If this is in fact true,there could be long term problems related to foreign investment for Thailand.Plus if the gov't is aware of that,it could speak volumes about the attitude towards falangs in general!
The Nation: Implications of the new visa regulations for legitimate foreign business in Thailand
LETTERS TO THE EDITOR
Implications of the new visa regulations for legitimate foreign business in Thailand
There has been a lot of debate about the new visa requirements for foreign nationals that came into effect on October 1, although mainly with regard to tourist visas, with quite a few letters from disgruntled "visa runners" and with some pretty smug responses from, for want of a better description, "legal tourists".
I am somewhat surprised though by the lack of comment about the implications for businesses.
I manage a 49:51 "foreign" owned, well-established company here in Thailand. The company comprises all Thai nationals except for three essential senior management positions that are currently held by expats.
This year this company will generate income for Thailand both direct and indirect to the tune of around US$7 million (Bt257 million) and has performed somewhat similarly for the past 10 years.
To fund an expansion some years ago a loan was obtained from the foreign shareholders and significant additional assets were procured. Due entirely to the depreciation of these assets and the shareholders' loan, the company will have negative equity on its balance sheet for some years. We make an operating profit and we have a good cash flow situation.
However, one of the new requirements for an extension of a business visa is that the sponsoring company must have Bt1 million positive equity in the audited accounts. In our case, we will not have positive equity until the new assets are depreciated and/or the loans are repaid. (Under Thai auditing standards, you cannot change the depreciation term to alleviate the situation).
This company complies with all the other immigration requirements in terms of registered capital and Thai staff and has cash in hand for all of next year's foreign salaries, etc.
This week we applied for an extension to one of the expat's visas, only for it to be declined due to the equity issue. (They've given this individual a 30-day extension whilst they review his case.) The immigration Department's answer was for the company to recapitalise to overcome the problem.
To be frank, this just is not going to happen, neither with this company nor do I suspect with any other company that finds itself in this position.
Thailand already has lost most of its competitive advantages. Corporation tax is amongst the highest in the region. Corruption and inefficiency within Customs costs all companies dearly and let us not even go near the freight problems at Suvarnabhumi. This past year interest rates and the unbelievably strong baht have just about made Thailand nonviable. Local costs and inflation are still rising and the Land of Smiles has lost the smile.
To now have to advise foreign shareholders that the only way they can maintain their operations is to inject additional funds into the company, with no guarantees that the rules will not be further changed in the future, is a non-starter.
Now I do not know whether the new government inherited this problem without understanding the full implications for businesses but, if our case is typical, there will be many companies in the same dilemma in which we now find ourselves.
Our realistic choices are limited, as recapitalisation is not an option. Relocate to a more business friendly environment within the region or just shut down? Either way, Thailand loses the income and my Thai staff will lose their livelihoods.
Unfortunately, I suspect the shareholders will throw in the towel and adopt the latter.
Is this really what Thailand wants or even needs? This past four years or so have seen an anti-foreign sentiment creep into everyday life. Up until the Thai Rak Thai era, it was virtually unheard of for resident expats to experience anything other than civility, kindness and genuine warmth. Of course, residents in turn knew how to be respectful and behave in a correct manner and even the less respectful tourists were better tolerated by the Thais than the resident expats!
Talk to just about any resident expat now and most have experienced crime, sometimes with violence and a dramatic change in everyday attitude. Is this visa issue an extension of this changing attitude?
Eighteen years ago when I initially came here, this country truly deserved the Land of Smiles label. Sadly today that's just not so. Intolerance and a rip-off culture are the overriding impressions a first-time visitor now gets.
From a business perspective, I believe that too much damage has been done. This visa issue is the proverbial straw that finally broke that poor camel's back and overseas investors will walk with their wallets to more accommodating climates.
A (soon to be unemployed) expat
correction:1 Mil baht positve equity,not $1 Mil positve equity!
