The Rise of Data Centers: Why Thailand is Becoming a Hotspot for Colocation Services

In today’s digital era, Data Centers are the backbone of our technology-driven world. These physical facilities house and manage vast amounts of computer systems and equipment, serving as the lifeblood of data collection, protection, and maintenance. Among the array of services they offer, Colocation Data Center services are rapidly gaining traction. But what exactly is colocation, and why is it creating a buzz in the business world?

Colocation services provide companies the option to lease space within a provider’s data center to store their servers and hardware. Unlike in-house data management, colocation facilities come with fully equipped infrastructure, including power, cooling systems, security, and a dedicated technical team to ensure smooth operations. This service offers a strategic solution for businesses that require robust data management but lack the resources or space to do it themselves.

The Thai Boom in Data Center Demand

Thailand’s data center market is experiencing explosive growth. The surge is driven by the increasing reliance on technology in everyday life and the rapid expansion of tech-related businesses. As more companies embrace digital transformation, the need for reliable and secure data storage solutions becomes paramount.

Why is Thailand becoming a hub for Data Centers?

  • •  Strategic Location: Positioned at the heart of Southeast Asia, Thailand is ideally located to act as a digital gateway to the region.
  • •  Stable Power Supply: Consistent and reliable electricity is crucial for data center operations, and Thailand meets this requirement effectively.
  • •  Government Incentives: The Thai government, through the Board of Investment (BOI), is actively offering attractive incentives to lure businesses into this burgeoning sector.

Opportunities for Entrepreneurs

For entrepreneurs looking to tap into Thailand’s burgeoning data center industry, several key factors should be at the forefront of their strategy:

  • •  Infrastructure: Ensuring top-notch facilities with high levels of security and efficiency.
  • •  Compliance: Staying updated with Thai regulations and BOI incentives.
  • •  Market Trends: Keeping a pulse on the growing tech landscape and evolving data management needs in the region.

Thailand’s burgeoning role as a data center hub presents a golden opportunity for businesses looking to expand their digital footprint in Southeast Asia. With the right approach, entrepreneurs can leverage this momentum to establish themselves as key players in a thriving market

For entrepreneurs to operate a Data Center in Thailand, the following key details are important to consider:

1. Laws and Regulations

1.1 License and Permits

Data Center business fall under Telecommunications Business Operation Act B.E. 2544 (“Telecommunications Act”) which is under the authority of the Office of the National Broadcasting and Telecommunications Commission (“NBTC”). According to Section 7 of Telecommunications Act, the telecommunication businesses are categorized into 3 types of licenses:

Type One license Type Two license Type Three license
Does not have his or her own telecommunication network Does not have his or her own telecommunication network Have his or her own telecommunication network
Provide services on the basis of liberalization Provide services for a limited group of people or has no significant impacts on free and fair competition or on public interest and consumers Provide services to a large number of general public or may have significant impacts on free and fair competition or on public interest or requires special consumer protection

Since the Data Center business does not require its own telecommunications network and operates based on liberalization principles. Therefore, Data Center business is required to obtain a Type One license under the Telecommunications Act.

The qualifications for obtaining a type one license shall be as follows;

  1. 1) the applicant shall not be a bankrupt;
  2. 2) the applicant shall never have a telecommunications business license revoked;

1Telecommunications business operation act B.E. 2544 section 4.
“Telecommunication network”, means the set of telecommunications equipment which is directly connected or connected through switching equipment or any other equipment for telecommunications between defined termination points by means of any wire, radio-frequency spectrum, optical, or any other electromagnetic systems or a combination thereof;

  1. 3) the directors, managers, or persons in authority of the applicant shall not be a person sentenced by a final judgment for an offense committed under this Act, or under the law on telegraph and telephone, the law on radiocommunication, or the law of consumer protection during 2 years period prior to the date of submitting the application.2

To operate the Data Center business, the owner must pay government fees to obtain and renew the business license, as well as an annual fee. The annual fee is calculated based on the yearly income before deduction expenses. For businesses with a Type One license, the fee ranges from 0.25% to 1.5%, depending on their annual income.

Once the business license is obtained, the business owner is required to commence operations within 1 year from the license issuance date. Additionally, the business must submit a performance report to NBTC every 3 months until services begin.

Upon commencing operations, the business owner must submit an annual report, which includes key details such as start and end dates of operations, financial statements, number of customers, business plan, and other information as specified by NBTC.

Furthermore, any changes to the business, such as the changes of a company name or address, the director, or shareholders that could affect the company’s status converting into a foreign-owned entity, must be promptly reported to the NBTC.4

1.2 Foreign Shareholder

Although the Type One license does not impose specific regulations related to foreign shareholder, the company which is not Thai company is still subject to the Foreign Business Act B.E. 2542.

The company that is not registered in Thailand or the company that is registered in Thailand with foreign shareholders holding 50 percent or more of the shares shall be considered as a foreign company and may fall under Foreign Business Act B.E. 2542 (“FBA”). Data Center business is classified as a “services business” under FBA, the company must obtain a Foreign Business License before operating a business.

2. Incentives

2.1 BOI Promotion

2Telecommunications business operation act B.E. 2544 section 8

3Announcement of the National Broadcasting and Telecommunications Commission (NBTC) on the Telecommunications License Fee, December 28, 2012

4Announcement of the National Broadcasting and Telecommunications Commission (NBTC) on the Standard Conditions for Granting Telecommunications Licenses, May 25, 2021

Regarding the Investment Promotion Guide 2024, Data Center business was stipulated in Investment Promotion Division 4, section 8, digital industry. Data Center business has been classified under incentive category A1.

The conditions for Data Center business to apply for BOI are that the equipment and systems must ensure that their equipment and systems are fully prepared and operational. These are some key conditions that are important for entrepreneurs to consider:

  1. 1. the project must provide complementary service for customers located in projects such as server co-location, managed service, customer’s server backup service, disaster recovery service (DRS), Data Hosting;
  2. 2. the project must have a “Continuous Rating” generator, which is capable of supporting the entire electricity needs of the Data Center, with a backup generator that can support the need for electricity when one of the generators does not function properly;
  3. 3. the project must be certified with ISO/IEC 27001 (data center).5

2.2 Benefits for A1 incentives in BOI

  1. 1) Exemption of corporate income tax for 8 years with no cap.
  2. 2) Exemption of import duties on machinery.
  3. 3) Exemption of import duties on raw materials used in R&D.
  4. 4) Non-tax incentives, for example, permit to own land or take out or remitting money abroad in foreign currency.

2.3 Other Promotion

Not only the promotion provided by BOI, but there is another incentive for operating Data Business in Thailand under Royal Decree Re VAT Exempt for Data Center Service No. 759. Business owners who submit their application before November 7, 2570, are eligible for a VAT exemption for Data Center business, which has conditions as follow;

  1. 1) it is Thai company or registered under the law of Thailand;
  2. 2) the company that had been registered VAT;
  3. 3) the company which has been promoted under the Competitiveness Enhancement for Target Industries Act B.E. 2560;6
  4. 4) the business owner of Data Center who has not claimed the purchase tax related to the Data Center to deduct it from the sales tax in their VAT within 3 years prior to the tax payment month or submission of the application under section 2.

5Investment Promotion Guide 2024, page 118, 119

6Decree no. 759 B.E. 2565, section 4

7Announcement of the Director-General of the Revenue Department Regarding Value Added Tax, No. 251, May 16, 2023

Please note if the operators apply for VAT exemption for the Data Center business, they will not be able to claim the purchase tax of VAT.

Conclusion

As the technology sector continues its rapid expansion, the Data Center business emerges as a compelling opportunity for entrepreneurs. With increasing data demands, businesses are turning to robust solutions like colocation services to manage their digital assets efficiently.

Thailand, with its strategic location, reliable infrastructure, and attractive incentives, stands out as a promising destination for data center investments. The government’s support, including income tax exemptions and VAT exemptions, further enhances the country’s appeal, making it an ideal spot for entrepreneurs to establish or scale their ventures.

For businesses eager to dive into this thriving industry, ILAW ASIA offers expert legal counsel to navigate the complex regulatory landscape. We are a one-stop service for legal consultation, providing a comprehensive range of services tailored to the Data Center business. Our expertise includes:

  • •  Company Setup
  • •  Corporate Structure Planning
  • •  Joint Venture Agreements
  • •  NBTC License Applications
  • •  BOI and Foreign Business License
  • •  Lease Agreement Reviews
  • •  Data Center Colocation Service Contract Reviews
  • •  Construction Contracts for Data Centers

We ensure your business stays compliant and competitive, helping you seize opportunities without legal hurdles. Partner with us, and let’s grow your business in Thailand’s dynamic and evolving data center market.
Announcement of the Director-General of the Revenue Department Regarding Value Added Tax, No. 251, May 16, 2023

Author

Tanadee Pantumkomon, Partner;

Wachinorot Siladet, Associate; and

Avika Kanjanakul, Associate.

by wris

Unlocking Opportunities in Senior and Dependent Care Businesses

According to Thailand’s National Statistical Office, the country officially entered the status of an “aged society” in 2024. This aligns with a global trend highlighted in a United Nations report, which underscores the increasing size and proportion of older individuals in populations worldwide.
As a prominent health and wellness hub, Thailand has experienced growing demand for health-focused services. To address this societal shift and tap into emerging opportunities, the government has introduced attractive incentives aimed at supporting the evolving needs of its aging population. These measures are designed to unlock potential in adapting to demographic changes while attracting investors to high-growth sectors such as senior and dependent care businesses.
The key details of these initiatives are outlined below:

1. Licenses
Senior and dependent care businesses, including day care centers, residential homes, and nursing homes, fall under the legal definition of the “Business of Caring for the Elderly or Dependent Persons” (collectively referred to as the “Business”). Operating such businesses requires a license, as stipulated by the Health Business Establishments Act B.E. 2559 (2016) and its amendments.
These businesses are further regulated under the Ministerial Regulation on the Specification of the Business of Caring for the Elderly or Dependent Persons as a Health Business Establishment B.E. 2563 (2020) (the “Ministerial Regulation”).
The Ministerial Regulation classifies this Business into three distinct categories, as outlined below:

No. Categories Criterion
1. Day Care : The business that provides day care services for the elderly or dependents, with activities to care for, promote and rehabilitate 
the health of the elderly or dependents without overnight stays.

2. Residential Home : The business that provides services for the elderly, including activities to promote and rehabilitate the elderly by providing a place to stay.
3. Nursing Home : The business that provides care and support of the elderly 
or dependents, including activities to care for, promote and rehabilitate the health of the elderly or dependent persons, with overnight stays.

For each category, business owners must adhere to specific requirements, such as implementing enhanced safety measures for businesses offering overnight accommodations or residential services. Licensing costs also vary depending on the type of service provided and the size of the service area, which is calculated based on square meters.

To obtain the required license, applicants must submit an application form to the Health Service Support Center under the Department of Health Service Support, Ministry of Public Health.

2. Additional Requirements for Foreign Companies
Under Thailand’s Foreign Business Act B.E. 2542 (1999) (the “FBA”), a company incorporated under a foreign law or a company incorporated under Thai law with foreign shareholders holding 50% or more of the shares is classified as a foreign company.
The business of health care is categorized as a business under List 3 of the FBA, in which a foreign company must obtain authorization from the Foreign Business Administration Division, under the Department of Business Development (DBD), Ministry of Commerce (MOC).

3. Business Incentives

  1. 3.1 Specific criteria on the Senior and Dependent Business
    The incentives by the Board of Investment (the “BOI”) are outlined in the Announcement of the BOI No.9/2565, setting the criteria for entities operate the senior or dependent care business, as detailed below:

    No. Criteria Details
    1. Nationality Must have Thai national shareholders holding 51 percent or more of its registered capital.
    2. Compliance Must be a business focused on caring for the elderly or dependent persons.
    3. Capacity Must have 31 or more beds for overnight stays of admitted patient.
    4. Activity Must provide care and support for senior/dependent persons by allowing overnight stays and offering rehabilitation activities*
    5. License Must obtain license to operate a health business establishment 
before exercising the incentive, and before the full operation deadline.
    6. Minimum Investment Must have minimum capital of investment not less than 1 million Baht (excluding costs of land and working capital)

     

  2. 3.2 Benefits

    The entities being granted BOI incentives under the criteria are entitled to enjoy the benefits granted as follows:

    No. Categories Details
    1. Corporate Income Tax An exemption on the Corporate Income Tax for 3 years.
    2. Import Duties An exemption on the import of 1) machinery, 2) raw materials used in R&D, and 3) raw materials used in production for export.
    3. Non-tax Incentives Such as permits for owning land, permits to bring skilled persons and experts to work, visa and work permit benefits, etc.

 
In conclusion, as one of the world’s aging societies and a renowned global health and wellness destination, Thailand has experienced a growing demand for health-focused and well-being services. To support this trend, the government, through the Board of Investment (BOI), offers attractive incentives, including corporate income tax exemptions, reductions in import duties, and various non-tax benefits, specifically targeting high-potential sectors such as senior and dependent care businesses.

While foreign companies face additional operational requirements and are currently ineligible for BOI incentives due to structural restrictions, they still have opportunities to enter this promising sector. Operators must also comply with a range of licensing and legal obligations, including obtaining health business licenses and adhering to stringent safety and waste management regulations.

Despite these challenges, the senior and dependent care business sector presents significant investment potential in Thailand, underpinned by the country’s demographic trends and strong health and wellness reputation.

For businesses in the senior and dependent care sector, ILAWASIA provides expert legal advice and comprehensive regulatory support to ensure compliance and help clients capitalize on emerging opportunities in this dynamic industry. Let us be your trusted partner in navigating the evolving legal landscape and driving the success of your business.

Author:

Tanadee Pantumkomon, Partner;

Thanaphorn Kaewsukko, Associate; &

Kornkod Suk-aram, Associate.

by wris

ILAWASIA listed as ALB Fastest Growing Firms 2024.

“ILAWASIA Recognized as One of ALB’s Fastest Growing Firms 2024”

ILAWASIA Co., Ltd. is proud to be listed among the Fastest Growing Firms 2024 by Asian Legal Business (ALB). This recognition highlights our consistent growth, innovative approach, and unwavering commitment to delivering exceptional legal services across Southeast Asia.

The ALB Fast 30 list celebrates law firms that have significantly influenced the future of the legal industry in Asia, standing out as leaders in an increasingly competitive and dynamic market.

We extend our gratitude to our clients, partners, and dedicated team for their trust and contribution to this remarkable achievement. As we continue to expand and innovate, we remain committed to excellence in meeting the evolving needs of our clients in a dynamic legal landscape.

Source : https://www.legalbusinessonline.com/sites/default/files/e-magazines/ALB-ASIA-NOVEMBER-2024/

#ILAWASIA #ALB #ALBFast30 #FastestGrowingFirms2024 #AsianLegalBusiness #LegalExcellence #GlobalRecognition

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2025 Minimum Wage for Workers in Garment, Textile, Footwear, Travel Goods, and Bag Sectors under the Cambodian Minimum Wage Law

Overview:
      Article 4 of the Law on Minimum Wage, enacted on July 6, 2018, states that the minimum wage is determined by a PraKas from the Minister of Labor. On September 20, 2024, the Ministry of Labour and Vocational Training (MLVT) issued Prakas No. 221/24 ក.ប/ប្រ.ក.ខ.ល on determining the minimum wage for workers in the garment, textile, footwear, travel goods, and bag sectors, which will be effective from January 1, 2025. Any conflicting provisions of this Prakas are void.

Key provisions:
     The previous minimum wage was $202 per month for probationary workers and $204 for regular workers, according to PraKas No. 283/23 ក.ប/ប្រ.ក.ខ.ល issued on September 29, 2023. Recently, in accordance with the Article 2 of Prakas No. 221/24 issued on September 20, 2024, by MLVT, workers in the garment, textile, footwear, travel goods, and bag sectors, will receive the following minimum wages:
    1- For probationary workers is at $206 per month. At the end of the probationary period and became a full-time worker, the minimum wage shall increase to $208 per month.
    2- For regular workers, the pay rate is based on production level. If this results in a rate above the minimum wage, workers receive the higher amount. If it falls below the minimum wage, the employer must adjust pay to meet the minimum wage ($206 per month for probationary workers and $208 per month for regular workers).
    Other benefits for workers in the garment, textile, footwear, travel goods and bag sectors remain unchanged, including a transportation or accommodation allowance of $7 per month, an attendance bonus of $10 per month, a meal allowance for overtime working of $0.50 or one free meal, and a seniority bonus of $2 to $11 per month for workers with 2 to 11 years of services.

Penalties:
    Under Article 24 of the Law on Minimum Wage 2018, employers who commit any of the following violations can be fined up to 40,000,000(forty million) Riels:

  •  the wage must be at least equal to the minimum wage set by a PraKas of the Minister of Labor .
  • any agreement, written or oral, requiring wages below the legal minimum is null and void .
  • in subcontracting or wage-based work, skilled workers should earn at least the guaranteed minimum wage. Workers who paid by the quantity of product must be paid based on their actual output. If their earnings exceed the minimum wage, they receive the extra. If it’s less, the employer must top it up to meet the guaranteed minimum wage .
  • all workers covered by this law must be paid equally for the same work, skills, and conditions, regardless of origin, gender, or age .

Conclusion:
    In conclusion, Article 4 of the Law on Minimum Wage establishes that the minimum wage is determined by a PraKas from the Minister of Labor. As of September 20, 2024, the Ministry of Labour and Vocational Training has set new minimum wages for workers in the garment, textile, footwear, travel goods, and bag sectors, effective January 1, 2025. Probationary workers will earn $206 per month, increasing to $208 upon full-time status, while regular workers’ pay is based on production levels, with provisions to ensure it meets the minimum wage. Additional benefits for these workers remain unchanged, and strict penalties are imposed for violations of the minimum wage laws, emphasizing the importance of fair compensation regardless of a worker’s origin, gender, or age.

Article 4 of the Law on Minimum Wage 2018.
Ibid., Article 6 Paragraph 1.
Ibid., Article 7.
Ibid., Article 8.

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Thailand has started Issuing Local Trademark Certificates for International Registrations (IR) Designating Thailand

Thailand has started Issuing Local Trademark Certificates for International Registrations (IR) Designating Thailand

Since Thailand joined the Madrid Protocol in 2017, the process for international trademark registrations (IR) has become more streamlined. However, a technical issue at the Thai Trade Mark Office (TMO) caused delays in issuing local registration certificates for IRs designating Thailand. The TMO has now resolved this issue and started issuing local registration certificates for IRs designating Thailand, marking an important development for brand owners who have been awaiting official confirmation.

For years, the TMO had committed to issuing local certificates following the World Intellectual Property Organization’s (WIPO) statement of grant but provisional refusals concerning goods and services specifications caused delays. The good news is that, as of August 2024, the TMO has resolved the technical issues, and the office began issuing certificates in early September 2024.

The TMO is now working through the backlog, starting with applications filed in 2017 and 2018. For IRs that did not face provisional refusals, certificates are being processed subsequently. This development provides long-awaited relief for brand owners waiting for their official registration certificates in Thailand.

Looking Forward

As the TMO works through the remaining backlog, brand owners are encouraged to review their portfolios, especially IR designations affected by provisional refusals. This step marks a positive shift in Thailand’s trademark registration process, offering greater clarity and efficiency for international trademark applicants seeking protection in the region.

We encourage brand owners to stay updated on these changes and reach out if they need support with their portfolios.

Authors

  • Somphob Rodboon, Managing Partner
  • Thanapha Phetkeereeskul, Senior Associate

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Somphob Rodboon, recognized as Trademark Star 2024 by Managing IP

Somphob Rodboon, Managing Partner of ILAWASIA Co., Ltd., has been recognized as a Trade Mark Star in 2024, as surveyed by IP Stars of Managing IP.

This prestigious recognition highlights his exceptional expertise and leadership in the field of intellectual property, particularly in trademark law. Somphob’s dedication to delivering high-quality legal services continues to strengthen ILAWASIA’s reputation as a leading law firm in Southeast Asia.

by wris

ILAWASIA ranked in the Asia M&A Rankings 2024

ILAWASIA Co., Ltd. is honored to announce that our head office has been recognized as one of the Notable Firms in the Asia M&A Rankings 2024, as surveyed by Asian Legal Business (ALB). This prestigious recognition, featured in the September 2024 issue of ALB both online and in print, places us among an elite group of 25 global, regional, and local firms in Thailand, spotlighting our expertise and leadership in the field of Mergers & Acquisitions.

This achievement underscores our unwavering commitment to delivering excellence in legal services, particularly in the dynamic and high-stakes area of M&A transactions. Over the years, ILAWASIA has built a strong reputation for guiding both local and international clients through complex mergers, acquisitions, and corporate restructuring deals. We take great pride in providing bespoke legal solutions that address our clients’ strategic business objectives while navigating the intricate regulatory landscapes across various jurisdictions.

As one of the leading legal service providers in the M&A practice area, this recognition not only highlights our technical expertise but also reflects the dedication of our talented team, who continuously strive to uphold the highest standards of service. Our focus on client success, innovation, and cross-border collaboration remains at the core of our practice.

We extend our deepest gratitude to our clients, partners, and colleagues for their continued trust and support. This recognition reinforces our determination to further enhance our services and remain a trusted advisor in the M&A sector. We look forward to continuing to lead the way in delivering impactful and innovative legal solutions for businesses operating in Thailand and across the region.

At ILAWASIA, we are driven by our vision of being a leading force in the legal industry, and this recognition is a milestone in our journey toward shaping the future of legal practice in Thailand and beyond.

Source : https://www.legalbusinessonline.com/features/alb-asia-ma-rankings-2024 

More details on our M&A service : https://ilawasia.com/service/#m-and-a

#ILAWASIA #MergersAndAcquisitions #LegalExcellence #ALBRankings2024 #LegalLeadership #ThailandLegal

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ILAWASIA Joins ICLA Network as Official Firm for Thailand Jurisdiction

ILAWASIA Joins ICLA Network as Official Firm for Thailand Jurisdiction

[Bangkok, Thailand, 20 August 2024] — ILAWASIA is pleased to announce its official listing as one of the network firms for the International Commercial Law Alliance (ICLA) in the Thailand jurisdiction. This significant development enhances our firm’s global reach and strengthens our ability to provide exceptional legal services in the region and global.

The inclusion of ILAWASIA in the ICLA network underscores our commitment to excellence and our strategic growth within the international legal community. Our firm’s expertise and dedication align seamlessly with ICLA’s mission to offer top-tier legal support across various jurisdictions

For further details on our listing, please visit the ICLA Thailand Locations page at this link : https://icl-alliance.com/locations/asia/thailand/

ILAWASIA looks forward to leveraging this affiliation to deliver even greater value to our clients and contribute to the ongoing success of the ICLA network.

#ILCA #Collaboration

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Litigation Star

The Firm is delighted to announce that our Managing Partner, Somphob Rodboon, has been recognized as a Litigation Star for the Thailand jurisdiction by Benchmark Litigation. This prestigious accolade positions him among the top 35 practitioners in Thailand.

The Firm is profoundly honored by his achievement, which underscores our dedication to excellence, expertise, and delivering exceptional legal services to our clients. This recognition motivates us to maintain the highest standards of professionalism and performance in the field of litigation.

The Firm extend our gratitude for this acknowledgment and remain committed to serving our clients with distinction.

by wris