Thailand vs Vietnam vs Malaysia for a Southeast Asia manufacturing base in 2026: foreign ownership rules, investment incentives and hiring costs compared

All three countries generally permit full foreign ownership of a manufacturing business, so the 2026 choice often comes down to incentive terms, approval paths and how quickly a plant team can be legally hired[1].

Key takeaways

About the Author

This guide was prepared by Settlr Global's company setup and people operations team, led by Managing Director Gagan Ajmani, who has 15+ years of regional experience across Southeast Asia.

Foreign ownership of manufacturing companies in Thailand, Vietnam and Malaysia

All three countries generally permit full foreign ownership of a manufacturing business. Ownership rules therefore mainly shape the licensing route inside whichever country is chosen. Specific activities may still carry equity conditions or need government approval, so the product line matters as much as the location[5].

Thailand's Foreign Business Act B.E. 2542 (1999) works activity by activity. Foreign investment in a restricted business must stay below 50% of share capital unless specially permitted, and a Foreign Business License in Thailand is one form of that permission[6][2]. A BOI-promoted company can generally be fully foreign held, except that Thai nationals must hold at least 51% in List 1 activities and the BOI may set foreign shareholding limits for certain activities[6][1].

A factory that later adds trading, installation or other service income should check each new activity against the Act's lists before it starts invoicing. US investors can also compare BOI promotion with the US Treaty of Amity route. Settlr Global's company incorporation work begins with this ownership and licence check before any filing is prepared.

Manufacturing incentives and corporate tax terms in 2026

Because ownership is broadly open, incentives become the main financial variable. In Thailand they attach to the specific project.

According to Thailand's investment promotion policy, the BOI package depends on several key factors, including[2]:

According to the BOI, corporate income tax exemptions reach 13 years for the top categories: A1+ gets 10 to 13 years, A1 and A2 get 8 years, A3 gets 5 years, A4 gets 3 years and B gets none, with A2 to A4 capped at 100% of the project's investment. A1 and A2 projects in the 20 low-income areas can receive a 50% reduction of corporate income tax for 5 years after the exemption period ends[1].

This makes the headline rate a weak comparison tool. A Thailand corporate income tax exemption saves money only in years when the plant earns taxable profit, and a multinational group with consolidated revenue of EUR 750 million or more must also factor in Thailand's Top-up Tax, so a more useful test is[8]:

Exemption value = sum of taxable profit in each exempt year x standard corporate income tax rate

A plant that needs three ramp-up years before turning a profit captures less of a long exemption than one that is profitable from year two.

The Malaysia corporate tax rate and MIDA terms should be confirmed against current Inland Revenue Board and MIDA guidance for the specific project.

BOI promotion depends on the BOI's assessment of the project and is not guaranteed. The application steps are set out in the guide to BOI company registration in Thailand.

Hiring costs and work permits compared

Incentives pay off only once production runs, and production runs only when the plant team can legally work. Statutory minimum wages vary by location in both countries, and by sector for some Thai businesses, so a Thai site shortlist should be priced province by province and a Vietnamese one by the local regional zone[11].

In Thailand, a foreign plant manager generally needs a Non-B visa and a work permit sponsored by the employing company[14]. Timing depends on the authorities and on how complete the file is.

The bottleneck is often sequence: the first hires are needed before the entity or the BOI certificate exists. An employer of record in Thailand can help by acting as the legal employer while the manufacturer directs the work, but section 11/1 of the Labour Protection Act can treat the operator as the employer where the work is part of its production process, and a foreign hire's work permit names the employer, job title and location[15].

One option is EOR pricing that starts from THB 8,999 per employee per month for a local hire and THB 10,999 for an expat hire. EOR can run while incorporation is underway. The monthly cost can be estimated as follows:

EOR monthly cost = (L x local hire fee) + (E x expat hire fee) + salaries + statutory employer costs, where L is local hires, E is expat hires and fees start from THB 8,999 and THB 10,999

The Payroll Tax Calculator gives a planning estimate of the statutory side. Expat hires still depend on visa and work permit approval by the authorities.

China plus one sequencing for a Thailand manufacturing setup

For a manufacturer running a China plus one strategy, the order of these steps decides how long the gap is between board approval and first production.

The market entry page sets out entry routes by home region, including Hong Kong and China.

Frequently asked questions

Do I need a Foreign Business License in Thailand to run a factory?

Not in every case. The licence is needed when a company that counts as foreign under the Foreign Business Act carries on a restricted activity without another permission. BOI promotion is a common alternative, since a promoted company can generally be fully foreign held outside List 1, subject to any limit the BOI sets for the activity[6][1].

Is BOI promotion guaranteed for a manufacturing project?

No. The BOI assesses each project on technology level, supply chain role and location[2], and both approval and timing rest with the BOI.

What is the Malaysia minimum wage in 2026?

The national minimum wage is RM1,700 per month. Budget 2027 raises it to RM2,000 from June 2027, with an exemption for MSMEs with annual sales below RM50 million. You should check for any later revision before final budgeting[12].

Can I hire staff in Thailand before my company is registered?

Generally yes. An employer of record can employ staff under its own Thai company, and you can move them to your own entity later.

Can an engineer on a DTV work at my Thai factory?

No. The Destination Thailand Visa is for remote work for an employer outside Thailand and similar activities and does not permit employment by a Thai employer, which calls for a Non-B visa and a work permit[16]. The Thailand Visa Matcher gives an indicative recommendation, and final decisions rest with the Thai authorities.

About Settlr Global

Settlr Global is the operating arm of WOWS Global, a Singapore-incorporated corporate advisory and investment banking group, and an all-in-one platform for company setup, accounting and tax, payroll, visas and Employer of Record in Thailand. It brings those services under a single team, so founders do not have to coordinate separate local agencies. The platform has processed payroll and compliance work for 200+ clients across 15+ countries, from early-stage startups to established multinational enterprises. Its Employer of Record service lets companies hire in Thailand in about two days, with or without a local entity.

To compare ownership routes, incentives and hiring options for your own project, speak with the Settlr Global team.

References