Factory Due Diligence

Factory Due Diligence

After the COVID-19 pandemic, there was a considerable increase of fraud cases in Thailand. Due to the pandemic, a lot of companies and suppliers overseas considered getting their supplies from Personal Protective Equipment (PPE) manufacturers in Thailand. There are a lot of PPE manufacturers in Thailand, but only a few are registered and recognized and are practising safe transactions.  Fraud cases related to transactions between companies from overseas and companies in Thailand have constantly been increasing since 2020. Many new Thai companies have been involved with fraud cases related to medical masks and gloves (particularly nitrile gloves that are commonly used for medical purposes).  At Juslaws & Consult, we have handled numerous fraud cases over these past years, and we can attest that such cases can be avoided if you only take precautionary measures before your transaction. For transactions with factories and manufacturers not only in Thailand but in other countries, you must make sure that you hire professionals to proceed with Due Diligence.

The Process of Factory Due Diligence

Juslaws & Consult usually performs factory due diligence revolving around the concept of legalities in Thailand. Manufacturers of gloves, masks and other types of PPE in Thailand are usually situated in the outskirts of Bangkok, Chonburi, and Rayong provinces. Factory Due Diligence is usually conducted by visiting the actual site of the factory and checking at the relevant government offices regarding the legalities of the factory, such as certificates, permits, and the company formation documents, according to the Factory Act.  Juslaws and Consult's Factory Due Diligence involves digging deep into the information concerning the factory, be it case records of the company or its directors and shareholders, to make sure that there are no pending or current cases related to any transactions of the company, or checking if any and all certifications and presented documents of the factory is legitimate or fake, and many more.  Our Factory Due Diligence further checks the legitimacy and authenticity of the products and transactions of the company and goes as far as checking every aspect of the company or factory's transactions.

Benefits of Factory Due Diligence

Factory due diligence serves the crucial purpose of ensuring quality assurance in transactions, providing peace of mind and safeguarding against potential financial losses due to fraud. As highlighted earlier, prioritizing expenses related to factory due diligence is imperative for avoiding scams and conducting business confidently. In Thailand, factory due diligence offers three main benefits:

  • Assurance - Due diligence will validate the legality and authenticity of the factory or company you are dealing with. Nothing is better than comfort and trust when it comes to million-dollar transactions.
  • Reliability - Similar to assurance, the factory due diligence will also determine whether the factory or company is reliable with their service and with their product and to make sure that their claims (if any) and true.
  • Security - Of course, the main purpose of due diligence is security. If you have heard or read about the scams and fraud cases not just in Thailand but around the world related to PPE’s, chances are that they have trusted the company or factory too much and were relying on what they were told instead of checking further.

Types Of Factories

A factory is described as any site that uses machinery of five or more horsepower and employs seven or more workers with or without the involvement of machinery.Factory operations in Thailand differ in their factory license requirements based on their output, size, pollution probability, and the extent of environmental protection concerns. A factory business is regulated by the Ministry of Industry and classified in accordance with the Factory Act under Thai ministerial regulations. The following categories describe various factories:

Factories That Don't Require a Factory License
Not all factories are required to submit a factory license application to the Provincial Industrial Office. A factory building that makes use of factory equipment and factory machinery using between 5 and 10 horsepower or has over seven but less than twenty employees does not require a factory license.

Factories That Are Required To Notify The Ministry Of Industry Before Operating
Factory operators that have to notify the government officials before commencing factory operations do not need a factory license if they implement machinery equivalent to 20 to 50 horsepower or that employ between 20 and 50 employees.

Factories That Require A Factory License
Business operations that result in pollution and utilise factory machinery of over 50 horsepower and where over 50 employees participate in the manufacturing process require a factory license from the Department of Industrial Works. The license must be acquired before operations commence.

Requirements For A Factory License: Thailand

A factory in Thailand must comply with ministerial regulations. Factories that fall into category one or two are required to be situated more than 50 meters away from hospitals, schools, temples, and government offices, whereas category three factories have to be over 100 meters away from nearby premises operated or owned by government agencies for national security or safety purposes.

License Application and Timeframe
To acquire a factory license, the applicant's company is required to submit the following documents:

  • The company affidavit
  • The completed application form.
  • The complete plan related to the factory building layout indicating any factory construction that will occur on the factory premise, and any plans relating to factory expansion, which must be certified by a professional engineer or, alternatively, a person designated by the Ministry of Industry
  • A detailed written explanation of all the safety measures that will be implemented. The explanation has to include measures relating to nuisances, potential damage, waste control, danger, pollution, and any other environmental implications the production process with raw materials causes or produces pollution.
  • A plan displaying the factory equipment, which has to be certified by a professional engineer or a person designated by the Ministry of Industry.

The application for a factory license has to be submitted to the Provincial Industrial Office. If the application is approved, a government agent, or a private party, will visit and investigate the site and evaluate the structure, composition, and pollution control measures.

A report will be prepared by the government agent and submitted to the Office within thirty days after the application is received. The government officials will consider the license application and, according to the Ministry's discretion, will either be rejected or granted. Within this timeframe, the factory operator can still alter the application or factory plan.

The license granted is a personal license. For this reason, if the factory were to be transferred or leased to someone else, a new licence must be requested.

License Renewal

A factory license in the Kingdom is valid for five years. A fee of THB 100,000 is payable upon the renewal of the application. If a license application is submitted within sixty days after the expiration date, the application will be processed just as any other renewal, but a fine of THB 20,000 will be payable. After 60 days of the expiration date, the application will be handled as a new application.


Juslaws & Consult is known for its intricate and detailed due diligence service. Our goal whenever we do due diligence for our clients is to make sure that we provide them with the best details and information they require and to make sure that their interest is our top priority.

Performing a factory due diligence may be a time-consuming process; however, at Juslaws and Consult, we make sure that it is worth the wait. You can be assured that our due diligence service is at the highest standard.

If you need a consultation or if you need more detailed information about our Factory Due Diligence Service, do not hesitate to contact us. Our team of professionals is ready to assist you and proceed with the due diligence process anytime.