Thailand’s economy is recuperating from slow growth over the years since the 2014 government coup. The country’s economic fundamentals are stable, with low inflation, low unemployment rates, and reasonable public and external debt levels. Thailand is famous for being the “land of smiles”, however based on where Thailand is located and the increase in government support, it has become the prime location for business and investment opportunities. Keep reading to learn why Thailand is so popular among foreign investors.
The Thailand Board of Investments (BOI) offers investors an expansive range of tax incentives, support services, and import duty exemptions or reductions for activities that contribute towards the nation’s development objectives. On September 6th, 2019, Thailand introduced a stimulus package called “Thailand Plus”. It contains a variety of measures to promote foreign investment.
Foreign investors that employ highly-skilled staff in science, technology, engineering, and mathematics (STEM) sectors are eligible for corporate income tax (CIT) deductions of 200% for training expenses related to projects endorsed by the Ministry of Higher Education, Science, Research and Innovation. Investors that are involved in the development of advanced technology are entitled to 200% CIT deductions during the 2019-20 financial year for business investments or training purposes.
Under Thailand Plus, companies are eligible for a further five years of 50% CIT reductions if they invest at least 1 billion Thai Baht ($32 million USD) provided the investment is realized by the end of 2021. Through the Eastern Economic Corridor (EEC), a special economic zone, Thailand offers investors CIT exemptions for the first thirteen years and 50% CIT deduction for the next five. A government that supports foreign investment gives investors easy entry into the Thailand market.
The geographical area where Thailand is located presents a competitive advantage to business owners and investors that decide to enter the market. Thailand sits conveniently in between China and India. Not only does Thailand offers suitable trade with these two neighboring countries; it also is a member of the Association of Southeast Asian Nations (ASEAN). Investors that engage in Thailand will have accessible trade routes with Indonesia, Singapore, Malaysia, Philippines, Vietnam, Brunei, Laos, Cambodia, and Myanmar.
Thailand was one of the founding members of the ASEAN Region and has been active in the development of the ASEAN Free Trade Area, which is commonly known as AFTA. AFTA was implemented January 1st, 2010 for the six original ASEAN (ASEAN-6) members, which were comprised of Thailand, Singapore, Malaysia, Indonesia, Philippines, and Brunei.
Import duties were reduced to zero for countries that traded within the AFTA. Thailand is perfectly located at the crossroads of Asia and offers easy access to the region’s lively economies, including its own flourishing domestic consumer market of more than 68 million people.
Thai is the official language; however, many Thai people speak English. Most major universities in Thailand teach business in English. This makes hiring highly skilled and competent Thai employees an easy process.
Chinese and Japanese are also taught in many schools, and the number of graduates who have at least a basic understanding of German and French is quickly increasing. This makes doing business with other countries around the globe a lot easier and there is a rising demand for students to study business in university. There is still the chance of getting lost in translation, so it is still recommended to have a basic understanding of the Thai language and culture.
One of the reasons why business owners opt to expand internationally into other markets are the low wages compared to countries in the Western hemisphere. In effect since January 1st, 2020, Thailand’s minimum wage now ranges between 313-336 Thai Baht (about $10 USD) but the minimum daily wage varies by skill and experience.
An employee can work a maximum of eight hours a day, and work up to forty-eight hours per week. Employees that work in a Thailand-based company are entitled to a minimum of thirteen national holidays each year as well as a minimum of six days of holiday or annual leave after one year of consecutive work. Low work wages mean business owners will have more resources to fund other business-related efforts.
Thailand has made efforts to improve the nation’s economy and promote technological advancement and foreign relations. It’s no surprise why Thailand is popular amongst foreign investors. Business owners should look to Thailand to expand their efforts. NNRoad makes global expansion accessible for any business. We offer employment solutions, benefits administration, company formation, and payroll and tax solutions.
Contact us today to see how we can help you succeed in Thailand.