in Pataya and Jomtien are better than those places in far flung areas (Sri Racha excepted). Nearer to good and well equipped hospitals is another plus for Pataya and Jomtien. As a family man with kids, our only dislike of Pataya (still OK in Jomtien) is the sight of couples of bargirls/farangs and elderly man/young boy strolling along the beach and the royal garden mall. However, one still can mitigate the dislikes by avoiding these places at a certain time.

Pataya and especially Jomtien have a better chance of growth and higher capital gain than other areas in the Eastern shores. The coming revocation of 30% reserve is another spur for the rise irrespective of cries over the oversupply.

Wow! That was lovely and to the point. It was short and helpful to the questioner.

Just to share the reactions. A few brokers have been recommending SPF (samui airport) and CPNRF for a few weeks already in anticipation of the revocation of the 30% order. Liquidity is poor for SPF but slightly better for CPNRF. I have been collecting the two for a few months now with not much volume. This news has a direct impact on all property fund on the Exchange because previously foreigners are subject to this imposition if they buy the units of property fund. I expect liquidity could jump up for CPNRF but not much for SPF. There will be manipulative actions. The other sector that has an indirect benefit is the property companies, such as LPN, LH and QH since their sales especially on condos from foreigners could be spurred up by this news. All they need is another pep-up of the government being liberal on Foreign Business Law (there is no indication yet because the Minister just recovers from his collapse).

Other than that, the general atmosphere should be euphoric at the beginning but likely to be dampened by regional exchange indexes which are sure to fall heftily on Monday's early openings because of 3% drop of Dow Jones index on Friday. It is this area that no one can be certain whether the SET punters would care that much or the excitement could override that bad news from US. I tend to think of the latter because I expect foreigners will come in in drove in the afternoon. Why? Because of the baht would strengthen further at least by another Baht 1 which is a trend that foreign investors could gain from exchange upon disposal. With that, I will collect all the companies of PTT group if the prices do not shoot up by more than two spreads.

I am not an expert but the above is something that I am thinking aloud just to see others' reactions.

You need to have a committee set up with a few active leaders. First, go and find out on the owners' legal standing from the Law Society of Thailand. It is an association of Thailand lawyers and it has a division comprising of voluntary helper to advise citizens of their rights. The office is near the Democratic Monument on the Rajadomnoen Road. Second, go to consumers protection division at the Prime Minister Office for their second opinion. (You need to google to find out the address).

I would love to know the name of the developer so that I could avoid them in term of business and acquaintance. However, it is still very good of you to let us know how bad this can be. Although, under new laws, there are better protection but still not enough.

Neole,

With your new information, I would say the situation is worse with your parents not involving in the operation but only taking in income and paying expenses whenever required leaving your Thai friends to cover the grassroots. Irrespective of the good friendship, the whole concept is to open holes of the tills for the Thai friend to dip in. Either the Thai friends are really really honest (which is a rare commodity) or not bright, I would not be surprised the friendship could end in future. Threat of legal actions or even bodily harm could result.

However, I can sense that the investment sum to your parents is an extra cash and not significant in their heart, losses are bearable if at least the property still remains intact for your parents. Irrespective of the warnings etc., if your parents still like to go along with that route and expects only of some legal protection on the land and buildings, then I strongly suggest you to approach those law firms that have dealt with this situation before in designing a right company structure. Most likely they will come out with 51:49 shareholdings of a small registered capital with mortgaged loans to the company. I do not recommend you to rely exclusively on whatever said in this forum, a final review from an honest and reputable legal firm is a must.

My comments are in bold type:

What are the bare minimum requirements to keep a Thai Limited company going while we're not doing any business? Having the accounts updated to each year end date and having a set of audited finacial statements filed with the ministry of commerce. This could be arranged by your accountant or your accounting service company. The service company should be able to provide the inclusive services. Fees of 15,000 baht should be reasonable. But you can get it cheaper, if you can scout around. But it is better to get the one with capability and responsibility in filing. As to taxation, if you have registered VAT, a zero return has to be filed monthly unless you revoke the registration. This again can be inclusive with that 15,000 baht. So we have the option of starting up again and applying for work permits etc. in the future.

- Presumably we still need to do annual accounts and audit (annual report) at the start of each year (this normally costs us 15,000 baht)?Yes.

- Is the 6-monthly report still needed (after the end of July)? No, if there is no operation, six-monthly or half-year tax report is not necessary. But tactically, it is better to file with zero return. It is only on one sheet of paper, filling with nil. It should not take more than 5-minute to fill in and half an hour travelling to the district office. It is best to do that to avoid of having to receive an enquiring letter to the company on the missing half-year tax return.

- Does the company need any employees? Is there a minimum salary? No, not under corporate law or tax law. But if the company is used for asking work permit, then I don't know exactly the requirements.

- Are we required to continue to withhold rental tax on an office, even if we aren't doing business? Yes, whenever there is a payment and file with the revenue 7 days after the end month.

- Any other requirements? Based on your limited information, I cannot think of any.

Thanks!

chutai,

The best Pad Thai in the Kingdom? Wow, that is worth something to search for. Thank you for the info.

'steveromagnino',

Thank you. Good stuff.

To add to others, I have asked a few Thai couples on which development companies are the best and most reliable in their workmenship, LH has been mentioned most often. Most would also mention unsurpassable after-sale services. Not only that, as a stock investor, we view LH as a pioneer in uplifting gated community to a highest level and to buy that stock whenever the price drops unreasonably. They are in an enviable position in terms of goodwill.

Who's 'we' , if I may ask ?

Sounds like a good promo for LH, is it ?

Their website looks nice but is very, very slow and more Thai than Farang orientated but maybe it's me, from a distance.

LaoPo

LaoPo,

"we" in my context means stock analysts among all the brokerage companies and my investor friends in general when we evaluate choices of investments. We also talk in that light about LH. I just sold my LH stocks and expect to buy when there is a dip. That is the only interest I have with LH. For my own wealth preservation, I love to hear a lot of bad things about LH, then I could strike out LH from my choice. I invest in our stock market under Warren Buffet's concept or morningstar's direction on companies with moat, that is to look for value in which competitors have difficulties to break in.

I consider LH is one of them at the moment because of their goodwill they have cornered in the property market for housing development. (For condos, it is Sansiri. I also love to hear any bad things about them because I deal with them a lot.)

In the 1997 financial crisis, LH was almost in a bankruptcy stage until Government Investment Company of Singapore came in to help and making huge profits from LH shares. So LH knows of the pain in not being able to sell.

Neole,

Everybody on this thread is spot on with the observations that both your parents are looking for trouble. However, I was stuck by your comments that:

"but they have this much extra cash, and they would like to carry on working. They have been active all their life and would like to keep themselves involved in business, and this idea appealed to them."

Therefore, it would be difficult for you to convince them to give up this romantic idea of owning a workers' complex. Even for a Thai with no legal hindrance, he still has to think twice. First, dealing with multitude number of people with a few thousand baht rental per person, you have to like people a lot. Second, you are in a competitive field of supplies since there have been many Thais who have gone into this venture with some things to do. May be by now, all the ideal location has been taken. Third, as an owner, you are also responsible for a large number of human lives and possessions. Fourth, your parents would have to be more than active unless they have a few good deputies. Fifth, I do not think stress on this type of business is good in prolonging their well-beings. It is not easy to resell.

As to the intended question, whether it is possible for farangs to run this type of businesses. The answer is definitely possible. Look at a few boutique hotels owned by Europeans, their lawyers must have guided them to do so at a huge fee. You need building permission, "hotel" permit, structure in land ownership, company shareholders that are things I can think of. They are all possible at a price and your parents will get closer to a real scene of paying tea money etc. With that, perhaps you can convince them to take up business of such like 7-11 to keep them busy. The return on investment could be miserable but with their attitude they might be happier. I know of many Thai well-to-dos of the same like are also looking for somethings to do and mostly end up in restaurant business because their maids and wives are good at their home cooking. I would say 90% of them failed miserably after realising how hard to run a restaurant as different from home-cooking.

Why don't you start another thread, asking what could be an ideal business for people like you mom and dad who like to be active but not concerned with profit? I very much like to know the answers because I know quite a few who have been asking this type of question.

To add to others, I have asked a few Thai couples on which development companies are the best and most reliable in their workmenship, LH has been mentioned most often. Most would also mention unsurpassable after-sale services. Not only that, as a stock investor, we view LH as a pioneer in uplifting gated community to a highest level and to buy that stock whenever the price drops unreasonably. They are in an enviable position in terms of goodwill.

For your information.

A unit in my building recently sold for 85,000/meter.

Nice older building in a very good location.

Good to know. It would even be nicer to know of the area and the location or, better, the name of the condo.

Lower Sukhumvit close to BTS.

Thank you! That will help us to pinpoint the ruling market value more realistically since it is so dfficult to get the right information on this area.

I am not using via Hutch office, huawei line which is mobile for internet. Go to a Hutch office for details. The only snag is sometimes it is quite slow in Bangkok but OK in Pataya.

Besides what have been recommended, if you can get the facilities, you can have the house mortgaged with a bank for a long period (10 years and over). You get back part of the fund then slowly pay back the loan.