Choosing a Market-Entry Structure in Thailand: Subsidiary or Licence Holder

Q: What should you watch out for when setting up a company in Thailand for medical devices?

1. Key takeaways

Setting up a company in Thailand to trade in medical devices involves four matters. First, the foreign investment access path: whether a Foreign Business License (FBL) is needed or a BOI application should be made. Second, the business scope, which must include medical devices. Third, the establishment licence, for which the premises must pass a Thai FDA onsite inspection. Fourth, entity conditions, namely a GDPMD quality system and qualified personnel and warehousing. Device licence holding and importation themselves carry no foreign shareholding cap, but the incorporation step must be assessed under foreign investment rules, and the choice between self-setting and using an independent licence holder should be made on a three-year total cost of ownership practical estimate rather than on official fees alone, which barely move the comparison.

• Four setup matters. Foreign investment access path, business scope covering medical devices, the establishment licence with its onsite inspection, and entity conditions including GDPMD, personnel and warehousing.
• No shareholding cap on holding and import. Device licence holding and import have no foreign shareholding cap, but incorporation must be assessed under foreign investment rules.
• Three access paths. BOI promotion through the Board of Investment, the Foreign Business License (FBL) for restricted businesses, and 100% foreign ownership under specific conditions requiring case-by-case evaluation.
• Compare on a three-year horizon. The self-set subsidiary and the independent licence holder should be compared using a three-year total cost of ownership practical estimate.
• The recommended path is ILH first. Validate the market with an independent licence holder for one to two years, then decide on incorporation, transferring the certificate later via Transfer if a subsidiary is set up.
• Do not set up the company before obtaining the certificate. Validate first, commit heavy assets later; setting up first means bearing the heaviest fixed costs on the most optimistic expectations.

2. Legal basis

The foreign investment rules relevant to incorporation are the Foreign Business Act and the Foreign Business License (FBL) regime, the Board of Investment (BOI) promotion scheme under which applicants may obtain incentives and facilitation of foreign shareholding, and specific conditions or paths under which 100% foreign ownership is feasible, each requiring case-by-case evaluation. Specific application depends on the nature of the business, whether import, wholesale, retail or manufacture, and on the equity structure, so a full foreign investment access assessment is recommended before incorporation. The Thai FDA official FAQ, in its second question, confirms that foreign entities must appoint a Thai local authorised representative. The establishment licence requirements include the onsite inspection and a five-year validity period, with fees of 16,100 THB for importers and 14,100 THB for manufacturers. Certificate transfer follows the Thai FDA transfer notice dated 2024-09-19, requiring a Full CSDT dossier and a consent letter from the original licence holder. Entity conditions rest on the GDPMD requirements together with personnel and warehousing requirements, and on the MoPH GMP Notification B.E. 2566 (2023) and the Good Import and Sales Practice Notification B.E. 2566 (2023).

3. Expert insights

When is setting up a company worth it? When there are many SKUs and a long-term commitment to the market. The judgement standard is to compare the three-year total cost of ownership, as a practical estimate, against the independent licence holder’s service fees over the same three years: if the former does not exceed roughly 1.5 to 2 times the latter, and the market commitment is clear, the subsidiary is worth setting up. Conversely, in a testing phase or with very few SKUs, start with the independent licence holder. The sequence question is just as important as the choice itself: yes, you can go ILH first and set up the company later, and this is the recommended path. The order is to use the ILH to obtain the certificate and complete one to two years of market validation, learn the real sales volume, the SKU structure and the channel model, then decide whether a company is warranted, and if it is, transfer the certificate to the owned entity via Transfer, which requires a Full CSDT dossier and a consent letter from the original licence holder. The key premise of this path is that the willingness to cooperate with a future transfer must be confirmed at the moment the ILH is chosen, which is precisely the value of choosing a self-operating licence holder rather than a subcontracting type. Setting up the company before obtaining the certificate inverts this logic: it commits the heaviest fixed costs against the most optimistic expectations, before any real market data exists to support the decision.

4. Practical recommendations

• Run a full foreign investment access assessment before incorporation. The applicable path depends on the business nature, import, wholesale, retail or manufacture, and on the equity structure, and must be evaluated case by case.
• Choose between FBL, BOI and 100% ownership deliberately. BOI promotion offers incentives and foreign shareholding facilitation; the FBL addresses businesses restricted under the Foreign Business Act; 100% foreign ownership works only under specific conditions.
• Ensure the business scope covers medical devices. The registered scope of the new entity must include medical devices before licensing filings are made.
• Compare costs on a three-year total cost of ownership practical estimate. Set aside the 16,100 THB official fee and compare premises, personnel, systems, lead time and channel flexibility instead.
• Follow the validate-first sequence. Use the ILH for one to two years of market validation, accumulate real sales and SKU data, and let the data support the incorporation decision.
• Confirm transfer cooperation when choosing the ILH. A later Transfer requires a Full CSDT dossier and the original licence holder’s consent letter, so the future willingness to cooperate must be settled at the outset, favouring a self-operating licence holder.

5. Verification checklist

• □ Thai foreign investment access regulations (Foreign Business Act FBL, BOI investment promotion, 100% foreign ownership path, case-by-case evaluation required)
• □ Thai FDA official FAQ, question 2 (foreign entities must appoint a Thai local authorised representative)
• □ Thai FDA establishment licence requirements (onsite inspection, five-year validity, 16,100 / 14,100 THB)
• □ Thai FDA transfer notice (2024-09-19, Full CSDT plus original licence holder consent letter)
• □ GDPMD and personnel / warehousing requirements
• □ MoPH GMP Notification B.E. 2566 (2023) and Good Import and Sales Practice Notification B.E. 2566 (2023)

How GRZAN can help. GRZAN provides medical device and IVD registration, quality system, authorised representative and local testing support across Southeast Asia, including Thailand. Our team prepares dossiers to ASEAN CSDT structure, manages submissions and deficiency responses with the Thai FDA, and supports post-market vigilance obligations. Business enquiries: info@grzanglobal.com