Starting a Business in Thailand

By in
255
Starting a Business in Thailand

Thailand is a well-established market economy unlike many emerging economies in Asia.

Economy of Thailand

Thailand is an emerging economy and is considered a newly industrialised country. Thailand had a 2017 GDP of US$1.236 trillion (on a purchasing power parity basis). Thailand is the 2nd largest economy in Southeast Asia after Indonesia. Thailand ranks midway in the wealth spread in Southeast Asia as it is the 4th richest nation according to GDP per capita, after Singapore, Brunei, and Malaysia. Thailand functions as an anchor economy for the neighbouring developing economies of Laos, Myanmar, and Cambodia.

Thailand is recognized by the World Bank as “one of the great development success stories” in social and development indicators

The economy of Thailand is dependent on exports, which accounts for more than two-thirds of the country’s gross domestic product (GDP). Thailand itself is a newly industrialized country, with a GDP of 16.316 trillion baht (US$505 billion) in 2018, the 8th largest economy of Asia, according to the World Bank. Its currency, the Thai Baht, ranked as the tenth most frequently used world payment currency in 2017.

The industrial and service sectors are the main sectors in the Thai gross domestic product, with the former accounting for 39.2 percent of GDP. Thailand’s agricultural sector produces 8.4 percent of GDP—lower than the trade and logistics and communication sectors, which account for 13.4 percent and 9.8 percent of GDP respectively. The construction and mining sector adds 4.3 percent to the country’s gross domestic product. Other service sectors (including the financial, education, and hotel and restaurant sectors) account for 24.9 percent of the country’s GDP.  Telecommunications and trade in services are emerging as centers of industrial expansion and economic competitiveness.

Thailand GDP

Thailand Economic Indicators

Thailand GDP Growth Rate

Thailand is an export oriented emerging economy. As a result, manufacturing is the most important sector and accounts for 34 percent of GDP. Services constitute around 44 percent of GDP. Within services, the most important are wholesale and retail trade (13 percent of GDP); transport, storage and communication (7 percent of GDP); hotels and restaurants (5 percent of GDP) and public administration, defense and social security (4.5 percent of GDP). Agriculture also makes a significant contribution – around 13 percent of GDP.

Thailand GDP Growth Rate
Source: Nesdb, Thailand
Thailand Interest Rate

In Thailand, interest rates decisions are taken by The Bank of Thailand’s Monetary Policy Committee. The main interest rate is the 1-day repurchase rate.

Thailand Interest Rate
Source: Bank of Thailand
Thailand Inflation Rate

In Thailand, the most important categories in the consumer price index are Food and non-alcoholic beverages (36 percent of total weight), Transportation and communication (24 percent) and Housing and furnishing (23 percent). Others include: Medical and personal care (6 percent); Recreation and education (6 percent); Apparel and footwear (3 percent); and Tobacco and alcoholic beverages (1 percent).

Thailand Inflation Rate
Source: Bureau of Trade and Economic Indices, Ministry of Commerce, Thailand
Thailand Unemployment Rate

In Thailand, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.

Thailand Unemployment Rate
Source: Bank of Thailand
Thailand Government Dept to GDP

Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. Thailand recorded a government debt equivalent to 41.80 percent of the country’s Gross Domestic Product in 2018.

Thailand Government Debt to GDP
Source: Ministry of Finance, Thailand
Thailand Balance of Trade

As an export oriented country, Thailand is highly exposed to external economic shocks, which lower demand for Thai products, thus affecting the trade balance. Thailand major exports are electronics, vehicles, machinery and equipment. The country mainly imports fuel, electronic and machinery appliances. Main trading partner are Japan (10 percent of total exports and 20 percent of total imports) and China (12 percent of total exports and 15 percent of total imports). Others include: the European Union, the United States and Malaysia.

Thailand Balance of Trade
Source: Ministry of Commerce, Thailand
Thailand Currency Baht

The USDTHB spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the THB.

Thailand Currency Baht

Thailand Stock Market (SET50)

The Bangkok SET50 Index is a major stock market index which tracks the performance of all common stocks listed on the Stock Exchange of Thailand. It is a capitalization-weighted. The index has a base value of 100 as of April 30, 1975.

Thailand Stock Market SET50

Thailand Ease of Doing Business

Thailand is ranked 21 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Thailand improved to 21 in 2019 from 27 in 2018. The Ease of doing business index ranks countries against each other based on how the regulatory environment is conducive to business operation stronger protections of property rights. Economies with a high rank (1 to 20) have simpler and more friendly regulations for businesses.

Thailand Ease of Doing Business
Source: World Bank
Thailand Business Confidence

Business Confidence in Thailand decreased to 45.40 points in October from 47.50 points in September of 2020.

In Thailand, the Business Sentiment Index (BSI) measures the expectations of entrepreneurs regarding current business performance, orders, employment, production, costs and investment. The survey covers a sample of around 1500 entrepreneurs. The questionnaires are sent out during the last week of the previous month and are compiled by the third week of that given month. For each of the variables measured, the proportion of positive, negative and neutral answers is computed, and the final index is reported as a sum of the positive proportions with half of the neutral proportion. The BEI above 50 indicates that business sentiment has improved and below 50 that has worsened.

Thailand Business Confidence
Source: Bank of Thailand
Thailand Consumer Confidence

The University of the Thai Chamber of Commerce’s consumer dropped to 50.2 in September 2020 from a six-month high of 51.0 a month earlier. This was the first drop in five months, amid political protests, a slowdown in economic recovery, and mounting job losses from the COVID-19 pandemic. In recent months, protesters have rallied against the military-backed government in larger numbers, with the next big protest is set for October, 14th. In Q2 2020, Southeast Asia’s second-largest economy shrank by 12.2% yoy, the worst economic downturn since Q2 1998. The university predicts Southeast Asia’s second-largest economy to contract between 7-9 percent this year before growing 3-4 percent in 2021.

In Thailand, the Consumer Confidence Index (CCI) measures consumer’s outlook about current and future economic conditions, job prospects and income expectations. The index is based on a survey of around 2440 households. An index above 100 indicates an improving outlook and below 100 a deteriorating outlook.

Thailand Consumer Confidence
Source: University of the Thai Chamber of Commerce
Thailand Bank Lending Rate

Bank Lending Rate in Thailand remained unchanged at 6 percent in September from 6 percent in August of 2020.

In Thailand, the Minimum Overdraft Rate is the minimum rate of interest charged on overdrafts by commercial banks to private individuals and companies.

Thailand Prime Lending Rate
Source: Bank of Thailand
Thailand Corruption Rank

Thailand is the 101 least corrupt nation out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International. The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s rank indicates its position relative to the other countries and territories in the index.

Thailand Corruption Rank
Source: Transparency International
Thailand Credit Rating

Standard & Poor’s credit rating for Thailand stands at BBB+ with stable outlook. Moody’s credit rating for Thailand was last set at Baa1 with stable outlook. Fitch’s credit rating for Thailand was last reported at BBB+ with stable outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Thailand thus having a big impact on the country’s borrowing costs.

Taxation in Thailand

Corporate tax Personal Income Tax VAT or sales tax Social Security Rate For Companies Social Security Rate For Employees
20% 0 – 35% 7% 5% 5%
Stock Exchange of Thailand
Stock Exchange of Thailand

How to Start a Business in Thailand

text here

Leave a reply

Your email address will not be published. Required fields are marked *