Bangkok Touts Cheap Office Space To Lure Companies

[george]

Thailand touts cheap office space to lure companies

But it must cut red tape and improve infrastructure to compete with HK and S'pore: analysts

(BANGKOK) Thailand is touting its cheap office space to persuade firms to set up headquarters there for South-east Asia, but analysts say the country must slash red tape and improve infrastructure to usurp Singapore and Hong Kong.

Annual costs for top grade offices in Bangkok are among the cheapest in the world, on par with New Zealand's Christchurch and Colombia's capital Bogota at an average US$144 per square metre.

Companies pay around US$450 in Hong Kong, where property prices are now recovering from a six-year slide, and US$300 in Singapore - both popular Asian bases for western firms partly because of their English-speaking populations and British-modelled legal systems.

'The cost of doing business here in general is much lower and living is good,' said Somphong Wanapha of Thailand's Board of Investment.

An executive on US$100,000 in Bangkok would need a salary of US$120,317 in Singapore and US$185,855 in Hong Kong to maintain the same standard of living, according to the 'international salary calculator' run by US-focused website www.homefair.com.

On the downside, Bangkok's traffic is infamous although its transport is improving, fewer workers have English language skills and the country has a leaden bureaucracy, analysts say.

So landlords in glitzy Hong Kong and Singapore can sleep easy, at least for the time being, despite the Thai government's efforts to promote Bangkok as a regional hub for fashion, aviation and energy trading, among other things.

'Bangkok is making the right moves in becoming more of an international city,' said Robert Collins, head of commercial markets at property services firm Jones Lang LaSalle in Bangkok. 'But Thailand's got much more red tape than Singapore and Hong Kong - the legal and tax systems and work permits are more complicated. And the general traffic problem is still a stigma.'

Rents in Bangkok have risen steadily since the 1997-98 Asian crisis but are still relatively cheap. Vacancy rates are at around 20 per cent, compared to 18 per cent in Singapore and 10 per cent in Hong Kong.

US oil giant Exxon Mobil has moved hundreds of jobs to Bangkok from Singapore and Malaysia in the last year in customer service, accounting and payroll.

'Property costs went into the economic model as one of many factors. Bangkok is certainly cheap compared to Singapore,' said David Levy, managing director at Exxon Mobil.

Office landlords in Singapore and Hong Kong have also been able to count on tax incentives offered by their governments, but there too Bangkok is catching up.

-- Reuters 2004-06-27

[wcr]

as a business owner here I would agree with the red tape thing. It maybe cheap to rent office space etc, but when you factor in corruption and a poorly trained work force I expect it actually costs more.