Board of Investment (BOI) tips.
In our page concerning BOI companies, we provided basic information about the nature of the BOI and the benefits of working with them. In this blog post, we look at some practical issues related to preparing an application for BOI endorsement.
Once they have familiarised themselves with the role of the BOI, the first question that many people ask is whether to apply for BOI promotion before or after registering a Thai company. While the BOI allows investors to apply before registering a Thai company, there are certain advantages to setting up the Thai company first.
If you apply for BOI promotion as a foreign company you will need to provide various corporate documents and supporting information, and these will probably have to be translated and/or notarised. Creating a Thai company first streamlines and fastens such administrative formalities.
Another reason to establish the company first relates to making the most effective use of your time. Instead of being side-lined whilst the BOI processes your application, you can use those months productively to lease a factory and begin fitting it out, import and install necessary machinery, etc. In other words, you can be doing everything that needs to be done in order to commence operations as soon as BOI approval occurs.
Another question you might ask yourself is whether to use a lawyer to assist with your BOI application
The risk in not using a lawyer is that you may make errors as a result of not fully understanding both the application stage and subsequent monitoring process. Many foreign investors view obtaining a BOI license as marking the end of the process whereas in fact it is only the beginning. The BOI will keep an eye on what you are doing, and you will periodically be required to notify the BOI prior to or following on from the achievement of certain designated milestones. Thai-based lawyers have considerable experience dealing with agencies like the BOI, and so have a clearer understanding concerning their expectations within the context of your particular business.
For each form of investment the BOI has both general and specific requirements, and we plan to provide details concerning both in a subsequent blog post. General requirements are those questions asked of all applicants, regardless of the nature of the business. Specific requirements, on the other hand, are tailored to the specific type of business activities being proposed.
Foreign investors are often so keen to obtain BOI approval that they overstate the positive aspects of their proposal and downplay potential weaknesses. This is a mistake and they should neither embellish nor hide any pertinent information. It should be understood that, barring the unforeseen, the BOI will expect you to fulfil the commitments made by you in your application.
In closing, when preparing your BOI application:
- Don’t try to hide potential losses. If your budget anticipates losses during the early years of business operation then don’t be afraid to disclose this. BOI staff are experienced enough to understand that new businesses often run at a loss during the establishment phase.
- Be honest about the level of intended investment. The BOI is only interested in ensuring that the amount of your investment is appropriate to the type of activity you are considering and to the size of your project.
- Don’t overestimate your forecast profits. Again, BOI officers are pragmatic in this regard. Whilst they might not be experts in your sector they have evaluated enough business proposals to know what margins and profits might be expected for a business of your size and type.