Don't open a business in Thailand (part 2)

I have lived in Thailand for almost 15 years. I am one of the few business owners that escaped without losing everything I put into it. I was partially lucky and partially smart. The system is rigged and you are not allowed to succeed - at least not as a small business owner.

Before I start to sound too jaded, i want you to understand that I actually came out on top. I didn't lose all my money so this is not just the rant of someone that got burned by a system they didn't understand. However, I am going to present multiple REAL stories of people I personally know in an attempt to prove my point. I will include my own story at some point in this series.

I have changed all the names but I can assure you all of these stories are true.

Our second character has a lot in common with Pelle, but he actually started with significantly less money. Pelle dumped millions (of Baht) into his business venture, James our second focus, only spent 1 million (this is about $33,000 USD.)

I first met James when we were both doing a teaching program that I previously wrote about. It was called "English for Krabi People" and it was a government program that was intended to improve the English speaking capabilities of the local tourism sector. I would argue that the program was a joke, completely failed in its efforts, and was simply an opportunity for a politician to take photos of himself for the newspapers: This is another story though.

James cracked me up from the moment i met him because he couldn't find the main entrance to the school and actually climbed over the wall that surrounds the entire property with the assistance of some teenage students. What an entrance. Thankfully, no one in our program actually saw him do this.

the only picture i could find, he scaled that wall

Like many people in Thailand, James didn't especially want to be a teacher, but there is not a great variety of jobs available for foreigners in Thailand. Either you are a teacher, you are a dive instructor, or you own your own business. There are a few people who have professional jobs up in Bangkok (mostly) that are employed by huge companies but these jobs are very rare because the companies can employ 5 Thai people for what it costs to employ one foreigner.

After years of drudging through a job he hates (teaching,) James decided that he wanted to open his own business. He chose a small property near the river in Krabitown and opened a cafe, bar, and guesthouse. The property already existed as this type of business previously, so there was a lot less to be done in opening it. Furniture had to be bought, electrical work needed to be done, and some renovations were needed like painting and fixing this and that. It only took a month or so to get it going

it isn't exactly the 4-seasons, but it is really comfortable and a great value

James ran a skeleton crew because with only 10 rooms and a cafe that doesn't sell food, you don't really need very many staff members. The people that work there (again, all of them Thai) really enjoy their jobs. Their salaries are well over the average for their types of positions and the owner treats them with respect.

However, James and his wife made some very bad mistakes when they first opened and if you ignore my advice and foolishly open a business over here anyway at least do not make these mistakes.

• They agreed that only the owner of the land can sell the business on (James' family can not sell the business)
• They only had 1-year contracts
• They are renting from a family of lawyers
• Their rent is extremely high

It's easy for anyone (including me and James) to look at the above mistakes and think it is really dumb in hindsight to have opened this business and dumped $33,000 dollars into it but I think the "heat of the moment" got the best of him. He really wanted to stay in this country, he really didn't want to teach English anymore, and he knew that he would do well in the hospitality industry.

it's a fantastic place to hang out and have a beer too

So we can't really fault the owner for charging as much rent as they think they can get or even the fact that they are lawyers. That has proven problematic over the years but it wasn't a business-ender or anything. The business ending event is coming at the hands of the government.

There was a time not long ago where Thailand welcomed people with open arms. Getting visas was as simple as asking, and paying for one. Nowadays the hoops you have to jump through and the mountain of paperwork that must be submitted and in many cases rejected, is a real pain. Combine this with the fact that the politicians are constantly making knee-jerk sweeping changes to the system- to the point where various consulates have different rules, and we've got a very complicated situation.

James always went by the book. He never worked illegally (which because of his location he could have gotten away with.) He always had a work permit and the necessary visa whereas many many other people just get the easiest visa (normally an education one) and then work anyway. Keep in mind that when you do comply, and do have a work permit, you also pay relatively insane taxes on a completely made up salary that is based on nothing more than what country you come from. Also, if your business didn't make enough money to actually afford your fictional salary your accountant has to adjust the books and pay MORE tax on income that you didn't actually receive in order to be able to "afford you."

He decided to do the right thing and obey the law despite the fact that he could have gotten away with not doing so.

By doing this he subjected himself to being "on the radar" and this necessitated paying dramatically more tax. You'd think that someone in his situation would be rewarded for his compliance but that is not the case over here in Thailand. The people who obey the rules are subjected to more scrutiny, far more fines in the way of needing a permit for this and that and of course far more taxes.

James was scraping by but was happy because he was able to afford a life for his family. They never go on vacation because they can't really afford it. Vacation for them was taking a trip to a local beach and maybe renting a nice hotel room for $70 or something. They were NOT living a lavish lifestyle. They, like Pelle, were barely staying afloat.

This year James went to go and renew his work permit and it was denied. They have been paying bribes to the labor department for years and used an agent to submit the paperwork (and this is another story, the labor department and other departments are intentionally difficult with anyone who doesn't use an agent because it is easier for them to get bribes this way.)

Why was it denied? Because he doesn't have a hotel license. Let me tell you about hotel licenses. No one has them. The major chains of hotels have them, sure. All the small mom and pop places like his do not have them. The hotel license is an absurd qualification that in order to receive it you have to have fire suppression equipment in all rooms (ridiculous to require this in a country with horrible water pressure and unreliable electricity.) You have to install fire escape ladders for all floors. You have to have signs that indicate the exit that have battery back up for illumination. You have to have basically western standards of fire code stuff and I can tell you, no one has these things. Even if you do get these things (and i tried) the office in charge of issuing the license will not give it to you unless you also bribe them.

Almost all guesthouses and small B & B's do not have this certification and most of them don't need to. This license will never be asked for by anyone UNLESS you are applying for a work permit.

Can you see what I am saying here? Because James is not Thai he is subjected to a safety standard that other businesses are not subject to. I am not going to call out specific businesses but i know MANY that have foreigners illegally working there and they don't have this certification and likely never will. If your business is partially foreign-owned (and it can't be 100% foreign-owned anyway) you are subjected to a completely different set of rules than shops that are owned by Thais.

I'm all about safety and if the country wanted to enact reasonable requirements, apply them to everyone and i would be far more likely to get on board.

bonus points for understanding the reference

So James, who is married to a Thai and has a child here will be on a Tourist visa starting next month and this will only last for 3 months. Then he and his crew are going to have to move back to their home country against their wishes. They also can not sell the business because they signed that absurd contract that in retrospect was a really dumb thing to do.

He has staff who are now going to be unemployed, the owner of the land will get a bunch of free stuff (again, i don't fault them for this because it WAS in the contract,) and now the government, in their greed, is going to go from getting some tax from this business, to getting NO TAX from this business. He also has to uproot his family to a country that 2/3 of them have never lived in.

So, reason number 2 to not open a business in Thailand is that if you are a foreigner, you will be subjected to a different set of rules. These rules don't have any particular reasoning behind them. They are not officially classed as xenophobic penalties for not being Thai.... but that is precisely what they are.

As always i welcome your comments and suggestions. If you want to eagle eye feel free. But seriously guys, let's not split hairs here. I'm not trying to submit this article for a thesis review.