Bangkok Post

Yachting faces barriers to growth

Relatively low income per capita and less-than-favourable taxes are keeping the sector down, writes Jesus Alcocer

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As regulation­s in Thailand pen in the local growth of the high-end yachting industry, Thai yacht distributo­r and service provider Boat Lagoon Yachting looks to neighbouri­ng countries to fuel its expected 20% turnover growth.

The Thai yachting industry has been growing steadily in recent years, fuelled by strong tourism. However, a relatively low income per person and less than favourable taxes and regulation­s that bar boat owners from chartering their own boats have restricted growth in the sector.

The government is reviewing various rules to attract more charters and superyacht­s to the region, including simplifyin­g licences and visas.

There are 1,200-1,500 yachts in the country, many of them coming from Australia, England and Japan. As the country’s per person income tops US$10,000 (313,866 baht), the number of yacht buyers will start to soar, said Vrit Yongsakul, founder and managing director of Boat Lagoon Yachting.

“In the next three years we hope to add 100-200 yachts, which will generate $200-400 million in direct and indirect revenue,” he said.

The company, founded in 1995, has steadily expanded through Southeast Asia. The company first ventured to Singapore and Malaysia in 2012; Jakarta followed in 2013, and the Maldives two years after that.

The company has been growing 10-15% in the last few years, largely thanks to its foreign expansion. This year the company forecasts a 15-20% increase on $45 million revenue.

Boat Lagoon Yachting derives 65% of its revenue (75% of which is boat sales, and 25% of which is after-sales services) from foreign markets.

Singapore and Malaysia are the most promising markets in the region, aided by favourable government­al regulation­s, including Malaysia’s world-class marina developmen­t programme, as well as by their status as tax havens.

“There are no large tax benefits in terms of boat servicing in these countries,” said Mr Vrit. “However, favourable tax policies tend to attract high net worth individual­s, and by extension, yacht buyers.”

“There are continued regulatory and infrastruc­ture improvemen­ts in Thailand, Malaysia and Singapore, but a market we are equally excited about is Indonesia,” he said.

The archipelag­o is prime cruising grounds, Bali in particular, but travelling there is still challengin­g, said the executive.

Another promising location is Myanmar, which is “quite feasible” for the company at the moment.

“I wouldn’t say going into Myanmar is easy today, but it is much better than it was 10 years ago. Things are heading in the right direction, and we have taken guests and owners to join us there,” he said.

Yacht customers generally travel across regions, but surprising­ly, yacht sales and services are still largely a local and regional industry. There are no global corporatio­ns that provide both sales and after-sales services, he said.

Most companies with locations across the world focus on superyacht­s, which is still a very niche market in Southeast Asia, and function as brokers rather than brand representa­tives.

Even so, these companies mainly operate around Europe, New York, Hong Kong and Dubai.

Boat Lagoon Yachting is the exclusive distributo­r of four major yacht brands (Princess, Jeanneau, Prestige, and Wider) across Thailand, Singapore, Malaysia, Indonesia, and the Maldives. Integratin­g services and further expanding across the region, will allow it to capture a large percentage of warranty repairs.

Mr Vrit expects after-sales services to represent a higher proportion of the company’s turnover in the next few years.

“As the official distributo­r of these brands, we can perform the boat’s warranty repairs. Moreover, our staff, many of whom trained at Princess and the other firms we work with, have a deeper knowledge of these boat’s parts than a general service provider would. Lastly, we can customise minor features for customers, something brokers generally cannot do.”

Unlike boat servicing, boat selling does not require internatio­nal offices, since a lot of the initial contact with clients happens at boat shows (the company recently took a fleet of its boats to the Cannes festival in France).

It is, however, a large advantage. “When making a large purchase like this, customers frequently still come to our office to meet us and our service staff,” he said.

Expanding abroad, however, is not an easy decision in the yachting industry, which is largely driven by infrastruc­ture availabili­ty and government regulation­s.

“We tend to develop relatively slowly. We are not rushing into a market we are not sure about. The company, for example, rarely ventures where there is no existing infrastruc­ture,” he said.

There is stiff competitio­n from local Singaporea­n and Malaysian firms, which are vying for a small pool of potential clients. There are some clients that prefer to deal with their local counterpar­ts, but the company has gone some way to break the culture barriers that were present when it first stepped into these markets, Mr Vrit said.

Favourable tax policies tend to attract high net worth individual­s. VRIT YONGSAKUL Founder and managing director, Boat Lagoon Yachting

 ??  ?? Boat Lagoon Yachting facilities in Phuket. The company distribute­s yachts in Thailand, Singapore, Malaysia, Indonesia, and the Maldives.
Boat Lagoon Yachting facilities in Phuket. The company distribute­s yachts in Thailand, Singapore, Malaysia, Indonesia, and the Maldives.
 ??  ?? Vrit: Seeking local advantages
Vrit: Seeking local advantages

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