If you decide to manufacture goods in Thailand, you have two options: rent a ready-made factory or purchase (or lease) property and construct your own factory. On the basis of the possession of your production unit, you will get the license of indulging in the Industrial Business in Thailand.
Foreign Ownership of Land
There are some exceptions to the rule that foreign companies or individuals cannot buy and own land in Thailand. A largely foreign-owned firm can purchase freehold land for manufacturing purposes in one of two ways –
a. Have the Board of Investment (BOI) approval, or,
b. Have its plant location within an industrial estate (not just an industrial park).
The exceptions, on the other hand, are only valid for as long as your company is open for business. You must sell the land as soon as the company shuts down, as there is a prohibition in its use for any other purpose.
Thailand’s Board of Investment and Industrial Estate Authority both provide many of the same advantages. It can be tax and/or non-tax benefits. However, there are several extra benefits to putting your manufacturing within an industrial estate:
- An industrial estate provides ready-to-use infrastructure as well as estate upkeep.
- Being on an industrial estate eliminates the chance of land being rezoned off-site.
The Industrial Estate Authority of Thailand (IEAT) provides a number of advantages that may be beneficial to manufacturers whose firm is not supported by the BOI.
Outside of an industrial estate, establishing a factory usually necessitates few formalities. They are obtaining an Environmental Impact Assessment (EIA) and a Factory License. Generally, a factory shall not need this if it is situated in an industrial estate.
Foreign Business License
You can sell everything you make in Thailand on retail or wholesale basis. For retail or wholesale business activity, you do not need a Foreign Business License. You will need a Foreign Business License to provide services if your revenues are from services (consulting, repair and maintenance, etc.) even if they are related to the products you manufacture in Thailand.
2021 Statistics of Industrial Business in Thailand
According to Trading Economics global macro models and analysts, Thailand’s industrial production is predicted to increase by 8.50% by the end of this quarter. Looking ahead, we expect Thailand’s Industrial Production to reach 2.50 in the next 12 months. According to our econometric models, Thailand Industrial Production is expected to grow at a rate of 3.50% in 2022.
Thailand Industrial Output Growth at 8-1/2-Year High
Thailand’s industrial production increased by 25.84% year over year in May 2021, exceeding market expectations of 19.55% growth and following a downwardly revised 17.97% increase in April. Industrial output increased for the third month in a row, at its fastest pace since November 2012, despite a low base impact in 2020 due to the ongoing COVID-19 pandemic. Higher production of autos, air conditioners, and electronics contribute to the increase in manufacturing output.
Thailand Industrial Output Rises the Most in Over 8 Years
Thailand’s industrial output grows by 18.46% year on year in April 2021. In comparison to market expectations of 14.6% growth, it is a 5.89% increase in March. Increase in industrial output for the second month in a row, at its fastest pace since January 2013, despite a low base effect in 2020. Higher production of automobiles, beer, and air conditioners contributed to the increase in manufacturing output. With longer holidays occurring in April, capacity utilisation was 59.58%, down from 70.65% the previous month.
Thailand Industrial Output Rebounds
Thailand’s industrial production records growth by 4.12% year on year in March 2021. In comparison to market expectations of 4.4%, it is a 1.35% drop in February. With a low base effect and a slowing in the third wave of COVID-19 infections, this was the first increase in industrial output in 23 months. After declining 8.8% in 2020, the government expects the manufacturing production index to rise between 4% and 5% this year.
Thailand Industrial Output Drops Less than Expected
Thailand’s industrial production fell 0.54% year on year in October 2020. As compared to market expectations of a 1.8% loss it is a downwardly revised 2.15% dip the month before. This was the 18th month in a row that industrial output fell. However, it was the smallest drop in the current sequence, owing to the long-term impact of the COVID-19 pandemic.
Furthermore, this resulted in lower manufacturing of cars and clothing. The government expects industrial output to fall by 8% this year. It is down from an earlier prediction of 8% to 9%. In the meantime, capacity utilisation in October was 63.2%, down from 63.46% in September.
The Bottomline
To address skilled worker shortages, Thailand is transitioning away from labour-intensive manufacturing and toward more modern manufacturing. In order to address these challenges and modernise Thailand’s industrial industry, the Thai government has established the Thailand 4.0 Economy programme. The programme, which is named after the fourth industrial revolution, will allow enterprises to automate their manufacturing processes. This will not only lower operational expenses but also increase production efficiency.
Declaration of a number of incentives by the Government targets to promote private sector engagement in the programme. Additionally, these will help offset the expenses of implementing new technology. Therefore, now can be the best time for you to invest in manufacturing or industrial business in Thailand. Mail us at [email protected] to get your manufacturing business registered in Thailand.
