Short Answer
Not without checking the Board of Investment (BOI) position first.
BOI currently states that machinery imported using BOI import-duty privileges must be used for the promoted activity and promoted products. BOI’s own guidance also confirms that using privileged machinery for a non-promoted product requires prior BOI approval.
A company should therefore not assume that a small percentage of spare machine capacity can automatically be used for contract manufacturing outside the promoted project.
The analysis should separate three questions:
Is the proposed work within the existing promoted scope?
If not, will BOI permit the machinery to be used for it?
Does the non-promoted business create a separate Foreign Business Act or other regulatory issue?
Why This Matters
Factories frequently have unused capacity.
Commercially, it can make sense to use the same production line for a related product or to manufacture for another customer. The marginal revenue may look attractive because the machinery has already been installed.
But machinery imported under BOI privileges is not simply an unrestricted corporate asset for regulatory purposes. The privileges and promotion conditions are tied to a defined project.
Using the machinery outside that framework can therefore affect BOI compliance, customs treatment and potentially the promoted company’s other incentives.
The real source matter was a proposed limited use of BOI machinery for non-promoted contract manufacturing. It was an assessment mandate only; no BOI approval, Foreign Business Certificate, Foreign Business Licence or completed legal opinion was recovered. fileciteturn8file6L161-L163
Typical Scenario
A foreign-owned manufacturer has an existing BOI-promoted factory.
Its BOI machinery has spare production capacity. A customer asks the company to manufacture a related product that is not included in the current promoted project.
Management asks:
“It is only a small part of our machine time. Can we just do it as non-BOI business?”
The percentage alone does not answer the question.
Practical Analysis
01Read the promotion certificate and project scope first.
Before treating the work as “non-promoted,” confirm what products, processes, capacity and machinery the existing promotion actually covers.
The commercial description used by the sales team may not match the promoted-project description.
02Distinguish ordinary machinery from machinery imported under BOI privileges.
BOI’s current machinery guidance states that machinery imported with exemption from import duty must be used for the production of promoted products.
BOI also states expressly that privileged machinery cannot be used for another activity without permission.
03Obtain BOI approval before non-promoted use where required.
BOI’s published FAQ addresses this situation directly: if duty-exempt BOI machinery will be used to manufacture a non-promoted product, BOI approval is required first.
The guidance notes that such permission is normally considered after the promoted project has fully commenced operation.
That should be treated as an authority process, not as a “safe percentage” rule.
04Separate machinery permission from tax incentives.
Even if BOI permits the machine use, the non-promoted activity does not automatically obtain the promoted project’s tax or customs incentives.
Revenue, raw materials and production records may need to distinguish promoted from non-promoted business.
05Check whether the proposed service itself is restricted for a foreign-owned company.
A foreign-majority company undertaking contract manufacturing or another service outside its BOI promotion should separately assess the Foreign Business Act.
Do not assume that BOI machinery approval automatically creates a Foreign Business Certificate or that a particular Foreign Business Licence route will necessarily be available.
06Consider whether a project amendment or separate project is commercially cleaner.
If the new activity is substantial or recurring, a one-off machinery-use permission may not be the best long-term structure. The company should compare amendment, new promotion and non-promoted operation routes.
What We Usually Look At
We review the promotion certificate, approved products and capacity, machinery list, import-duty history, full-operation status, proposed non-promoted process, expected revenue, raw-material treatment, foreign ownership and any Foreign Business Act implications.
Common Traps
Common mistakes are relying on a low usage percentage, assuming company-owned machinery is unrestricted, mixing promoted and non-promoted revenue without records, and treating BOI permission as if it also resolves the Foreign Business Act.
Practical Next Step
Prepare a route matrix:
existing promoted scope → machinery privilege status → proposed new product → BOI permission / amendment → incentive separation → Foreign Business Act analysis
Do that before accepting the customer order.
Legal Sources
- Investment Promotion Act B.E. 2520 (1977), sections 28 and 29 on machinery import-duty privileges.
- Thailand Board of Investment, current FAQ stating that machinery imported under BOI privileges must be used for the promoted activity and requires BOI approval before use for a non-promoted product.
- BOI Form F IN MC 05-02, application to allow import-duty-exempt machinery or moulds to be used by another company or in a non-promoted process.
- Foreign Business Act B.E. 2542 (1999), including List Three (21), where the non-promoted activity constitutes a restricted service business.
General legal information only. Please seek advice on your specific facts. Laws and regulatory practice may change.