Startup Hubs Around the World: Bangkok
The world is changing quickly. Even in a city that has roots in the earliest parts of history, the inevitable change is beginning. Internet-linked computers and smart phones have created a world that is shrinking more and more – connecting the world’s population through e-commerce, education, social media and the commonality of entrepreneurship. There are qualities that transcend culture and language – one of the most elementary is the desire to create something new.
An entrepreneur is described as one who ventures out on their own into the workplace, and who creates a new way of doing things. While everyone likes to imagine that they are unique in the world, there is a sense of unity in the idea that no matter the language, people are always looking for something new to discover and create. The start-up market in Bangkok is an example of the way entrepreneurs can create and develop new processes – despite language and cultural barriers. Drawn to the city from all over the world, developers are beginning to work together to imagine a new tomorrow and then finding a way to make it a reality.
In this article about Bangkok, we look at six essential elements of a potential start-up location that must be considered: 1) location, 2) tax incentives, 3) legal incentives, 4) availability of investors, 5) local resources and workforce, and 6) specialization.
Despite the century old age of the city, Bangkok is just a few short years into its beginning as a start-up market. Southeast Asia’s second largest city leads Thailand as the center of every major industry. One would expect that a city that is not only known for their hospitality and tourist friendly city, recently, Bangkok was voted the second ‘Best Business City in Southeast Asia’. This multi-faceted city is poised to establish itself as a leader within the start-up community in the next few years.
Home to the nation of Thailand’s largest financial institutions and major commercial banking centers, it is also the headquarters to the country’s largest companies. There are a large number of multinational corporations that have established locations in Bangkok – fifteen of which are listed on the Forbes 2000.
As a tourist attraction, the appeal of Bangkok can be found in diverse sights. Cultural and historical locations abound with temples, royal palaces and museums. As a center of modernization and wealth, Bangkok is the primary means of entry into the nation of Thailand. Because of the great influx of tourists that the city receives on an annual basis, there is a constant state of change. In addition, the city benefits from the constant introduction of new technologies and ideas. The city’s tech infrastructure is booming – nearly 75 percent of the population is internet users. With smart phones becoming more prevalent, Thailand reports nearly mobile subscribers of over 80 million – a number that exceeds its population.
With a strong infrastructure, Bangkok has vibrant sea ports that benefit manufacturers, as well as importers and exporters. The seven large international airports can handle up to 100 million passengers annually, giving investors and entrepreneurs easy access to the world. Mass transit systems provide in-country transportation options, and an easily navigable road system allows for pedestrian traffic as well as automobile use.
2. TAX INCENTIVES
Establishing the benefits for companies to launch in Bangkok, Thailand has created tax incentives that help entrepreneurs do business. Thailand has low corporate income tax rates – from 10% to 30% and is based on specific criteria. A criterion that changes a company’s tax rate varies from corporate status, companies that are listed on Thailand’s stock exchange and profit levels. The companies can enjoy exemption from corporate income tax for up to eight years – enough time for the start-up to become established as a company.
Additional tax incentives can include reduced import duties for machinery that is brought into the city for use in the business; a reduction in taxes on raw components and material used to develop new machines and technology. As a further incentive, the company can take a deduction to help offset costs of infrastructure.
A company that wishes to bring in foreign nationals to work must seek permission from the Board of Investments (BOI). The BOI can give the company permission to bring a foreigner in to work under exacting specifications such as their availability to work on the study of investment feasibility. They can grant the foreigner permission to own property for the sake of the business.
Despite the many tax incentives offered by Bangkok officials, it is advisable for anyone wishing to do business in the city to seek the advice of a tax professional. The tax code is complex can require additional paperwork and filings that the average person may not be able to understand. By finding a Thai national who specializes in start-up business tax, the entrepreneur can be sure that they are taking advantage of every available tax credit.
3. LEGAL INCENTIVES
As the government begins to realize the potential for a tech industry growth explosion, they are establishing incentives and benefits for entrepreneurs. Thailand’s Board of Investment has been working to create opportunities for businesses. They have begun to establish ownership allowances for investors that give foreigners the opportunity to own 100% of a company begun in Bangkok. Further, they have given foreigners the right to own land to build their business on – an opportunity not always afforded to entrepreneurs. Work visas and permits are expedited for expatriates, making it easier to take advantage of the city’s many benefits.
The BOI has also established protocol that safeguards companies from competition. They protect against competition in the marketplace by state businesses, giving the start-up the opportunity to secure a spot in the public eye. To further bolster their claim, they have put a ban on the monopolization of products, set up controls against price controlling and grant companies permission to export their products.
Encouraged by the many benefits that Bangkok offers entrepreneurs, the legal system of the city is catching up as fast as possible. Specialized legal counsel offices that are experts in the field of start-up and tech companies should be consulted before beginning any work in Bangkok. While thriving, there are still bureaucracy problems that plague a new company trying to establish itself. Many companies incorporate in other countries, such as Singapore, while setting up headquarters in Bangkok. By handling the legal portions of the company in a country that can back up the legalities, the company (and the owners) are protected.
4. AVAILABILITY OF INVESTORS
The recent establishment of firms that specialize in venture capital, as well as angel groups will help the market grow within the city. With few investors, start-ups will struggle to solicit funding within the Thailand landscape. Bangkok is a city of wealth, and there are potential investors within the city. One drawback to finding an investor in Bangkok, however, is that a majority of the individuals with the wealth are leery of tech investment. A strong history in real estate, manufacturing and other traditional investment opportunities has generated wealth for people who now find it difficult to imagine investing in the unknown.
It makes sense, then, that a majority of funding for the Bangkok markets comes from Japan and the United States, while Singapore, Beijing, and Hong Kong draw most of the available Asian backers. Helping to encourage American investors, the United States has established a treaty with Thailand that has bolstered the Bangkok market, while benefiting American investors and entrepreneurs who wish to operate in Bangkok.
Through the treaty, US investors can obtain a business license to operate in Thailand in a very short amount of time. To benefit from this treaty, company ownership must be a majority of American ownership, or at least a majority of American. There must be an initial investment of at least $100,000, and certain industries are excluded from participation.
As the start-up market within the city grows and as more companies begin to reach success, investors will be drawn to the new tech industries. Like other tech hubs, Bangkok will be looking for their first big exit to help launch them as serious player on the world’s start-up stage. Investors, after all, are looking to make money. When a company becomes successful, it draws attention to the other start-ups that are taking place in the area. This growth – investor – growth cycle has a proven track record: as a company gains success, they attract more potential investors. For an investment opportunity rich city such as Bangkok, it means that competition will be fierce for the first few funders.
5. AVAILABILITY OF LOCAL RESOURCES AND WORKFORCE
Bangkok is rich with resources that are essential to a start-up hub. A bustling, global economy is located within a city that is bursting with resources. To begin with, living in Bangkok is affordable for almost every entrepreneur; coming in at 51% less than living in the United States. With super cheap housing, low utilities costs and an abundance of street food, markets and restaurants, the living on a budget entrepreneur can maintain a standard of living that surpasses the lifestyle found in many other countries.
Combined with the reasonable cost of living, Bangkok is home to a tech-savvy, well-educated generation that is ready to change the way Thailand interacts with the world. The extremely talented workforce is drawing attention – giving Disney, Pixar and LucasArts all reason to establish studios within the city. They are not proficient in the latest technology advances, but they are quickly catching up with the rest of the world. Hidden within the traditional city is a wealth of talent that is waiting to be discovered.
Working to train the talent are the universities located in the city. With a partnership that is years old, the universities have established relationships with the largest companies in Bangkok. The companies helped design the curriculum for the universities – based on the skills they needed their employees to have. The new tech industries will require a new calibration of the skills being taught, but the framework for training students to succeed in the market’s needed skills is already in place.
Collaboration and work zones are beginning to spring up in the city, creating spaces where the entrepreneur can design and build. With the establishment of start-up weekends, camps and Mobile Mondays, tech start-ups are beginning to explode within the city. In addition, the co-working spaces that are starting to open give entrepreneurs a way to connect with other, find freelancers and use inexpensive workspace as they get their company off the ground.
The entrepreneur market in Bangkok is strong. A majority (over 80%) of adults who are not currently an entrepreneurial role in Bangkok expressed an interest in future development of a new business. Of the total adult population, over 20% are currently engaged in a form of entrepreneurship. With a climate poised for individuals to take on the role of business owner, one would expect start-ups to explode all over the city. However, the majority of the entrepreneurship roles in the city of Bangkok are in traditional business markets. Beginning a thriving tech start-up industry will require money and training that is slowly being established in Bangkok. At this point, there isn’t a stand-out industry that could be designated as a start-up industry. With a wide open marketplace, the possibilities are endless for the development of the industry that will put Bangkok on the map for more than their tourist attractions.
Want to know which start-ups to keep an eye on? Check out these promising companies coming out of Bangkok.
Builk. A social network geared towards the construction industry, Builk connects suppliers, companies and engineers. As a country’s fledgling tech market takes off, they are focusing on one of the most concrete industries in the city.
Ookbee. An e-book platform, they have extended their reach into the countries of Malaysia, Singapore and Vietnam. Ookbee owns 90 percent of the city’s market share and is continuing to expand and extend their network.
Penta. A development of The Catalyst Group, Penta is working to create a platform that works in the cloud with healthcare solutions, Smart TVs, VoiP and more. By offering Bangkok a development structure that holds future applications, they are working to improve the possible future of Bangkok’s tech industry.
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