Thailand - Market Entry & Business Opportunities

Thailand, an upper-middle-income country in Southeast Asia, is characterized by its capital city Bangkok, a bustling metropolis and economic hub. With a population of approximately 69.6 million people, the majority of whom speak Thai, the country offers a rich cultural heritage and diverse landscapes. Bordered by Myanmar, Laos, Cambodia, and the Gulf of Thailand, Thailand occupies an area of 513,120 square kilometres. Renowned for its vibrant street life, ornate shrines, and bustling markets, Thailand's unique blend of traditions, natural beauty, and economic development make it a popular destination for tourists and investors alike.

Economic Overview

Thailand has emerged as the 23rd largest economy globally, transitioning swiftly from a low-income to an upper-income country. The nation is renowned for its successful poverty reduction efforts and is a major player in global exports. Its main exports include machinery, electrical equipment, vehicles, mineral fuels, and chemicals. Imports consist of gold, vehicle parts, petroleum, and electronic components. However, the economy faced challenges in recent years due to sluggish exports, domestic demand, and trade tensions. The government aims to attract foreign investment through transparent policies and simplified business procedures. Thailand boasts a low unemployment rate, although critics argue that it may be attributed to individuals seeking informal or part-time employment rather than sustained job opportunities.

Market Overview

Thailand boasts a robust economy with a GDP of $543 billion and holds the second-largest economy in the ASEAN region. The country's services sector contributes significantly to its GDP, accounting for 56.9% of economic output. While the services sector is strictly regulated compared to other Asian countries, Thailand's traditional backbone has been agriculture, making it one of the top food producers globally. As an export-oriented emerging economy, manufacturing and services play crucial roles, particularly in wholesale and retail trade, transport, storage, and communication. Foreign direct investment (FDI) flows have been significant, with Japan and Singapore being the largest investors. However, FDI experienced a decline in 2019, influenced by reduced investment in ASEAN member states. Manufacturing and financial activities have attracted a majority of FDI inflows. Overall, Thailand's economy demonstrates resilience and potential for growth, despite challenges faced in global investment trends and fluctuating FDI flows.

Bilateral Relations between India-Thailand

• Thailand and India have maintained a diplomatic relationship since 1947, with strong economic and cultural ties spanning over 2000 years.
• The "Look East" policy of India and the "Look West" policy of Thailand have evolved into the "Act East" and "Act West" policies respectively, contributing to the strengthening of bilateral relations and economic linkages.
• Both countries are actively working together to improve regional connectivity under the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) framework.
• The India-Myanmar-Thailand Trilateral Highway is a key project aimed at enhancing land connectivity between Northeast India and Southeast Asia, serving as a landmark cross-border facilitation agreement between South and Southeast Asia.

Taxation

Thailand's tax system includes various taxes such as Personal Income Tax, Gift Tax, Withholding Tax, Value Added Tax, Specific Business Tax, Stamp Duty, Inheritance Tax, and Land and Building Tax. These taxes have specific rates and regulations that individuals and businesses need to be aware of for compliance and financial planning purposes.

Subsidies and Incentives

Thailand provides a wide range of incentives to attract and support investment in various sectors. These incentives include tax benefits, grants, and support for specific industries, regional development, technology and innovation, exports, energy and environment, small and medium enterprises (SMEs), special economic zones (SEZs), agriculture, infrastructure, and training and skill development. These measures aim to enhance competitiveness, stimulate economic growth, and foster sustainable development in Thailand.

Financing Business In Thailand

• SME Bank provides tailored financing schemes for small and medium-sized enterprises, offering competitive interest rates and flexible repayment terms.
• The Industrial Finance Corporation of Thailand (IFCT) provides loans for industrial and infrastructure projects across different sectors.
• The Thailand Venture Capital Association (TVCA) represents venture capital and private equity firms that provide equity financing to high-potential start-ups and growth-stage companies.
• Angel investment networks, like Thai Angel Investors (TAI) and TVCA, connect entrepreneurs with angel investors interested in funding early-stage businesses.
• Crowdfunding platforms, such as Fungjai, KissKissBankBank, and ZmyHome, allow entrepreneurs to raise funds from individual backers for creative, social, or product development projects.
• Major commercial banks in Thailand, including Bangkok Bank, Kasikornbank, and Siam Commercial Bank, offer business loans and credit facilities for companies of all sizes.

Top 10 Companies in Thailand – 2022

Rank	Company	Industry	Revenue in 2022 (USD)
1	PTT PCL	Oil and Gas	$ 95.69 B
2	CP All	Retail	$ 23.60 B
3	Indorama Ventures	Chemicals	$ 18.63 B
4	Charoen Pokphand Foods	Foods	$ 17.46 B
5	Siam Cement	Cement (Manufacturing)	$ 16.23 B
6	Thai Oil	Oil and Gas	$ 14.39 B
7	Siam Makro	Retail	$ 13.44 B
8	PTT Exploration and Production	Oil and Gas	$ 9.41 B
9	Thai Beverages	Beverages	$ 8.15 B
10	Central Retail Corporation	Retail	$ 6.15 B

Most Popular E-Commerce Companies in Thailand – 2022

RANK	COMPANY	Headquarter
1	Shopee	Thailand
2	Lazada	Thailand
3	Kaidee	Thailand
4	My Best	Thailand
5	Amazon	USA

Top 5 Start-Ups in Thailand – 2022

RANK	COMPANY	INDUSTRY	FOUNDED IN
1	RP Odyssey	Real Estate	2015
2	The Alliance X	Real Estate	2018
3	Uni Class	Ed-Tech	2021
4	Viramino Co.	Food	2020
5	Plant Tein	Food	2021

Business Clusters In Thailand

Thailand has several prominent business clusters that specialise in different industries. Some of the notable business clusters in Thailand include:

• Automotive Cluster: Specialises in automotive manufacturing in the Eastern Economic Corridor (EEC) region.
• Electronics Cluster: Focuses on electronic manufacturing and assembly in Bangkok and the EEC region.
• Tourism and Hospitality Cluster: Centres around popular tourist destinations, offering opportunities in hospitality and tourism-related sectors.
• Food Processing Cluster: Spread throughout the country, specializing in food manufacturing, processing, and exporting.
• Medical and Healthcare Cluster: Concentrated in Bangkok, serving the medical tourism industry.
• Digital and IT Cluster: Prominent in Bangkok and Chiang Mai, focusing on software development and digital services.
• Industrial Estate Clusters: Located across Thailand, attracting industries like petrochemicals, automotive, electronics, and logistics.

How to Set up a Business in Thailand?

Foreigners are allowed to set up a business in Thailand, but they need to complete certain legal requirements and obtain a business license. Further, the foreign investors cannot have 100% ownership in a company in Thailand, they can hold maximum of 49% stake. The most common form of legal structures includes limited companies, partnerships, and joint ventures. The registration process involves:

• Finalizing name of the proposed Company
• Setting up a corporate bank account
• Obtaining approvals from the concerned authorities
• Tax Registration

It is important to note that the double taxation agreement between India and Thailand has also been adjusted to reducing withholding tax rates on interest and royalties.

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Best Locations to Set up Business in Thailand

Thailand offers several prime locations for setting up a business. Here are some of the best locations to consider:

• Bangkok, the capital city of Thailand, provides a thriving business environment with its well-developed infrastructure, large consumer market, and global connectivity.
• Chiang Mai in northern Thailand offers a favourable business environment, with a thriving tourism industry, cultural heritage, skilled workforce, and lower cost of living, particularly suitable for tech start-ups and creative industries.
• Phuket is an ideal location for hospitality, tourism, and real estate businesses, with a strong international presence and well-established tourism infrastructure.
• Pattaya, on Thailand's eastern coast, has a diverse economy focused on tourism, services, and manufacturing, with a strong presence of international businesses due to its proximity to Bangkok.
• Rayong, located in the Eastern Economic Corridor (EEC), Rayong is a hub for manufacturing and industrial activities.
• Samut Prakan, located adjacent to Bangkok, is known for its industrial estates and logistics infrastructure. It is an ideal location for businesses involved in manufacturing, warehousing, and distribution.

Visa and Immigration

Following are the various visa options for individuals who want to conduct business in Thailand:

• Non-Immigrant B Visa: Allows for business-related activities and can be sponsored by a Thai company. Initial stay is up to 90 days, extendable for one-year periods.
• SMART Visa: Specifically designed for highly skilled professionals, investors, executives, and start-up entrepreneurs in targeted industries. Provides longer-term stays and streamlined work permit applications.
• Business Visa Exemption: Visa-free entry for eligible nationals of certain countries, with a maximum stay of 90 days per entry for business purposes.
• Multiple Entry Visa: Enables multiple entries into Thailand within a designated period, usually one year, for individuals who frequently travel for business.
• Thailand BOI Visa: Available to foreign investors or executives of companies granted investment promotion by the BOI. Offers extended stays and additional privileges to support business activities.

Since the beginning of the 1990s there has been a significant change in the Thai market, today it is way stronger and more global economy which is quite capable of handling any financial challenges with growth incentives, more international trade and foreign investment and comparatively less risk. Thailand is a free-enterprise economy with a well-developed infrastructure and business friendly policies.

Over the past 20 years, India Law Offices has built a strong global presence and alliances with some of the largest law firms that enable us to serve our clients from around the world. In Thailand, we work closely with Dharmniti Law Office, a reputable law firm based in Bangkok, Thailand providing comprehensive legal services in areas of administrative law, debt rehabilitation, intellectual property, litigation, taxation, real estate, capital markets and securitisation.

If you are a Thailand based company seeking legal assistance in India or an Indian planning to enter the Thai market, our firm can provide the necessary guidance and support you require.


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