ENTREPRENEURSHIP & TAX (PART II)
Part II of IV
JOMTIEN, THAILAND - What can a business leader learn from today’s Thailand? Turns out, plenty. My wife and I recently spent two weeks in Jomtien, just south of Pattaya, Thailand. Here are ten observations that may be of interest to business leaders.
4 - Entrepreneurship
The irrepressible entrepreneurial spirit of ingenuity always seems to rear its head in various parts of the world. An interesting example in Thailand is the ride-sharing apps. “Grab,” based in Singapore, is the equivalent of Uber and was the first one to dominate in the Asian market. Uber then invested in it as a massive valuation. As with Uber, it is an obvious solution for many people. For business travelers, it is a godsend. You don’t need to negotiate, explain directions, use local currency, try to get receipts for your expense account, and it’s a consistent standard across countries.
Thailand is interesting as it reflects typical entrepreneurial competition. I couldn’t always get a Grab car, so I soon found out that there was a “better option” called “Bolt.” It’s also a ride-sharing app, but passengers pay in cash, where the fee is set in advance (which means you need to have the cash with you).
Bolt's main advantage is the lower fees and commissions. The company charges a 15 percent commission to its drivers – almost half of that of Uber and Grab – which means riders can also benefit from cheaper fares.
I was told that drivers prefer this app as the fees are lower (since with Grab they are paying a percentage of their revenue). From a practical perspective, I suspect that there are many more Bolt drivers than Grab drivers. I would call Grab and wait for quite a while; with Bolt, I rarely waited more than a few minutes before getting a ride.
5 - A Taxing Situation
Is Thailand the Greece of the East? In many countries, there is a situation where people want the benefits of government services—they just don’t want to pay for them. A classic example of this is Greece. The economy peaked with Plato and has been in general decline since that time. Apparently, Greeks retire in their 50s and half of them pay no taxes—it's good that Germany was around to blame for the situation (or the British playing with their Elgin Marbles).
In Thailand, it is surprising that a large number of companies take only cash. Not just tiny shops, but also large restaurants in heavily trafficked tourist areas.
In our Western world, in Canada, I go months without ever using any physical cash. Everything can be paid with a credit card. Most people enjoy the convenience. It’s simpler, even for buying a C$2 coffee or paying C$1.50 for parking, to flash the plastic.
When a commercial establishment says “cash only” then the assumption is that they are only doing so in order to avoid paying taxes. Given the inconvenience to prospective customers, why would you do so?
An alert for visitors to Thailand: bring a wad of walking around money!