The Thailand Economy, VAT Taxes & Thai Gold

The Thailand economy runs off the Thai currency, the Baht. The Thai currency of the baht comes in paper denominations of 10, 20, 50, 100, 500 and 1000; although the 10 is getting harder to find.

The Thailand currency coins come in 1, 2, 5, and 10. They even have many denominations lower than 1 baht but even in Thailand these are worthless and I'm not sure why they even have them.

One of the first things to remember when dealing with Thailand currency is to kept as many small bills as possible. The taxi driver, restaurant, or even hotel might not have change.

This is one of the biggest problems in Thailand. I don't know where all the small denominations of Thai currency go as few people have them but I suspect Thais don't like letting go of small denominations. The second thing to remember is that you must always have Thai currency on you at all times because you'll never know when you'll need cash as an ATM might not be around. Also some businesses your dealing with might only accept Thailand money, the Baht, and not credit cards.

The exchange rate for the Thailand currency varies but on average it runs about 33 Thai Baht to 1 USD. Some places do have better exchange rates than others and never exchange at a hotel because of the horrible rates.

VAT taxes

When you make purchases in Thailand you will be charge a 7% VAT (Value Added Tax) or sales tax. A major portion of the Thailand economy runs off the collected VAT because most people don't even make enough to pay personal taxes. Some small places places of business don't charge this (probably because they are not paying their taxes) but all major businesses will charge the VAT.

If you leave the country with-in 60 days of the date of purchase then you can your VAT taxes that you paid refunded. However, the purchase must be more than 2000 baht at a given store or location and your total claim must be more than 5000 Thai baht. When you make your purchase make sure you present your passport and ask the sales person to fill out the VAT Refund Application. They also attach your original receipts to the form. Once you’re at the airport give your information over the revenue officers at any of the VAT Refund Offices found through-out the airport. The purchased items are usually inspected by the officers and a refund will be given as cash or money credited to your credit card.

The second Thailand money, Thai Gold. Siam means gold in ancient Sanskrit and gold has always been part of Thai history and the Thailand economy.

Gold is almost as good as money in Thailand. You see many Thais wearing 23k gold jewelry all the time.

Thais measure gold in baht gold or baht weight which is about 15 grams. This is different from the West where everyone keeps an eye on the gold ounce at 28 grams. The Thai people keep a close eye on the price of baht gold and its price is advertized everywhere. The price of gold is pretty much the same all over the world it's just the unit of measurement a country uses that differs. Thai gold jewelry is where Thailand really shines as even though the price of raw gold is the same all over the world, the labor costs are very low in Thailand. Thailand has very skilled silver and gold jewelry makers, creating a lot of bang for your buck. I enjoyed their jewelry market so much I made a business out of it and became an exporter.

Thai gold shops are everywhere around Bangkok and Thailand in general; you can't miss them, usually bright red in color. Red is a lucky color in China and I guess in Thailand too apparently. It's amazing how much gold these shops have in them; countless shops, millions of dollars in each one. Thai gold is usually bought and sold at 23k or 24 karat level and rarely under this amount. At first I had reservations about buying gold at the 23 or 24k level because of the "too soft" gold talk from growing up in the U.S. Yes, gold is softer at the higher karat levels but it's still fine for most jewelry, PLUS you can always sell this jewelry back to the seller in Thailand for around the same price or even higher, depending on the price of gold. I believe the West sells 10k, 14k and 18k so they can make more profit. Don't believe me? Try selling your 14k gold back to the seller in the U.S. for the same price or higher! However, you can do this in Thailand and they WILL buy it back.

Short History of the Thailand Economy,

Thailand was once called an Asian Tiger back in the mid 80's to mid 90's as it grew at 9% a year, and many thought it would be like Hong Kong or Singapore. However, after the late 90's speculation crash, Thailand slid back heavily. Many of the unfinished buildings you see are from the late 90's crisis which affected everyone. I know of people in Thailand who were in charge of millions, reduced to selling sandwiches on the street.

In 2001 Thailand picked up steam again but has been up and down ever since then. The Thailand economy and Thai currency has been a victim of political instability, oil prices, and even the tsunami of 2004 (which damaged the tourist industry) but Thailand has still been able to sustain an average GDP growth of 4 to 5% a year. The Thai baht has traded as low as 20 Baht to the dollar back in 1980 and as high as 44 Baht to the dollar in 2001. I first came to the land of smiles back in 2003 the Thailand currency exchange was around 40 baht to the dollar and it stayed that way for a couple years.

I tell you those were the days! The dollar went a long way. Now when I see 31 or 32 baht to the dollar exchange I cringe as I remember the good old days. The recent rise of the Thai currency, the Baht, has most likely been a result of the weak dollar and our never ending borrowing! versus a strong Thailand economy.

Currently, the Thailand economy is supported by mostly industry and manufacturing at 43% but this only employs 14% of the work force, next is services at 44% (of that only 6% is tourism) which employs 37% of the work force, and finally agriculture at 8% but employing a whopping 49% of the population!