Thailand, often dubbed the “Detroit of Asia,” is Southeast Asia’s largest vehicle producer and the 10th largest in the world. With over 1.9 million vehicles produced annually and robust government support through Board of Investment (BOI) incentives and the Eastern Economic Corridor (EEC), the country offers exceptional opportunities for foreign investors looking to enter the automobile sector. Whether your focus is on manufacturing, parts supply, or electric vehicles, Thailand is a launchpad for both domestic sales and global exports.
This guide walks you through every step of starting an automobile industry in Thailand
1. Can Foreigners Start an Automobile Business in Thailand?
Yes, but subject to regulatory controls. Under the Foreign Business Act (FBA), foreigners are typically restricted to 49% ownership unless they obtain an exemption through BOI promotion or operate within special zones like the EEC or IEAT industrial estates. If your proposed venture contributes to Thailand’s priority sectors, such as EVs or advanced automotive components, higher ownership rights and incentives may be granted.
2. Company Registration & BOI Promotion
Start by forming a Thai Limited Company with:
At least 2 shareholders and 1 director
A minimum capital of THB 2 million for foreign work permit eligibility (may be higher for BOI applicants)
Apply for BOI promotion if your business qualifies. BOI benefits include:
Up to 8-year corporate income tax exemption
Import duty exemption on machinery and raw materials
Permission for 100% foreign ownership
Streamlined visa/work permit processes for foreign specialists
3. Factory Licensing & Land Use Approvals
To operate an automotive manufacturing or assembly plant:
Foreign-owned manufacturing facilities typically require a Factory License from the Department of Industrial Works (DIW).
Setting up within an Industrial Estate Authority of Thailand (IEAT) or Eastern Economic Corridor (EEC) zone often provides:
Expedited licensing processes
Long-term land lease rights (up to 50 years)
Possibility of foreign land use rights for buildings and operations
Investors in IEAT zones may also benefit from integrated utility, logistics, and customs services.
Location options:
Regular industrial zones (lease up to 50 years)
IEAT or EEC zones (may allow additional benefits)
Additional approvals are pursued if setting up in an IEAT zone.
4. Import & Customs Registration
Registering as an importer with Thai Customs enables duty-registered operations.
Import licenses from the Ministry of Commerce are often required for components, CKD kits, or machinery.
Compliance with Thai Industrial Standards Institute (TISI) ensures local safety and quality recognition.
For EV-related imports:
Regulatory guidance by Office of Industrial Economics (OIE) and Department of Land Transport (DLT) ensures alignment with national electric mobility standards.
Benefit: Once registered, companies gain access to duty drawback programs, free trade zone benefits, and eligibility for import tax exemptions if BOI-promoted.
5. Environmental & Safety Compliance
An Environmental Impact Assessment (EIA) may be needed if the facility exceeds certain capacity thresholds.
Compliance involves installing waste treatment, emissions controls, and safety monitoring systems.
For EV and battery plants:
Compliance with hazardous materials regulations ensures eligibility for special storage, transport, and recycling permits.
Benefit: Approved EIA and safety frameworks often lead to smoother licensing and reduced environmental liability exposure.
May require submission of an Environmental Impact Assessment (EIA) to ONEP.
For battery or EV plants, handle hazardous materials under strict protocols.
6. Foreign Staffing & Work Authorization
Foreign directors or engineers generally apply for a Non-Immigrant B Visa, sponsored by the Thai company.
Upon arrival, a Work Permit must be secured from the Ministry of Labour.
BOI-promoted companies access the One-Stop Service Center, reducing time and documentation.
Benefit: Promoted projects may be allowed to employ more foreign experts and can bypass standard local-foreign staff ratios.
7. Taxation & Reporting
Register for Corporate Income Tax (CIT) and VAT at the Revenue Department.
Standard CIT rate is 20%; BOI promotions may reduce this to 0% for up to 8 years.
Other applicable taxes include:
Excise duties on vehicles and luxury parts
Customs duties on non-exempt imports
Environmental taxes depending on fuel type or emissions
Benefit: BOI-promoted firms may enjoy tax holidays, VAT refunds, and access to special audit channels for fast-track reporting.
Submit annual audited financials to DBD and Revenue Department.
8. Exporting Vehicles & Parts
Exporters register with Thai Customs and onboard to the National Single Window (NSW) digital system.
Apply for Certificate of Origin (COO) through Department of Foreign Trade (DFT) for FTA benefits.
Licensed customs brokers manage documentation, bonded warehousing, and shipping logistics.
Benefit: Thailand’s export ecosystem supports manufacturers with competitive port access, global trade agreements, and logistics cost advantages.
Ensure product meets destination-country technical and environmental requirements (e.g., EU or U.S. standards).
Conclusion
Setting up an automobile industry in Thailand involves navigating various steps—from forming a compliant company structure and securing BOI privileges to managing licensing, staffing, and exports. The process, while comprehensive, provides access to a globally connected manufacturing hub with extensive government support.
Foreign investors focusing on innovation and sustainable mobility are particularly well-positioned to benefit from Thailand’s policy direction and production ecosystem.
SHABADPREET KAUR
