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Update March, 2015


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Update by Natrakorn Paewsoongnern
 
 
 

Paul Gambles
Co-founder of MBMG Group

 

Update March 27, 2015

Perma-bear or just worried about the debt? Part Two

I=The last time that we were in debt-deflation was the 1930s. It took extreme policy measures to end debt deflation back then. Not the New Deal, not the Rentenmark but rather a policy, or at least an outcome, called World War II.

So not only are we in debt-deflation now, but we could be in it for years to come. This means that we should recognize that Thailand’s export-driven miracle phase is coming to an end - or at least a multi-year if not multi-decadal pause or hiatus. If that gap isn’t filled with something else then, just as export economies have suffered the most in major downturns previously, Thailand has a pretty rough few years ahead. That said the glass is still half full because there are 2 sensible ways to fill the export gap:

1) Domestic spending - in economies like America, consumer spending accounts for around the 70%1 of GDP that exports make up in Thailand. Give Thai consumers money to spend and we could move to a more balanced, more developed looking economy - the problem is Thailand has virtually full employment (unemployment rates in 2013 and 2014 were both 0.6%2) but, despite or maybe partly because of minimum wage policies, real wages remain stubbornly too low and Thailand is still caught in the middle income trap (see chart 1).

Chart 1, Source: Bank of Thailand.

I call this the ‘Thai Disease’ - if you’re born and raised in a land of plenty, in one of the most fertile, resource-rich regions of the world, you don’t have much incentive to do too much. Every entrepreneur needs to know how hunger feels. I’m not really talking about Bangkok and other urban areas, but Thailand has an extremely ruralized population mainly living in badly-connected small villages that institutionalize sub-standard education, lack of opportunity and marginalization from participating in the socio-economic development of the Kingdom.

Thailand’s urban dominance keeps most of its population under-skilled, underpaid and underrepresented in the politics of the country. When the likes of Jonathan Head on the BBC mock Thailand’s elite for concerns about how democracy can work in the Thai landscape, they’re only showing their ignorance of Thai realities.

There is a genuine problem in terms of the marginalization of vast swathes of the Thai population, one that is best solved by finding a way to include the vast majority of Thai people in the socio and political economy. If we recognize their marginalization and its root causes, we stand some chance of dealing with it.

In China the equivalent of more than the entire population of America will have moved from rural populations to urban ones by 2033.3 While there are many, many problems with the Chinese growth model, increasing average salaries at over 10% per year (see chart 2) for several years and largely absorbing these extra costs through increased productivity is a salutary lesson as to what can be achieved.

Chart 2, Source: MOHRSS

Of course, as mentioned earlier, one impediment to consumption is high consumer debt. Interestingly Thailand’s consumer debt increased very significantly during the last government (for a lot of reasons) but there’s definitely not a consumer debt problem in most income sectors - in fact it’s only the lowest 20% of earners who are heavily indebted4 - which is sad on an individual level but on an economic level, it means that the most powerful 80%5 of consumers are still able to increase consumption and also that the problem is more easily remediable (see chart 3).

Chart 3, Sources: BOT Paper “Rising Household Debt: Implications for Economic Stability” & SES (October 2014)

For one thing, it tends to be easier to increase average incomes and enable debt repayment amongst the lowest paid sectors of society. Also other effective policy tools are available. My colleague at IDEA Economics6, Prof Steve Keen, often talks about a debt jubilee7 - governments cancelling consumer debts - a policy that not only has a very sound historical justification but actually was implemented just the other week by the Croatian government8. It’s also believed to be a populist policy that actually does have a positive economic impact; Thailand take note!

2) The second way to fill the export gap would be for the government to actually implement the much needed infrastructure reforms. While I welcome some initiatives that have seen the Chinese and Japanese encouraged to open their governmental wallets to help improve Thai infrastructure9 and while I very much welcome the fact that Prime Minister Prayuth has committed to save 30% of the cost of infrastructure projects,10 speed is of the essence and disbursement is in danger of missing the critical point in time when it’s most needed.

So, the world has a problem - a huge problem and finding a better economic solution than another World War is a really difficult challenge - one that sadly looks beyond the grasp of the policy makers that I’ve met or spoken to from developed countries, especially in Europe.

Thailand is very much affected by that problem. It also has homemade problems of its own. The good news is that they are remediable but the bad news is that there’s not much time left. We have some very impressive individuals in Thailand - Dr. Prasarn at the BoT is for me the standout global central banker.11 The current ruling administration isn’t short of talent either and it certainly seems to know the right policy measures and direction - but it needs to get a move on - or else things could turn very dark indeed.

Footnotes:
1 68% in USA: OECD, Household final consumption expenditure, etc. (% of GDP) USA (2013)
2 Bank of Thailand
3 UNDP & China Translation and Publishing Corporation (2013), China Human Development Report
4 BOT Paper “Rising Household Debt: Implications for Economic Stability” (October 2014)
5 idem
6 http://www.ideaeconomics.org/
7 http://www.debtdeflation.com/blogs/manifesto/
8 http://www.cnbc.com/id/102388026
9 http://www.bangkokpost.com/news/transport/450907/thailand-china-sign-railway-deal and http://www.business-in-asia.com/thailand_infrastruture.htm
10 http://www.nationmultimedia.com/politics/NCPO-aims-to-avoid-debt-30241210.html
11 See MBMG Article for The Nation Newspaper, Experts discuss outlook for Thailand, ASEAN and China, September 2013

Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG Group cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Group. Views and opinions expressed herein may change with market conditions and should not be used in isolation.

MBMG Group is an advisory firm that assists expatriates and locals within the South East Asia Region with services ranging from Investment Advisory, Personal Advisory, Tax Advisory, Corporate Advisory, Insurance Services, Accounting & Auditing Services, Legal Services, Estate Planning and Property Solutions. For more information: Tel: +66 2665 2536; e-mail: [email protected]; Linkedin: MBMG Group; Twitter: @MBMGIntl; Facebook: /MBMGGroup


Update March 21, 2015

Perma-bear or just worried about the debt? Part One

I’m increasingly described these days as a perma-bear or something of a pessimist. I think this is a little unfair because as I often point out, I’ve only been bearish for only most of the last 18 or 19 years or so and only in respect of most aspects of the global economy. Plus, it’s not so much that I’m being unduly pessimistic in my assessment of the global outlook as the fact that things are grim out in the world and they’re getting worse every day.
But I suppose that is what a perma-bear would say.

Global Debt-deflation

In fact, my only permanent economic belief is in cyclicality. Where we are now is just part of the cycle, albeit the worst part; debt-deflation.
At least 15 years into the current phase, we’re far from through this. We may even be barely halfway through, but once this phase of the cycle is complete then we have several decades of increasing relative prosperity to look forward to.
Every economic cycle since time began has started off with a relatively clean slate - with low asset values, low prices, low debt, an underemployed population and low levels of economic activity. People then get new jobs, open new businesses, buy new cars (or in the past chariots?) and houses (maybe caves?) and all this generally creates an upswing, from ground zero or at least from a very low base, to a gradually higher level of economic activity.
At that point, everyone feels good because things are going so well; everyone sees this and wants some part of the action. This tends to result in initially tentative private borrowing from initially low but gradually rising interest rates. The borrowing tends to be largely directed into production and increases employment, incomes and profitability. A look at the period prior to and after the Wall Street Crash demonstrates this (see charts 1-5).
Then private borrowing starts to accelerate and becomes more focused on consumption (which of course drives more consumption) and also on assets such as property.
The upswing then turns into a full-on boom - salaries and the values of assets tend to go up, as do interest rates and eventually inflation starts to run away and we tend to enter a bubble.
The combined impact of higher private debt and higher interest rates causes a gradual slowdown, which initially looks healthy because inflation and interest rates start to moderate. However, the consumer debt that has been borrowed becomes much harder to repay, even as interest rates fall, because wages start declining in real terms. All the speculative assets that were bought stop going up in value and the world finds itself facing debt deflation.
Heavily in debt, unable to increase salaries in real terms and struggling to get the kinds of investment returns that you used to get - welcome to debt-deflation, where the global economy has been trapped for a long time now.
Treating the symptoms not the causes of debt-deflation, which is what global policy makers have done throughout this period, actually makes things worse not better.
The world is in debt like never before - George W. Bush created more debt than every preceding US president added together since Richard Nixon took office in 1969;1 and now President Obama has outdone him.
Having said that, one major misconception is that government debt is the real issue. It’s not; it’s much less important than private debt in terms of making national economies and the global economy tick - both up and down. Private debt, created by commercial banks, represents the vast majority of the money that is deemed to exist - in the UK, it’s at more than 97%, for example.2 Relatively small percentage changes in these figures make huge differences to the economy.

Where does that leave Thailand?

Like everywhere, the situation leaves Thailand on a pretty sticky wicket (‘in a difficult situation’ for those unfortunate people uninitiated in cricket - for such uninitiates, the key fact is that this is a game in which Yorkshire County Cricket Club once again excel!).
Meanwhile, back in Thailand, exports have been the primary mover of economic growth here ever since 1997 when the country exited its own version of the Euro - the ASEAN region’s obsessively rigid peg to the US$.
However, exports will be increasingly difficult in a slowing global economy. Over the past few weeks and months, I’ve been asked by countless people, “Isn’t it good for the economy that oil, which Thailand imports more than any other ASEAN country except Singapore, has fallen to $60, then $50 and even $40 a barrel?”
My answer has been, “No it isn’t - it’s terrible. Because it’s telling us that private demand is falling off a cliff.”
We know that, because all other commodities are struggling.
We also know that because, if you take out the addicts buying iPhone 6’s, then sales revenues for the global companies listed in New York were weak in quarter 4 last year.3 And we also know that because Thai export and GDP growth hit a brick wall at that same time.4 That wasn’t really a Thai problem - it was a global ripple reaching Thai shores which is building in intensity the longer the world remains trapped in debt-deflation.
Footnotes:
1 Data from the Whitehouse: Office of Management and Budget.
2 http://www.positivemoney.org/how-money-works/proof-that-banks-create-money/
3 http://www.zacks.com/commentary/37843/retail-sector-in-focus-as-q4-earnings-season-winds-down
4 http://www.cnbc.com/id/102427944
 

US Unemployment 1910-1960

Source: BLS, Peace01234

US Debt & GDP 1920-1940

Source: Steve Keen’s Debtwatch: Debtdeflation.com

US: Real GNP Per Capita 1919-1930

Source: Economic History Association

US: Price Changes 1920-1930

Source: Economic History Association

GRAPH 5

Figures: the Whitehouse: Office of Management and Budget

Source: Bank of Thailand

Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG Group cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Group. Views and opinions expressed herein may change with market conditions and should not be used in isolation.

MBMG Group is an advisory firm that assists expatriates and locals within the South East Asia Region with services ranging from Investment Advisory, Personal Advisory, Tax Advisory, Corporate Advisory, Insurance Services, Accounting & Auditing Services, Legal Services, Estate Planning and Property Solutions. For more information: Tel: +66 2665 2536; e-mail: [email protected]; Linkedin: MBMG Group; Twitter: @MBMGIntl; Facebook: /MBMGGroup


Update March 14, 2015

Being sheepish in the Year of the Goat

In the Chinese system, 2015 is referred to as the Year of the Goat, Sheep or sometimes Ram. Officially, 2015 belongs to the sign wči, which is identified with the yang; but look yáng up in a Chinese-English dictionary and you’ll find that it says 'sheep'. But yáng does not actually mean 'sheep' at all: in a monolingual Chinese dictionary, the definition is as follows:1
A ruminant mammal, generally with horns on its head. Divided into a number of types, including shānyáng, miányáng, língyáng, etc.
A little further investigation reveals that:
shānyáng ('mountain yáng') = goat
miányáng ('cotton yáng') = sheep
língyáng = gazelle
Thus, the Year of the Goat and the Year of the Sheep are equally correct because yáng covers both types of animal. People born within the relevant date ranges2 can be said to have been born in the "Year of the Goat" or "Year of the Ram".

TABLE 1:
Start Date End Date Heavenly Branch
13 February 1907 1-Feb-08 Fire Goat
1 February 1919 19 February 1920 Earth Goat
17 February 1931 5 February 1932 Metal Goat
5 February 1943 24 January 1944 Water Goat
24 January 1955 11 February 1956 Wood Goat
9 February 1967 22 January 1968 Fire Goat
28 January 1979 15 February 1980 Earth Goat
15 February 1991 3 February 1992 Metal Goat
1 February 2003 21 January 2004 Water Goat
19 February 2015 7 February 2016 Wood Goat
 

For some there's a stigma attached to the Year of the Goat/Sheep/Ram; those born during it are thought not to be leader-like, and there are reports that some parents delay birth to avoid Sheep years because of the bad luck demonstrated by failed Empress Dowager Cixi (of Boxer Rebellion fame) in the Qing Dynasty.3

“Beware of Financial Loss”

The propensity for good fortune is said not to be very good for those born in a year of the Goat/Sheep/Ram, and that they will easily become involved in financial difficulties. Therefore, they should adopt conservative strategies when dealing with investments. They should try their best to increase their income, decrease their expenditure, and live within their means. Lottery fans should restrain themselves from gambling too much in order to avoid big losses.
In terms of fortune, according to this chart 1, the year starts with 3 bad months, picks up, but months 6 & 10 are terrible.

Chart 1 - Source: http://www.chinahighlights.com/travelguide/chinese-zodiac/goat.asp

“Beware of property”4

1. Herd of sheep
According to Chinese feng shui masters, 2015 is the Year of the Wood Goat/Sheep/Ram that carries a strong earth element. Wood on dry earth with the absence of metal and fire is not a good sign for growth.
Investors have to exercise extra caution. Gentle and timid are the traits of the sheep. It has no big ambition and lacks a fighting spirit. The sheep has a soft character and is not strong enough to suppress any instability and turbulence. If there is a perfect storm, nothing is powerful enough to get things under control.
2. The black sheep of the family/Scapegoat
The Chinese believe that nine out of ten goats are imperfect. Being born under the goat sign implies a life full of worries, hardships and misfortunes. That’s why many superstitious mothers-to-be in China chose to induce labour in the past few weeks just for a horse baby.
3. Like lambs to the slaughter
Have you seen how the lamb line up calmly and obediently for the slaughter without the slightest complaint for their tragic fate?
The character of the sheep is known to be tame. It is loyal and submissive. It always knows its place and behaves discreetly. It is a pessimist and believes in destiny.

The track record for yang years is pretty dodgy too:

The track record for yang years is pretty dodgy too:
Start Date End Date  
13-Feb-07 01-Feb-08 Knickerbocker crasha
01-Feb-19 19-Feb-20 The start of the 1920-21 Depressionb
17-Feb-31 05-Feb-32 The global crash, GBP exits gold, Kreditanstalten failurec
05-Feb-43 24-Jan-44 Officially the final year of the Great Depression
24-Jan-55 11-Feb-56 1955-56 bull market ended with various crises including
    Suez, IMF refusal to support UK
09-Feb-67 22-Jan-68 Nick Leeson born, GBP/gold pool crisis,
    HK stock crash (left riots)
28-Jan-79 15-Feb-80 Dollar crash, bond market crash, Volcker intervention
15-Feb-91 03-Feb-92 Indian economic crisis,d Scandinavian bank crises,e
    US recession S&L crisis, Japanese bank crisis
01-Feb-03 21-Jan-04 Positive year globally but bad in Asia because of SARS
19-Feb-15 07-Feb-16 ???

a The Panic of 1907 or Knickerbocker Crisis was a United States financial crisis that took place over a three week period starting in mid-October, when the New York Stock Exchange fell almost 50% from its peak the previous year. Panic occurred, as this was during a time of economic recession, and there were numerous runs on banks and trust companies. The 1907 panic eventually spread throughout the nation when many state and local banks and businesses entered bankruptcy. JP Morgan was credited with saving the day.
b In many ways the precursor of the Great Depression, in the farming sector. Bank failures started in early 1920 - income disparity spiralled out of control.
c Allen5 called 1931 "the year that made the great depression great" also the start of 1932 "the tragic year".
d By the end of 1990, India was in a serious economic crisis, government was close to default, its central bank had refused new credit and FX reserves had fallen to three weeks’ worth of imports. The government had to airlift national gold reserves as a pledge to IMF for a loan to cover balance of payment debts.
e Swedish & Finnish Banking Crises were deep systemic crises of the entire financial sector from 1991–1993.
Whether or not you put your faith and money in this is of course your decision.

Footnotes
1 from Xiandai han'yu cidian
2 http://en.wikipedia.org/wiki/Goat_(zodiac)
3 http://www.independent.co.uk/news/world/asia/chinese-new-year-is-it-the-year-of-the-ram-sheep-or-goat-10055872.html
4 Source: http://www.theonlinecitizen.com/2015/02/the-property-market-in-the-year-of-the-goat/
5 Eric H. Allen (2010) 1931: The Year of the Great Worldwide Financial Crash, CreateSpace Independent Publishing Platform.


Update March 7, 2015

The Flaws in the Euro - Is there light?

You see, there was one tiny flaw in the plan […]. It was b*******s.
- Captain Edmund Blackadder1


Post-World War II, there was a determination that the horrors that had covered much of the planet from 1939-45, and which had substantially emanated from rivalries among the European powers, must never be witnessed again.

Germany was given aid to rebuild, in contrast to the aftermath of World War I, and a great deal of focus was turned to how to enable cross-border trade rather than troop invasions. Bilateral agreements within specific sectors gradually led to the advent of a European Union that supported and helped to harmonize trade and capital flows. The Union expanded to cover much of the continent plus Great Britain, Ireland and even the islands of Malta and Cyprus. In a sense, this was a very logical reaction to all that had gone before - the hope was that trade regulation could also create political harmony, obviating the need for neighbouring or proximate tribes to engage in military contests for prosperity. A trade federation showed that it was able to operate in the interests of and for the benefit of most of its members - it succeeded in finding common ground. The danger was that this wasn’t enough for everyone - especially those with grand political visions who envisaged a politically harmonious broader federal union.

As tends to be the way, the bigger questions were never really asked in a way that people could make binding decisions about them. Instead they were tested via various proxies that had the effect of creeping very slightly - just like Field Marshal Haig’s drinks cabinet in another of Captain Blackadder’s memorable quotations - “yet another gargantuan effort to move [it] six inches closer to Berlin.”2

The ultimate proxy was the introduction of the single currency - although this was no bolt from the blue having been preceded by the fixed exchange rate mechanism, the EMU and the pre-Euro prototype, the ECU. One reason why the name was changed was apparently that “ein ECU” in German sounds too much like saying eine Kuh (a cow) which wouldn’t have been sufficiently dignified or important sounding. I’ve previously written about why I think Euro was a badly-chosen name for a doomed project and why I think Disney Dollars would have been more appropriate.3

The Euro was, however, one step much too far. The warning signs were evident, not only in the inability of Pound Sterling to defeat George Soros’s determination to highlight the flaws in the EMU, but also the inability of just about every Euro member state to actually achieve the impossible, artificial standards required to join the currency. It would have been best for all if the single currency had died its death at either of these times; yet for completely non-economic reasons it was kept alive and revived.

The problem in any currency union of unequal participants is that the inequality that would normally manifest itself - through exchange rate adjustments - has to manifest itself, often subversively and poisonously, elsewhere.

The less competitive PIIGS economies were tied to the same foreign exchange rate as the D-Mark Bloc (DMB). Hence Greece and Portugal had to try to compete on a level playing field with Germany and the Netherlands. This created a deficit in many of the weaker countries and a surplus in the stronger ones. Initially these cracks were papered over by the stronger economies recycling their surpluses as loans or investments back into the weaker ones. This symbiosis gave the impression of economic harmony, until the wheels fell off spectacularly following the Global Financial Crisis.

It transpired that Ireland’s banking sector had created a gargantuan property bubble by recycling available surpluses from the giant German banking sector into the previously tiny but now bloated Irish banks. With the banks unable to repay, Ireland’s government stupidly/feebly/was bullied into (delete as appropriate) accepting responsibility for Irish banks’ debts so that the primarily German creditor banks could and would be repaid. However, Ireland remained within the Euro. Luckily Ireland had a reasonably competitive economy relative to the EU average and, by squeezing the pips dry, austerity measures were able to transfer sufficient income and wealth from Irish businesses and people to repay the creditor banks (via the transfer mechanism of the Irish government) - even if the Celtic Tiger was well and truly buried (see chart 1).

Source: OECD

The decision of the stupid/feeble/bullied Irish government to destroy the income and wealth of its people and businesses to stay on the right side of, mainly German, banks was understandably unpopular. A new government under the bright-eyed and perfectly coiffed Enda Kenny replaced it, promising to renegotiate the debt. Although they hadn’t pledged to do so, many hoped this meant repudiating the so-called bail-out and exiting the straitjacket of the single currency. They were to be disappointed - extremely disappointed. So disappointed in fact that Kenny’s government is now widely thought of as no better than its catastrophic predecessor4. Faced by threats of what the EU/ECB could and would do to Ireland, Kenny showed the same resourcefulness as Jack (of Beanstalk fame), who sold the family’s only asset for a handful of beans. Luckily for Jack, his were magic. Sadly for Enda, his were not.

No longer funded by the massive recycled surplus, a struggling economy had no way to disguise the shortenings that were now highlighted of competing on a level currency playing field with more powerful neighbours and so it had to resort to cutting spending and domestic investment. Businesses failed, unemployment soared, wages (in real terms) dropped by 6.3% between 2009 and 2013.5

When that inevitably caused Ireland’s GDP to collapse, reducing the quantum of national income produced, further cuts, asset sales, and failures became necessary to pay the bills once more.

Faced with such challenges in the past, Ireland might have repudiated/renegotiated its debts in a meaningful way and devalued its currency down to a level of competitiveness. This was the same trick pulled off by ASEAN economies after the 1997 Asian Financial Crisis, where escape from an overvalued currency peg created a competitive devaluation that has enabled Thailand to run a trade and current account deficit almost continuously since then. The intervention of the IMF prevented Thailand from defaulting on its debts, so the ASEAN challenge was in many ways much tougher.

However, Ireland (followed by other Eurozone bailout nations) stuck grimly to the task of inflicting slow motion national economic suicide through a thousand cuts.6 This story is now back in the spotlight again because the Greek people are tired of being starved and hopeless and they recently elected a Syriza-dominated government led by Alexis Tspiras on a mandate of change.

What worries me is just how much, or rather how little, change they will achieve. Renegotiating (Enda-style) or even properly repudiating the debt will do little by itself to help Greece. If Greece remains in the Euro, which now means also complying with the fiscal compact, and the obligations therein to run a current account surplus that can only be achieved by further destruction of the Greek economy, then nothing will have changed. Even if all external Greek sovereign debt were to be written off, which it wouldn’t be, a Greece tied to the Euro and obligated to run a surplus is an economic tragedy for future generations to endure.

To see any sustainable growth in the Greek economy, it first needs to exit the Euro - preferably in an orderly way. Optimists tell me that they believe such negotiations are underway, behind the scenes. For Greece’s sake I hope so. I also hope that the remaining PIIGS countries follow. However, this implies a catastrophe for the DMB. That is now the choice facing the Eurozone - not whether it will implode but when and where the implosion will take place.

Either way the impact will be globally devastating - but if you’re Alexis Tsipras right now, you should be mainly concerned with ending Greek suffering.

Public Domain.

Footnotes:
1 Blackadder Goes Forth, BBC (1989)
2 idem
3 Financial Chernobyl in Euro zone will hit Asia http://m.bangkokpost.com/business/304129
4 http://www.forbes.com/sites/karlwhelan/2012/10/07/the-celtic-comeback-dont-believe-the-hype/
5 OECD
6 http://www.theguardian.com/world/2013/oct/15/ireland-more-budget-cuts-despite-recovery


Update March 1, 2015

Obtaining a resident’s permit or visa in Thailand: Not as easy as it seems!

With the Thai government making several announcements regarding residents’ visas over the past few months, it’s probably an opportune moment to explain the different types of permit or visa.
As well as education and marriage, there are four other main types of visa which allow you to reside in Thailand: Permanent Residence, Retirement, Business and Investment visas. These vary in terms of qualification criteria, length of validity and how long they take to issue.

Permanent Residence Permit

If you have had possession of a 1-year renewable visa for at least each of the last three years, you could apply to be a permanent resident. Of course, it’s not as simple as that: you have to have obtained those renewable visas through investment, work or having a Dependent Visa. Furthermore, you need to have had a work permit for at least three years, as well as having been paying tax in Thailand. You must also speak, read and write fluent Thai: in fact you’ll have to go through an interview entirely in the language.
Should you meet these stringent criteria, you should also be well-prepared and extremely patient. Applications can only be made inside the window designated by the Immigration Bureau, and are restricted to a pre-determined annual quota per country. Plus, you may have to wait a long time before a permit is granted: the timeline depends on the current policy of the Immigration Commission and the Ministry of Interior. MBMG Group Legal Team has seen cases in which it has taken up to five years to grant a permit.
There are two fees which you have to pay the government for the permit: the first on application (THB 7,600) and the second, much more expensive payment (currently at THB 191,400), is due once the application is approved.

Retirement Visa

The Retirement (Non-immigrant “O”) Visa, to give its full title, is for foreigners who are over 50 and have held a minimum of THB 800,000 in their bank account for at least the past 3 months; or transfer a retirement income of at least THB 65,000 into Thailand every month.
This visa is renewable annually and to obtain it you’ll have to pay an initial fee of THB 1,900 and, once received, you’ll have to apply for a re-entry permit. This is a relatively cheap and easy method of obtaining a resident’s visa; however, it does mean that you cannot earn a wage in Thailand.

Business Visa

If you work for, or have an official job offer from, a company registered in Thailand, you could qualify for the Business (Non-immigrant “B”) Visa. For this to be considered, the firm itself has to have a registered capital of at least THB 2 million. It also has to have four times as many Thai staff on its books as it has foreign staff - that means four Thai people to one foreigner’s work permit. The initial fee is also THB 1,900 but you’ll also have to pay for two re-entry permits: one valid for the 30-day period during which the application is being considered; the other when the visa is granted. If you apply for the Business Visa, you will be granted a 30-day visa during the consideration process. Once issued, your visa will be valid for 1 year from the date of application.
However, my legal colleagues tell me that a Business Visa is very narrow, in terms of the scope in which you can work in Thailand. Plus, the application process is complicated and requires a lot of documentation.

Investment Visa

Another way of obtaining a 1-year renewable visa is by transferring at least THB 10 million into Thailand. This can be done in the form of investing in a condominium; placing the money in a Thai bank account; buying government or state-run company bonds: or a combination of some or all of those three.
The fees and the process are the same as those of the Business Visa. Whilst an Investment Visa application requires a lot of documentation, it is usually a smaller amount than that needed for the Business Visa. You should also note that if you are granted an Investment Visa, you will not be allowed to work or earn a salary in Thailand.

Which visa is best?

Given all the different criteria, costs and restrictions there is no one-size-fits-all solution. Finding the best visa for you really depends on your circumstances and reasons for wanting to live in Thailand. It may be helpful to seek legal advice to enable you to decide which type of visa suits you best.
 

Please Note: While every effort has been made to ensure that the information contained herein is correct, MBMG Group cannot be held responsible for any errors that may occur. The views of the contributors may not necessarily reflect the house view of MBMG Group. Views and opinions expressed herein may change with market conditions and should not be used in isolation.
MBMG Group is an advisory firm that assists expatriates and locals within the South East Asia Region with services ranging from Investment Advisory, Personal Advisory, Tax Advisory, Corporate Advisory, Insurance Services, Accounting & Auditing Services, Legal Services, Estate Planning and Property Solutions. For more information: Tel: +66 2665 2536; e-mail: [email protected]; Linkedin: MBMG Group; Twitter: @MBMGIntl; Facebook: /MBMGGroup

 


 
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