A dear friend (not a client) who labored long and hard to make his Thai restaurant a success (#1 on TripAdvisor – hard to pull off) was recently approached by his Thai landlord’s  son. He had noticed that the restaurant was constantly sold out. He deduced that my friend had cheated his mother when she signed the 5-year lease – though the restaurant building had been abandoned for years before my friend leased it.

The son demanded that my friend sign a new lease, more than doubling the rent and that, if my friend refused, he would ’cause trouble’ in the restaurant. The son holds the double advantage of sharing his mother’s high social standing and of being known to hang out with thugs.

So my friend decided to move his restaurant elsewhere.

If the son is true to form he will now start a restaurant in the same location and wonder why it fails within 6 months. That is part of Thai commercial landlords’ pattern, too. It’s not just restaurants that are in danger of this. 3 years ago another expat friend started a very hip coffee shop-bookstore and the place was jammed from 10 am to midnight on the first day. The next morning the landlord arrived with a new lease.

And yes, the landlord did start a coffee-shop bookstore after my friend vacated. And it failed in 4 months.

If you intend to enter into an agreement with a commercial Thai landlord, please contact me first. There’s a right way and a wrong way to go into such deals that has nothing to do with what’s written on the lease document. This is the kind of minefield that we routinely navigate for our Concierge clients. That’s the point of having a concierge, after all: to help you through the local scene in comfort and safety.

Update: two years later, my friend’s new restaurant in town is booming. His previous location is still empty. Landlords in Thailand remain as much a mystery as ever!

The post Landlords in Thailand appeared first on Thai Retirement Helpers: Retiring in Thailand Made Easy.

A British friend who’s making money in Thailand by managing Chiang Mai’s swankest private hotel told me he’s “a slave to TripAdvisor”: as soon as he wakes he checks TripAdvisor. A bad review can wreck months of hard work. You, too, can be such a slave…

May 10, 2016: Several of you have emailed to say you’re interested in local businesses so we’ve been looking been looking for modestly-priced business opportunities around Chiang Mai. Here’s the first: a guesthouse. I haven’t vetted this place, don’t know the owner and receive no reward for bringing it to your attention (the same goes for real estate listings). For this job you would need some hospitality experience and trustworthy local help to audit the books and instruct you about the unique pitfalls of doing business in Thailand.

The financial requirements of this deal are: Deposit 500,000 baht and 120,000 baht monthly. In US dollars, that’s $14,000 and $3,500 monthly. Doesn’t look so bad when you convert it to familiar currency, does it? Term of the lease? Long-term. Sounds like it’s up to you and the landlord to negotiate the term. Location? Soi Rachamanka 3, right in the beating heart of the Old Town. Could hardly be  better. You can contact the owner at +66-(0)83-515-9988 or (0)87-972-9988. But read the rest of this post before you invest a penny…

Starting a Business in Thailand Can be Tricky

One factor that complicates starting a business in Thailand is that, under current law, foreigners and foreign businesses may only own a 49% stake in local companies. The current law forbids foreign majority ownership in sectors where Thai businesses are deemed not ready to compete with foreign companies. Businesses have circumvented restrictions by issuing preferred and common stock options, with preferred shares enjoying more voting rights. Now a draft law put forward by the Ministry of Commerce would restrict foreign firms from using preferred stock to retain control.
“This proposed change would have far-reaching ramifications that would affect thousands of existing firms here, big and small, and would certainly deter future foreign investment,” said Marcus Burtenshaw, executive director of real estate consultancy Knight Frank Thailand.
“My business is one that you can run from literally anywhere. We registered in Thailand because we like the lifestyle here,” said Chris Roberts, who did not provide his real name out of fear of a possible backlash. Roberts runs a small IT firm that specializes in software engineering. His company employs only four foreigners but has over 20 Thai staff. He says that while he has Thai partners who own the majority of the company, they do not have executive authority on the direction of the company. “If they’re going to make it difficult for me to run my business, then I have no problems about packing up and moving somewhere else.”
Resistance from foreign officials and businesses has prompted internal reviews and assurances from the Ministry of Commerce that any changes to the law would be made after consultations with all parties. A source from the ministry said that any changes are still preliminary and that all changes would have to go through both the legislative assembly and the cabinet – adding that compromises with foreign businesses could be made, as a reworked Foreign Business Act could allow foreigners to own a majority share in certain sectors including accountancy, legal services, architecture, engineering, brokerages, advertising, hotel operations, food and beverages and “other service businesses.” The ministry said some restrictions may be relaxed as a compromise for limiting the use of preferred stock options. Yet foreign companies say that is not enough.
“Imposing tighter restrictions would be seen and felt as a step backwards at a time when foreign direct investment levels are low and Thailand’s neighbours are becoming increasingly open for business,” said Burtenshaw.
The various chambers of commerce agree with such sentiments. When rumours circulated about the proposed changes, the American Chamber of Commerce quickly pointed out that the last time such restrictions were discussed in 2007, the stock market dropped 15 per cent in one day as a result.
Stanley Kang, chairman of the Joint Foreign Chambers of Commerce, said erecting more protectionist barriers would be going against the tide of increasingly freer trade.
“With the ASEAN Economic Community due to be implemented next year, there is going to be more competition in the region, so we want to see more liberalization of the economy.”
Sources within the Ministry of Commerce said the committee overseeing the draft law is resolute in the belief that it is vital to protect Thai interests.
“To them, this is not about chasing away foreign businesses but protecting Thai ones. More transparency and fewer loopholes can only be a good thing,” one official said on condition of anonymity.
For others, however, the proposed changes come at a bad time. As Thailand’s economy slowly recovers from a decade of political instability and the world comes to grips with the country’s new military government, any changes that rock the boat could only worsen the situation.
“Thailand faces a choice,” British Ambassador Mark Kent wrote in a blog post circulated by the British Chamber of Commerce.
“It can choose to seize the initiative again and make itself the most attractive destination for foreign investment … or it can choose a different path.”

A Thai Startup: Richard’s Cosmetic Business

Richard Berry is launching a new cosmetics business in Chiang Rai, Thailand, about 3 hours north of Chiang Mai, near the Myanmar border. I’ll be following the progress of Richard and his partner, Uwie, over the coming months a posting videos of each stage of their adventure. Here’s some of what he had to say, based on his progress to date:

Me: so, if you’re thinking of doing business here, what are some of the things to do before you commit?

Richard: Okay. Buy Thailand Fever, the book. And by the way, it’ll give you a little bit of insight into how the Thais think differently. You have to understand that their thought process is their actual mentation is based on the five precepts, and an animus society is very, very different from the way we think in the west. The language, okay, we think if you speak the same language. It’s very different. So the key factors that have helped me, and while our business isn’t open yet, we’ve got the product produced, is to find a farang who’s successful in business, who doesn’t moan about the Thais, also, somebody who accepts the culture is very important. Someone who’s not got a business who battles with the Thais. So find someone who accepts the Thai way of life, who’s successful, and go and talk to them. And they’ll always be happy to impart their information to you. So that’s the key factor. You will not learn it from books. You will not learn it on YouTube or any videos. You need to talk to somebody who’s set up businesses out here, and that’s what’s helped me. That’s the key factor.

What about language?

I can get by with basic Thai, and every single new word I’ve learned has made it easier, and you’ll get more respect from the Thais you deal with. So I would say, if you’ve got a predisposition towards learning, and I haven’t really, and even if you haven’t learned the language, go to school. Learn from books. The best book ever is by James Higbie, called Essential Thai Grammar, I think, or the Fundamentals of Thai Grammar, big thick book like this. No one’s ever come near learning from a book, but you need to go to learn lessons, to get the pronunciation right. If you can learn the script, it’s a phonetic language, so if you learn the script, you cannot pronounce it incorrectly. So that would help a lot, and of course you won’t have the wool pulled over your eyes. You’ll get to understand a little bit, and you’ll get so much respect from your Thai business partners and the Thais you deal with in the street. They love it.

Further Reading

How can you do better than to read the classic, Making Money in Thailand?  It describes 22 ways that Westerners who retire in Thailand can (and DO) make extra income. From legal employment to buying a business to starting one. Covers budgets, profit margins, on-line and off-line businesses, visas, legalities, business culture, import and export, and a range of stories and videos by and about Thai expats making extra money,  and more.

The post Making Money In Thailand appeared first on Thai Retirement Helpers: Retiring in Thailand Made Easy.