Why Thailand? Take the best, forget the rest
It is not only Thailand’s geo-strategic location in the heart of Southeast Asia which makes it highly attractive for foreign investments. A manufacturer from e.g. Europe can thrill several birds with one stone if he decides to set-up a production facility in Thailand:
- Manufacturing in Thailand under BOI promotion with eight years tax holidays and a bundle of non-tax incentives.
- Free distribution of his products within the ASEAN free trade area.
- Sourcing of natural resources, raw materials and semifinished products from China under the ASEAN China Free Trade Agreement.
- Avoidance of the high trade barriers between AEC and Europe.
Investing in Thailand as a foreigner
The laws of Thailand restrict certain types of foreign direct investments. Depending on the type and structure of the investment, several activities are prohibited. In general, the manufacturing of goods is not subject to these restrictions.
These investment limitations are not applicable, if the project is promoted by the Thai government (“Board of Investment”). Such promotion requires
- privileged business activities (depending on type, scope, location, etc.),
- fulfillment of specific requirements (know-how transfer, etc.) and
- a successful application process – which will take three months or more.
The legal structure of the project in Thailand
In nearly all cases a “Company Limited” under the laws of Thailand is the only appropriate investment vehicle. It can be set-up within a few days and needs three or more shareholders and one or more directors. There are generally no minimum capital requirements in Thailand.
Licenses to do business in Thailand
Certain foreign business activities require a specific “Foreign Business License”. Such license is not required, if a majority Thai partner is involved in the structure. Apart from these foreign ownership restrictions, Thailand has specific license requirements for
- the import and export of specific goods and the manufacturing of certain products
- building construction license and factory license
- health related licenses and hazardous substance license
- specific other business activities.
Reference source : Dr. Ulrich Eder. THE PUGNATORIUS THAILAND INVESTMENT LEGAL GUIDE 2016.