Start a recycling business in Thailand as a foreigner

Register a foreign company in Thailand remains complex with regard to the national limitations and restrictions as mentioned by the Foreign Business Act. Indeed, this law restricts the ownership for the foreign natural and legal persons within a Thai company allowing them to hold 49% of the social shares and obliging them to find a Thai partner holding 51%. Finally, the waste recycling industry in Thailand requires, prior to the exercise of this activity, the obtaining of authorizations, licenses, administrative obligations for visas and work permits for foreigners.

In order to fight this plastic pollution, the Thai government, through the Office of the Board of Investment (BOI), has, however, facilitated the establishment of foreign companies specialized in ecology. There are many ecological sectors promoted and supervised by the BOI. These include the production of electricity, running water, natural gas stations and the recycling and reuse of unwanted materials such as waste.

Applicable regulations to start a recycling business in Thailand

In principle, the Foreign Business Act 1999 provides that non-Thai citizens and entrepreneurs are not allowed to acquire shares above 50% or to become shareholders above 49%. However, there are different possibilities for foreigners to control or own a Thai company as indicated below:

Solution 1: Preferential shares: This type of status allows foreigners to have a higher voting right than Thai majority shareholders. Limits are indicated by the administrations (DBD), and by the Thai law.

Solution 2: The incorporation of a Foreign Business License (FBL) company allows its holder to own 100% of the shares held by foreigners,

Solution 3: The incorporation of a company with the Bord of Investment (BOI) allows the company to benefit from many tax and non-tax advantages, including the possibility to own 100% of the shares held by foreigners. The BOI promotes activities related to waste treatment and especially plastic recycling. The minimum investment capital must be 1 million baths or 26,479 euros and 29,917 dollars (US) in order to proceed with a BOI application, making the application accessible to all.

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Obtaining the BOI waste recycling

The national environmental policy foresees for the coming years, an industry dedicated to bio plastics. In addition, the BOI’s investment policies are oriented towards sustainable development. All activities related to the protection of the environment for the benefit of Thailand are therefore part of these policies. Eligible activities are classified into divisions. Division 3 deals with industrial development. The environmental industry is present and proposes in particular the activity of waste recycling. Concretely, this process includes several steps to start a recycling business:

➤ The project for the creation of a company dedicated to waste recycling must be approved by the state services, in order to comply with the standards in force concerning waste management
➤ The place of assignment of the company must be located in an eligible industrial zone or considered as such, in order to keep it away from the houses and thus avoid any noise, visual, auditory or olfactory pollution
➤ As for the origin of the waste, it must be of a private nature, i.e. it must come from individuals
➤ The technique of collection is also taken into account, indeed it will have to satisfy a modern technology in the matter. This technique is therefore subject to governmental authorization

The advantages of the plastic waste processing activity are numerous:

Fiscal: The corporate income tax, (CIT) which is 20%. The company will be exempted for a period of 8 years. At the end of this period, the tax will be reduced by half.

Non-tax advantages: other advantages that could be mentioned above such as the fact of owning the company without more than half of the members being Thai nationals. Being the owner of the land on which the structure will be established or the right to employ people of foreign origin.

In addition, a recent project has been approved and has allowed the Envico company to benefit from an investment of 2.476 billion baths, to finance its project of recycling plastic waste for packaging purposes. An application for investment funds is therefore possible.

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Licenses and ISO to start a recycling business

To create a recycling business, an operating license is required based on two criteria: the power of the machines used (50 HP) and/or the number of people employed (50 employees).

This application must be made to the Department of Labor Industry fifteen days before the start of work to erect the structure. Then a second time, fifteen days before the actual start of the planned activity. From a procedural point of view, here is the list of documents and papers to be provided:

➤ A document that summarizes the purpose of the structure
➤ An affidavit of the company
➤ A plan that represents the structure within the environment in which it is located
➤ A plan that technically details the machinery used, the expert in question must be an engineer
➤ A plan that demonstrates the proper management of any nuisance or pollution

Once the documents have been sent, a government agent intervenes on site. He checks the whole structure and then writes a report which he submits to the Minister of Industry within 30 days. The latter has a period of 50 days to grant or refuse the operating license.

This license is valid for 5 years and can be renewed before the expiration date for a fee of 100,000 Baths (2,659 euros and 2,993 dollars (US)).

As for the ISO standards (International Organization for Standardization), they concretize the certification of procedures allowing an optimization of the technical processes used by the various companies while guaranteeing values such as safety, quality or environment.

Standard 15270: 2008 covers guidelines for the recovery and recycling of waste.

ISO 15270: 2008 provides guidelines for the development of standards and specifications covering the recovery of plastic waste, including recycling. It establishes options for the recovery of plastic waste from pre-consumer and post-consumer sources.

It also establishes the quality requirements that need to be considered in all stages of the recovery process and provides general recommendations for inclusion in material standards, testing standards and product specifications. Therefore, the process steps, requirements, recommendations and terminology presented in ISO 15270: 2008 are intended for general application.

Intellectual Property

A patent is a document that guarantees the protection of an invention or design, so the owner has a monopoly on its creation. It has a fixed legal term. In addition, it is a territorial right which only produces its effects within the geographical territory of the country in which it was granted.

As for Thai patent law, there is a Patent Act enacted in 1979. It covers inventions, product design and medicines.

In 2008 Thailand joined the Paris Convention and in 2009 it became a member of the Patent Cooperation Treaty. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has also been ratified, within the framework of the World Trade Organization.

Thus, the nationals of States members of these conventions receive in Thailand the same treatment as the nationals. However to claim the delivery of a patent several conditions must be satisfied, the work must:

➤ To have a new character
➤ Be an advance (technical, scientific)
➤ Be usable for economic production

As for the delay for the granting of the patent, it is necessary to count on average between 5 to 8 years. As for the medical field, the methods of medical treatment and diagnosis are considered as non-patentable, which restricts the scope of the patent in the medical field.

General Framework Visa

For recycling companies eligible for BOI, a list of documents and supporting evidence are required to be provided for a business visa:

➤ A permission to enter the kingdom to carry out an activity of economic nature
➤ A copy of the company's registration certificate and the list of shareholders
➤ A certificate attesting that the person has a driver's license and a certificate with the list of family members
➤ Documents proving the academic level and professional experience
➤ A copy of the passport

As for the Smart Visa, it is dedicated to foreign investors, entrepreneurs and experts in order to facilitate their access to the kingdom and thus to accelerate the procedure of obtaining a visa. Depending on their status, different categories are offered to them:

Category T: Highly qualified professionals in the industry or services sector
Category I: Investors in companies
Category E: Chief Executive Officer or member of the Executive Board
Category S: Innovative companies called startups

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