Why the order matters more than the paperwork
Foreign manufacturers setting up in Thailand rarely fail on a single permit. They lose time because steps were done in the wrong order: machinery shipped before the promotion certificate, land signed before zoning was checked, a building finished before anyone confirmed which factory class it would house.
Each of those is a reasonable business decision made under deadline pressure. Each turns an administrative step into a correction. This guide sets out the sequence, with the dependencies between steps, so the decisions that cannot be undone are made first.
1. Decide what the Thai entity will actually do
Start with activities, not with the company.
- Manufacturing is generally open to foreign-majority companies.
- Selling domestically through your own sales operation, installation, maintenance and after-sales services may be restricted activities for a foreign-majority company.
- Owning land is restricted for foreign companies unless a specific route permits it.
Write down everything the Thai company will do in its first three years, including the services customers will expect. That list decides whether you need investment promotion, a foreign business licence, a Thai-majority structure, or none of these. See whether your Thai company needs a foreign business licence.
2. Choose the route: promotion, estate, both or neither
Two decisions shape everything after them.
Investment promotion. A promotion certificate can lift foreign-ownership restrictions for the promoted activity, permit land holding for the project, give import duty exemption on machinery, and ease work permits for foreign experts. It also comes with conditions, reporting and deadlines. See living with promotion after approval.
Industrial estate. An estate gives a single authority for many approvals, infrastructure that already exists, and a land route for foreign companies. Outside an estate, zoning, access, utilities and land holding need to be worked out parcel by parcel. See factory and industrial-estate law and what changes when your site is outside an estate.
3. Form the company to match the route
Only now form the operating company, with objectives, capital and shareholding that fit the route chosen. A company formed first and adjusted later works, but every adjustment is a registration, and a promotion application measured against the wrong company particulars is slower.
If there are several foreign founders, settle the shareholding decisions before registration. See shareholding decisions in a promoted company.
4. Secure the site: buy, lease, or lease ready-built
| Option | Suits | What to check first |
|---|---|---|
| Buy land and build | Long-term, large or specialised plants | Land-holding route, zoning, access, utilities, title |
| Lease land and build | Estate or private sites where purchase is not permitted or not wanted | Lease term, registration, what happens to the building at the end |
| Lease a ready-built factory | Faster start, smaller plants, uncertain volumes | Approved use, power, the landlord's documents, fit-out limits |
Before signing anything, do land and title diligence. See land due diligence for a project site and leasing a ready-built factory.
5. Confirm zoning and the factory class before design
Two facts should be fixed before an architect finishes drawings.
Zoning. The town plan decides whether the parcel may host this type of factory at all.
Factory class. Under the Factory Act as amended in 2019, a plant counts as a factory where its machinery reaches 50 horsepower or it employs 50 workers or more. Factories are then divided into classes, and the class decides whether you simply operate, notify, or must hold a licence before operating. The class depends on the process and the scale, so it comes from the machinery list and headcount plan. See your factory licence in Thailand.
At the same stage, screen whether the project type and size require an environmental impact assessment. Where one is needed, it runs before other approvals can complete and is often the longest item in the whole schedule.
6. Building approvals and the construction contract
Obtain the building permit for the approved use, and sign a construction contract that deals with delay, variations, defects and termination. See contract terms an owner needs before construction starts.
Changes during construction that alter the process layout or capacity are worth checking against the factory licensing position before they are built, not after.
7. Machinery: order after the import route is secured
Where the project relies on duty exemption under investment promotion, machinery should be imported under that route, within its time limits, and matching the approved list. Machinery that arrives before the route is in place generally cannot be brought back into the exemption. Used machinery has its own criteria. See importing machinery for a new factory.
8. Utilities: apply early
Power capacity is the utility that most often delays a start. Large connections and transformer work take time and are sequenced by the utility, not by your production plan. Apply as soon as the site and load are known. Water supply, wastewater treatment and discharge conditions follow the same principle.
9. The factory licence or notification
With the building complete and machinery installed, the licensing or notification step for your class can be completed. For licensed classes, operation starts only once the licence is granted. Licences under the amended Act no longer carry a fixed renewal cycle, but they do attach to the operator, the site and the approved process, so later changes need amendments.
10. People
- Foreign managers and technicians need work permits before they start work, including installation specialists.
- Thai staff need contracts, social security registration and, from ten employees, work rules. See HR for a small foreign-owned factory.
- Customer audits may impose standards beyond Thai law. See RBA requirements for suppliers.
11. Before the first shipment
Check product standards that apply before goods can be sold, customs registrations for import and export, and tax registrations. See mandatory product standards.
The sequencing mistakes we see most
- Machinery shipped before the promotion certificate, losing duty exemption
- Land signed before zoning and the land-holding route were confirmed
- Building designed before the factory class was known
- Power applied for after construction, delaying start-up
- Foreign installation engineers arriving without work permits
- Process or capacity changed after licensing without an amendment
- Domestic sales and services started under a structure that only permits manufacturing
What to bring to a first meeting
- The products, processes and planned capacity
- A draft machinery list with power ratings and origin, new or used
- Headcount plan, including foreign staff
- Candidate sites or estates, and whether you intend to buy or lease
- Whether investment promotion has been discussed or applied for
- How products will be sold: export only, or domestic as well
With those, the sequence and its dependencies can be mapped for your project specifically.