Legal
Promoting Innovation: Thailand’s BOI Matching Fund for Startups
Thailand’s Board of Investment (BOI) has recently launched an initiative aimed at supporting and encouraging high-tech startups in the country. The Matching Fund is designed to provide financial assistance to startups operating in targeted industries, specifically ones that promote innovation and economic growth in Thailand.
This article takes a look at the new BOI Matching Fund, its objectives, eligibility criteria, benefits, and how startups can effectively apply for this funding opportunity.
Key points
- Thailand’s BOI Matching Fund offers up to 50 million baht per startup, matching private investments to support high-tech ventures in targeted industries.
- To qualify, startups must be Thai-majority owned (51%), founders must hold 60% of shares, and must secure private investment beforehand.
- The fund focuses on specific high-growth sectors including electric vehicles, smart electronics, biotechnology, agriculture, and food/medicine, aligning with Thailand’s Eastern Economic Corridor development.
- Applications require a business plan, secured private investment commitment, and supporting documentation showing innovative business models and growth potential.
What is the BOI Matching Fund?
The BOI Matching Fund serves as a financial resource for startups, allowing them to secure essential capital needed for growing their company. With a total fund size expected to reach THB 500 million, the initiative aims to match private investments, providing up to 50 million baht per qualifying startup.
The fund provides substantial financial assistance that can be important during the early stages of business development. For example, if a startup secures a private investment of THB 2 million, the BOI will match it with an additional THB 2 million, resulting in a total funding of THB 4 million.
This financial backing can be used to cover various costs, including research and development, marketing, and operational expenses.
What are the Objectives of the Matching Fund?
The fund aims to support startups that are developing new technologies and innovative business models. By promoting the establishment and expansion of new businesses, the fund hopes to help further develop Thailand’s economic development.
The initiative also seeks to create a safety net for international investors, encouraging them to invest in Thai startups by providing matching funds.
What is the Eligibility Criteria for the BOI Matching Fund?
To qualify for the BOI Matching Fund, startups must meet several key criteria that ensure they are well-positioned for growth.
Registration Requirements
Startups must be legally registered entities in Thailand. One key requirement is that Thai nationals hold at least a 51% share in the startup. The founders of the company must also hold at least 60% of the shares.
Please note, at the time of writing it does not seem as though companies are required to have a BOI promotion in order to apply for the funds, any company operating in the relevant industries are eligible.
Innovative Business Model
The business must demonstrate a unique and innovative product or service offering. This focus on innovation is a key consideration for the fund’s objectives, which aim to promote technological advancement in Thailand.
Growth Potential
Startups must show potential for significant growth and scalability. This includes having a well-defined business direction and a roadmap for future expansion.
Private Investment Commitment
A commitment from private investors to invest in the company is a mandatory requirement, as the BOI fund is designed to match these investments. Startups must secure private funding before applying for the Matching Fund.
What are the Targeted Industries for the Matching Fund?
The BOI Matching Fund primarily focuses on startups in high-growth sectors that are essential for Thailand’s economic future. These sectors include:
- New-generation vehicles, with a particular emphasis on electric vehicles (EVs)
- Smart electronics
- Biotechnology
- Agriculture
- Food and medicine
The BOI Matching Fund is closely linked to the development of the Eastern Economic Corridor (EEC), a strategic area in Thailand aimed at becoming a high-tech industrial hub. The EEC focuses on parts of Chon Buri, Rayong, and Chachoengsao.
Focus on S-Curve Industries
The government aims to develop 12 targeted S-curve industries within the EEC, including new-generation vehicles, smart electronics, and biotechnology. The Matching Fund plays a key role in supporting startups within these sectors.
Promotion of Zero-Emission Vehicles
The Thai government is heavily promoting zero-emission vehicles as part of its industrial strategy within the EEC. The goal is for battery electric vehicles (EVs) to comprise 30% of total car manufacturing by 2030, which includes the production of 725,000 zero-emission cars, 675,000 electric motorcycles, and 34,000 electric buses and trucks.
What is the Application Process for the BOI Matching Fund?
The application process for the BOI Matching Fund is straightforward but requires proper preparation. Here’s a step-by-step guide to help understand the process.
Prepare Your Business Plan
Startups must develop a full business plan that outlines their vision, market analysis, growth strategy, and financial projections. The plan should clearly show how the BOI funds will be used to achieve business objectives.
Secure Private Investment
Before applying, startups must obtain a commitment from private investors. This commitment is essential as the BOI will match the amount raised from these investors.
Submit an Application
The next step is to complete the application form. Applicants must fill out the form with accurate and detailed information about the startup.
Provide Supporting Documents
Applicants must attach all necessary documents, including business registration, financial statements, and letters of commitment from private investors.
Await Evaluation
The BOI will evaluate applications based on several criteria, including the innovation of the business model, growth potential, and the amount of private investment secured.
Receive Funding
If approved, the BOI will distribute the matching funds to the startup, providing the necessary capital for growth and innovation.
How can the Matching Fund Benefit Businesses in Thailand?
The Matching Fund is expected to significantly help businesses in their expansion plans and improve their ability to compete on an international level, with the potential for some to achieve unicorn status i.e a privately owned startups valued at over US$1 billion.
This scheme is considered to be the next step towards establishing Thailand as a regional innovation hub.
What is the BOI?
Thailand’s Board of Investment is a special government agency that focuses on promoting foreign investment within Thailand. A BOI promotion removes many barriers to doing business in Thailand, such as the restrictions of the Foreign Business Act.
Furthermore, the BOI provides the following incentives for qualifying projects that could offer significant advantages to qualifying companies.
Read more about the BOI:
BOI Company Formation in Thailand
What Benefits are Offered by the BOI?
The incentives offered by the BOI are one of the main selling points for investors considering Thailand as a location for their business. The Board of Investment (BOI) has designed a wide ranging package of incentives to encourage both foreign and domestic investment in priority sectors that align with Thailand’s economic development goals.
Benefits include:
- 100% Foreign Ownership (not eligible for the BOI matching fund)
- Visa and Work Permit Benefits
- Streamlined visa and work permit processes for foreign employees:
- Land Ownership Privileges
- Foreign Business certificate allowing foreign owned companies to engage in restricted activities
Tax Incentives include:
- Corporate Income Tax Exemptions
- Import Duty Reductions
- Exemption from import duties on machinery
- Exemption or reduction of import duties on raw and essential materials for manufacturing export products
Please note, tax incentives are awarded on the discretion of the BOI and depend on each individual application.
Read more about BOI incentives here:
Is your business eligible for a BOI promotion in Thailand?
The BOI actively offers promotions over a wide variety of different business activities and industries. There is a common misconception that the BOI is only available for high level projects, which is not the case. BOI promotions can be obtained for activities such as manufacturing, agriculture, software, digital, services, machinery, etc. Any potential business whose business activities don’t satisfy these criteria may be eligible for a TISO promotion instead. The TISO promotion is often fondly referred to as the ‘catch-all’ promotion due to its wide scope and accessibility to companies.
Read more:
Discover the Qualifying Business Activities for a BOI Promotion in Thailand
To find out whether your business is eligible for a BOI promotion in Thailand, why not book a consultation with one of our experts. During this consultation we will be able to explain the BOI, how the application works and identify whether your project may be eligible to apply. Consultations can be booked here.
How can Belaws help?
For more information about the BOI matching fund why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
What are the benefits of setting up a factory in Thailand?
Setting up a factory in Thailand offers advantages such as a strategic location, a skilled workforce, and supportive government policies, including tax incentives and import duty exemptions through the Board of Investment (BOI) and Industrial Estate Authority of Thailand (IEAT) promotions.
Can foreign investors own 100% of a factory in Thailand?
Yes, foreign investors can own 100% of a factory in Thailand if they qualify for BOI or IEAT promotions, which provide various benefits including full ownership and tax incentives.
What types of factories are recognized in Thailand?
Factories in Thailand are categorized into three types based on size and power usage:
- Category 1: Operates without prior notice, typically with lower horsepower.
- Category 2: Requires notification to authorities before starting operations.
- Category 3: Must obtain a license before commencing operations.
What are the licensing requirements for opening a factory?
Factory owners must apply for a factory license from the Ministry of Industry, which ensures compliance with safety and environmental standards. The licensing process includes an assessment of the factory’s potential impact on the environment.
What incentives does the BOI offer to approved companies?
Companies approved for BOI promotion can benefit from 100% foreign ownership, corporate income tax exemptions, import duty exemptions on machinery and raw materials, and streamlined visa processes for foreign employees.
What is the Eastern Economic Corridor (EEC) in Thailand?
The EEC is a special economic zone aimed at promoting high-tech industries under the “Thailand 4.0” economic model, offering incentives such as corporate tax exemptions and eligibility for EEC visas for foreign employees.
What environmental compliance measures must factories adhere to?
Factories must implement waste management plans, control emissions, conduct Environmental Impact Assessments (EIAs) when necessary, and comply with regulations set by the Ministry of Industry and other environmental authorities.
What safety regulations are mandated by the Factory Act?
The Factory Act requires safety training for employees, regular equipment inspections, emergency preparedness plans, and reporting of workplace accidents to ensure safe operations.
Where can factories be located in Thailand?
Factories can be established in industrial estates designed for industrial use, purple-zoned land outside industrial estates, or non-industrial zoned land (green zone), each with varying regulatory requirements and advantages.
What should investors consider before opening a factory in Thailand?
Investors should conduct thorough research on local regulations, potential locations, available incentives from government agencies like BOI and IEAT, and compliance requirements under the Factory Act to ensure successful operations.
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