Navigating Legal and Tax Challenges in Southeast Asia

We interviewed the founders of a group of retail companies that started in 1999 and now operate in three countries across Southeast Asia. We asked them what their greatest legal and tax challenges have been and how they have overcome them.

One of our first and biggest challenges was figuring out how to set up and operate our businesses in Vietnam. Although the law has changed since we first started out, at the time it wasn’t possible for a retail business to be owned by a foreigner. We had a production company there which we fully owned, but for the retail side we had to be creative. We followed a well-used route at the time that involved setting up an agreement with a trusted Vietnamese partner to establish the company, with written contracts to back it up. Although this route was legal, it wasn’t clear cut and wasn’t always easy to know how to navigate the situation.

Each time we have registered a new company in one of the countries we’ve hired a local law firm or business consulting firm to help us go through the business registration process. This has been essential because where we operate, this is not something you want to do on your own. We use a lawyer and we check with consultants locally about the process. We got our Vietnam registration completed in six months, whereas others have taken years. Getting that expert input is essential – if you don’t have everything right, it can really come back to bite you.

In Vietnam it is difficult to process anything without paying extra ‘fees’. We don’t pay bribes (i.e. offering money to receive a service we are not entitled to), but we do occasionally get extorted for money (i.e. being forced to pay extra for a service we are entitled to). Although we do try and resist being extorted, it does happen from time to time. Read more

Paying Taxes with a Mountain of Cash: A Taxing Story!

Death and taxes, though often said to be the only sure things in life, are not often a source of amusement. However, here is a funny story from one tourism business in Asia that had to pay their taxes the hard way.

Three years after opening their tourism business, the department of tourism finally created the proper paperwork for filing the tourism tax. In developing countries systems and processes are a work in progress. The company paid their other government taxes when due but with the tourism tax, they set aside money in the bank until the government processes were in place. Three years of taxes added up to approximately US$25,000.

Due to risk of corruption, the tax office required that the payment clear the account on the same day it was received. No money could be left in the account overnight. There was no guarantee that a check would clear or a wire transfer go through in the suitable amount of time prior to the end of a day’s work, so cold hard cash was the only acceptable form of payment.

On the morning of paying the tourism tax, the owners parked the company car in front of their bank and walked in with backpacks and duffle bags to make the withdrawal. Not knowing how much space US$25,000 in local currency would require, they tried to plan accordingly. Read more

Day to Day Life in Hostile Places: Doing Business in Central Asia

The challenges to doing business here are many. The market is small and corruption is massive. There is a deficit of qualified professionals in the employee pool. This means that you need to fully train whoever you hire, knowing that when they have marketable skills, they will be seeking to emigrate to a country for a “better life”.

Inflation is another significant risk factor for business, as well as sudden bouts of devaluation which can be disastrous when supplies are purchased in dollars but customers are paying in local currency. Corruption and lawlessness are rampant in government institutions and there is an underdeveloped legal framework for doing business. We openly declare our position against corruption and this is a plus and a minus. We have no sense of protection from the government here, and there is constant pressure. One of the most threatening developments has been the more recent rise here in Islamic radicalism.

When we published the book of Proverbs and began to openly distribute it we raised the wrath of certain legislators in the parliament here. They vowed to shut us down and began sending an endless barrage of inspectors from every possible government department, all instructed to find something that could put us out of business. We faced corruption that brought us to the brink of being shut down. Our refusal to pay bribes resulted in lawsuits, investigations and audits. In the end, however, most inspectors went away with a true respect for how we run our business. The auditor sent to “shut us down” ended up so impressed at our dealings that she came to the faith. Read more

Day to Day Life in Hostile Places: Doing Business in North Africa

How do you do business in a country that your home country says it is illegal to do business in? Forget about export markets. Forget about connections to the international banking system for personal or business funds. Forget about visiting the ATM. You need to carry as much cash in with you every time you come and then stick in a safe in the corner of your bedroom because you cannot have a bank account in the country.

The bureaucracy and corruption were just the tip of the iceberg of doing business where we lived in North Africa. War and instability, currency fluctuations, international sanctions and constant anti-Western sentiment from the country’s government were just some of the things we contended with day to day. Even the weather could be hostile, with highs of 45°c (113°f), along with sandstorms and power cuts!

Although war was almost constant in different areas of the country, it rarely impacted daily life in the capital. We often told our family that even though the country had been through decades of civil war, the rebels had only attacked the capital once and that was 30 years ago. That was until they attacked it while we were there! The situation returned to normal after a week, but it was hectic. The city shut down for that week while battles went street to street.

On another occasion, we had an outreach team ambushed with grenades and AK-47’s while doing ministry in a remote district that we thought was safe. A number of team were killed and wounded. We still don’t know who was behind the attack. Read more

After the Tsunami: Business on the Edge

Little did James know just how strategically God had placed him fourteen years prior to the adversity that rocked multiple countries and millions of people when the 2004 tsunami hit Asia. As the ocean bulldozed its way through the coastline, sparing nothing in its path, so came a flood of both urgent and long-term needs. The physical destruction was almost incomprehensible, with hundreds of thousands of homes leveled and those that weren’t completely destroyed sustaining major water damage.

The area James lived in had long experienced government versus rebel conflict. Trust levels were at a low between people groups. Most things had ground to a complete halt as a result of years of unrest. The infrastructure was almost nonexistent, and what little infrastructure was there was almost completely dysfunctional. The civil unrest had already led to massive financial devastation. The additional destruction of the tsunami made for a completely corrupt situation where everyone grabbed for whatever money they could get their hands on.

For Such a Time as This

After the tsunami’s destruction of homes, multitudes lived in refugee camps which were a hotbed for the advancement of political unrest or conflict. The circumstances were ripe for anything but a successful BAM venture! Except that James and his wife and team knew they were called ‘for such a time as this’ and the Holy Spirit was leading them. James also had some ‘street smarts’ when it came to working in his location, which helped him move farther, faster. They hadn’t seen it coming, but along with the devastation of the tsunami came opportunities to start businesses that could help rebuild. Read more

Four Personal Experiences of BAM in Hard Places

The BAM Global Think Tank Report on BAM in Hostile Environments shares numerous personal stories and cases from BAM companies in hard places. Here are four brief experiences:

Boat Building in East Asia

In 2009 Josh was living in East Asia and had an opportunity to buy a boat building company there. He saw the opportunity to own a company in an unreached area and use it for ‘triple bottom line’ impact: to be profitable and sustainable, to create jobs, to live out ‘Jesus’ and to make disciples of Jesus among the Muslim and Hindu population. Josh was a fully qualified architect; he had 25 years of boating experience together with experience of teaching design and construction technology; he had lived in country for five years and spoke the language fluently; he had made several disciples of Jesus on other islands. While Josh brought considerable assets to the table, he did not have a business background, he had no money and he had not rubbed shoulders with the cutthroat business world of the country. While the company for sale had proven profitable, there were several hostile factors: the previous owner had not paid taxes and had a system for smuggling profits out of the country; the owner had some debts and potentially serious liabilities against the company; the country’s tax and other typical business laws were not obvious or easily known and Josh knew of no place in country where he could go for honest help; the location was isolated for a family with three children. Read more

The Power of Dignity Restored: Business in the Heart of a Community

Read Part 1

Getting to Market with a Detour

From tree to table, the average coconut oil has likely changed hands 9 times. Each change of hands hikes up the price and disconnects the consumer from the farmer. By the end, a hierarchy of profits has left the farmer, who usually needs it most, with the least amount of money. “On one side, we see the farmers making so little from their work while the middlemen and big oil companies reap the profits. Then on the other side, many in the West are asking questions of brands like: Who are the people behind the brand that actually made this product? How are they treated? Is my purchase feeding an oppressive system or helping people? We saw an opportunity to benefit both sides.” remarked Erik.

Dignity has had a goal of connecting the local farmer to the global export market, but did not always know how reaching that goal would unfold. A successful Kickstarter campaign in May 2015 provided the necessary funds for Dignity to detour from their original plan of selling in bulk and instead develop their own brand for retail sales. They became the direct bridge between the farmers as well as factory workers, and the end users. This tangible connection between customer and producer has shaped the position of their brand in the market. Read more

Restoring Dignity Through Business: Dignity Coconuts’ Story

“We’re fighting this multi-billion dollar evil with a peashooter,” Stephen told Don as they wandered around the exhibition hall at an anti-human trafficking convention. At every booth they were encountering stories of abuse and human suffering. There were also stories of rescue and restoration… However, the sheer scale of global slavery seemed to dwarf the efforts of those at the front-lines fighting against it. Most organisations working with trafficked communities can only provide jobs for 5, 10, 20 or so people. This is great and essential work; giving meaningful work and a stable livelihood is central to people getting out and staying out of slavery. Yet the need for stable jobs far surpasses the supply. Don and Stephen came away with a burning question: How can we employ a growing number of people vulnerable to, or rescued from, human trafficking?

A year later in 2009 Stephen Freed and Don Byker left their long-held positions and set out to research business opportunities. They realised that if they were really going to tackle the underground slavery industry, they would need multiple, substantially-sized businesses that could employ hundreds or thousands of people. They looked at micro-enterprise solutions, but realised that there is a limit to how effective those can be. Not everyone is an entrepreneur with aspirations to own their own business – and micro-businesses rarely scale to create thousands of jobs. As they researched they found, as economists have discovered, that the key to solving poverty and bringing widespread economic development to communities is a growing number of SME-sized businesses. Read more

How Does Spiritual Impact Intersect with Your Product or Service?

It goes without saying that the product or service you develop will be tightly interwoven with your missional goals: social, economic, environmental and spiritual. We can learn a lot from mainstream business about how to most effectively develop products and market share that will turn a profit and create economic impact. We can also learn much from the social enterprise movement and other socially responsibility companies about how products and services integrate with both social and environmental impact. But business as mission integrates a fourth bottom line, that of spiritual impact. In what ways does the product you develop or the service you offer intersect with the spiritual impact of a BAM company?

We asked four BAM practitioners in very different sectors in different parts of Asia to share why they chose their business and how it connects with the spiritual goals for their business:

Extreme Sports Equipment – Wholesale and Distribution

For us it’s impossible to separate our products from the impact we want to have as a business. First of all we want to make sure that all our products have integrity. We use the finest quality materials to make our equipment. Factories here tend to use a lower grade of materials when mass producing this type of equipment. We asked our manufactures to use the highest grade of materials possible and have a good standard of quality control in place. We pay more, but we feel that supplying top-quality equipment is integral to our credibility and our message. We also include graphics and images on our equipment that have a gospel meaning behind them. Every graphic has a story and we include booklets with our products that explain what the images mean and essentially tell the gospel. We are actively engaged with the extreme sports community here, we sponsor competitors and hang out with the people who are into our sport. We’ve started a kind of church among this group, we go where they all gather together and we do a bible study there, we regularly meet with a core group of 20 to 30. We send representatives from our company out as they do product distribution to other cities and they are able to build relationships with community leaders and begin to disciple them. – Jon and Dave Read more

8 BAMers Share Their Stories: What Propelled You Towards BAM?

We asked eight people who have got involved in BAM in the last 5 years to share how they got launched and how well they landed. We asked them:

We’ll be posting what they shared in four short blogs: Part 2 | Part 3 | Part 4

Part 1: What helped propel you towards business as mission?

We were working professionals for a long time and felt we reached a certain level of accomplishment in our career and knew it was time for a change. When we decided we wanted to move abroad, we looked at ways on how we could have the greatest impact and found that running a business can hugely benefit a community on many different levels, as well as give ministry opportunities we otherwise would not be presented with. Also, starting a business felt the most authentic way for us to truly become “immigrants” in our new home country and displayed our commitment to the locals that we were serious and in this for the long haul. – Ben and Yumi, Vietnam [have been operating a software development company for 18 months, before that they spent 10 months intentionally preparing to do BAM, 4 months in their home country and 6 months in Vietnam] Read more