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  • Anonymous  On November 14, 2010 at 2:31 am

    Early days and I am not sure what sort of reception this will get among those responsible for making Thai policy and laws. Also, I don’t want this to be yet another blog that purports to explain all there is to know about investing in Thailand, etc. while actually servicing as a marketing device for a full “all” service provider. Well, not that, exclusively. I am hoping for serious policy discussion. And when you see my comments about one-stop shops that all offer combined legal, accounting, business valuation and business brokerage services (and anything else you might need) and the very serious practical and ethical problems these service providers create, I think the need for some level of anonymity will become apparent.

  • Steve Sykes  On December 1, 2010 at 6:45 am

    A friend referred me to your blog. I run what you refer to as a “one stop shop” in Bangkok.

    The wording of your FBA article disparages “one stop shops” – to the point that I wonder which chop-shop “gored your ox”.

    First, I do not dispute any facts that you reported. And – I agree that it is foolish for service providers such as my company to advertise and promote services in a way that openly flaunts Thai law, and explicitly promotes illegal practices.

    But – allow me to give another perspective on “one stop shops”. Specifically – how do such operations come into being?

    Well, in my case, my company started out offering just incorporation services, plus work permit and Immigration permit processing. But – a funny thing happened. A majority of start-up clients had the same four questions:

    1. Can you hep me find a website developer?
    2. Can you help me find an office?
    3. Can you help me find an office manger/administrator?
    4. Can you help me find an accountant?

    So – of necessity – in order to “take care of the customer” – we had to develop networking contacts who could provide these services. And – both an outside accountant, and an outside website developer started coming to our office to meet with clients there – and then – began to actually perform some of their work functions in our office. Eventually, they simply joined my company staff – because we were providing most of their business. I ended up with a website division, and and accounting division.

    The accounting part is useful, because substantial aspects of both work permit processing, and processing of Immigration entry permit extensions, requires substantial accounting paperwork.

    The next trend that evolved was that many foreign clients needed a temporary/interim office address – typically so that their company could rapidly get VAT registration, so that they could get a work permit, so that they could open a bank account, so that they could remit or deposit funds – so that they would pay lease deposit on a real, permanent office, from money that had been recorded as paid up capital – paid into a company bank account. This then pushed us to work out arrangements so that we could offer legally-sufficient, but effectively “virtual” office support, on a temporary basis.

    The next service that evolved was the service of providing “custodial” Thai director services. Customers in need of Thai-speaking assistance, and who needed processes to proceed during their absence from Thailand – processes that required director signatures – pushed us to offer temporary/interim Thai directors – and offered to pay for this service. Without our initial intention, we evolved an entire business practice of providing custodial Thai directors, for a monthly fee.

    So – we reached the point that we became able to create turn-key companies, ahead of the arrival of overseas clients into Thailand. This was largely driven by the desire of some clients to have their new company send them visa sponsorship packets, prior to them ever departing for Thailand.

    Thus – we would create a company “made to order” – with us supplying all shareholders, director, business address – and obtaining tax and VAT registrations – and also providing initial accounting services – ahead of a client ever coming to Thailand. Client would select company name, amount of registered capital, and company business objectives – and send us the funds necessary to carry out all tasks. Once we created the company, it could then send visa sponsorship packet to the client. Client would then arrive in Thailand with a business visa, and then assume ownership of 49% of shares – and would then be appointed as a director.

    What started out as a fully Thai company, has now brought in a foreign investor for a minority share of the company – and in recognition of his investment, gives him a director’s seat. At a later time, the Thai director may choose to resign.

    Has this sequence bee executed to violate the FBA? Or has it been executed so as to allow compliance with MFA rules for business visas – in a situation where client does not wish to make multiple trips into and out of Thailand, just to get a visa, during the critical phase immediately after incorporation? If there was no FBA – but the business visa rules were the same – would this process not still be appropriate?

    In the absence of using a “one stop shop,” a client needs to interface with multiple service providers, many of whom need input from other service providers – and the flow of paperwork will invariably slow down.

    Personally, I would think it very unwise to NOT use a “one stop shop”. What you don’t want to do is use a one-stop shop that flaunts its disdain for Thailand’s FBA. Nor should a customer use a company that promotes practices that “red flag” intention to violate the FBA – such as assigning different classes of shares to Thai and foreign shareholders, specifically to remove voting rights from Thai shareholders.

    There is also the social and philosophical issue of the general practicality of the FBA. Clearly, the vast majority of foreign-managed businesses in Thailand are not operating in the spirit of the FBA – insofar that strict compliance with the spirit of the FBA would require that all companies without a Foreign Business License (FBL) be under control and direction of Thai shareholders and directors, without foreign influence.

    In an environment of strict enforcement – and unless obtaining an FBL became very simple and inexpensive – perhaps 65% of foreign managed businesses in Thailand would need to close. Would that eventuality be “good for Thailand”?

    What would remain would be foreign-managed companies that had BOI privileges, Thai-US Amity Treaty privileges, or were involved in activities not restricted by the FBA – manufacturing, sourcing and export of Thai products, and performance of hotel management services. Companies run by foreigners with Thai spouses – effectively family businesses – might also remain.

    Feedback from my company’s Thai staff have indicated that the Thai government offices with whom we interact are very comfortable with our practices – and appreciate the attention to detail that we display in preparing applications, ensuring that all eligibility requirements are satisfied, making sure that clients pay their taxes, and – in general – ensuring compliance with the letter of Thai laws. We are not working in defiance of the Thai ministries – we are operating so as to make their jobs easier – and continually asking them for advice and suggestions on how to better meet their expectations.

    So – although I take issue with some of your “blanket assertions” and conclusions, I am happy to see your blog emerge, and I will check back to see what future topics you may cover.

    Chok dee, khrap!
    The Lone Ranger

  • Thai Law and Policy  On December 1, 2010 at 2:39 pm

    Thank you for your comment. Your comment is quite detailed, I appreciate that and I intend to respond in what I believe to be appropriate level of detail shortly (but not tonight). We obviously disagree on some important issues, but in fairness to you, I wanted to make sure that your post appeared on the blog site as quickly as possible (I have set the blog for “clearance” out of an abundance of caution).

    In the interim, a few quick comments. First, I wanted to identify an area where I think we are in agreement: the impractical nature of the FBA. I hope this was apparent from initial posts, but I believe the law is impractical and outdated. I certainly agree that Thailand would not benefit by using the FBA to close foreign controlled businesses.

    Second, to be quite candid, I do see serious problems with one shop stops. I see this in actual practice – meaning, many of the companies I see with serious FBA problems were created by one stop shops. That’s the way it is. And there is a reason why this occurs, but setting out that reason in a clear and concise manner is going to require more energy than I can muster tonight. But I will do so, and do my best to address your points in a fair and reasonable manner (I will likely break this response down into separate posts simply because it will make the discussion easier to follow). I do appreciate your comments, believe they deserve a considered response, and will provide one in the days to come.

  • InBKK  On July 26, 2011 at 1:41 pm

    I just discovered your blog through a link from Twitter on the Thai-Germany arbitration spat. I found your post on the plane impoundment to be very insightful, covering several issues that most of the press coverage and commenters have overlooked. I’ve bookmarked the site and will definitely be back.

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