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Phuket Finance: An expat’s guide to the inevitable

Legacy Phuket Gazette

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PHUKET: It’s natural to experience culture shock as an expat, but the real shock comes when expats consider just how complicated proper investment or financial planning becomes after they expatriate from their home countries.

Here are some of the key areas expats will need to have a plan for and likely consult with knowledgeable experts about.

EXCHANGE RATE AND REMITTANCE

Expats whose income is largely fixed and denominated in a currency different from that used in the country in which they are living need to have a plan for dealing with exchange rate fluctuations as well as transactional costs of having their money remitted to them.

In the worst case scenario, where the exchange rate makes a big and sustained movement not in the expats’ favor, they may have to plan on making major cutbacks in living expenses or even return home.

INFLATION

For most expats in Phuket, their home country has low inflation and low interest rates.
However, emerging markets such as Thailand tend to have much higher rates of inflation that their incomes or investment returns will need to keep pace with.
Expats must keep this in mind while considering the risk of their investments, as high returns can often mean higher risk of losses.

EMERGENCIES

Expats need to tie up cash in a much bigger emergency cash fund than most would otherwise need back home.

This emergency cash fund should be large enough to cover things such as medical emergencies, where cash may be needed to pay upfront or to cover repatriation to the home country should the expat need to return home.

Expats also need to keep in mind and plan for the likelihood that various social welfare entitlements, such as unemployment compensation or disability, from the home country probably won’t cover them while living abroad.

They may even need to re-establish residency back home in order to qualify.

TAX

Expats from countries that enforce worldwide taxation, such as the United States, or require their nationals to maintain a residence in the home country, could face double taxation – unless there is a tax treaty in place.

Such expats need to consult a tax expert to find out which taxes they and their investments could be liable for, as investing in various offshore investments marketed to expats as a way to lower taxes may actually not make sense.

EDUCATION

Expats with children will need to have a plan for how to pay for their children’s education costs, including international school fees and possibly even for university.

Even if the employer is currently footing the bill for most international school fees, such parents better have a backup plan in the event they don’t always have an employer willing to do so in the future.

HEALTH CARE

The older expats get, the harder and more expensive it is for them to get good expat health insurance coverage, and the home country’s retirement health care scheme will likely not cover them while abroad.

They may need to plan on returning home after a certain age or if their health deteriorates to a certain level.

RETIREMENT

Expats working abroad might be paying into their adopted country’s government sponsored retirement program and still be eligible for a pension back home if there is an appropriate tax treaty.

If not, they will need to plan on saving and investing a considerable amount of extra money for retirement.

DEATH

No one likes to talk about the inevitable, but planning for the inevitable becomes much more complicated if assets or family members need to be provided for. This includes those in both the expat’s adopted country and back in their home country.

If the expat’s financial and family situation is complicated, he or she had better find an expert
lawyer in estate planning back home and in the country where he or she is currently living.

At the very least, they should make sure they have a written will and appropriate power of attorney documents kept in a safe place.

Don Freeman is president of Freeman Capital Management, an independent US-registered investment advisor. He has over 20 years’ experience and provides personal financial planning and wealth management to expatriates living in Phuket, and specializes in UK and US pension transfers. Call 089-970-5795 or email: freemancapital@gmail.com.

— Don Freeman

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Business

PETA reveals ‘abused’ monkeys used to pick coconuts in Thailand

The Thaiger

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PETA reveals ‘abused’ monkeys used to pick coconuts in Thailand | The Thaiger
PHOTO: PETA

A boycott is in full swing amongst western retailers to pull Thai coconut products off their shelves following allegations that the coconuts have been picked by monkeys who were ‘abused’ to learn how to pick coconuts. People for the Ethical Treatment of Animals director, Elisa Allen, claims the macaque monkeys are “snatched from the wild” and cruelly trained to climb up coconut trees and pick up to 1,000 coconuts a day.

“These curious, highly intelligent animals are denied psychological stimulation, companionship, freedom, and everything else that would make their lives worth living, all so that they can be used to gather coconuts.”

PETA says that the Thai pigtailed macaques are treated like “coconut-picking machines”. A new investigation into Thailand’s coconut industry reveals the monkeys are confined to cramped cages, chained, and forced to work. PETA reports that the monkeys are used by commercial farms that supply 2 of Thailand’s best-known coconut milk brands, Aroy-D and Chaokoh. Both brands are exported EU countries and the US.

In the UK, Waitrose, Ocado, Co-op and Boots have now announced they will stop selling some coconut products from Thailand. A spokesperson for Tesco told the BBC… “Our own-brand coconut milk and coconut water does not use monkey labour in its production and we don’t sell any of the branded products identified by PETA”.

“Following PETA’s Asia’s investigation, more than 15,000 stores will no longer purchase these brands’ products, with the majority also no longer buying any coconut products sourced from Thailand monkey labour.”

PETA has shared a video narrated by Downton Abbey star Peter Egan. According to PETA, the video shows ‘monkeys pacing and circling endlessly on chains… confined to cramped cages with no shelter from the rain… forced to climb trees and pick coconuts for milk sold by major brands’.

PETE claims it had found 8 farms in Thailand where monkeys were forced to pick coconuts for export around the world. Male monkeys can pick up to 1,000 coconuts in a day. It’s thought that a human can pick about 80.

“Other coconut-growing regions, including Brazil, Colombia and Hawaii, harvest coconuts using humane methods such as tractor-mounted hydraulic elevators, willing human tree-climbers, rope or platform systems, or ladders, or they plant dwarf coconut trees.”

The group said it has uncovered “monkey schools”, where the macaque species monkeys are trained to pick coconuts, fruit, as well as ride bikes or play basketball for the entertainment of tourists.

“The animals at these facilities, many of whom are illegally captured as babies, displayed stereotypic behaviour indicative of extreme stress.”

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Crime

Prohibition activist criticises unequal enforcement of Thai alcohol laws

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Prohibition activist criticises unequal enforcement of Thai alcohol laws | The Thaiger
PHOTO: The Thaiger

The head of the prohibitionist Alcohol Watch Network is criticising the Office of Alcohol Beverage Control and police for looking the other way after ML Piyapas Bhirombhakdi posted a photo of herself showing off a branded bottle of an alcoholic drink on her Instagram profile (the picture has since been deleted). Piyapas is not only a great-granddaughter of HRH Prince Nares Varariddhi, a son of HM King Rama IV, but is the wife of Chutinant Bhirombhakdi, an heir to the Boon Rawd Brewery fortune and executive vice president of Singha Corp. Her post showed her holding a new Boon Rawd product.

Kamron Choodecha argues that the bottle and brand were clearly visible and, given that Piyapas has a vested interest in Boon Rawd’s sales, her post must be construed as sales or marketing, violating the Alcohol Beverage Control Act, which prohibits any sort of alcohol marketing online. He claims the fact she has not been fined, even as police extract hundreds of thousands of baht in fines from ordinary people posting harmless photos of themselves enjoying alcoholic beverages, shows the inequality in Thai society and the privilege elites are given when it comes to the law.

Others may argue, however, that the hypocrisy of the incident illustrates only how ludicrous the law is. Sporadically enforced over the years, the law again made headlines this year when foreign-managed alcohol distributor Beervana was fined 50,000 baht for an online post describing one of its products as “refreshing,” which contravened a ban on adjectives in marketing copy.

In the days that followed reports surfaced across the country of the OABC and police summoning people and slapping them with huge fines for posts that had no connection to sales or marketing.

Most recently, a young woman in Thailand’s South was fined 17,000 baht for posting a photo of a beer she liked to a beer fan page. The page owner was so outraged that he paid 5,000 baht of the fine and met face to face with regulators to protest the law.

Even Kamron, an anti-alcohol zealot, admits that the law is being misused by police and authorities. He says simply using the word “beer” or posting photos of bottles or glasses does not break the law, as long as brands are not shown. He believes the law’s intent is only to prevent advertising of alcoholic beverages on conventional and social media platforms. He argues that if the poster had no commercial intent, no one should be fined.

“But if authorities are going to strictly interpret the law, distant royal relatives or any other elite member of society should be punished equally.”

By the way there is an alcohol ban on for the next two days.

2 Buddhist holidays, Asahna Bucha Day and the start of Buddhist Lent, fall this weekend, and as a result the government has added Monday, July 6, as a national holiday. There will be an alcohol ban on the Sunday (July 5) and Monday (July 6). No alcohol will be sold or served on these days.

Prohibition activist criticises unequal enforcement of Thai alcohol laws | News by The Thaiger

PHOTO: Nation Thailand

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Coronavirus (Covid-19)

Bangkok’s shopping malls struggle under tourist ban, fierce competition

Jack Burton

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Bangkok’s shopping malls struggle under tourist ban, fierce competition | The Thaiger
PHOTO: Nerdnomads

Suvarnabhumi, the name of Bangkok’s second international airport, means “realm of gold,” and was given by His Majesty the late King Rama IX to Bangkok’s eastern outskirts (technically in Samut Prakhan province), once a marshland called Nong Nguhao (Cobra Swamp). With its overtones of wealth, the name represents the hopes of developers, who are turning the area into a retail battlefield.

The problem is oversupply. In late June, multitudes of of shoppers eager for a new experience after weeks of Covid-19 lockdown came to the grand opening of Siam Premium Outlets Bangkok, a brand new mall less than 10 kilometres east of the airport, the main gateway to Southeast Asia’s second largest economy.

The mood was festive for the debut of the massive project, a collaborative effort by Thai mall operator Siam Piwat and US conglomerate Simon Property Group. The joint venture invested 4 billion baht to accommodate an anticipated 10,000 visitors per day in the mall’s 50,000 square metres of floor space.

Siam Piwat Simon’s managing director says “Premium outlet is a retail trend that still has potential to grow”. He believes that growth will reinforce Thailand as one of the world’s most popular tourism destinations. But given the effects of the Covid-19 pandemic, it’s hard to imagine a tougher time to open a mall. The foreign tourists whose spending would normally ensure the success of a new shopping complex are being kept out as the government still bans most international arrivals.

When tourists do return, their numbers and mobility may be limited, and competition among major retailers around Suvarnabhumi will enter a new, more intense chapter. Rivalries between central Bangkok’s many malls and those emerging around the airport will also heat up. There’s plenty of shopping for bored travellers waiting for flights inside the main airport as well.

Some analysts predict the “new normal”, requiring social distancing and limiting customer numbers that could result in significant shrinkage in physical store offerings. The head of retail advisory and transaction services at CBRE Thailand says retailers’ rental space requirement may be reduced by 20 – 40% from the levels before the pandemic. Still, nearly 1.3 million square metres of new retail space is expected in Bangkok by the end of 2023 – more than 25 times the size of Siam Premium Outlets Bangkok. That many commercial facilities opening in a span of just 3½ years is sure to add plenty of new challenges to the retail landscape. According to a spokesman for the Thai Retailers’ Association…

“Premium outlets are business in an upward trend, while duty-free shops are the opposite. In the future, there will be no tax because of free trade agreements. And tourist behaviour is changing. They don’t want to pay a lot of money for short-lifecycle goods. They would buy more goods from premium outlets rather than duty-free shops, where goods are more expensive.”

Thailand has been benefitting from growing overseas tourism, led by the Chinese with their formidable purchasing power, which was booming until the pandemic. According to a report by the World Tourism Organisation, in 2018 the kingdom was the ninth most visited country by tourists in the world, and second after China in Asia. Thailand’s visitors in 2019 were close to 40 million.

Bangkok's shopping malls struggle under tourist ban, fierce competition | News by The Thaiger

The turf war near Suvarnabhumi is essentially an extension of the fierce retail competition in central Bangkok, where retailers are also highly dependent on overseas visitors. Siam Piwat introduced mega mall Iconsiam on the east bank of Chao Phraya river, as a joint project with Thailand’s largest conglomerate CP Group and its property arm Magnolia Quality Development, in November 2018. Siam Piwat co-owns Siam Paragon with another retailer, The Mall Group, which also developed Emporium and EmQuartier department stores. Central Group, including Central Pattana, runs Central World and Central Chidlom.

More projects are in the pipeline. Magnolia Quality Development is working on one called The Forestias, scheduled to be completed by 2023. The US$4 billion (124 billion baht) project is on track to be the largest property investment in the kingdom’s history.

Whether in Bangkok proper or near Suvarnabhumi Airport, all major retail complexes have one thing in common: they’re counting the days until the foreign tourist inflow returns. The Tourism Authority of Thailand came up with a plan to promote domestic tourism packages to mitigate the impact from the lack of overseas travellers, but Thais’ spending power is limited compared to that of foreign tourists.

Although the coronavirus situation in the kingdom is well in hand, the risk of a second wave has the world on edge, even as some countries such as the US and Brazil struggle to rein in their first wave. The outlook for Thailand’s big bet on the return of inbound demand is fraught with uncertainty. The “Realm of Gold” that welcomes travellers may not be quite so precious for some time to come.

Bangkok's shopping malls struggle under tourist ban, fierce competition | News by The Thaiger

SOURCE: Nikkei Asian Review

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