Entrepreneurship in Thailand
Entrepreneurship has long been the main vehicle of Thai economic growth. However, entrepreneurship in Thailand is hampered due to ineffective enterprise education and a lack of qualified management. The economic crisis in mid 1997 had serious negative impacts on the Thai economy. Thus, the government and other related agencies initiated several projects and activities to help strengthen and promote entrepreneurship in the country.
Private enterprises in Thailand can be divided legally into four categories: unlimited partnership, limited partnership, limited company and public company. During the decade of economic boom in Thailand, entrepreneurial activity expanded at a very rapid rate. The commercial class in Thailand is made up mainly of Thai and Chinese origin. Intermarriage between these two groups has dated back centuries. That’s why the role of Thai and Chinese has been a decisive factor in the country’s industrial transformation. In Thailand, the thinking of the entrepreneurial class has been embedded in the hard working values of Confucianism. Entrepreneurship Development Program in Thailand helps the entrepreneurs think systematically and help them make right decisions before investing in and expanding their business. The financial constraints play an important role in shaping the pattern of entrepreneurship in Thailand, especially in the Northeast compared to the Central region. Also, small firms in Thailand employ 60% of the work force and account for approximately 50% of GDP. One-third of households report that they would like to change occupations because the average annual income of business owner in rural and semi urban in Thailand is three times higher than that of non-business owner.
- One of the highest rates of women entrepreneurship activity among GEM countries. It stood at 18.5% in 2002.
- High levels of necessity based rather than opportunity based entrepreneurs.
- In the early 1990s approximately 20,000 new enterprises were registered annually with the Ministry of Commerce. This number declined at the height of the Asian crisis in 1997-98 and rebounded when the economy recovered in 2001. The current number of registered new enterprises is approximately 32,000.
- There is a direct correlation between the rates of economic growth with the intensity of entrepreneurial activity in Thailand. Since the 1960s, the private sector has played a critical role in the country’s economic growth.
- The Thai commercial class is mostly made up of Thais of Chinese origin. This group is characterized has having a greater entrepreneurial drive (a result of their Confucian belief system). This group has contributed significantly to the economic development of Thailand and is also largely responsible for moving the Thai economy from an agriculture-based economy to a more service-based economy.
- A Buddhist belief system has also contributed to tolerance of failures with regards to entrepreneurship.
- Small and medium sized businesses have some trouble when it comes to finding appropriate funding. They often must rely on the owner’s own capital base. Some resort to Small Industry Finance Corporation or the Industrial Finance Corporation and also unorganized financial markets with high interest rates.
- Government and specialized banks are required to expand lending to SMEs and commercial banks are requested to give more credit to SMEs. Cheaper financing and more favorable fiscal conditions are the goals of the government to counter the threat from competing foreign firms.
- Tax incentives are given to SMEs by the government, especially in export-oriented firms.
- The Thai Board of Investment (BOI) was set up to facilitate new business ventures.
- Bureaucratic red tape has prevented some entrepreneurs from starting businesses in Thailand. There are several categories of businesses which restrict foreign companies from entering local markets (e.g. agriculture, retail, and some services). Location and presence of Thai partners is often an issue as well.
- Protection of Intellectual property rights remains an issue in Thailand. However, the Thai government is currently taking measures to enforce laws against intellectual theft.
- Trademarks registered in Thailand are protected for a 10 year period and can be extended for an unlimited number of additional ten-year periods.
- The problems currently affecting Thai entrepreneurs include limited international exposure, access to capital, and education.