Starting a business in Thailand. Is it easy?

[Brandonpm]

I am very interested in starting a hostel business in Thailand. I have been doing some research for a while now but want to get a good idea of just how easy/hard it will be. I have a Thai friend willing to become a partner and they will complete the paperwork for me but I just wanted to ask a few questions from people that have already gone through then process.

 

Will I still need 2 million baht capital paid up?

 

How much should I plan to save so I have enough to fall back on?

 

is it easy to obtain a work permit?

[Rc2702]

There was a great thread on this that provided numerous ways to set up a business. I believe if you input "immigration circling" into the TV search engine you will find a thread with those words in the subject title. Have a good read through that thread.  Perhaps then click on the thread author and review his later content and from there you should find a multitude of answers relating to your enquiry.

[TheFishman1]

Easyier to lose your ass TIT

[Destiny1990]

Yes very easy especially because u have thai friends for all your paperwork.but how you plan to obtain a building for your hostel and hotel lisence?

[hdkane]

I have a friend who started a hostel on a tourist island here...can tell you a couple of things he experienced...first, to get the business license and work permit were very easy...paid some gratuity to make sure things happened in a timely manner...he was familiar with the process and used his thai wife's name and information to register the company...

 

his real problems came when dealing with everyday Thais...he purchased beds, but they were never delivered...lost money...an attorney tried to extort money from him, simply stating that he would be killed if he didn't pay...told police, but no action...lost money...purchased equipment for the hostel...stolen by the security staff...despite cctv evidence, no arrest...lost money...was offered very young girls as potential wife by their muslim parents...didn't lose money, but was totally put off and a bit worried about how so many thais think...was told by police and other thais that the island "is another country, and we don't follow the same rules"...he cannot find staff, had to recruit people from the mainland...forced closing and lost money...place  reopened, but he and his wife are working quite a lot   just to make it each month...

 

his problems could be locale specific, or they could reflect common problems you will encounter...his feeling is that you need a thai to be the onsite manager...

[Fairynuff]

Short answer, DON'T. Long answer, if you need to ask that question....DON'T

[little mary sunshine]

Years ago I read it is so easy to start

a business in Thailand and make a

million dollars.....Just start with 3 million!

[Dan5]

Your asking how much startup capital? That depends on what kind of business.

[seancbk]

Where do you want to have your hostel?    As HDKane outlined you may have problems doing it on any of the islands.   

I know a young English guy (in his 30's) who has a hostel with his Thai GF in Hua Hin.  They haven't been at it long, they bought it from the previous owener so their setup was easier, but they are doing pretty ok.
 

I don't have any experience with hostels, but I know lots of people with businesses here and there is nothing hard about the process.   

Good luck with your endeavour.

 

[Destiny1990]

Hand your partners 100% of the investment capital and then you own it for 49%.Very Easy.

[likewise]

You could just do it with wife or Thai partner if you trust him/her, get the rental contract in your name but all other licenses in her/his. You'd kinda be like the man behind the screens without putting up a registered company. Possible I suppose ?

Edited March 12, 2017 by likewise

[williamgeorgeallen]

2 hours ago, hdkane said:

I have a friend who started a hostel on a tourist island here...can tell you a couple of things he experienced...first, to get the business license and work permit were very easy...paid some gratuity to make sure things happened in a timely manner...he was familiar with the process and used his thai wife's name and information to register the company...

 

his real problems came when dealing with everyday Thais...he purchased beds, but they were never delivered...lost money...an attorney tried to extort money from him, simply stating that he would be killed if he didn't pay...told police, but no action...lost money...purchased equipment for the hostel...stolen by the security staff...despite cctv evidence, no arrest...lost money...was offered very young girls as potential wife by their muslim parents...didn't lose money, but was totally put off and a bit worried about how so many thais think...was told by police and other thais that the island "is another country, and we don't follow the same rules"...he cannot find staff, had to recruit people from the mainland...forced closing and lost money...place  reopened, but he and his wife are working quite a lot   just to make it each month...

 

his problems could be locale specific, or they could reflect common problems you will encounter...his feeling is that you need a thai to be the onsite manager...

this is not an isolated story. i bought a couple shop houses and converted them into accommodation. i found renting nightly was a lot of work. renting monthly was not worth the tiny amount of income. i managed to sell both shop houses and break even although i deserved to loose them both for buying them in a country where it is illegal for foreigners to own land. i had a work permit for my watersports business and although after a few years it was making an ok income it was just not worth the hassle. i employed as many thais as i could (this is not an easy thing to do) every year getting a new work permit and visa was like being a monkey in a circus. now i am in new zealand with my thai girl. if she wants to work she ticks an extra box on her visa application. screw doing any business in thailand ever again. i will never own anything there ever again. still love the place but will keep it to a few months at a time to get away from the winters here. hope you listen to the stories on here. thailand is a great country, dont ruin it by working there unless you are a professional.
 

[khunPer]

There are several newer threads in Thai Visa Forum about starting a business as Thai Co. Ltd., and Work Permit requirements. Try the forum search function, as you may find both answers and good hints, you may not have been thinking about, among the many posts.

 

Some has been extremely successful starting a business in Thailand – and others have failed and lost everything.

 

Don't expect it to be easy, expect more work starting a successful business in Thailand, than in your home country. 

 

The book "How to Establish a Successful Busines in Thailand" by Philip Wylie (ISBN 1-887521-75-8) may be of your interest. see more at www.paiboonpublishing.com.

 

Wish you goo luck...

[timewilltell]

You will regret it as Thais hate foreign investors but are greedy for foreign investment. They keep the latter and discard the former. Thailand is a graveyard both literally and figuratively for foreign investors.

[seancbk]

25 minutes ago, timewilltell said:

You will regret it as Thais hate foreign investors but are greedy for foreign investment. They keep the latter and discard the former. Thailand is a graveyard both literally and figuratively for foreign investors.

 

What do you base that on?

Foreign investors (big companies) would not bother putting money into Thailand if there wasn't a good reason to do so. 

Foreign Direct Investment in Thailand increased by 10095.86 THB Million in December of 2016. Foreign Direct Investment in Thailand averaged 20376.29 THB Million from 1997 until 2016, reaching an all time high of 125800.99 THB Million in December of 2013 and a record low of -95430.07 THB Million in June of 2013.  Source: http://www.tradingeconomics.com/thailand/foreign-direct-investment


If by foreign investors you mean small businessmen investing from zero to 5 million baht into little businesses, then the situation is slightly different because many of the 'investors' in these situations either have no previous business skills, or no relevant skills (pening bars, restaurants, etc) and their failure is usually a result of that.  

The main issue that cause small foreign owned businesses to fail is that the people starting them don't have proper Thai business partners.   Starting a business with a Thai woman who has at best a basic education and no business accumen might be ok if the business is a single noodle stall, but if you are trying to build a brand with 1000 noodle stalls you'll likely fail, unless you have Thai partners who really understand business, not just how to make noodles.


 

[samuijim]

Aloha, I have started business in many locations in the world. Thailand was difficult but really worth it. Takes some time to figure our the culture for sure ! After 22 years of doing business here I would not change a thing.

[Lannig]

Careful with the figures mentioned above.

They only make sense if you compare them with the figures for neighboring countries, especially with Vietnam. That shows a trend.

[timewilltell]

1 hour ago, seancbk said:

 

What do you base that on?

Foreign investors (big companies) would not bother putting money into Thailand if there wasn't a good reason to do so. 

Foreign Direct Investment in Thailand increased by 10095.86 THB Million in December of 2016. Foreign Direct Investment in Thailand averaged 20376.29 THB Million from 1997 until 2016, reaching an all time high of 125800.99 THB Million in December of 2013 and a record low of -95430.07 THB Million in June of 2013.  Source: http://www.tradingeconomics.com/thailand/foreign-direct-investment


If by foreign investors you mean small businessmen investing from zero to 5 million baht into little businesses, then the situation is slightly different because many of the 'investors' in these situations either have no previous business skills, or no relevant skills (pening bars, restaurants, etc) and their failure is usually a result of that.  

The main issue that cause small foreign owned businesses to fail is that the people starting them don't have proper Thai business partners.   Starting a business with a Thai woman who has at best a basic education and no business accumen might be ok if the business is a single noodle stall, but if you are trying to build a brand with 1000 noodle stalls you'll likely fail, unless you have Thai partners who really understand business, not just how to make noodles.


 

Big business is a different story but still many have been ripped off - Carlsberg - Pepsi - these are big companies screwed over by the Thais.  As for the micro businesses with 1-2 million baht - you are probably right added to which they are an easy target for the corruption to target - and I mean tax office, labour department, police and law.  The medium sized businesses are also targeted and the playing field is not even close to being level.  As a foreign business you are targeted and its as simple as that.  Yes you can have a Thai partner who controls your investment as you cannot control the company legally so its easy to get any precautions avoided by a Thai partner who wants to cheat you and the vast majority are well and truly into that.  Thailand is an awful place to invest - not just because the laws are set up to cheat you but because the mindset of so many people is to cheat as well.  There are good Thais in business but most are not so your chances of any success are slim.  What do I base it on - 17 years of experience living here and seeing what happens

[Asiantravel]

3 hours ago, seancbk said:

 

What do you base that on?

Foreign investors (big companies) would not bother putting money into Thailand if there wasn't a good reason to do so. 

Foreign Direct Investment in Thailand increased by 10095.86 THB Million in December of 2016. Foreign Direct Investment in Thailand averaged 20376.29 THB Million from 1997 until 2016, reaching an all time high of 125800.99 THB Million in December of 2013 and a record low of -95430.07 THB Million in June of 2013.  Source: http://www.tradingeconomics.com/thailand/foreign-direct-investment


If by foreign investors you mean small businessmen investing from zero to 5 million baht into little businesses, then the situation is slightly different because many of the 'investors' in these situations either have no previous business skills, or no relevant skills (pening bars, restaurants, etc) and their failure is usually a result of that.  

The main issue that cause small foreign owned businesses to fail is that the people starting them don't have proper Thai business partners.   Starting a business with a Thai woman who has at best a basic education and no business accumen might be ok if the business is a single noodle stall, but if you are trying to build a brand with 1000 noodle stalls you'll likely fail, unless you have Thai partners who really understand business, not just how to make noodles.


 

 

 " because many of the 'investors' in these situations either have no previous business skills, or no relevant skills (pening bars, restaurants, etc) and their failure is usually a result of that. "

 

That's not the only reason they fail. They also fail when they are defrauded by their partner as evidenced by the story that Jonathan Head of the BBC was so anxious to expose  to the world before he was effectively silenced by the Thai judicial system

 

https://asiancorrespondent.com/2017/02/five-years-jail-await-bbc-journalist-charged-defamation-phuket-land-case/#IxeVlYWZLFBTS4bK.97

 

 

[seancbk]

50 minutes ago, Asiantravel said:

 

 " because many of the 'investors' in these situations either have no previous business skills, or no relevant skills (pening bars, restaurants, etc) and their failure is usually a result of that. "

 

That's not the only reason they fail. They also fail when they are defrauded by their partner as evidenced by the story that Jonathan Head of the BBC was so anxious to expose  to the world before he was effectively silenced by the Thai judicial system

 

https://asiancorrespondent.com/2017/02/five-years-jail-await-bbc-journalist-charged-defamation-phuket-land-case/#IxeVlYWZLFBTS4bK.97

 

 

 

 

Why is it that no mater what the discussion, people trot out a few examples of bad things happening as "proof" that any and every attempt to do something here will result in the same outcome?

 

Of course there are people that will get cheated, that doesn't mean everyone will.

Of course there are people who will have issues with a cheating spouse or GF, but not every relationship with a Thai woman ends in misery.

Of course there are bad drivers here, but that doesn't mean you are definitely going to have an accident or that if you do it will be blamed on you.

Of course there are some bad Police here, but there are also a hell of a lot of genuinely good ones.  


Do you people really think everything is that bad here?   

In my experience things are very good here, I've never been scammed and I think life is pretty great.

Sure there are things I'd prefer to be better, mostly to do with long term visas for under 50's.

But things keep improving, the quality of life in Bangkok keeps improving, there are new restaurants opening up all the time, more high end shopping, the middle class is growing.  Young Thais are travelling more and bringing back more international ideas.    In another 10 years Bangkok is going to be even better than it is now.   


 

[mike324]

too competitive and cutthroat if you don't already have your own property, if you have to rent the land / property, the return is too low to hire staff unless you have a trustworthy thai wife to help out....I advise look for another business to do unless you have lots of money to blow and able to take losses to build up the business

[Asiantravel]

12 hours ago, seancbk said:

 

 

Why is it that no mater what the discussion, people trot out a few examples of bad things happening as "proof" that any and every attempt to do something here will result in the same outcome?

 

Of course there are people that will get cheated, that doesn't mean everyone will.

Of course there are people who will have issues with a cheating spouse or GF, but not every relationship with a Thai woman ends in misery.

Of course there are bad drivers here, but that doesn't mean you are definitely going to have an accident or that if you do it will be blamed on you.

Of course there are some bad Police here, but there are also a hell of a lot of genuinely good ones.  


Do you people really think everything is that bad here?   

In my experience things are very good here, I've never been scammed and I think life is pretty great.

Sure there are things I'd prefer to be better, mostly to do with long term visas for under 50's.

But things keep improving, the quality of life in Bangkok keeps improving, there are new restaurants opening up all the time, more high end shopping, the middle class is growing.  Young Thais are travelling more and bringing back more international ideas.    In another 10 years Bangkok is going to be even better than it is now.   


 

 

 

" Of course there are people that will get cheated, that doesn't mean everyone will."

 

the issue is not that some people will get cheated but before investing one satang in any business in any country it's not unreasonable to expect where something does go wrong you should at least be able to expect the judicial system to help the victim and go after the perpetrator. When the opposite occurs twice in one case (as occurred with this story the BBC were covering) and then on top of that accuse you of being the criminal for simply wanting your money back (and chasing you out of the area with death threats) you'd have to be daft to invest anything here.

p.s. do you know anything about this case because if you did I find it very hard to understand that you can brush aside as easily as you do?

 

Edited March 13, 2017 by Asiantravel

[seancbk]

1 hour ago, Asiantravel said:

 

 

" Of course there are people that will get cheated, that doesn't mean everyone will."

 

the issue is not that some people will get cheated but before investing one satang in any business in any country it's not unreasonable to expect where something does go wrong you should at least be able to expect the judicial system to help the victim and go after the perpetrator. When the opposite occurs twice in one case (as occurred with this story the BBC were covering) and then on top of that accuse you of being the criminal for simply wanting your money back (and chasing you out of the area with death threats) you'd have to be daft to invest anything here.

 

p.s. do you know anything about this case because if you did I find it very hard to understand that you can brush aside as easily as you do?

 

 

I know as much as you about this case (unless of course you have some inside knowledge).  

I still don't see how the one case is sufficient reason to stop all foreign investment.   

Starting a business, even under perfect business conditions still carries an inherent risk, and anyone investing into anything should be aware of that.
 

I'd like to see the statistics of how many successful foreign owned businesses there are in Thailand compared to the number of cases where the foreigner has genuinely been cheated, not just failed through their own incompetance or bad luck.

 

[simon43]

What is the OP's nationality?  This is relevant to starting a business/limited company in Thailand.

[Brandonpm]

45 minutes ago, simon43 said:

What is the OP's nationality?  This is relevant to starting a business/limited company in Thailand.

I'm from the UK

[Brandonpm]

A lot of mixed reviews on here. Sounds like it's very easy to start but not so easy to maintain. Of course there will always be a struggle with any start up business. Was looking to get a long term lease on a building and go from there. I'm still in the planning stage at the moment but appreciate all the help.

[Brandonpm]

23 hours ago, seancbk said:

Where do you want to have your hostel?    As HDKane outlined you may have problems doing it on any of the islands.   

I know a young English guy (in his 30's) who has a hostel with his Thai GF in Hua Hin.  They haven't been at it long, they bought it from the previous owener so their setup was easier, but they are doing pretty ok.
 

I don't have any experience with hostels, but I know lots of people with businesses here and there is nothing hard about the process.   

Good luck with your endeavour.

 

Either in Bangkok or the South. Samui would be perfect but it's getting a bit hard to find a good building now. Maybe I could look into buying a pre existing hostel and revamp it. Cheers for the help!

[seancbk]

11 minutes ago, Brandonpm said:

A lot of mixed reviews on here. Sounds like it's very easy to start but not so easy to maintain. Of course there will always be a struggle with any start up business. Was looking to get a long term lease on a building and go from there. I'm still in the planning stage at the moment but appreciate all the help.

 

Brandon,

 

One thing to also factor in are accounting fees.  By Thai company law you must have a Thai accountant to submit your annual accounts.   You can do your own accounts, but a THAI accountant MUST submit them.
 

You'll be looking at 8,000 THB or so per quarter for a Thai accountant (non english speaking)  although I know one friend pay 15,000 a month but his accountant speaks English.

Thailand presents challenges because of the language difference, in my case as I don't speak any Thai I will need to hire an assistant to translate between me and all my other staff.  You have a Thai wife, so that is a cost you won't have.   

Good luck.

 

 

[khunPer]

38 minutes ago, Brandonpm said:

Either in Bangkok or the South. Samui would be perfect but it's getting a bit hard to find a good building now. Maybe I could look into buying a pre existing hostel and revamp it. Cheers for the help!

There are a number of possibilities at Samui, but they have been up for sale/lease for long time and is probably too expensive to run as what they are, hostels or cheap hotels, when in the attractive areas. Most of the stuff in the previous cheaper end, get upgraded and up-priced when changing owner; i.e. typically an affordable about 1,000 baht/day bungalow place in Chaweng ends up as 10,000 baht/day bungalows, with almost half of the original bungalows removed, a nice pool constructed and new-build restaurant, and the remaining parts painted and with new equipped bathrooms.

 

In less attractive areas there will be land and existing bungalow/hostels up for sale and lease, but presumably hard to make an overhead if not upgrading, as lease prices on Samui are often set quite high. If you can lease land on long-term, for example up to 30-years, and you can afford to build, your choices might be better; or invest in major upgrade of an existing building.

 

Land lease, depending of size and location, can be anything from 15,000 baht/month and up to 100,000 baht a month for small plots (not including some hidden off road places, customers cannot find), but enough size to build a little hostel. Hostel competitors will have prices from 600 baht to 800 baht a room a night, a cheap fan-bungalows in not main areas (like Bang Por) can still be found from 290 baht; modest rooms in guesthouse/hostel/hotel in Nathon from some 400-500 baht. Just mention it for your budget-calculations – Thai owners, that already have the "family-land" may not account for land-costs, when they calculate something, only what added in buildings; so it can sometime be hard to compete with them.

 

You'll still need your 2 million baht in company capital and 4 Thai employees to apply for 1 Work Permit. It's certainly possible, but not easy (as I mentioned in an earlier post) – have friends doing it, some manage to survive in business, others gave up; whilst those upgrading often are doing Okay, but that requires quite a bit of starting capital.

 

More and more young folks comes to Samui – and even most of them seem to be a lot better financially equipped than before, and therefore looking for a higher grade of accommodation than simple hostels – a little bit of local search for the right location, might make you a succesful hostel-owner...