Scrutiny for Expat Shareholders
By Chutima Sidasathian Saturday, January 5, 2013
PHUKET: All 2900 businesses on Phuket with foreign shareholders are being examined in a thorough review now being undertaken by the Department of Business Development, Phuketwan has learned.
As much information as the department's Phuket office can make available is being readied this month for presentation to officials from Bangkok from February onward.
The full re-examination of all companies with foreign shareholders on Phuket is expected to run through February and March.
It's not clear whether Bangkok officials will remain on Phuket the whole time. The reason for the review has also yet to be made public.
Nimid Kangkajid, Direct of Business Development on Phuket, revealed the large-scale review was about to begin when Phuketwan made inquiries about the growing interest of Russian-based companies in Phuket.
The Labor Office revealed that Russians had quickly risen to hold second place after Britons in the issuing of work permits for Phuket.
Britons sit at the top of the list with 1121 work permits current for Phuket. However, the number of Russians working on Phuket is increasing rapidly.
A total of 566 work permits were being used by Russians on Phuket in November. This rose substantially to 602 in December, the Labor Office records show.
Most work as managers in tourism-related businesses.
Russian investment on Phuket has been thrust into sharp focus following the blockade by taxi and tuk-tuk drivers this week. They protested outside Karon Police Station at what they claim is loss of business to Russian enterprises.
A meeting yesterday disclosed widespread Russian involvement in other enterprises. Russians owned 20 of the Kata-Karon region's Thai massage salons, the meeting heard.
Earlier in the week, Phuket Provincial Hall officials heard of a Russian attempt to set up a taxi rank in the five-star district of Cherng Talay. Earlier in the year, it was a jet-ski operation at Bang Tao.
Khun Nimid explained yesterday that when Russians registered businesses on Phuket, the difference was that Russian businesses usually included a ''complete cycle'' of all types of operations and outlets within tourism.
No other national group displayed this characteristic of business activities, Khun Nimid said.
A follow-up meeting is to be held on Tuesday so Vice Governor Somkiet Sangkaosutthirak can hear the results of an investigation by a committee into the extent of Russian business operations in the Kata-Karon district.
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Comments
Comments have been disabled for this article.
i wonder how much their work permits cost. but there again it is only free enterprise. Mafia hate the word COMPETITION
Posted by
john
on
January 5, 2013 19:01
Russian tourists have been a Godsend to Phuket, replacing the vast numbers of European tourists that have stayed away.
If anyone thinks they spend next to nothing, hang around the registers at Villa Market on any given day for 15min and see how much they spend on groceries alone.
They rent high-end houses and villas, bring in their whole family and recommend Phuket to their friends. They have money and like to spend it.
Phuket should thank it's lucky stars to have the Russian tourists here.
They are not stupid however and just like everyone, they don't like to be ripped off. When locals don't offer services at reasonable prices, they will. Perfectly legal and logical. Take Pegas tours for example.
This is in stark contrast with the second large group of tourists, the Chinese. They are on package tours, do virtually zero independent exploring on Phuket and stick to their resorts.
I have nothing against the Chinese either, just wanted to highlight the differences in clientel.
Organizing a witch-hunt aimed at the Russians will not go unnoticed. At times rough around the edges as Russians may be, even they do not like to visit places where it's made clear they are not welcome.
Nationality-specific action like this would enable you to file harrassment and discrimination charges in most developed nations. Obviously not in Thailand.
Coming from a nation that went to war with Russia (Soviet Union at that time) I should have plenty of reasons to be biased against them. I'm not. I take everyone at face value.
Your average 2 kid family from Novosibirsk has nothing to do with Russian mafia whatsoever.
Posted by
Andrew
on
January 5, 2013 20:10
@Andrew.
I could not agree with you more - especially concerning the differences in the types of tourist spending.
Posted by
Anonymous
on
January 5, 2013 21:11
ahhhh yes- lets look at those pesky furriners again and not look at the root problems of doing business in Phuket. If in doubt- xenophobe out!!
Posted by
Mister Ree
on
January 5, 2013 22:51
Totally agree with Andrew. What a bizarre investigation. Not that I would be surprised...but I suggest caution...if the Russian families will not return to Phuket, then the local businesses will get seriously hurt...do "they" not realize how much Phuket benefits from the Russian!!?? ...the "old Europeans" have already left a while ago!!!!
Posted by
Peter
on
January 5, 2013 23:34
Dear Andrew, what kind of crab are you writing down here? You have no clue about anything what's going on. I'm staying here more than 24years and I know you are not. You don't even know your neighbours living next to you and you want to tell anybody here how it works? LOL, LMFAO. You better go home where you're coming from and write to your local newspaper's daily mama column. The Russians coming in organised, that means by hundreds, setting up a network of business's and start to control everything. That's their way of doing it. It has nothing to do with all the families you know or see bringing their kids to school or are shopping at Villa Market. BTW, Villa Market's selection went way down since Russians are shopping there, that's why you don't see any Europeans going there anymore. The Russians walk to Villa Market, shop the cheapest they can get and walk back. I'm tired of reading comments from guys like you who don't have an eye and clue and brain to understand the development here.
Posted by
Non_Russian
on
January 6, 2013 01:12
But Peter, that's why the Europeans left!
And Andrew, you think its ok for them to come in and take the Thais' only source of income?...they wait all low season for the few months of high season..
Posted by
Anonymous
on
January 6, 2013 03:38
Good post Andrew, and most sensible expat residents here will agree with you. The European (and to a slightly lesser extent the Australian) market had diminished to a point that was near catastrophic for the tourist industry here. Heavily discounted hotel rooms have since brought the Russian market to fill the void. Economic conditions and poor exchange rates have contributed to the lack of Europeans here, not the increase in Russians.
The reasoning that Thais only have a few months of high season to make money is a joke. The last 'low season', again mainly due to the Russians, was the busiest that I can remember in my 6 years here.
Posted by
Phil
on
January 6, 2013 06:47
@ Anonymous
The only people "taking away" any business here are the taxi and tuk-tuk drivers who through corruption, violence, coersion and intimidation use all means available, legal and illegal, to make sure no competition is allowed. Neither Thai nor foreign.
Numerous Thai drivers have been threatened and even beaten up right in front of horrified customers.
A few years back a public bus service was introduced between Patong and Karon/Kata. On the 2nd day of operation the driver was pulled out on the road and severly beaten. That was the end of that. Let's see what happens this time around.
They charge up to 20x more than is common in Thailand. Bt 20 is standard price for a few Km of Tuk-Tuk ride in Thailand.
A Tuk-tuk driver some time back publicly stated that they made Bt 3000 per day. Now that's Bt 90.000/month, twice what a bank manager makes, for a job that requires no education and apparently no manners either.
I don't think you fully understand how much money they make but if you saw the cars and properties they own, you'd be amazed.
These are NOT poor people by any standards and certainly not by Thai ones.
If they offered a decent service at acceptable price levels, they would easily beat the competition. As of now, they beat their competition with clubs and fists only.
I appreciate your point of view but you have bought into their propaganda and are defending the indefensible.
Btw, Pegas drivers are all Thais.
@ non_russian
What a balanced and well argumented response. You got me there. I don't have a clue. I've only been here 9 years so naturally whatever you say supercedes my uneducated POV.
Except of course that I know all my 120 or so neighbors not only by name but in detail because I manage these properties and 40% of them happen to be Russian.
For people who "walk to Villa Market and shop the cheapest they can get", they sure have a lot of cars and spending Bt 6000 to 8000 on any given shopping day does not sound cheap to me.
I would not dare to write crab. I'm allergic to shellfish.
Posted by
Andrew
on
January 6, 2013 08:59
Phil, with all due respect, you have only been here for 6yrs!...You really have no idea what the feeling of being here was like ...For expats that have really been here for a long time, the Phuket the we all fell in love with is over...very sad!....The atmosphere has really changed...
Posted by
Anonymous
on
January 6, 2013 10:27
@ anonymous he don't take me 6 years to understand whats is Phuket 3 yrs was enough and thats its allready a lot for me !! happy to not be Thailand any more!! also this case look like some Business Farang will be lost soon not smell so good ! some Work Permit would be cancel coming up cheers
Posted by
ratatoee
on
January 6, 2013 10:58
The point that all writers' comments forgot is that all 2900 businesses on Phuket with foreign shareholders will be examined in a thorough review now being undertaken by the Department of Business Development; including businesses setting up by other foreigners such as Europeans, Koreans and so on....
Today through bribes to corrupted civil servants with the help of a lawyer or an accounting office, any foreigner can get a legal work-permit by setting up a legal Limitel Partnership Company for less than 30,000 Baht package fee.
The main problems by doing that it is done by getting official documents in illegal manners such as:
1/- The Ltd Parts Company must have at least 2M Baht in asset of in cashflow to cover bankrupcy or a court order to repay debitors.
2/- To get a legal work-permit, the Ltd Parts Company must have at least 4 Thai staffs per work-permit (2 in case the foreigners is legally married to Thai spouse). Must use nominees as Thai staffs (Thai friends or employees of the lawyer/accounting office).
3/- Many foreigners use their work-permit to do job other that what is written in the "description of the job".
Posted by
Whistle-Blower
on
January 6, 2013 11:25
I recommend for everybody reading this comment first: Posted by Andrew on January 5, 2013 20:10
Posted by
Sam
on
January 6, 2013 13:35
@Whistle Blower. Yo seem to be anti foreigner/foreign investment, I put it to you, how many Thais own their employment to foreign investment, it seems you would have all these thais out of work, the same people you have been employing and I might add, making money out of their "sweat and blood."
Posted by
Reader
on
January 6, 2013 14:34
@ WB
I think you missed a couple of essential points made in this report so let me highlight them for you:
" Vice Governor Somkiet Sangkaosutthirak can hear the results of an INVESTIGATION by a COMITTEE into the extent of RUSSIAN business operations in the Kata-Karon district "
There may be a all-nations inclusive investigation in the cards but that sure sounds like there already is a Russians-only investigation underway.
The main problem is not what you emphasize. It is the fact that Thais do not want any foreigners to make any money on tourism related businessess.
They consider it their birthright to rip off foreigners and any attempt to curb, prevent or even regulate it is met with fierce, heated and even violet resistance.
After all, what's the point in letting the foreigners in if their money can't be extracted.
The hospitality factor has long since died on Phuket. It's all about money and if you don't hand it over, you better just go home.
This is sad because the true and genuine Thai hospitality is still to be found in more remote and unexplored places, areas Thais would call Ban Nook.
Greed has killed that very famous and lovely characteristic of Thai culture on Phuket and it's only getting worse.
When AEC finally comes into effect, it will be a sobering experience for the local workforce. People in general like to blame others for their shortcomings and this is especially true in Thailand.
When Thais start to lose their jobs to better skilled and motivated foreigners, I expect there to be serious social unrest.
For better or worse, you cannot turn back the clock. Can't claim to be a tourist destination of international fame and standards but then not accept the international elements making their way into local business enviroment.
Like it or not, the times of protectionism and market monopoly are over. Improve your product, analyze your strenghts in comparison to the competition and offer a better value experience.
Posted by
Andrew
on
January 6, 2013 15:10
@ Reader
I can give you some numbers Re importance of foreign investment.
Common misconception is that tourism is the main source of revenue for Thailand.
Not so, it accounts for only 8% of GDP. However on locations like Phuket one can easily assume it to hover around 80% of local income.
Main GDP earner is export industry, accounting for over 60%. Of that, roughly 60% is due to FDI (Foreign Direct Investment).
That would make about 44% (36 + 8) of Thai GDP directly dependent on foreigners and/or foreign investment (FDI enabled Export and tourism).
Assuming the same ratio applies to labor force of 30+ million, roughly 13 million Thais make their living through foreign investment.
If all foreign investments were withdrawn from Thailand, the country would simply collapse.
Flame up enough anti-foreign sentiment and people abroad may decide to start boycotting Thai products.
Keep flaunting international copyright laws and Thailand may end up on the worst offenders list bringing in tough trade sanctions. This decision is due later this year.
Bottom line is - Thailand needs foreigners a lot more than foreigners need Thailand.
Posted by
Andrew
on
January 6, 2013 15:41
@Reader
I am not against foreigners or foreign investment in thailand but I am for a real reinforcement of the Thai laws which are violated by too many greedy foreigners willing to make money at the expenses of Thai businesses.
I give you some samples:
1/- Many large dive operators employ fulltime freelance Instructors who are setting up a Ltd Part company with proxy Thai nominees which is completly illegal.
2/- Just opposite our office, a start-up company is renting the 1st floor of 5 buildings to have more than 25 foreigners without one Thai people working with them..... Amazing!!! The entrance is in the back of the buildings and there are no company name to inform passer-bys!
3/- Some foreigners own websites in foreign countries with payment by Paypal to foreign account but are working for the customer's bookings in Phuket and set up a Ltd Part Companies to have a legal work-permit but in fact they do not have TAT licences and are acting illegally those websites.
Foreigners are welcome in Thailand if they work for a true Thai company as at the moment the Thai companies are the born losers because of too much corruption with civil servants and those ready to pay do what they want as are doing the Russians at large scale.
Posted by
Whistle-Blower
on
January 6, 2013 15:51
@ Anonymous on January 6, 2013 03:38
The Europeans have definitely not left because of Russian guests. They are not returning because Phuket has become overpriced, exchange rates moved heavily to their disadvantage and the debt crisis is not resolved. It would be foolish to scare the Russian tourists off. Once they are gone, Phuket is in trouble...as the Europeans will not return for a long time.
Posted by
James
on
January 6, 2013 16:37
"It would be foolish to scare the Russian tourists off. Once they are gone, Phuket is in trouble...as the Europeans will not return for a long time."
The good thing, for Phuket:
Egypt is still not a option, these days. But in case, it would go back to normal, the 'invasion' of Ruskies will go back to before the 'Arabic Spring'. Still Egypt would be the cheaper option for them. ( Both, PEGAS and their customer)
Posted by
Anonymous
on
January 6, 2013 19:24
Andrew and his fellow supporters here are completely out of there minds. The Russians have brought the tourism to a new low in Phuket. I have been living here for 11 years and that is the way I see it. I could go on and list all the negatives concerning the massive influx of Russians to the area, but they have been repeated over and over. Any business that even hints of Russian influence should be avoided like the Plague.
Posted by
Soinanai
on
January 6, 2013 23:17
Editor Comment:
I suspect there are two Russian tourist markets, the independent travellers and the mass tour groups, both growing on Phuket simultaneously. Resorts deal with one or the other, and gain entirely different impressions.
Here is the latest informations I got on internet:
Department of Business Development informs partnership or limited company to reveal the financial position of all Thai shareholders.
The Ministry of Commerce of the Department of Business Development has issued the Order of Office of the Company Limited and Partnership Registration 205/2555. The order states that entities planning to set up a partnership or a company limited in Thailand must submit certified bank statements declaring the financial standing of all Thai partners or shareholders. The bank statement must be submitted together with the business set up application. The said document must indicate the equivalent monetary value of each shareholder's number of shares given the following condition:
If the partnership or the company limited has foreign investors holding shares less than 50% in the partnership or company limited, OR;
If there is no foreign investor in the partnership or company limited but has a foreign member of the Board of Directors or has a non-Thai signatory representing the business entity.
The said order will take effect on January 2, 2013.
Posted by
Whistle-Blower
on
January 7, 2013 00:43
@ Andrew thumps all comments made are sense and true agree on it cheers
Posted by
Ratatoee
on
January 7, 2013 09:14
@Whistler-Blower: Well researched! As far as I understand nothing which is dramatically new...and no Thai shareholder should have a problem with this since a consideration for subscription to shares has always been required.
Posted by
Johny
on
January 7, 2013 10:22
Thailand wake up...others are happy to take your foreign investors.
Posted by
Johny
on
January 7, 2013 12:36
@Johny - "Thailand wake up...others are happy to take your foreign investors".
Foreign investors or foreign predators....that is the question!
Posted by
Whistle-Blower
on
January 10, 2013 08:48
My foreign landlord is not honoring our contract regarding a lease on land. Where I turn his illegal nominee company in at?
Posted by
Media Watcher
on
January 16, 2013 10:24
There was a recent report in the Guardian UK that the Austrians are now limiting the number of Russians in their hotels 'as they like a mix of nationalities' Yes, well ...
As to yet another nominee crackdown. Well the first Junta instigated one came with Surayud and the real estate market plummeted. On another forum, a farang couple (not Russian) were recently ratted out and are having to find alternative means of owning their home. So, whomsoever rattled this monkey's cage, thanks for that.
Posted by
findlay
on
January 18, 2013 11:18
Today turned up a visit from several Customs $ Excise officials at my home asking about a SWEDISH company. They took some convincing it wasn't me as I'm not Swedish and the company address was incorrect. They were all very nice about it and left with apologies.
BUT. A big heads up for foreigners going the company route to acquire property AND the plethora of Thai developers in this area hoping to make a killing with their various grandiose housing projects. They are NOT going after only the Russians.
Posted by
findlay
on
January 31, 2013 22:30
Hey whistleblower. You know you have a big mouth and have an attitued that what you are doing in Thailand is all above board.Why dont you come clean and let us know what perfect business you operate? The simple fact is that there are many foreign companies that have been operating legally for many years and are now going to get caught up in all this nonsense.
Posted by
yozza
on
February 3, 2013 23:32
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i wonder how much their work permits cost. but there again it is only free enterprise. Mafia hate the word COMPETITION
Posted by john on January 5, 2013 19:01