Thailand is a major manufacturing hub in Southeast Asia, with 79,400 manufacturing establishments operating as of 2023. The country’s strategic location, skilled labor force, and supportive government policies have resulted in increased attention from investors looking to set up a manufacturing business.
In this article, we will guide you on how to obtain a manufacturing license and set up your own manufacturing company in Thailand, as well as provide insights on key regulations to consider.
Overview of Thailand’s manufacturing industry
What is a Manufacturing License in Thailand?
A manufacturing license in Thailand is issued by the Provincial Industrial Office for large factories in the country that may have significant effects on the environment due to their scale. Manufacturing licenses, also referred to as Factory licenses are valid for five years and are renewable.
The application can take up to 40-60 days, which may involve site visits from a government agent as part of compliance inspections. Depending on the scale of your operations, your factory may also be required to conduct an Environmental Impact Assessment (EIA) and comply with stricter regulations regarding waste management and control.
You must apply for renewal before the expiration date as well as pay a license renewal fee (typically around 100,000 baht). The license is mandatory for setting up a manufacturing company in Thailand.
What are the benefits of setting up a factory in Thailand?
Thailand’s commitment to sustainability and innovation positions it as a forward-thinking manufacturing hub, attracting companies looking to implement advanced technologies and environmentally friendly practices. The Thai government provides ample incentives to encourage more companies to invest in the country’s manufacturing sector:
- Free trade zones (FTZs) – Thailand has multiple designated areas where goods can be imported, processed, manufactured, and exported with reduced or eliminated customs duties and taxes. They aim to encourage foreign investment and boost local manufacturing by creating a favorable business environment.
- Corporate Tax Exemptions – Eligible manufacturing companies can benefit from extended corporate income tax holidays that can last up to 13 years, depending on the level of investment and the nature of activities undertaken.
- Import Duty Exemptions – Manufacturers can import machinery without incurring customs duties, significantly reducing initial setup costs. You can also import raw materials with reduced import duties (up to 90%). Specific sectors identified as priorities by the Thailand Board of Investment, such as automotive and electronics, receive enhanced benefits regarding import duties.
- Potential for BOI promotion – The Thai Board of Investment (BOI) may allow you to have 100% ownership of your manufacturing companies by applying for BOI promotion. Furthermore, you can claim up to 200% deductions on research and development expenses to encourage innovation in certain sectors.
Emerhub can assess your eligibility for incentives based on your company’s operational model and industry focus. We can help with the practical implementation of these benefits by providing comprehensive support in areas such as company registration, compliance with local regulations, and establishing supply chain logistics.
Types of manufacturing companies in Thailand
In Thailand, manufacturing companies are classified based on their licensing requirements under the Factory Act of 1992. This classification helps regulate operations, ensure safety, and manage environmental impacts. The three main types of factories that you can register are as follows:
| Types of manufacturing company | Description | Machinery | Employee count |
| Factories that do not require a license | Small-scale operations such as home-based handicraft businesses. | 5-20 horsepower | 7-20 workers |
| Factories that can operate by notification | Factories that must notify relevant authorities before commencing operations but do not require a full license. | 20-50 horsepower | 20-50 workers |
| Factories that have a license to operate | Subject to stricter regulations due to their potential impact on the environment (often needing an Environment Impact Assessment) and operational scale. Must be 100 meters away from schools, temples, hospitals, government offices, and other public places. The licensing process needs to assess your factory’s layout, equipment, and safety procedures. | +50 horsepower | +50 workers |
How to Register a Manufacturing Company in Thailand
Key Requirements for Setting Up a Manufacturing Company in Thailand
A Limited Liability Company (LLC) is the most common legal entity structure for manufacturing companies in Thailand. With an LLC, you can safeguard the company’s assets and provide limited liability protection to shareholders.
Additionally, the incorporation process is straightforward, typically taking just a few weeks, which facilitates quick entry into the market. Here’s what you need to set up a manufacturing company in Thailand:
- Minimum shareholders – must have at least 3 initial corporate or individual shareholders that can be restructured to 2 shareholders after registration. Foreign investors can hold up to 49% of the total shares in your company.
- Commercial address – your company must have a registered address in Thailand. Any address is suitable so long as the landlord confirms in writing that the company is authorized to use the property.
- Paid-up capital requirements – there is no specific minimum registered capital for a manufacturing company. However, if you want to hire foreigners in your factory, a minimum of THB 2 million (~USD 57,500) is required. A company must employ at least 4 Thai nationals for every foreigner on payroll.
- Manufacturing license – operations must have the appropriate licenses issued by the Department of Industrial Works (DIW). Emerhub can help manufacturing companies and factories obtain these licenses from relevant authorities.
How to Secure a Manufacturing License in Thailand
Emerhub provides a comprehensive suite of services designed to assist manufacturing companies in securing a manufacturing license in Thailand. Here’s a step-by-step process on how Emerhub can facilitate this process:
- Company Registration – Emerhub will assist you in incorporating your company in Thailand. This includes selecting the appropriate legal structure (e.g., Limited Liability Company) that aligns with your business goals and complies with local regulations.. We can help gather all the necessary documents such as identification, business plans, and other required paperwork for registration.
- Licensing requirements – we can assist businesses in identifying the type of manufacturing license required for your operations. Furthermore, we can assist you with license renewals by conducting thorough reviews of your current operations to ensure ongoing compliance with local regulations
- BOI-promotion – If applicable, we can guide you through the Board of Investment application process, which may offer incentives for certain sectors, including tax exemptions and reduced import duties.
- Factory assessment – upon submitting a factory license application to the DIW, a government agent is required to conduct an on-site inspection within 30 days. To help prepare for this inspection, we can help evaluate machinery and equipment compliance with local regulations, assess workforce requirements, and ensure that all operational standards meet the criteria set out by the Thai government.
- Ongoing support – After securing your license and establishing operations, Emerhub offers ongoing support for business growth, including tax advisory, payroll services, and compliance updates. We can help identify potential partnerships within Thailand’s manufacturing ecosystem to enhance your supply chain and operational efficiency.
How to import raw materials to use in your factory in Thailand
To import raw materials for your factory in Thailand, you need an import license for essential raw materials such as petroleum, industrial machinery, textiles, pharmaceuticals, and certain agricultural products. Remember that certain regulated products are also subject to product registration with the Thai FDA before they can be imported and/or distributed.
When importing goods to be used as raw materials for your factory, you need to prepare several documents:
- Import entry form
- Commercial invoice
- Packing list
- Bill of lading or airway bill
Alternatively, you can use Emerhub’s Importer of Record (IOR) service, which allows you to start importing virtually immediately, through our own logistics network. Our IOR is already licensed and can act as your consignee throughout the entire process. Some of the benefits include:
- Bypass the lengthy process of obtaining an import license.
- Manage all necessary paperwork and compliance for importing raw materials.
- Access to local expertise in navigating Thailand’s customs regulations.
- Assistance with FDA product registration
- Access to warehousing options in Thailand for your goods.
Ready to start your new factory in Thailand? Contact us by filling in the form below. Our team of local experts can help you get started in obtaining a manufacturing license in Thailand and more!
