Foreign Business Ownership in SE Asia
"Like a lamb led to the
slaughter" sounds a bit over
the top, but it might spark your interest. It's a biblical
quotation* relevant in the context of a recently-arrived foreigner going into business
in a country or region he or she knows very little about. There is both high
risk and the likelihood (some would say inevitability) of failure and
loss of money.
avoid the minefields of starting a business in Southeast Asia in one
of the popular expat locations of Bali and Indonesia,
Thailand, Philippines, Malaysia, Singapore, Laos,
Vietnam or Cambodia not to mention any
foreign country you might first consider an
alternative which might allow you to
sleep easier in your adopted new home.
Attempting to start, run (or take over) a business
in Asia, or become otherwise involved in the local economy, is likely to be
rocky ground and should be approached and entered with extreme and constant caution. There is an often-repeated
joke: How do you make a small fortune in
.....? Start with a big one!
This invariably results in laughter all around, including those who've
heard it many times before, but all too often it is the
truth. Many an intrepid ex-pat has lost everything, sometimes by falling
in love, (love is blind), throwing caution to the wind,
trusting local partners and not taking enough care of finances
one way or another. The sharks are waiting in the warm
shallows for new blood.
In spite of 'due legal
process', foreigners are always going to be at a
disadvantage when in
dispute with locals, and only a few lucky ones are successful with or without (and sometimes in spite of!) a
local business partner who may also be
the girl friend, wife or lover. Two major issues are finding people you can
really trust, both personally as well as in business and coping with the many
differences between Eastern and Western cultures and different ways of
thinking and doing business.
the language helps a lot in understanding the people and will be an asset in
many aspects of living, socialising as well as in business. Visit our
language learning and
(including translators and talking dictionaries) pages.
Previous Business Experience
word of warning, this time to those who have never run a successful business
in their own country. They should be very wary about trying to do it in Asia.
The odds are stacked against them before they start and stories of failure and
loss are legendary and well documented on internet forums.
and Joint Ventures
In many countries, not only
in Asia, the only way to own a business is by having a local partner or
partners, and making it a 'joint venture'. Apart from your own personal
relationship with a local, you will quickly discover that there are local
'businessmen', with unsuccessful and usually under-capitalised businesses, some of
whom are going to be plain con-men. These people (they could also be fellow
ex-pats possibly even less trustworthy than the 'natives'!) see a
foreigner who is looking for an opportunity as 'fair game'. They will go to
extraordinary lengths to portray themselves as having important connections
with the right people in government (often claiming to be a related to a
high-ranking official) who can pull all the necessary strings as far as
licenses, permits etc are concerned, with promises of great mutual benefits
if you go into business together. Your new potential partners may also be
introduced to you by your wife or other friend.
It is very difficult,
especially for a foreigner, to check on anyone's credentials in these
countries. You rely mainly on the word and assurances of those whom you
think of as friends or even family, but this is misleading and you should
tread very carefully indeed before making any financial commitment with
anyone. Asians tend to categorise people by family connection or general acceptance by
their peers. "He is a good man" or "he has a good heart" is not something you
would take at face value back home, and there is even less reason to do it
when on foreign soil. Be warned, ask to see some proof of honesty or fair
play in business, and do as much undercover research as you can before
making important decisions.
While you cannot avoid
them, do not trust or rely on
local lawyers too much. Use them only for applying for the legal papers
required for business applications, work permits and visas. Always get a
written quote beforehand. Local lawyers generally
make the worst business partners as they know the law and you don't. You
will always be at a disadvantage. Countries where you should be particularly
careful are Indonesia, Philippines, Laos (Lao PDR), Thailand and
Malaysia, all of
which are high on 'corruption' lists and where power, business and
politics are inextricably entangled.
on 'local toes'
While foreigners are generally seen as wealthy
by the average local resident, they
can also be seen as a threat to local businessmen. It is not a good idea to do something better or more successfully than
your competitors, whether you have local partners or not. They have their own ways of dealing with this,
some not exactly ethical, and some quite frightening!
Indonesia including Bali the island is
also a province
To stay in
Indonesia, in the capital Jakarta or the popular resort island
of Bali and work or start a business, you need to be aware that visas, visa
extensions, work permits (KITAS) etc are important issues. You need to
use a 'facilitator' in the form of a consultant, law office or other
agency, to apply for any legal document. These people have connections relatives
friends in government departments (including police and
immigration) who can smooth the way for business and visa applications. It is
virtually impossible to run a business or work in Indonesia without using
them and paying their fees over and above the official ones. Local partners are likely to be dishonest, corrupt,
or both. This applies to all businesses, wholly owned by locals, or
foreign-run with a local (possibly sleeping) partner. Although little can
usually be done about this, being aware of how things work in many parts of
SE Asia certainly helps avoid unnecessary problems.
Three sites, nasty-bali.org, fugly-bali.org and
balibs.org comment in detail about corruption and the ethics of the police, Indonesian government and foreign-run business
in Bali, and articles to support their almost entirely negative point of view. If you are intent
on starting a business in Bali (or anywhere in Indonesia), these
probably put you off! But there are of course (at least) two sides to every story.
those with the right approach and realistic expectations, a new business venture in a foreign country
can become successful. The best chance is to accept advice from those who have
gone before you. Learn from ones who made it (and how) and not rely on or be
put off by the
bitter experiences of those that didn't. Expat bars, clubs and forums are
full of them.
Essential reading for
anyone thinking of
starting a business
in Bali, Indonesia or
other Asian location.
Published in June 2010 is "How to
Start a Business in Bali", thoroughly researched and written by
well-known local businessman Mike Henry. Having just read it myself, I would say
this is the de facto (if not the only!) guide to opening an expat
business in Bali or other location in Indonesia. It's 100 pages of fact
without any attempt to disguise the truth. It's not all doom and gloom,
though, as Mike has augmented his own experience with in-depth
interviews with several other successful
Bali expat business owners, from different fields of enterprise; this
gives added invaluable insight into the
topic. He also provides a list of resources essential for anyone planning on
living and working in Bali. This $25 guide is a 'no-brainer' for
anyone needing reliable, firsthand information about running a
business in Southeast Asia not only Bali. Learn more about the island
on Mike Henry's Bali Expat website:
do intend running a business in Indonesia, it would be wise also to
learn the main language, Bahasa Indonesia. Courses are available there, but there's an easy,
fun way to get started, using your mobile phone:
General vocabulary, Business, Legal, Medical and Computer terms. Instant
Indonesian <-> English Flash Cards for Mobile Phones
(Nokia 3600, 3620, 3650, 3660, 6600, 7610, 7650, N-Gage,
Samsung SGH-D710, Sendo X, Siemens SX1 and other Symbian
There are government-sponsored schemes for medium to large enterprises (BoI),
a little outside our scope, so we will limit our advice and observations to smaller businesses that ex-pats might want to own or operate.
Visit our page on Foreign Business in Thailand.
From a small business aspect we cover the topic in some detail (from experience). Many of the problems likely to be encountered by
foreigners trying to run businesses in Thailand are similar in SE Asian countries
like the Philippines, Laos, Indonesia and Malaysia,
Vietnam or Cambodia.
As mentioned elsewhere on our pages, we can do no better than recommend you
get this guide
on living and working in the Philippines, written by Australian
businessman and author Perry Gamsby, who has
'been there, done that' and is still doing it!
Read our review of
Making a Living in the Philippines or visit the
author's website. As mentioned above, many aspects of foreign business ownership
in the Philippines apply in
other Asian countries too. You can do it, but make sure you perform 'due
This is an up-to-date, thoroughly researched 265 page
just about anything
you need to know to operate a BUSINESS, GET A JOB or INVEST money
in the Philippines. Purchase includes free
forum membership and newsletters all for less than $30 (with money
back satisfaction guarantee).
personal experience here
too, but if you search Google for 'malaysia sucks' you'll find some
who rant about their money-losing experiences there. The choice of business
partners is going to have a crucial effect on success in Malaysia. More
of 'lambs to the slaughter'.
* "...but I was like a gentle lamb led to the slaughter; and I did not
know that they had devised plots against me".
[from the Book of Jeremiah]
See also our
Foreign Business in
Thailand and Running a Thai Bar pages.
are other ways of earning income while living or retired in a
foreign country. Here's
the alternative we found, and only wish we'd gone ahead with it
We don't recommend that
foreigners go into a conventional business
in Asia unless they know their markets and potential partners very well.
However, there is no reason not to operate an online business which can be based
Income in Singapore (or anywhere) by
Budding Asian entrepreneurs
need look no further for
advice on how to do this than Singapore's own master of internet