Introduction:
Thailand has established itself as a prominent hub for international business, and the Industrial Estate Authority of Thailand (IEAT) is set to play an increasing role in its success. With its strategic location, developed infrastructure, and attractive incentives such as 100% foreign ownership of businesses and land, the IEAT offers a great opportunity for foreign companies to establish and expand their operations in Southeast Asia.
In this article, we will explore the key reasons why the IEAT is the ideal option for businesses looking to establish themselves in Thailand.
Key Points
- The Industrial Estate Authority of Thailand (IEAT) allows 100% foreign ownership of businesses and land within its industrial zones
- Companies in IEAT zones enjoy reduced import-export restrictions, tax/duty exemptions, and can hire foreign skilled workers
- IEAT operates General Industrial Zones (GIZ) for industrial activities and Free Zones with special import-export benefits
- IEAT’s One-Stop Service Center streamlines processes like land acquisition, permits, and business establishment
What is the Industrial Estate Authority of Thailand?
The Industrial Estate Authority of Thailand (IEAT) is a state enterprise operated by the Ministry of Industry. Its primary objective is to develop and manage industrial estates and ports, creating strategic production and service bases with the necessary infrastructure.
The IEAT offers qualifying businesses a range of benefits, including 100% foreign ownership, offering a one-stop service centre (OSS) that provides assistance throughout the whole business process, from land acquisition to establishing a business within one of the free zones. The IEAT also offers both tax and non-tax benefits to eligible companies. Industrial estates under the IEAT are divided into two zones: General Industrial Zones (GIZ) and Free Zones.
General Industrial Zones (GIZ):
These zones are designated areas for industrial activities and related businesses. The IEAT provides essential services within the GIZ, such as transportation, training centres, and land ownership permissions.
Free Zones:
Operators within the IEAT Free Zones are eligible for import-export and various tax and duty benefits. The Free Zones allow the importation of merchandise or raw materials and the exportation of products without restrictions imposed by the World Trade Organization (WTO).
The Industrial Estates Operated by the IEAT
The IEAT has established various industrial estates across Thailand to facilitate industrial development and attract both local and foreign investments. These estates are located in different locations such as:
Southern Region Industrial Estate in Songkhla
Located in Songkhla province, the Southern Region Industrial Estate covers a total area of 2,261 rai (approximately 361.76 hectares). It comprises different zones, including the industrial zone, commercial and residential zone, infrastructure and green zone, and a free zone.
Smart Park Industrial Estate in Rayong
The Smart Park Industrial Estate, located in Rayong province, is a state-of-the-art eco-industrial town committed to environmental sustainability and the well-being of surrounding communities. It is connected to various transportation systems and is scheduled to be completed in 2024.
The Smart Park Industrial Estate offers attractive land rental promotions for investors, including free land rental and maintenance fee waivers for the first year. To qualify for these promotions, investors must notify the start of business operations within three years of the permission date and rent the land for a minimum of ten years.
Gemopolis Freezone in Bangkok
Gemopolis Freezone Thailand, strategically located near the Suvarnabhumi International Airport, is the world’s first and only low-pollution business zone specifically designed for the gems, jewellery, and related industries. With over 155 acres of specialized facilities, Gemopolis offers a strategic location and strong government support, making it an attractive destination for local and international investors.
Gemopolis offers dedicated factory spaces, advanced technology, and specialized equipment, Businesses can also enjoy 0% import duty and 0% value-added tax (VAT) on purchases
Benefits of the Industrial Estate Authority of Thailand for Foreign Investors
The Industrial Estate Authority of Thailand provides numerous benefits and incentives for foreign investors looking to establish and expand their operations in Thailand. The key benefits include:
Foreign Ownership of Land and Companies
The most significant advantage offered by the IEAT is the ability for foreign investors to have 100% ownership of their businesses and the land within the industrial zones. This is particularly important as foreign ownership of land is generally restricted in Thailand, except in specific cases such as obtaining a BOI (Board of Investment) promotion. The IEAT’s policy of allowing full foreign ownership provides businesses with greater control and flexibility in their operations.
Significantly Reduced Import-Export Restrictions within IEAT Zones
Companies operating within the industrial zones managed by the IEAT enjoy import-export flexibility. They can import goods, raw materials, and components without restrictions on quantity or value, allowing smooth operations and supply chain management. Additionally, products manufactured within the industrial zones can be exported without facing export conditions imposed by the WTO.
Additionally, products made for domestic use and taken out of the Free Zones are eligible for tax and duty relief. Similarly, raw material components produced domestically and used within the Free Zones also benefit from tax and duty exemptions.
Ability to Hire Foreign Skilled Workers
The IEAT promotes the hiring of foreign skilled workers within the industrial zones who possess talent with specialised knowledge and expertise. This allows businesses to hire professionals who can contribute to the growth and development of their operations.
Typically the IEAT will approve the hiring of the following positions:
- directors,
- presidents,
- finance and administration personnel,
- executive assistants,
- factory assistants,
- marketing,
- export, and
- sales professionals.
The IEAT also permits the spouse and dependents of a foreign skilled employee to stay in Thailand. Spouses and dependents are entitled to stay in Thailand for the same amount of time as the foreigner. However, the employee of the company operating in the IEAT will have to prove the relationship between the spouse and the dependent. To do so they have to provide evidence such as a valid marriage certificate or a birth certificate.
Tax and Duty Exemptions
Another key advantage of operating within the IEAT industrial estates is the eligibility for various tax and duty exemptions. Businesses within the IEAT zones are exempt from the majority of import taxes and duties that are typically imposed when importing or exporting goods. This tax relief reduces the financial burden on businesses and enhances their competitiveness in the global market.
Please note, the specific tax and duty exemptions provided by the IEAT vary depending on the type of business and its activities within the industrial zones.
One-Stop Service Center
The IEAT operates a one-stop service centre (OSS) that streamlines and makes the process of doing business within the industrial estates far more efficient. The OSS provides support and assistance to companies, from the initial stages of land acquisition to the establishment and operation of businesses.
The OSS also provides assistance with various tasks, including land acquisition, permits and licences, utilities connections, and other administrative procedures.
What are the Requirements for Foreign Companies to be Able to Own Land in an IEAT Estate?
Typically, in Thailand foreigners are generally prohibited from owning land, except in certain situations such as obtaining a BOI promotion. Another such exception is the ability for foreign investors to own land within an IEAT operated industrial estate in order to conduct business. Please note that the ability to own land is as the Industrial Estate Authority of Thailand may deem appropriate.
In order for foreign investors to be able to purchase industrial land in Thailand, they must obtain a license from the Industrial Estate Authority of Thailand. This licence grants the company permission to use the land for business operations.
To obtain this licence, the company must complete and submit Form Industrial Estate Authority of Thailand 01/1. The complete this form properly the following information is required:
- the specific land plot that the applicant is interested in purchasing and details about from whom the land is being purchased,
- basic information regarding the applicant’s corporation, and
- the precise dates as to when the factory will begin construction and
- the precise dates of when it will begin operations.
Once the licence has been obtained, the company may proceed with the application to actually own the land. For the company to be able to own the land they must submit Form Industrial Estate Authority of Thailand 15 S, a copy of the Industrial Estate Authority of Thailand licence, a copy of the title deed, and other relevant documents to the land office.
Our Thoughts
Foreign investors engaging in industrial or import/export operations, aiming to expand into Thailand and Southeast Asia, can greatly benefit from the Industrial Estate Authority of Thailand (IEAT). The IEAT presents a significant opportunity by allowing 100% foreign ownership of businesses. This ownership structure, combined with tax incentives, import privileges, the ability to hire foreign skilled workers, and the option to own land, provides advantages unavailable to other companies operating in the country. The IEAT offers a comprehensive solution for foreign enterprises seeking to establish a foothold in Thailand and leverage the nation’s strategic position within the dynamic Southeast Asian region.
