Setting Up a Factory and Manufacturing in Thailand: Foreign Ownership, Factory Licence (Ror-Ngan 4), Industrial Estates and BOI

Start with Foreign Ownership: Manufacturing Is Relatively Open, but Structure Still Matters

• Manufacturing thresholds are usually lower than services: the Foreign Business Act restricts most manufacturing/production less than services like F&B or retail, so foreign shareholding room is greater — but check each specific product case by case
• A company is step one: register a Thai company and arrange compliant shareholding — see the foreigner business set-up guide and company registration cost
• BOI can relax foreign ownership: a BOI-promoted manufacturing project can often be 100% foreign-owned and hold land — see the BOI application guide
• Don't use nominees to dodge limits: holding shares through a Thai nominee to skirt limits carries legal risk; manufacturing is already relatively open, so use a proper structure

The Core Threshold: the Factory Licence (Ror-Ngan 4 / รง.4)

• What it is: Thailand's Factory Act grades factories by machinery power and worker count, and factories above a certain scale must obtain a factory operating licence (known as รง.4) from the Department of Industrial Works to produce lawfully
• Small workshops may be exempt or simplified: production below the threshold may only need registration or none, but judge by the current grading — don't assume
• The licence covers safety and environment: buildings, machinery, fire safety, effluent and hazardous waste must meet standards and pass inspection
• Maintain the licence: after obtaining it, operate per the rules, with annual checks and renewals; breaches can bring penalties or shutdown

Site and Land: Industrial Estate or Own Land

• Industrial estate (IEAT): locating in an estate under the Industrial Estate Authority gives mature infrastructure (power, effluent, customs, bonded) and makes it easier for foreign investors to hold/use land inside the estate, with simpler compliance
• Factory on own land: direct foreign holding of industrial land is restricted, usually relying on BOI privileges or estate status — don't assume you can freely buy land and build
• The site must fit zoning: land-use zoning decides whether such a factory is allowed — verify before choosing a site
• The Eastern Economic Corridor (EEC) and similar areas offer extra policy for specific industries — worth researching before investing

EIA and Compliance: Don't Overlook the Environment

• Some projects need an EIA: factories above a scale or in specific industries must pass an Environmental Impact Assessment before construction and operation — allow time for it
• Effluent, hazardous waste, occupational safety: environmental and safety compliance in production is an ongoing duty, not a one-off
• Annual company compliance continues: a factory company still files audited accounts and tax yearly — see the annual audit guide and what a company does each month

BOI Benefits, Hiring and Equipment Import

• BOI promotion: manufacturing projects can often apply to BOI for major benefits — a corporate income tax holiday, duty-free import of machinery and materials, foreign land holding, and work-permit quotas for expat technical/management staff — the most worthwhile thing to secure
• Expat managers and technicians: owners and secondees need a work visa plus work permit — for costs see the cost of hiring a foreign employee
• Local hiring follows labour law: hiring Thai workers, hours, wages, severance and social security follow the labour law employer guide
• Importing equipment and materials: machinery and raw-material imports involve duty and VAT (often exempt under BOI); for general imports see the import/export and customs guide

FAQ

Can a foreigner own 100% of a factory in Thailand?

It depends on whether you go through BOI and the specific industry. The Foreign Business Act usually restricts manufacturing/production less than services, so foreign shareholding room in manufacturing is greater — but each product still needs case-by-case checking. With a BOI promotion, a project can often be 100% foreign-owned and hold land, which is why many foreign investors set up factories via BOI. Without BOI, whether you can hold a high share or own land follows the current rules — don't assume it's always allowed. Never use a Thai nominee to dodge limits; manufacturing is already relatively open, so use a proper compliant structure, subject to the FBA and BOI's current rules.

Do I always need a factory licence (รง.4) to build a factory in Thailand?

It depends on scale. Thailand's Factory Act grades factories by machinery power and worker count, and factories above a certain scale must obtain a factory operating licence (known as รง.4) from the Department of Industrial Works to produce lawfully; small-scale production below the threshold may only need registration or be exempt — but judge by the current grading, don't assume. The licence covers building, machinery, fire, effluent and hazardous-waste safety and environmental requirements, and after obtaining it you must renew, pass annual checks and accept inspection. Have a professional assess whether your project needs รง.4 and its conditions, subject to the DIW's current rules.

Can foreign investors buy land and build a factory in Thailand?

Buying land directly is restricted, but there are compliant routes. Foreigners/foreign companies face Land Code restrictions on directly holding Thai land, so you can't assume you can freely buy industrial land and build. In practice, land for a factory mainly comes two ways: locating in an industrial estate under the IEAT, where foreign investors more easily hold or use land and infrastructure is mature; or holding project land as approved under a BOI promotion. The site must also fit land-use zoning. Plan your site and land approach together with foreign structure and BOI, subject to the Land Code, IEAT and BOI's current rules.

Do I need an EIA before starting production?

Some projects do. Factories above a certain scale or in specific industries must first pass an Environmental Impact Assessment (EIA) before construction and operation — allow time for it, and don't discover at start-up that you're stuck on the EIA. Beyond that, effluent, hazardous-waste handling and occupational safety in production are ongoing compliance duties, not one-and-done after the licence — you must keep meeting standards and accept inspection while operating. Whether an EIA is required and to what standard depends on project type and scale, so build it into your timeline and budget before investing, subject to the environmental authority's current rules.

Need Help?

TaiHuBang offers hands-on support for setting up a factory and manufacturing investment in Thailand: manufacturing-company registration and compliant foreign structure, BOI promotion applications, factory operating licence (รง.4) and industrial-estate site matching, work visas for expat managers, and guidance on local hiring and equipment import. We do no nominee or other non-compliant arrangements, everything follows the DIW, BOI and relevant authorities' current rules, and professional conclusions rest on a licensed lawyer/accountant. See our company registration services or submit an enquiry, and an advisor will reply within 24 hours.