It is a known fact that starting a business in Thailand can be a very daunting process, especially for foreigners, due to the rules and regulations that can be quite unfriendly to foreigners wishing to expand their business into the Thai market. However, it is also the second largest economy in Southeast Asia with a very lucrative market and an abundance of opportunity in the industrial and service sectors. Here’s how MPG has helped one of the Singaporean SMEs expand into the Thai market.
About Singatronics:
SingaTronics is an SME in Singapore that produces electronics and electric appliances. SingaTronics has a proprietary design for its own products. As the SME start to look to expand overseas, it sees potential in internationalizing into Thailand as a very good opportunity to exploit the market gap. Hence, SingaTronics’s CEO seeks MPG’s help to set up a BOI company in Thailand so as to retain full ownership of the Thai company and enjoy several tax and non-tax incentives.
What is BOI?
The Board of Investment (BOI) Thailand is the principal government agency for encouraging investment in Thailand by offering incentives to eligible companies. The BOI aims at enhancing competitiveness and facilitating investments in tech related sectors by offering attractive packages of tax incentives, easing foreign equity restrictions on manufacturing activities and services and waiving restrictions on land ownership by foreign entities. BOI Thailand promotes investments in specific activities and investment zones, granting both tax incentives and non-tax incentives, which includes:
- Permission to operate under 100% foreign ownership
- Exemption from work permit and visa rules
- Exemption from import duty on machinery
- Corporate income tax exemption for up to 8 years
- Deduction of transportation, electricity and water costs.
- Deduction of project’s infrastructure installation
- Exemption of import duty on raw or essential materials used in the manufacturing of export products for 5 years
- Permission for foreign technicians, experts and their spouse or dependents to work and stay in Thailand.
What is the outcome:
Under this joint venture, MPG has advised that SingaTronics must satisfy at least one of the following conditions to qualify for BOI privileges:
- The electrical products must be able to connect to Internet of Things; or
- The electrical products must have circuits or operation control systems, processing systems, embedded systems or embedded software to allow for more complex or variety of functions.
On top of helping Singatronics with the complications of BOI, MPG has also helped to significantly reduce the cost of entering the Thai market, enabling Singatronics to take on the business opportunities in Thailand with minimal risks involved.
Admittedly, there are a lot of complications when it comes to applying for BOI or setting up the business in Thailand. Our partner, MPG, has been confirmed for the second year as the go-to legal, tax and management consulting firm for market expansion in Thailand.
Feel free to chat with us to know more about how we can help you to expand successfully into the Thai market.