Introduction:
Thailand’s healthcare landscape is undergoing a significant transformation, presenting a unique opportunity for entrepreneurs and investors to establish medical businesses in the country. With its growing ageing population and global reputation as a destination for medical tourism, Thailand is poised to experience a surge in healthcare demands in the coming decades, making it an increasingly attractive destination for medical service providers and investors.
Key Points
- Thailand is positioning itself as a premier destination for medical tourism in Asia, offering affordable medical costs, high-quality healthcare services, and exceptional tourism infrastructure.
- The Thai government is actively promoting the medical industry through initiatives like the Yothi Innovation District, offering incentives such as corporate tax reductions and foreign ownership allowances for eligible medical companies.
- Foreign investors can achieve 100% ownership in medical businesses by obtaining a foreign business licence (FBL) or seeking approval from the Thailand Board of Investment (BOI).
- BOI certification provides significant benefits to medical companies, including tax exemptions, no foreign employee quotas, and streamlined visa/work permit processes.
- Thailand offers intellectual property protection for medical innovations through its Patent Act and participation in the Patent Cooperation Treaty (PCT).
Thailand’s Healthcare and Medical Tourism Landscape
Thailand has firmly established itself as a premier destination for medical tourism in Asia, thanks to a combination of affordable medical costs, high-quality healthcare services, and an exceptionally developed tourism infrastructure. The country’s global rankings in various healthcare metrics, such as 18th overall, 27th in facilities and services, 6th in quality of care, and 13th in tourism infrastructure, attest to its exceptional medical standards.
The development of Thailand as a medical hub and the demographic shift towards an ageing population is set to intensify the demand for quality medical services. As the country’s population ages, the proportion of citizens over 60 is projected to surpass other regions, including Europe and the United States, by 2045. This demographic trend is a significant contributor towards the push by the Thai Government to further develop the medical sector and encourage foreign investment.
Are there any Government Initiatives in the Medical Industry?
The Thai government has demonstrated a strong commitment to facilitating access to medical services and public healthcare. The proportion of government healthcare expenditure has risen rapidly, from below 50% in 1995 to approximately 80% today. The country’s universal healthcare system, introduced in 2002, has proven to be a resounding success, with over 99% of the Thai population now covered by public healthcare.
The Yothi Innovation District
The Thai government’s introduction of the ‘Yothi Innovation District’ in late 2018 further solidifies the country’s commitment to innovation in the medical sector. This project is a collaboration between the Ministry of Science and Technology, the Ministry of Public Health, and the Ministry of Education, and aims to establish Thailand as the hub for medical innovations. The district is set to house 13 medical institutions and two universities offering medical courses, with the capacity to treat approximately 8,000 patients daily and provide more than 7,000 beds.
Furthermore, the Yothi Medical Innovation District has been designated as an investment promotion zone by the BOI. The BOI hopes to encourage foreign investors to come to Thailand and help drive medical innovation and research and foster innovation, development and technology exchange.
For foreign investors to be eligible to work with the Yothi Innovation District they must satisfy the following criteria:
- Have a cooperation with educational institutions, such as the Work-Integrated Learning (WIL) project and cooperative and bilateral education; and
- Have a cooperation with hospitals, medical, educational, and research institutions, or government agencies in developing in-depth technologies, such as MedTech.
Foreign investors who can work with the Yothi Innovation District will receive a 50% reduction of corporate income tax for a period of 5 years.
Investors will also be able to utilise the YMID One Stop Service Center. This centre offers access to research capital and additional benefits to government bodies and private companies whose business activities are in medical innovation research and development.
What are the Foreign Ownership Restrictions in the Medical Industry?
One of the primary challenges faced by foreign investors in the Thai medical industry is the country’s foreign ownership restrictions. In practice, business activities relating to the medical industry are restricted under the Foreign Business Act. These restrictions mean that for a normal Thai Limited Company, foreign ownership is restricted to 49% and a Thai partner would be required to hold the remaining shares.
However, medical companies can overcome these limitations and achieve 100% foreign ownership by obtaining a foreign business licence (FBL) or seeking approval from the Thailand Board of Investment (BOI).
What are the Eligible Medical Activities for Foreign Investors?
The Thai government has identified seven medical activities that qualify for Board of Investment (BOI) approval, including:
| Type of Business Activity | BOI Promotion Number |
| Manufacture of medical food and/or supplements | Activity 1.18 |
| Manufacture of hygiene products | Activity 3.2 |
| Manufacture of medical equipment | Activity 3.11 |
| Manufacture and/or sale of pharmaceutical products | Activity 6.9 & 6.10 |
| Rehabilitation centre | Activity 7.23.4 |
| Medical care centre | Activity 7.28 |
| Clinical research | Activity 7.38 |
What Incentives Does the BOI Offer for Companies in the Medical Industry?
Obtaining BOI certification provides the following benefits for investors:
100% Foreign Ownership: While regular Thai Limited companies are typically limited to 49.9% foreign ownership due to the Foreign Business Act, BOI-promoted companies face no such restriction, allowing complete foreign ownership.
Foreign Business Certificate: BOI-promoted firms receive a Foreign Business Certificate, exempting them from the 50+ restricted business categories under the Foreign Business Act. This opens up opportunities for a wider range of business activities in Thailand.
No Employee Quotas: Unlike other structures, BOI-promoted companies face no quotas when hiring foreign skilled employees. For example, Thai Limited Companies typically need a 4:1 ratio of Thai to foreign employees, but this requirement doesn’t apply to BOI-promoted businesses. Additionally, the process of obtaining visas for foreign employees is significantly more straightforward with BOI approval.
Eligible medical companies are also able to benefit from significant tax benefits, including:
- exemptions from corporate income tax for up to eight years,
- a 50% reduction in corporate income tax for up to five years, and
- waivers on import tax for machinery, raw materials, and objects used for research and development.
What are the Licensing and Regulatory Requirements?
Depending on the specific medical activities and services a company plans to offer, various licences and permits may be required. These can include hospital licences, clinic licences, medical device licences, pharmaceutical licences, laboratory licences, and import-export licences.
Does Thailand Offer Intellectual Property Protection for Foreign Investors?
Thailand’s Patent Act, which was enacted in 1979 and significantly amended in 1992, provides protection for inventions, pharmaceuticals, and designs in the medical industry. By filing a single international patent application under the Patent Cooperation Treaty (PCT), applicants can seek protection for their innovations in multiple countries, including Thailand.
What are the Visa and Work Permit Options for Investors in Medical Businesses?
While every company in Thailand needs to obtain the correct Visa and Work Permit for their foreign employees, companies promoted by the BOI are not subject to the same requirements as other company structures. For example, BOI promoted companies are not restricted by the same mandatory capital and minimum Thai staff requirements.
Foreigners who are employed at a BOI promoted company can obtain their BOI Visa and Work Permits from the One Stop Service Centre, as opposed to the Labour or Immigration offices respectively. The application and approval process is also far quicker and can be completed in a single day.
Furthermore, for investors who may not have their own BOI promoted company or have any employment that can support a visa and Work Permit, the SMART and LTR visas may be an option.
The Thai government’s introduction of the SMART visa program in 2018 has significantly simplified the process of obtaining visas and work permits for high-skilled foreigners and investors looking to work or invest in the medical industry. This specialised visa offers various benefits, including a validity period of up to four years, no need for a work permit, and reduced reporting requirements to the Thai Immigration Service.
The LTR for highly skilled professionals is also a potential option for professionals in the medical industry. The LTR visa for highly skilled professionals is a visa category introduced to attract and retain highly skilled foreign workers in specific professions or industries where there is a talent shortage, promoting economic growth and innovation in Thailand. The medical industry is one of the promoted industries for this visa.
Our Thoughts
With its growing healthcare demands, government support, and a reputation for exceptional medical care, Thailand presents an attractive opportunity for entrepreneurs and investors looking to establish medical businesses. By navigating the regulatory landscape, taking advantage of the BOI incentives on offer, and tapping into the country’s talented pool of medical professionals, medical companies can take advantage of the vast potential of Thailand’s thriving healthcare industry.
