Doing business in Thailand / Alien Employment
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Illegal Economic Activity
While foreign language teachers don’t seem to run much risk to be rounded up by immigration authorities, it’s a different story with those who engage in the business of providing accommodation, food and entertainment for foreign tourists. To set up a small hotel, restaurant or even a bar in places like Pattaya or Phuket has been the choice of many Western foreigners who have married Thai women. Quite a number of other Westerners are employed to run such places when the owner is absent.
As elaborated above, foreigners cannot own such establishments or work there, except when special permits are granted. This is the case only at large establishments.
Often, establishments that have been funded by foreigners are registered in the names of their wives or girlfriends. While such set-ups commonly are accepted in the Philippines and a number of other Asian countries, they are not in Thailand.
As Bernard Trink wrote on Pattaya in the Bangkok Post of September 28, 1991 "...with businesses hurting, locals jealous of their farang competitors are summoning the authorities to investigate their work permits. The result is arrest, fines, invalidation of visas and expulsion." Trink writes that licences in the names of their wives and girlfriends are taken for what they are: subterfuges.
According to Trink, foreigners engaged in the catering business in Pattaya were usually arrested on Fridays and kept in ail over the weekend. By Monday they were brought to court in the provincial capital Chonburi, fined and "warned that they face 28 days in jail if it happens again, then sent packing."
Trink writes that many of the foreigners who silently own or have interests in "eateries and niteries" had hoped that "by not going behind the counter or sitting at the cash-register", they would not appear to be owners. "However the gendarmes maintain that by their very presence on the premises, they are carrying out and soliciting trade. They are forbidden to talk to patrons. Living above the nitery or eatery is regarded as further proof of their running the business."
Staff
Following the implementation of a highly successful national family planning program, the growth rate of the Thai population has been reduced by half to the current 1.6 percent in less than two decades. It is estimated that the population will increase from some 55 million in 1989 to about 64 million by the year 2000.
With the declining population growth rate resulting in a smaller number of young children, the proportion of the population in the labor force has grown steadily. However, the impact of this demographic change on the labor force is that growth will decline from around 2.7 percent in 1985 to 1.6 per cent by the year 2000.
On the employment side, the rapid structural transformation of the economy towards industry and service orientation results in a steady transfer of workers from traditional agricultural activities to more modern industry and service work.
It is estimated that out of a labor force of 27.6 million in 1988, agriculture accounted for almost 65 percent with industry and services accounting for 11.5 and 23.9 percent respectively. By the year 2000, the share of agriculture in the labor force of about 37 million is expected to drop to 49 percent while those of industry and services will increase to 19 and 32 percent respectively.
An important factor responsible for the impressive economic performance of Thailand has been the plentiful supply of unskilled or semi-skilled low wage labor. Such workers do not appear to be in short supply except in certain regions where demand has been very high or population levels are low. However, as the growth rate and the sophistication of the industrial sector has been increasing, thus requiring workers with higher skill levels, the supply has not been able to keep up with the demand.
At the lower skill levels, the rather low secondary school enrollment ratios are a source of concern as it has been shown that firms receiving BOI promotion privileges are increasingly demanding secondary school graduates. In addition, the vocational training school graduates, although quite numerous, tend to be concentrated in fields that are not in heavy demand and generally have received little practical training. These problems are lessened to some degree by the easy trainability of Thai workers, something noted by Thai and foreign firms alike.
At the level of engineers and highly skilled technicians, suitable staff may be difficult to find and salary levels have been rising sharply in recent years, especially in Bangkok and the surrounding areas. Furthermore, middle level management staff, especially those with experience, are in short supply. It should be pointed out that firms in some of the larger regional centers such as Chiang Mai and Nakhon Ratchasima seem to find it less difficult to fill these higher level staff positions than those in the Bangkok area.
Recognizing the various manpower shortages, the government has initiated a number of policy measures to address the problems, both in the short run and in the longer run.
In the short term the following measures have been implemented to alleviate the shortfalls in skilled personnel:
* concerted efforts by both private and public sectors to reverse the brain drain and to induce highly qualified Thai nationals working abroad to return to work in Thailand
* a relaxation in the immigration rules for foreigners with high levels of technical skills
* the provision of large-scale scholarship programs to finance study abroad in selected engineering fields
* the introduction of programs to upgrade technicians to engineers and to facilitate the shift of scientists from their field of study to engineering
* short courses in selected critical professions in both public and private institutions
* the encouragement of private-public sector cooperation in the provision and financing of training programs
* the improvement of firm-level human resource development policies
Work hours and holidays are stipulated, depending on the nature of the work. Employees are entitled to medical leave (not more than 30 working days per year) or maternity leave (if applicable). The employment of women and children is restricted. Guidelines exist for wages and overtime, and there are procedures for dealing with disputes. Employers must also pay compensation if an employee suffers injury, sickness or death in the course of work.
The laws also require an employer to provide welfare facilities, including medical and sanitary facilities. Every employer with more then ten workers must establish written work rules and regulations governing working conditions.
Long time employees are entitled to severance pay. Conditions for terminating of employment are also laid out, and a code governs unfair practices and unfair dismissals. Employees associations and labor unions have to be registered at the Labour Department and require a license to operate. Finally, there is a labor court to deal specially with employment disputes.
Offices
Office space in Bangkok has become increasingly more expensive over the past few years. The highest rents are commanded by locations in the Silom Road area, followed by the Sukhumvit Road area.
When deciding for office space, one of the major concerns should be the availability of direct and independent telephone lines. To have telephone lines established the ordinary way can take years. The alternative solution, to buy them on the free market, is costly. Often, amounts around 40,000 Baht are paid. (For more details on renting or buying places, please refer to the chapter Accommodation further in the front of this book.)
As prices for permanent office space have skyrocketed, an increasing number of establishments offer temporary office space. Commonly available facilities are computers, fax and telex machines as well as secretarial and messenger services. Rates for these services are considerably lower than at hotel business centers. Temporary office space is advertised regularly in the Bangkok Post and the Nation.
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