International Procurement Office in Thailand: BOI Incentives

Understanding the International Procurement Office

An International Procurement Office (IPO) in Thailand functions as a central hub for acquiring raw materials, parts, and components essential for manufacturing. Its main function is to streamline and oversee procurement processes, ensuring that supply chains are both efficient and cost-effective. By setting up an IPO, companies can consolidate their procurement operations, take advantage of Thailand’s strong industrial capabilities, and utilize the country’s extensive network of free trade agreements.

What are the benefits of establishing an International Procurement Office?

Establishing an International Procurement Office in Thailand offers significant strategic and economic benefits for multinational corporations. These offices function as centralized hubs, improving procurement operations and enhancing overall efficiencies. Here are the main advantages:

1. Streamlined Supply Chain: An IPO helps streamline the supply chain, reducing procurement costs and enhancing operational efficiency.

2. Access to Local and International Markets: Thailand’s strategic location and multiple free trade agreements provide IPOs with preferential access to numerous markets.

3. Centralized Operations: By centralizing procurement activities, companies can improve coordination and control over their supply chains.

4. Cost Reduction: Leveraging local resources and BOI incentives can significantly reduce operational costs.

What are the investment opportunities?

Setting up an International Procurement Office in Thailand simplifies business operations and opens up many investment opportunities. These opportunities take advantage of Thailand’s strong manufacturing sector and its strategic location in Southeast Asia to boost international trade and economic growth. Here are some key investment prospects:

• Procurement of Raw Materials, Parts, and Components for Manufacturing:
  • An IPO can tap into a diverse range of high-quality and economical raw materials, parts, and components crucial for manufacturing. This is especially beneficial in sectors like automotive, electronics, and consumer goods, where Thailand boasts significant manufacturing strengths.

• Management of Inventory and Warehousing Operations:
  • By setting up an IPO, companies can optimize their inventory levels and improve warehousing operations using advanced logistics and warehousing technologies. This efficiency not only reduces operational costs but also enhances the speed of market responsiveness.

• Export and Distribution of Goods to International Markets:
  • Thailand’s many free trade agreements and central location in ASEAN make it ideal for IPOs to act as export centers. This advantage helps companies distribute products efficiently across Asia-Pacific and beyond, improving their global supply chains.

Are there specific conditions for the International Procurement Office?

To qualify for the BOI incentives, an International Procurement Office must meet certain conditions:

1. Procurement of Raw Materials: The IPO must be involved in the procurement of raw materials, parts, and components used in manufacturing industries.
2. Warehouse Management: The IPO must own or rent a warehouse and manage inventory using an IT-based system exclusive to warehouse management.
3. Merchandise Procurement and Management: The IPO must have appropriate activities related to merchandise procurement and management.
4. Procurement Resources: The IPO must have several procurement resources, including at least one domestic resource.
5. Operational Scope: The IPO must engage in domestic wholesale and/or overseas exports.
6. Capital Requirements: The IPO must have a registered capital of no less than 10 million baht.

What are the BOI incentives for International Procurement Office?

The Thailand Board of Investment (BOI) provides a range of incentives to encourage the establishment of International Procurement Offices. These incentives are designed to enhance Thailand’s attractiveness as a procurement hub and support businesses in reducing costs and improving efficiency.

Tax Incentives 

• Exemption of Import Duty on Raw Materials
  • One of the key incentives is the exemption from import duties on raw materials imported for use in production for export. This exemption helps reduce procurement costs and encourages the use of high-quality materials.

• Exemption of Import Duty on Machinery
  • Machinery used in the IPO project is also exempt from import duties. This incentive promotes the adoption of advanced technologies and equipment, enhancing the efficiency and productivity of procurement operations.

Non-Tax Incentives

• Majority or 100% Foreign Ownership
  • The BOI allows up to 100% foreign ownership of International Procurement Offices. This incentive provides foreign investors with the flexibility and control needed to manage their operations without the constraints of local ownership requirements.

• Right to Own Land
  • International Procurement Offices are granted the right to own land in Thailand. This benefit facilitates the establishment and expansion of permanent facilities, ensuring long-term operational stability.

• Visa and Work Permit Facilitation
  • The BOI offers streamlined processes for obtaining visas and work permits for foreign employees. This ensures that businesses can efficiently bring in their expert personnel, facilitating smoother operations and knowledge transfer.

What is the step-by-Step procedure to establish an International Procurement Office?

Setting up an International Procurement Office (IPO) in Thailand involves several key steps that align with the regulations and incentives offered by the Thailand Board of Investment (BOI). This structured approach ensures compliance and optimal operational setup.

1. Application Submission: Submit an application to the BOI detailing the nature of the IPO and its planned activities.
2. Review and Approval: The BOI reviews the application and evaluates its eligibility for incentives.
3. Incorporation: Once approved, incorporate the IPO as a legal entity in Thailand.
4. Land Acquisition: Acquire the necessary land for establishing the IPO.
5. Warehouse Setup: Establish or rent a warehouse and implement an IT-based inventory management system.
6. Operational Setup: Hire the required personnel and commence procurement activities.

What are the licenses and permits needed?

For an International Procurement Office in Thailand, various licenses and permits are necessary. These include:

• Business Registration: Register the IPO with the Department of Business Development.
• BOI Certification: Obtain certification from the BOI to qualify for incentives.
• Import/Export License: Secure the necessary licenses for importing raw materials and exporting finished goods.
• Work Permits and Visas: Obtain work permits and visas for foreign employees.

Establishing an International Procurement Office in Thailand offers numerous benefits, including streamlined supply chains, access to local and international markets, and significant cost reductions. With the support of the BOI incentives, businesses can leverage Thailand’s strategic location and robust industrial base to enhance their procurement operations and drive global growth. At Benoit & Partners, our law firm is uniquely equipped to assist you throughout this process. Our lawyers specialize in Thai business regulations and have extensive experience with the BOI’s procedures and requirements. Contact us and ensure that all legal and regulatory bases are covered.