So you all heard about great exciting potential of Southeast Asia’s market, in case you don’t, here is my 30 second pitch:
“Southeast Asia has 600 million populations which constitutes only a half of 1.2 billion populations in India but it has higher spending power with US$ 1.4 Trillion.”
Okay, now you want to get access to this challenging market and wonder in which country you should set up your business entity. If this question keeps buffering you, I would like to recommend Thailand as an answer. Let’s see if these facts, together with my honest and professional opinions, sound convincing enough for you.
1. Hiring cost of software engineer is 3 times lower than hiring cost in Europe.
I have been working in HR Tech sector and my occupation drives me to immerse myself in the HR industry. On one occasion last year, I met a group of European founders who have set up their Startup in Thailand. One founder from Sweden told me the reason why they chose to try their luck in Thailand instead of Europe, a place where they have some vital advantages since they were born and raised and were even granted funding there. It shocked me as he said “You knew what, hiring the guy with the same level of skills you just introduced me could probably cost me three times, if not higher, than what it costs me here, leaving alone the buzzing income taxes.”
Additionally, the overall cost of living in Thailand is significantly lower; the rent, the food, working space, etc. So it makes every sense to base the Startup here in Thailand where we can keep the burn rate low and have a longer runway which probably means more chances to success.
2. Wholly/Majority Foreign-own Entity is not (too) difficult to set up.
Thai Government wants to promote tech industry therefore they allow foreigners to establish a wholly owned Startup entity through “Thailand Board of Investment (BOI)” channel (or own a majority shares in the company). In summary, as a foreigner, you can establish the entity following these steps:
Go to BOI website, fill out the form online and schedule the meeting with BOI officers which I find to be super nice and very helpful. Since most of Tech Startups fall into Software business category (section 5.7) under BOI definition, the whole process usually takes less than 60 days.
Once granted the BOI certificate, you can incorporate the wholly foreign owned entity with Department of Business Development (DBD).
Request a “Foreign Business License” which you can easily obtain since you have already been granted BOI certificate.
Open the business bank account.
As a BOI supported company, you are permitted a fast-lane to request a Work Visa and Work permit through BOI e-Expert system which is way more easier and faster than normal process.
3. Thailand is such a great place to work and live.
Unsurprisingly, Thai food has the best taste in the world. A decent favor street food can be found in almost every main street in Thailand. Attractive tourist destinations and a lot of beautiful beaches are located within 2–3-hours drive of central Bangkok, so you can just work in Bangkok during the weekday and enjoy yourself on the beach as often as you desire.
During the political situation in past few years where many protesters took to the street but the affected area is limited to some specific parts of central Bangkok with no impact on the rest of the city, the shopping mall was still open, sub-way / sky train was operated as normal and people went to work as usual.
Most importantly, Thai people are nice and extremely friendly to foreigners. That’s why most foreigners usually feel comfortable to live and work in Thailand.
4. Tech talent is not difficult to find.
Don’t get me wrong, Thailand has a problem of talent shortage as serious as the other countries around the world. But due to the advantages in #3, I would say it is quite an easy task to bring in foreign talents as it is evident that most of them seem eager to work in a comparatively carefree environment in Thailand. Fortunately, in our tech recruiting business, more than 80% of our clients are open for foreign candidates and are willing to sponsor Work Visa and Work Permit for those qualified foreign candidates.
5. Thailand with its 65-million population is digitally ready and is big enough as a early market.
Having over 25 million Facebook active users, Bangkok could be named the capital city of Facebook (the highest ranking in the world). Moreover, half of the population in Thailand (over 30 million) is Line active users. Mobile penetration rate is roughly at 133%. Thailand is among the world’s top 10 countries who spend the most time watching YouTube video. And most importantly, 3G/4G high-speed mobile internet has already covered nationwide area. So Thai digital consumer is more than ready to adopt new technology. With market size of 65-millions-people, it can serve as early market during initial stage of startup before scaling up and expanding to 600 millions consumers in regional market.
6. One of the lowest Corporate Income Tax Rates among the South East Asia’s region.
Thailand’s Corporate Income Tax rate is set at 20 percent which is second only to Singapore in terms of tax rate in this region. If the Startup entity is supported by Thailand BOI, it will be tax-exempted for 5 years. See the whole package of Corporate Income Tax Rates here.
Venture Capital (VC) firms are tax-exempted for 10 years in order to incentivize VC firms to establish their local investment entities in Thailand and will be able to get access to further incentives from the government.
7. Thailand’s Tech Startup Ecosystem is growing at lightning speed with tons of incentives from the government.
Minister Pitch “From Startup Thailand to Scale up Asia: Partnership for Growth”By Dr. Atchaka Sibunruang, Minister of Science and Technology of Thailand
Please see the Minister Pitch by Dr. Atchaka Sibunruang, Minister of Science and Technology of Thailand explaining the incentive packages for Startup registered in Thailand during the region’s largest tech event of the year “Startup Thailand-Scale up Asia”. This event was greeted by over 36,000 attendees and found itself a spot on the list of world’s top ten tech events with respect to attendees.
Recently, one of Thailand’s largest mobile operators, True Corporation has just unveiled a massive 200,000-square-meter of digital hub project worth over half a Billion Dollars. To no one’s surprise, most of the major corporates in Thailand have already set up the Startup investment funds or Accelerators programs ranging from:
- Banking— SCB Digital Ventures, Kbank’s Beacon Venture, Krungsri Finnovate, Krungsri RISE Fintech Accelerator, Bangkok Bank’s Innohub and Bualuang Ventures.
- Real Estate — SiriVenture, Ananda’s Urban Tech
- Energy — PTT (Thailand largest company)
- Telecom — Intouch’s Invent, AIS The Startup, DTAC Accelerate, True Incube
- Internet: Ascend Capital
- Industrial- SCG’s AddVentures
The moment is coming and showing no signs of slowing down anytime soon. With all the reasons I mentioned above I would say there is still plenty of room for innovative Tech Startup to grow and prosper. Let’s come and explore the opportunity in Thailand together!
Business Model Generation | User Experience Design | Product Development | Digital Recruting | Back-Office Set up