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Thailand Reforming Itself To Make Doing Business Easier
A person might start a small resort serving local people as well as tourists in Thailand. It would possibly take him around two months to set up his business after finalizing the location of business, employees and getting the business registered. He would find it considerably easy to start his business.
On the other hand, a foreign expat being an investor living in Singapore and looking to make an investment of 3 million baht in Thailand in a restaurant business might have a different experience. Probably he would find the process a bit challenging and complex. The relevant information contained in most of the websites are generally written in the Thai language, the paperwork required in order to register a company in Thailand can be pretty daunting for foreigner expats, and obtaining a business license and work permit can take longer than expected.
The business environment in Thailand plays a very vital role in attracting both Thai and foreign investment, and these experiences could be reflective of the sentiments of a potential investor trying to set up a business in Thailand.
A good business-friendly environment makes it easy for the investor (domestic or foreigner) to invest, start and run a business, and enhances the competitive position of Thai businesses in global markets. It also benefits locals, small business owners, who are the source of most of the jobs in Thailand.
Thailand has a better business environment, as measured by Doing Business report of World Bank, which measures the ease of doing business in 190 economies globally. Based on the last year report, Thailand ranked 46th among 190 countries, retaining a spot among the top 50 economies for ease of doing business.
Though, Thailand’s score broadly remained flat in last several years while other middle-income countries have been pulling ahead. Singapore has remained at the number 1 and 2 spot for several years. Enhancing the business environment further and inviting more investments will be crucial for Thailand to surge its integration into domestic and global value chains, and to become an economic capital in the ASEAN region, and understand its mission and vision to become a high-income economy.
Measures are being enforced to ease starting a new business in Thailand, accessing financial credit for SMEs (small and medium enterprises) to facilitate trade in order to realize all the objectives laid out by the Thai government. Recent crucial reforms include an amendment in Customs Act, which could curtail the time for investigations clearance audits. With the introduction of electronic ID system, it will replace the present manual system which requires certified copies to access public services, a noteworthy simplification of bureaucratic requirements.
Thailand has undergrown from various key reforms which are aimed to simplify the setting up a business in Thailand and paying taxes. In 2016, Thai Government has introduced several reforms that made registering a business simpler and easier by establishing a single window for receiving payments and started to assign credit scores to banks and financial institutions. With the introduction of electronic submission of customs declarations, the import and export have become easier. Furthermore, the trade-related reforms will be a priority, as Thailand is looking to increase its FDI in the country.
Thailand has now further formulated various improvements in order to make doing business easy with the business environment policy a topmost priority.
Thailand Government key reform initiatives to strengthen up the business environment
The Finance Ministry and the office of the Prime Minister led the reform effort, under the leadership of Deputy Prime Minister Somkid Jatusripitak. The ministry has asked OPDC (Office of Public Sector Development Commission) to act as the coordinating body for all business environment reform efforts. The World Bank is highly delighted to participate and support this essential reform initiative and to make a contribution in Thailand’s efforts to strengthen the business environment.
The Thai government’s Doing Business task force work has focused, with the support of the World Bank Group, to identify the key reforms to fortify and strengthen the business environment across ten areas: starting a business, getting electricity, dealing with construction permits, registering property, protecting minority investors, getting credit, trading across borders, paying taxes, resolving insolvency and enforcing contracts. The focus of the most of the key reforms focus in particular is on how to ease business entry of SMEs and their operation, by minimizing complexity, increasing transparency, securing property rights, reducing the cost of regulatory processes and increasing access to credit. Some of these important business environmental reforms have already been introduced in the recent years.
Reforms includes short-term measures that would create greater clarity, in particular acts like the Business Security Act, which can boost SMEs access funds, longer-term measures such as full implementation of the Thai National Single Window system to achieve a fully automatic i.e. paperless process for the clearance on import, export and transit goods for all agencies and all categories of goods.
Continuing these reforms to push a far better business environment is a key success factor for Thailand as a whole to comprehend its twenty-year strategy and Thailand 4.0. They’re going to not guarantee success, however, they’re going to facilitate. Additionally, implementing public infrastructure investments, developing trained and skilled staff through promoting innovations and quality education, will all be important to enhance the country’s effectiveness and competitiveness.
As Asian country Thailand makes it even easier to do business, Thai and foreign entrepreneurs alike – from a small and medium Thai business owner to an overseas expat living in Vietnam – can realize Thailand a pretty place to speculate funds. They’re going to bring capital, produce a lot of higher end jobs, and facilitate the Thai economy to grow quicker, leading to higher incomes for a lot of people to boost their families’ well-being and lives
Thailand shot up the World Bank rankings this year
The World Bank’s flagship publication showed this year (2017) that Thailand has seemingly upgraded in terms of starting businesses from 96th position to 78th position, on the terms of acquiring credit from 97th position to 82nd position, on the terms of minority investor protection from 36th position to 27th position and on the terms of solving insolvency from 49th position to 23rd position. The World Bank Country Director for Thailand Mr. Ulrich Zachau has said that Thailand is making steady progress to ease the process of doing business.
Reforms reducing the complexity and cost of regulatory processes in the area of opening a business in Thailand were the most common in 2015/16, as in the previous year. The next most common reforms were in the areas of paying taxes, getting credit and trading across borders.
In the recent Doing Business report, Thailand upgraded its performance in 8 out of the 10 areas observed by the World Bank that bases its standings. The World Bank, though noted that there is plenty of work to be done. For instance, the time required for enforcing contracts in Thailand is 420 days, whereas its just 164 days in the neighbourhood country like Singapore.
Thailand did exceptionally well in 2017 in terms of expediting business startups by eliminating the requirement for the corporate stamp on every company share certificates.
Such improvements have been challenging in the past as they required altering the laws, typically a big challenge to Thailand’s previous elected governments comprising of disagreeing and horse-trading coalition partners.
Along with fostering reforms, another of the government’s priorities has been tackling the corruption, a well-established practice in the country that is assisted by plenty of red tape and myriad regulations. While many politicians and officials have been brought to book, criticisers claim graft-busting has targeted only the military’s political rivals, not allies.
Improvement in the Doing Business ranking boils down to robust competent administrators and leadership.
Thailand’s objective might not be very ambitious; however, the country wants to become the 2nd highest ranked nation in the ASEAN region on ease of Doing Business list. In 2018 list, the country is behind only to Singapore and Malaysia.
With its 26th place ranking on the list of ease of doing business, Thailand has levitated into the top 15% of nations globally in the ease of doing business which itself is a great achievement. The government is looking forward to continuing its strong business policies and employer-friendly business structures to support a strong business environment in the country and help create more jobs for people all across the country. Several major changes in the ease of doing business have paved way for foreigners eyeing Thailand as the ultimate business destination. Starting a business in Thailand used to take around 27.5 days. As of today, thanks to several business regulation reforms, it takes only 4.5 days as per the World Bank report.
The country has implemented several measures and projects for improving the business environment, which includes the introduction of e-Services and amendment of related laws. Several recent surveys result clearly reflects Thailand’s continuous efforts in making the country as one of the most preferred destinations for starting or expanding business in Asia.
If you are looking to startup in Thailand, then please contact us.