Rant On!: $75,000 To Start A Foreign Controlled Business

[fanciman]

Perhaps I do not fully understand the situation, but as far as i can see, to establish a farang controlled company in Thailand, that is capable of employing a farang, would require $75,000 in capitalization.

If i were a government wishing to deter foreign investment, a $75,000 requirement would be a fantastic barrier. Also, if i were a government wishing, for some unimaginable reason, to restrict my population from access to foreign knowhow and skills, requiring $50,000 capitalization / farang would be a great way forward.

Am I right in concluding that the governement wishes to both inhibit foreign investment, and limit the hiring of farangs? If so, what is the motivation for this extraordinary policy?

I suspect that i am not the only one mystified by this.

[~G~]

Perhaps I do not fully understand the situation, but as far as i can see, to establish a farang controlled company in Thailand, that is capable of employing a farang, would require $75,000 in capitalization.

If i were a government wishing to deter foreign investment, a $75,000 requirement would be a fantastic barrier. Also, if i were a government wishing, for some unimaginable reason, to restrict my population from access to foreign knowhow and skills, requiring $50,000 capitalization / farang would be a great way forward.

Am I right in concluding that the governement wishes to both inhibit foreign investment, and limit the hiring of farangs? If so, what is the motivation for this extraordinary policy?

I suspect that i am not the only one mystified by this.

I am not sure how you got to this figure. Nevertheless, I find it understandable (whether I like it or not) that governments will encourage larger foreign investments over smaller ones. I do agree that some requirements regarding foreign employment, visas and ownership rights are exessive.

[LivinLOS]

Is this a new rule or is this a confusion of existing rules..

As I understand it you cannot open a 'farang controlled company' at any price (depends how you define control I guess with voting and non voting shares)..

Also the requirements for 2 mil paid up capital (50k USD) does not mean the money has to all be sitting there, it can be used for the companys costs and creation..

Speak to a lawyer.

[Indo-Siam]

It is correct that the Foreign Business Act of 2542 requires 3,000,000 baht in REGISTERED capital in order for a company to be eligible to apply for an Alien Business License - the reference is the second paragraph in Section 14 at http://www.thailawforum.com/database1/foreign2.html.

That's REGISTERED capital. At present, there is no pressure on a foreigner to pay up capital. Thailand's Civil and Commercial Code states that ALL companies (including thsoe started entirely by Thais) are supposed to pay up a minumum of 25% of registered capital within 90 days of registering that capital - but there is no active enforcement mechanism for even this requirement.

And - foreigners are welcome to start a completely foreign-owned manufacturing company, or exporting company - or a hotel management business - without any restrictions at all - these activities are not restricted by the Foreign Business Act (see list of activities that are restricted at http://www.thailawforum.com/database1/foreign5.html).

And - if you will invest just 1,000,000 baht in qualifying capital investment - and pursue any of the 130 categories of activities that are eligible for BOI promotion (see http://www.boi.go.th/english/about/eligible_activities.asp), then your company can be 100% foreign owned. But - you must have (and present) a well-thought-out business plan - so "pretend" businessmen aren't going to get very far.

So - this thread is whining about nothing.

I think Thailand has evaluated the trade-offs between the likelihood that a foreign company start-up with a shoestring level of initial capitalization is going to create significant Thai employment, and the liklihood that a low threshhold of entry is going to attract all the foreign bums of the world to come here and create minimal companies for their own exclusive benefit -and has correctly decided to set the bar at a level that discourages bums, and attracts more substantial creators of Thai employment.

In case anyone is wondering, Thailand is pulling in PLENTY of direct foreign investment - and I'm talking about major employers - the type who pay $75,000 just for the professional assistance to get their "$50 million plus" businesses set up here. And I do not see the trend declining. It is an absolute joke to think that Thailand is scaring away importannt investment by requiring a modest level of initial capitalization.

Cheers!

Steve Sykes

Managing Director

Indo-Siam Group

Bnagkok

[email protected]

www.thaistartup.com

[moonoi]

It is correct that the Foreign Business Act of 2542 requires 3,000,000 baht in REGISTERED capital in order for a company to be eligible to apply for an Alien Business License - the reference is the second paragraph in Section 14 at http://www.thailawforum.com/database1/foreign2.html.

That's REGISTERED capital. At present, there is no pressure on a foreigner to pay up capital. Thailand's Civil and Commercial Code states that ALL companies (including thsoe started entirely by Thais) are supposed to pay up a minumum of 25% of registered capital within 90 days of registering that capital - but there is no active enforcement mechanism for even this requirement.

And - foreigners are welcome to start a completely foreign-owned manufacturing company, or exporting company - or a hotel management business - without any restrictions at all - these activities are not restricted by the Foreign Business Act (see list of activities that are restricted at http://www.thailawforum.com/database1/foreign5.html).

And - if you will invest just 1,000,000 baht in qualifying capital investment - and pursue any of the 130 categories of activities that are eligible for BOI promotion (see http://www.boi.go.th/english/about/eligible_activities.asp), then your company can be 100% foreign owned. But - you must have (and present) a well-thought-out business plan - so "pretend" businessmen aren't going to get very far.

So - this thread is whining about nothing.

I think Thailand has evaluated the trade-offs between the likelihood that a foreign company start-up with a shoestring level of initial capitalization is going to create significant Thai employment, and the liklihood that a low threshhold of entry is going to attract all the foreign bums of the world to come here and create minimal companies for their own exclusive benefit -and has correctly decided to set the bar at a level that discourages bums, and attracts more substantial creators of Thai employment.

In case anyone is wondering, Thailand is pulling in PLENTY of direct foreign investment - and I'm talking about major employers - the type who pay $75,000 just for the professional assistance to get their "$50 million plus" businesses set up here. And I do not see the trend declining. It is an absolute joke to think that Thailand is scaring away importannt investment by requiring a modest level of initial capitalization.

Cheers!

Steve Sykes

Managing Director

Indo-Siam Group

Bnagkok

[email protected]

www.thaistartup.com

I just took a quick look through the 2 lists and notice that there seems to be some contradictions...for instance aviation maintenance is in the BOI promotion list but it is also in the list of business that foreign businesses are not allowed to operate in due to national security and safety.

Or have I misunderstood something?

I only ask because I intend to start my own business here sometime over the next year. I'm currently working on a business plan and hope to get things together within the next year or so (I'm in no hurry want to make sure everything is correct). Btw as a side note I already have a work permit and during the setup and startup phase I intend to continue working for my exisiting company to (they are aware of my plans), as I already have work permit does that make things any easier or no differant?

[fanciman]

It is correct that the Foreign Business Act of 2542 requires 3,000,000 baht in REGISTERED capital in order for a company to be eligible to apply for an Alien Business License - the reference is the second paragraph in Section 14 at http://www.thailawforum.com/database1/foreign2.html.

That's REGISTERED capital. At present, there is no pressure on a foreigner to pay up capital. Thailand's Civil and Commercial Code states that ALL companies (including thsoe started entirely by Thais) are supposed to pay up a minumum of 25% of registered capital within 90 days of registering that capital - but there is no active enforcement mechanism for even this requirement.

And - foreigners are welcome to start a completely foreign-owned manufacturing company, or exporting company - or a hotel management business - without any restrictions at all - these activities are not restricted by the Foreign Business Act (see list of activities that are restricted at http://www.thailawforum.com/database1/foreign5.html).

And - if you will invest just 1,000,000 baht in qualifying capital investment - and pursue any of the 130 categories of activities that are eligible for BOI promotion (see http://www.boi.go.th/english/about/eligible_activities.asp), then your company can be 100% foreign owned. But - you must have (and present) a well-thought-out business plan - so "pretend" businessmen aren't going to get very far.

So - this thread is whining about nothing.

I think Thailand has evaluated the trade-offs between the likelihood that a foreign company start-up with a shoestring level of initial capitalization is going to create significant Thai employment, and the liklihood that a low threshhold of entry is going to attract all the foreign bums of the world to come here and create minimal companies for their own exclusive benefit -and has correctly decided to set the bar at a level that discourages bums, and attracts more substantial creators of Thai employment.

In case anyone is wondering, Thailand is pulling in PLENTY of direct foreign investment - and I'm talking about major employers - the type who pay $75,000 just for the professional assistance to get their "$50 million plus" businesses set up here. And I do not see the trend declining. It is an absolute joke to think that Thailand is scaring away importannt investment by requiring a modest level of initial capitalization.

Cheers!

Steve Sykes

Managing Director

Indo-Siam Group

Bnagkok

[email protected]

www.thaistartup.com

Hi, Indo Siam!

Thank you for your very informative posts.

I could argue that a closer reading of my message would show that I was not "whining", but rather questioning my beliefs. Anyway, your point is taken: I seem to not fully understand. I am very glad to learn that Thailand is attracting such large investments.

Some things I hope you could clear up for me, though:

For an ordinary business:

1 The start up capital must be available, at some stage during set up, but there is no requirement to keep that cash on deposit in a bank, for example. Is that right?

2 I have read that there are requirements on businesses in Thailand to employ a certain number of Thais for every frarang (I am unsure, maybe 7?). There is a minimum wage here ( i can't remember, something like 160 baht a day..._, so that means that in addition to every farang hired, there will be, for every farang, about 35000 baht / month minimum necessary to employ Thais. Is this right?

[~G~]

1 The start up capital must be available, at some stage during set up, but there is no requirement to keep that cash on deposit in a bank, for example. Is that right?

You don't really need to show much money, but how do plan to start a business without some cash? May I ask what is the size of investment you plan to make?

2 I have read that there are requirements on businesses in Thailand to employ a certain number of Thais for every frarang (I am unsure, maybe 7?). There is a minimum wage here ( i can't remember, something like 160 baht a day..._, so that means that in addition to every farang hired, there will be, for every farang, about 35000 baht / month minimum necessary to employ Thais. Is this right?

No Thai employees are required for Work Permit. You might be refering to the minimum of 7 shareholder for a company. None of those must be employed.

[Indo-Siam]

With this one reply, I am addressing issues raised in several posts.

With respect to conflicts between Foreign Business Act, and BOI promoted activities - once you receive BOI promotional approval certificate, you are required to apply for an Alien Business Certificate (20,000+ baht) - and you are basically assured of being approved.

With respect to paid-up capital, as soon as any portion of it is documented as being paid-up, you are free to do with it what you wish - there is no requirement to keep it in the bank, or in cash. It is intended/expected to be used for business expenses.

It is Immigration that requires certain Thai employee head counts - in order to obtain a long-term entry permit extension. Many people happily live business life here without applying for an extension - which means they need not hire any Thai employees - but they do have to depart and reenter Thailand every 90 days.

For an entry permit extension based on employment, the required Thai head-count per extension ranges from two, to four - but never higher than four.

Cheers!

Steve

Indo-Siam

[Misty]

"For an entry permit extension based on employment, the required Thai head-count per extension ranges from two, to four - but never higher than four."

I had thought that in certain cases only one Thai head-count per extension was needed. For example: an advisory business. Is this incorrect?