Love Thailand Dearly, But Reevaluating Having A Business Here

[Gonzo the Face]

I know that there are some other expats on this forum that have businesses here in Thailand,, and wonder if they may have thoughts like mine.

I have been in business here for almost 17 years now and have run everything 100% legal, with taxes and all reports paid and/or filed as required by Thai law. ... and by doing so, I must say have had absolutely no governmant problems.

Now, I am afraid that I have to reconsider being in business here at all. This relates primarily to some of the laws and regulations that have come to be with this last government and their populist programs. It appears that this government panders to the people [voters] to get their votes,then the hell with whatever until the next election is due, then its promise and pander all over again.

Now I am talking more than all the tablets for all the kids program fiasco or the flood relief millions and billions just disappearing, but other good and wondorous programs by the government that will allow them to fatten their wallets by thousand baht but giving the small people [voters] fifty baht......MAYBE,,, for this, one should ask the rice farmers themselves how much this rice scheme has benefited the little man farmer.

Lets look at the 1st of January. ..... the new govenrmant has promised that there will be a 300 baht minimum wage. OK sounds great for the little man/woman worker, but lets think this thru. The basic starting worker who may be earning around 5200 baht as a cleaner or maid now, will be guaranteed 9,000 baht per month.That is almost double the current minimum wage. NOW don't get me wrong, I do not begrudge the little people getting a better wage, but where is the money supposed to come from??? If you have a restaurant, will the buying public allow you to double the price of a hamburger????? If you run a hotel, will potential guests allow you to double the price of a room????? I don't think those businesses will have enought customers to continuing in business.

Who will benefit ???

When the businesses close and the workers have no income because they have no job.

When tourism dries up piece by piece and close or move to Lao, Cambodia, Vietnam, or maybe Burma.

Who will benefit ???? Why it would seem that the only one benefiting is the government, because they have already benefited by convincing you to give them your vote, by being elected, and given keys to the vault. To hell with the rest,,,,,, let someone else sort it out as it was the oppositions fault.

Remember,,,, "stupid is as stupid does" ... and I thought the Forest Gump movie was about and in America.

More of [to me] Thai government bureaucrat logic.

Make a hospitality business get 20 different licenses, including ones to sell beer and spirits.... then put into place regulations that say you cannot sell beer and/or spirits after 2PM, when many people are still at lunch in restaurants ! ! ! Maybe Thai logic but what is the rationale and purpose??

Now as pertains to the program involving alien workers doing mostly work that the Thai does not like or want to do.

A few years back the govenment had a problem with too many illegal alien workers and created a program to control and regulate these workers. What was touted to be a cost of 1000 to 1500 baht these workers would be registered and made legal tax paying workers. Well the 1000 to 1500 baht came much closer to 10,000 baht when the dust settled and these alien workers now were registered and had their own alien work permit and alien RED cover passport. A couple years into the program they started issuing blue cover passports. Now it seems that all the workers who had done as then required by law, have now to pay an extra 1000 baht and get the red covers changed to blue covers. Maybe Thai logic, but what is the rationale and/or purpose??? Why not wait til the passport expires and then issue the new one in the color of the day.

Corruption seems to be rampant here in Thailand and according to a recent report Thailand is going down of the country corruption rankings. But like the alcoholic, corruption can only be corrected when the individual wants to be corrected. The people cannot idolize certain individuals and try and emulate them with thoughts that someday maybe I can do that or be in that position, so I like it and think corruption is ok.

The list goes on and on..... and yes, I know TIT , this is Thailand, and have known for some 25 years now. In spite of it all, I love the country, and most of the real people and of course consider it home, but some greedy and self centered people seem to be making it worse. I am now seriously thinking of a relocation, and this is not a simple task for a older person who just cannot retire. I am most seriously thinking about Burma, now that it seems to be opening up.

Well I've rambled on and on and gotten a lot off my chest, but does anyone , who may or may not be in business here,have any input or comment related to any or part of this???? Thank you for reading this far and if you post I promise to try and read to the end or your imput

Gonzo

[Ulysses G.]

While I agree with much of what you have said, I would be very surprised if things were "better" in Burma, Vietnam or Cambodia or - if so - would stay that way for long.

As far as Thailand getting "worse", I would say no. It is getting worse in some ways and getting better in others, but we were willing to put up with a lot more when we were younger, so maybe it seems to be going downhill. Corruption was worse 20 years ago and there were plenty of stupid regulations.

If you want to move on because you need a new adventure, that might be worth doing, but I would not expect the grass to be greener otherwise..

Edited December 14, 2012 by Ulysses G.

[Phronesis]

Gonzo...

Issue: Whether to continue to do business here

Empirical answer: If the micro and macro factors you adumbrated make your current business model unprofitable, then stop trading

Non Empirical answer: If the milieu in which your business currently operates is unacceptable to you personally, then stop trading

[hansbak]

a suggestion? perhaps pay per working day....if they work 5 days per week that will be just over 20 days which is 6000 baht?

reagards.

[Rancid]

Thailand seems to be following the ill advised processes of the west where the rich get richer and the poor get the picture. Debt is being run up and the bureaucrcy and governmnet are all lining their parasite pockets, and basically these regs are absorbed by big companies and the smaller businesses get screwed.

You can only base your decision of your numbers. I closed my business a while back, lost the staff and the taxes, not sure how Thailand benefited from that. Still make money legally though, just a variation on what I was doing with a different angle. Just a thought that maybe you can do similar somehow.

[eyecatcher]

I think writing this post means you are 80% decided already that its time for a change. Is it Thai beaurocracy that you are at odds with or is it your enthusiasm for your business that is waning?.

After 17yrs you have either loved the business as a hobby or you came here without sufficient funds to treat it as a hobby and had to make it work to survive. Survival and responsibility is a big drive but If you no longer have the drive here, then you need to find the drive somewhere else; but a change is as good as a rest if nothing else.

I know from meeting you you have a strong Burma connection in your wife/in laws; and they will surely encourage a move and help with the difficulties you will inevitably face.

Life is about going forward, experiencing new adventures….we only regret what we don’t do; rarely what we actually do. Go for it mate, this could be a new lease of life that you have been secretly craving

[butterisbetter]

If your workers work 6 days per week, as most do in Thailand, then the average month will have slightly over 25 work days. So the total would be a little over 7500 baht for a minimum wage. For the sake of argument let's say that's a 40 percent premium over what you are paying your workers now. Now, if all your expenses were wages, then you might be expected to raise your prices by 40 percent. But wages are only a fraction of your costs. Let's say wages are 30 percent of your costs. Then the real increase in your costs would be 30 percent of 40 percent which would be about a 12 percent increase in costs. Not negligible but not overwhelming either.

In our case, most of our workers (except the very new ones) make more than that already. Of course, when we raise the lowest paid workers' wages, we will have to make some upward adjustment of the others' wages as well.

[Beetlejuice]

Hi Gonzy

I fully appreciate all what you said in your post and fully understand your dilemma.

Only you have knowledge of your financial situation and also a good insight as to whether or not your business will remain a viable proposition for the foreseeable and long-term future.

Circumstances change, the goal posts are moved, can be better for some and worse for others. When Governments make changes it`s normally us, the little people who lose out, which could mean working harder to stay afloat. Of course through our lives we must try and somehow adapt to these changes, but sometimes it can become like the Titanic, when you know it is sinking, then it`s time to take to a lifeboat and abandon ship.

I guess that running the business has been your lifestyle for many years and that you are not ready to hang up your guns yet and probably thinking, what will I do next?

That’s the dilemma I afraid. Perhaps you will be force to give up the business for health or economic reasons or hopefully you will find methods around the situation.

I wish you all success and truly hope you succeed whatever you decide to do.

BJ

[harrry]

As long as you can remain in the Social Security scheme by paying payments I would do what feels best for you.

[OldeBellPedr]

Gonzo, thank you for sharing your thoughts with the rest of us. It takes a lot of courage to open up like you did.

In the hospitality business we are all struggling at the moment and we look for reasons why things are not going as well as we'd like. Firstly we look to our own businesses and think - are we doing this right? so we make changes, introduce more promotions, improve quality and all that stuff, but the bit of extra business that generates is swallowed up in higher wage bills!! We have to pay the higher wages because staff won't work for less and from a moral and ethical point of view, why should they when costs are rising all-round? Customers, as you rightly point out, can't pay more because the ridiculously strong baht means they don't have the money. so we consider moving on. But where to go? It is far too early to consider Burma (though in the future, if they get their act together, it could be very different. Laos, Cambodia and Vietnam have their own problems, so we stick it out and hope things will improve.

The one thing i don't agree with you about is your proposition that this situation is the current governments doing.

Yingluck would like to replace the governor of the Bank of Thailand with someone who will sell off some of the country's foreign currency reserves to invest in the country and the effect of this would be to weaken the baht. Why does she have to sell Thailand's rice on government to government deals rather than on the open market? Because Thai rice is too expensive due to the strong Baht! The previous government initiated the increasingly restrictive visa laws which cut out non imm O visas for visiting friends, and restricted repeat border runs to 15 days at a time. The previous government made the Burmese go home to register, which the Burmese military junta took as a green light to tax their meagre wages and which led to the labour shortage that means we hav elittle option but to pay ever higher wages.

i hope you stick with it my friend, because you have a great little business and I hope the Western tourist hordes descend on you (and us!) very soon!

Edited December 14, 2012 by OldeBellPedr

[Pond Life]

Slightly off topic, but maybe those in business can answer this for me.

300 B minimum wage, is that before or after tax & other deductions ?

If its before deduction, what would the worker end up with in the hand ?

If its of relevance, assume 20 days work per month.

I'm asking as I have a gardener/handyman & I'd like to make sure he gets

a fair rate even tho I pay him cash, off the books (I'm not in business).

Thanks

[hellodolly]

Gonzo

The social Security System was mentioned does that not include medical.

For myself that would be a big issue. The older we get the higher the [rice and the less able we are to meet the qualification for a new policy.

[JeffreyMcCollum]

The trade I am in, I have to pay double or triple the min. wage. But I get good workers. Pay min. get min work out of them.

[bluweyze]

If your workers work 6 days per week, as most do in Thailand, then the average month will have slightly over 25 work days. So the total would be a little over 7500 baht for a minimum wage. For the sake of argument let's say that's a 40 percent premium over what you are paying your workers now. Now, if all your expenses were wages, then you might be expected to raise your prices by 40 percent. But wages are only a fraction of your costs. Let's say wages are 30 percent of your costs. Then the real increase in your costs would be 30 percent of 40 percent which would be about a 12 percent increase in costs. Not negligible but not overwhelming either.

In our case, most of our workers (except the very new ones) make more than that already. Of course, when we raise the lowest paid workers' wages, we will have to make some upward adjustment of the others' wages as well.

The monthly minimum wage for salaried staff from January 1st will be 9000 Baht. The 300 Baht per day is confusing but the law requires an employer to pay 30 days per month at a minimum of 300 Baht per day.

[bluweyze]

Slightly off topic, but maybe those in business can answer this for me.

300 B minimum wage, is that before or after tax & other deductions ?

If its before deduction, what would the worker end up with in the hand ?

If its of relevance, assume 20 days work per month.

I'm asking as I have a gardener/handyman & I'd like to make sure he gets

a fair rate even tho I pay him cash, off the books (I'm not in business).

Thanks

The minimum wage is before deductions but generally the only deduction on that wage level is 5% social security. If you pay cash the employee gets 5% more but no social security coverage and you risk a large fine.

[butterisbetter]

If your workers work 6 days per week, as most do in Thailand, then the average month will have slightly over 25 work days. So the total would be a little over 7500 baht for a minimum wage. For the sake of argument let's say that's a 40 percent premium over what you are paying your workers now. Now, if all your expenses were wages, then you might be expected to raise your prices by 40 percent. But wages are only a fraction of your costs. Let's say wages are 30 percent of your costs. Then the real increase in your costs would be 30 percent of 40 percent which would be about a 12 percent increase in costs. Not negligible but not overwhelming either.

In our case, most of our workers (except the very new ones) make more than that already. Of course, when we raise the lowest paid workers' wages, we will have to make some upward adjustment of the others' wages as well.

The monthly minimum wage for salaried staff from January 1st will be 9000 Baht. The 300 Baht per day is confusing but the law requires an employer to pay 30 days per month at a minimum of 300 Baht per day.

You may well be correct but it's not what our accountant told us. Thanks for the info. I will look into it.

[jackr]

Thailand is a good holiday destination.

It's headed for Singapore expensive, minus the glitz, high standards and quality of service. If I were in your shoes, op, and had connections with Burma, I know what I'd do. Wouldn't it be great to see it rise as an SEA tiger like pre-Junta days!

[mamborobert]

As jackr indicated Thailand is marketed as a holiday destination, and CM as combined retirement/tourist destination. Business is not that sought here unless mult billion baht multi nationals.

The foibles of Thai governments have been the only consistent thing for more that 5 decades.

Treading delicately, perhaps you have changed, or need to change, rather than Thailand. One you have relative control over, one you do not. Eyecatcher posted well on this.

I have been to your business a few times and always enjoyed the food. location and relaxed atmosphere. I do not think there is much more you can do with your business as it stands. Greater capital investment/marketing (if that is an option) would in no means translate to profits.

I focused on one thing you mentioned, that being and older person that cannot retire. Why not challenge this...you have to plan you retirement like you plan your business...it does'nt just happen or you will get bored. You have to pull the pin sooner or later, why not start a transition now. Actively look for new hobbies/challenges that you can do in retirement. Rather than look for new business opportunities, how about some me time and me opportunities.

I myself found it nigh on impossible to do "nothing" in....but after 4 years have managed to get it down pat and am all the more happier. I find myself fully occupied, happy, but in no way productive or profitable. Its a giant leap to go from working to nothing, and very hard if your have such a work ethic.

Perhaps its just time to hang up the apron for good and find another way of enjoying yourself.

Don't think of it as retiring. Find another reason to live , read/write/travel/cook/fondle/.

As the man said, "no one on their death bed wished that they had spent more time at work".

Edited December 15, 2012 by mamborobert

[Thighlander]

As long as people will pay to volunteer (and even that may be illegal), it is going to be a rough road ahead. The easy visa in Cambodia, alone, makes that country look attractive.

[elektrified]

I focused on one thing you mentioned, that being and older person that cannot retire. Why not challenge this...you have to plan you retirement like you plan your business...it does'nt just happen or you will get bored. You have to pull the pin sooner or later, why not start a transition now. Actively look for new hobbies/challenges that you can do in retirement. Rather than look for new business opportunities, how about some me time and me opportunities. Perhaps its just time to hang up the apron for good and find another way of enjoying yourself.

I disagree. I too, would never wish to "retire", and probably never will. I would be bored out of my mind. I love working and still have time for my hobbies/interests. Some of the retirees walking around Chiang Mai look lost in space to me. My Dad is 91 and still works every day.

[mamborobert]

I focused on one thing you mentioned, that being and older person that cannot retire. Why not challenge this...you have to plan you retirement like you plan your business...it does'nt just happen or you will get bored. You have to pull the pin sooner or later, why not start a transition now. Actively look for new hobbies/challenges that you can do in retirement. Rather than look for new business opportunities, how about some me time and me opportunities. Perhaps its just time to hang up the apron for good and find another way of enjoying yourself.

I disagree. I too, would never wish to "retire", and probably never will. I would be bored out of my mind. I love working and still have time for my hobbies/interests. Some of the retirees walking around Chiang Mai look lost in space to me. My Dad is 91 and still works every day.

Poor wording on my part. Retirement has a finality to it like taking a ticket and waiting for your place at the morgue, that you are in a way redundant, or no use, or lack purpose. Not suggesting he go to a twilight home quite yet

What I was (badly) suggesting is find another reason to live and enjoy life rather than work. Work is important, you spend a lot of your life there and it can be unbearable if you do not enjoy it. But clearly Gonzo is not enjoying it to the same degree and there are so many other enjoyable things to do (other than just work or indeed retire). All I am suggesting is that he examine different things to do, and challenge himself that not working does not actually translate to retirement.

[hellodolly]

When it comes to retirement for my self it is a time of freedom. I buy nothing I can not walk away from with out a second thought. Thus leaving myself open to what ever new thing comes down the line. For me to buy a home or condo would be like saying OK I am ready to die.

When I first retired I was so busy I swore I was going to get a job so I could have some time for myself. It has taken years to adjust to the idea that I am an old man and do not need to be constantly doing some thing that is productive. It is OK to read a book watch TV follow Thai Visa. I have put in a productive life and it is now time to let others do the same.

I have found a way to help others to do this and for that I feel very satisfied.

The only draw back to retirement is that it means you are getting older and the body no longer responds as it did at one time.

[Oscar2]

It is OK to watch TV follow Thai Visa.

hopefully not with the same obsession/compulsion as you

[maichai40]

Gonzo, thank you for sharing your thoughts with the rest of us. It takes a lot of courage to open up like you did.

In the hospitality business we are all struggling at the moment and we look for reasons why things are not going as well as we'd like. Firstly we look to our own businesses and think - are we doing this right? so we make changes, introduce more promotions, improve quality and all that stuff, but the bit of extra business that generates is swallowed up in higher wage bills!! We have to pay the higher wages because staff won't work for less and from a moral and ethical point of view, why should they when costs are rising all-round? Customers, as you rightly point out, can't pay more because the ridiculously strong baht means they don't have the money. so we consider moving on. But where to go? It is far too early to consider Burma (though in the future, if they get their act together, it could be very different. Laos, Cambodia and Vietnam have their own problems, so we stick it out and hope things will improve.

The one thing i don't agree with you about is your proposition that this situation is the current governments doing.

Yingluck would like to replace the governor of the Bank of Thailand with someone who will sell off some of the country's foreign currency reserves to invest in the country and the effect of this would be to weaken the baht. Why does she have to sell Thailand's rice on government to government deals rather than on the open market? Because Thai rice is too expensive due to the strong Baht! The previous government initiated the increasingly restrictive visa laws which cut out non imm O visas for visiting friends, and restricted repeat border runs to 15 days at a time. The previous government made the Burmese go home to register, which the Burmese military junta took as a green light to tax their meagre wages and which led to the labour shortage that means we hav elittle option but to pay ever higher wages.

i hope you stick with it my friend, because you have a great little business and I hope the Western tourist hordes descend on you (and us!) very soon!

Maybe i can help you understand why you and other business owners are struggling...

I came back few days ago from Pattaya, i have never seen so many tourists in one place in my life.

Bars are full, discos are full, restaurants full, i had to walk 2 hours to find a room at a decent price, every cheap or medium price guesthouse/hotel was full....and people queuing for a fish massage!!

It's not the baht...it's the place.

Here in Chiang Mai the entertainment has almost disappeared, the mountains don't have the same appeal of the sea,

this is the truth, and the quality of the tourists seems to be going down and down everywhere.

I live here, so don't get me wrong, i don't like Pattaya very much....but there is the money, not here.

[hellodolly]

It is OK to watch TV follow Thai Visa.

hopefully not with the same obsession/compulsion as you

With less of an obsession/compulsion than you have of following me like a little puppy dog.

[rookball]

Thailand is a good holiday destination.

It's headed for Singapore expensive, minus the glitz, high standards and quality of service. If I were in your shoes, op, and had connections with Burma, I know what I'd do. Wouldn't it be great to see it rise as an SEA tiger like pre-Junta days!

its still a long way till singapore prices. i pay more than 100000 per month for a tiny condominium in singapore that is not even in town. stalls rental in town are so high and don't let me get started on how ridiculously expensive are alcohol there, alcoholic there must be rich!

[slapout]

I have noticed that the Thai owned businesses that I am use frequently (service station, tire shops, battery shop and even some of the resturants reduced staff by (estimate) 40 percent in the lead up to this wage increase. They seemed to fill in somewhat with family members.

It is my understanding that the real wage will now be 9000 baht/month for a full time employee and that overtime, bonus, tips cannot be applied against that figure. This is as per a Thai labor legal beagle which contridicts what an accountant had put forth to the same inquiry.

The majority of the farmers have seen less than a 10% net gain in product price with all of the various government vote buying scams and have seen the day rate for farm help go from 150 baht/day to the proposed 300 next year.

I think Gonozo has raised some real concerns that many residents of Thailand both Thai and farang are going to have to address very shortly and some might not like the outcome.

[ramrod711]

I think we all know that the 2:00 to 5:00 ban on alcahol sales is srtrictly for the benefit of the police. You will not have a problem, if you pay tea money. Undercover police moved in on the beer garden at big C hang dong about a month ago at about 4 minutes after 2:00 pm. They were forced to cover the beer logos on the glasses and signs, and the waitresses had to wear street clothes. Now, everything is back to normal, including being able to buy beer at 1:59 and drink until 5:00. I have no first hand knowledge, but the rumour is that it cost 20,000 baht a month, Amazing Thailand. Kudos to all you business owners that have to deal with this. I would hate to see you go John, but I don't blame you. Good luck to you and your family.

[Johpa]

Oh please, labor is just one of many expenses for any business. One will not need to double the price of your product or service to cover any anticipated minimum wage increase. Sure, a modest price increase may be necessary. So too would be a tightening of other costs and, I know this is sacrilegious, but a small cut in the owners personal income may be in order until you can figure out how to increase your efficiency and your sales. So stop crying in your beer.

Edited December 15, 2012 by Johpa

[Teak]

The problem with pulling up your stakes in one culture is the cultural learning curve that is required to do business in another culture.

Burma/Myanmar is difficult. I have had containers take 5 months to arrive. Corruption blended with dictatorial bureaucracy. I never learned when one one was dominant over the other. I expect that it took you a long time to learn how to effectively do business in Thailand. Complaints, of course, but you know the method that is required. There is no right or wrong....just the system that has to be negotiated. My business is now in China. That system is easy to deal with, if you include your Thailand experience....but the daily life is quite boring compared to the quixotic mayhem of Thailand. ....Ken