Executive Dinner Talk
European Association for Business and Commerce
Ease of Doing Business and Transparency Upgrade:
Thailand’s Facilitation Act
9th June 2015
Mr. Pakorn Nilprapunt
Full-time Law Councilor
Office of the Council of State
His Excellency Professor Dr. Visnu Krue-Ngam,
His Excellency Ambassadors,
President of the European Association for Business and Commerce,
Members of the European Association for Business and Commerce,
Ladies and Gentlemen,
 First of all, I would like to present my special thanks to the European Association for Business and Commerce (EABC) and all EABC staffs for the industrious and very impressive effort to organize this dinner talk this evening. I would also like to thank His Excellency Professor Dr. Visnu Krue-Ngam who allows me to introduce to all of you on his behalf the works of the Royal Thai Government on the ease of doing business in Thailand; particularly to the Licensing Facilitation Act and our steps forwards. I shall do my best to make it clears within a very short but invaluable period.
 His Excellency, Ladies and Gentlemen, the Royal Thai Government profoundly aware that free and fair competition, market openness and ease of doing business will lead our country to sustainable and inclusive growth. As a member of WTO, APEC and ASEAN, Thailand upholds the principles of non-discrimination, free and fair competition and market openness. The past governments spent their best efforts to be in line with those principles and to create fundamental structure and attractive environment for business. Nevertheless, the unease of doing business in Thailand and corruption are outcry by both local and foreign businessmen through the past years. The question is why? Why Thailand is unable to come across this hurdle?
 When the current government as led by the Prime Minister General Prayut Chan-o-cha took office last year, the top priority agendas that the government pays serious attention to; other than national peace keeping, constitution drafting, reconciliation and counter corruption, is an increasing of Thailand National Competitiveness.
 To lift up the national competitiveness of the country, the government starts directly with the problem on the ease of doing business which has been complained by investors for very long time. The objective of the government is to override this problem within the Road Map of the government as declared to the public. The government has also realised that this problem comes along with the problem on transparency of laws and regulations as well as law enforcement of government officials which will finally lead to another big issue; that is to say, corruption.
 If no precise and immediate actions have been taken against these problems, Thailand may no longer be an attractive place for investors anymore and we shall gain nothing from trade liberalisation.
 The government then entrusted the Law Reform Commission of the Office of the Council of State as you may know well in Thai as “Krisdika” to do research on this matter and propose the best solution against those problems to the Council of Ministers for further action.
 The Law Reform Commission, as I will call this Commission hereinafter shortly as the LRC which is now chaired by His Excellency Meechai Ruchuphan, the former Speaker of the National Assembly, found that under the principle of the Rule of Law, the backbone of State’s administration is laws and regulations. The LRC set up hypothesis that perhaps legal mechanism of the existing laws and regulations themselves are the fundamental grounds of the problems on the ease of doing business and transparency in Thailand.
 The empirical evidence which supports the presumption of the LRC on impact of laws and regulations on the ease of doing business and transparency are Global Competitiveness Report of the World Economic Forum and IMD’s World Competitiveness Yearbook. According to those reports, it appeared to the LRC that while other indicators were getting better, the indicators on burden of government regulations and on transparency and corruption are at the middle-low ranking for many consecutive years. These scientific evidences convinced the LRC to believe strongly that laws and regulations are hurdles for the ease of doing business and transparency in our country.
 The LRC then started the tough research. It studied more than 650 Acts of Parliament which is still in force today and also the bills which had been submitted to the current Cabinet one by one. The result of this study was interesting! About 90 percent of Thai legislations, even the bills proposed at the time being, based on the close government control system. That means almost all activities of the people, especially businesses activities are subjected to licensing!!
 In the LRC view, the close government control system was fashionable style of laws and regulations during the 50s to the 70s. This system was used generally around the globe while an international trade was in the protectionism era. But, the world legal concept had passed this post and went to deregulation in the 80s, to better regulations in 2000s and is at better regulations for better lives nowadays.
 The LRC found that the close control of government through licensing is not friendly with trade liberalization environment of the world today. Under this system, the power to grant permission or license has been delegated by the Legislatives through the Act of Parliament to the authority, and the authority has a very broad discretionary power in granting of permission or license. Just a few legislations imposed the extent to which the discretional power of the authority should be exercised. In this situation, the granting of each license depends on merit and ethic of the authority solely. Therefore, discretion of different authorities is varieties and produces unpredictable outcome.
 Moreover, the Legislators has also delegated the authority the powers to lay down subordinate legislations determining rules, procedure and conditions for the granting of each license as he thinks appropriate. When dig down deep into substance of each subordinate legislation however, it appears to the LRC that almost all subordinate legislations were made to ease the performance of their powers and duties rather than public facilitation. The LRC found that the cost-benefit and cost-effectiveness relationship as well as public consultation has never been taken into consideration for the issuance of the subordinate legislations.
 One of an inconvenience truth is that both Acts of Parliament and their subordinate legislations have a little bit change once they have been enacted! This matter relates to the attitude of the officials that they fear of change. As a result, the provisions of Thai laws and regulations seem to be static rather than dynamic as they should be. This is critical situation because it could be presumed that most of Thai laws and regulations may not be responsive to the current situation of the world. If the trust in Thai legal system has declined, investment in Thailand may be diminished little by little.
 Another disappointed finding is that almost all authorities do their works without collaboration with the other, even within the same agency. Working with others in concert manner is something strange in Thailand’s bureaucracy. So, the people as well as investors have to do hard work with their own cost; which is high and may not be estimated, if they want to run their activities or businesses legally! They have to find out by themselves which authority is responsible for the activity or business they want to do, where such authority is located and what are documents to be used for the application for license or permission? Further, the work flow and duration for the granting of license of each authority is not opened to public. The people and investors therefore do not know when the license is to be granted or even rejected, how long do they have to wait for? This situation is not comply with the nature of doing business and the principle of transparency. It causes unnecessary administrative burden as well as unnecessary compliance and administrative costs to the people and investors and being stairways to corruption and bribery of the corrupted officials.
 For foreign investors, the problem is more critical than the problem faced by local investor, without regard to their nationalities. As you may know well, only a few Thai legislations have been translated into other languages. So, in the view of the investors who never make investment in Thailand before, this situation is similar to running in the land mine field. Risks are all around! The LRC is therefore of opinion that this problem is significant barrier to market openness. If Thailand wants to turn on the light of transparency; especially for foreign investors, and to open the door to welcome foreign investors, all legislations and regulations have to be translated into other languages; especially English which is the official language of ASEAN. According to the EISENHOWER MATRIX, this problem is important, but not urgent because it should take some period of time to produce such translation. The LRC decide to prioritize this problem to the second tier.
 From the aforesaid study, it appeared to the LRC that the close government control is not fit for all activities or businesses, but for the restricted activities or businesses which relates to national security, public order, public health and sanitary or good moral. However, it is not possible to amend the legislation with close government control system one by one because it should take years. If so, what should be done to reach the target on the ease of doing business as soon as possible as required by the government?
 The LRC then turned back to analyze the research once again. This time the LRC found one weak point of Thai licensing problem. As I have said earlier, the granting of license under Thai laws base on discretion of each authority. There was no standard procedure for the granting of license. So, in order to attack this problem directly, the LRC proposed that:
First, the standard procedure for the granting of license shall be set up by the Act of Parliament in which all government agencies have to comply with as an umbrella for all licensing;
Second, such standard procedure must require all authorities having powers and duties in granting any kind of license to disclose to the public by any means, especially on electronic basis, the rules, procedure, conditions, costs and period of time for the applying and granting of license as well as all documents and evidences which shall be submitted altogether with the application for license;
Thirdly, the manual for each licensing composing of the details as I have said in the second proposal shall be published and the public shall enjoy the right to access to such manual easily without charge. But if the individual asks for a printed version of such manual, such person shall have to pay for that at a reasonable cost. The common objective of the second and the third proposal are to strengthen transparency in licensing process;
Fourth, if any official fails to comply with the standard rule and the manual, he must be subjected to disciplinary penalty and may also be subjected to criminal penalty in some cases. This sanction should be imposed as a security of the ease of licensing;
Lastly, each authority shall review the law that empowers him to grant license as to whether such licensing should be improved, repealed or replaced by any other measure every five years with close stakeholders’ consultation. If it is necessary, the authority may conduct the review prior to the completion of such period. This measure is proposed to make laws and regulations become dynamic tool.
 The LRC also proposed that each government agency shall, in rendering licensing facilitation to the public, establish its Service Link Center to accept all applications for licenses, and to provide license-related information as prescribed by the laws related to licensing, under its responsibilities to the public in accordance with the guideline laid down by the Public Sector Development Commission. Additionally, the One Stop Service Center shall also be established as the center for receiving all applications under the laws related to licensing.
 The LRC therefore drafted the Licensing Facilitation bill upon the five principles as aforesaid and submitted to the Council of Ministers for approval. It should be noticed that this bill was one of the first six bills that the government submitted to the National Legislative Assembly once this Assembly had been established. This shows how much the current government care about the ease of doing business and transparency problems. The bill had been approved by the National Legislative Assembly and published in the Government Gazette on the 22nd January 2015. This Act shall come into force at the expiration of 180 days as from the date of its publication in the Government Gazette or on the 21st July 2015.
 Since the National Legislative Assembly passed this Act, the Office of the Public Sector Development Commission (OPDC) and Krisdika which is a secretariat unit of the LRC have set up the joint task force to provide education of this Act to both public and private sectors throughout the country. Further, the preparation procedure as proposed by the two organizations had been approved by the Council of Ministers. According to the work plan, OPDC shall, within the first 60 days, have to prepare an instruction for the making of manual to all government agencies. During the next 60 days, the authorities having powers and duties in granting of license shall make a draft manual and send back to OPDC for examination. The last 60 days shall be the period for publication of manuals. OPDC expects that this plan shall be implemented as smooth as silk. For further information on the progress of the work plan, you may have this from OPDC directly.
 Due to time limit, I shall go directly to the key substance of the Act. Under section 7, if the license to do any act is required by law, the authority shall prepare the licensing manual which at least composes of the rules, procedure and conditions (if any) for the submission of the application, work flow and period of time for the granting of license as well as the list of documents or evidences to be attached with the application, and the submission of the application may be made via electronic method in place of submission by hands if so specified in the manual. All authorities are required to finish and publish their licensing manuals by 21st July 2015.
 The licensing manual shall be exposed at the place for submission of application and shall be disseminated in the website of each government agency. If the individual requests for a printed version of such manual, he has to pay for that at a reasonable price as specified therein.
 In order to ensure that the manual is made appropriately, the Public Sector Development Commission (PDC) shall have the duty under this Act to inspect so to whether the work-flow and period of time for the granting of license as published in the manual comply with the rules and procedure for good public governance or not. If it is of opinion that such work flow or period of time may cause unnecessary delay, unnecessary cost or unnecessary burned, the PDC shall have the duty to submit the proposal for change to the Council of Ministers.
 Further, each government agency shall establish its Service Link Center or SLC to accept all applications for licenses, and to provide license-related information as prescribed by the laws related to licensing, under its responsibilities to the public in accordance with the guideline as laid down by the PDC.
 Another substantial matter of this Act appears in section 8. The Act places the duty to the government official at the front desk to examine the completeness of the application and its attached documents or evidences. If the submitted application has any defect or the attached documents or evidences do not fulfill the requirements, he shall suggest the applicant to fix it or fill it up at once. In the case where the defect or the requirements could be fixed or fulfilled instantly, he shall notify the applicant to do so forthwith. If the fixing of defect or the fulfilment of the requirement could not be done at that moment, the government official shall make a record of such defect or the requirements to be fulfilled as well as the period of time in which those have to be fixed or fulfilled. In this regards, the government official and the applicant shall sign their names on that record, and the government official shall deliver a copy of that record to the applicant as evidence. This evidence is very important for the applicant if he want to bring the case against the official.
 If the application and the attached documents or evidences submitted by the applicant is complete as specified in the licensing manual for the public, or the application has been fixed or the documents or evidences has been fulfilled as suggested by the government official or as appeared in the aforesaid record, the government official shall not be able to call for any other documents or evidences and shall not refuse the application on the ground of defect of the application or of insufficient documents or evidences, except where such ground arising from the negligence or dishonest in the performance of duties of the government official and the granting of license is unable to be made. In this case, the authority may have an order as he think fits, but he shall bring disciplinary action or bring a charge against all relevant government officials without delay.
 In the case where the applicant fails to comply with the suggestion of the government official or the record made under section 8 as mentioned above, section 9 provides that the government official shall return the application to the applicant and shall clarify in writing the ground of such return altogether. In this case, the applicant has two choices. Firstly, he may appeal against the return of the application in accordance with the law on administrative procedure. Alternatively, he may submit the new application.
 After receiving the application, the authority is required by section 10 to finish his consideration within the period as specified by the licensing manual and shall then notify the result thereof to the applicant within seven days as from the date he finishes the consideration. If the authority is unable to finish his consideration, he shall clarify in writing the ground of delay to the applicant every seven days until finish. In this case, he shall submit a copy of such written clarification to the PDC every times. If the PDC is of opinion that such delay is caused by unreasonable ground or by inefficiency of the authority or the related government agency, the PDC shall report to the Council of Ministers together with the recommendations to strengthen the efficiency of such agency. If the authority fails to make a clarification as I have said, it shall be deemed that such authority commits or omits the commission of an act which causes damages to other persons and he shall be liable to such damage; provided that, the failure to do so caused by force majeure.
 Another notable point of this Act is section 13. This section places the duty to the authority to impose the rules and guidelines for monitoring business or activity of the licensee as to whether it complies with laws related to licensing, and the authority shall have the duty to conduct examination in compliance with those monitoring rules and guidelines. If it appears to the government official himself or upon any complaint that any activity or business of the licensee causes nuisance or damage to another, there shall be the duty of the government official to conduct investigation and to shall have to take any appropriate action under his powers and duties to stop such nuisance or damage at once. Failure to do so is deemed to be the omission of official duties as prescribed by laws.
 Further, section 14 empowers the Council of Ministers to propose the Royal Decree to establish the One Stop Service Center or OSSC to be the center for receiving all applications under the laws related to licensing. Once the OSSC has been established, if the laws related to licensing or rules issued under those laws prescribe that the application, documents, evidences or fees shall be submitted at any place, if they are submitted to the OSSC, it shall be deemed that that application, documents, evidences or fees is submitted legally under those laws or rules.
 At this moment, the OPDC in cooperation with the Electronic Government Agency (Public Organization) is studying for the best solution and appropriate electronic platform for the establishment of OSSC. I would say that the NSW Business Licensing Information Service or BLIS of the New South Wales Government of Australia and Service Canada are our role models for development of our OSSC.
 Additionally, every five years as from the date the Licensing Facilitation Act comes into force or as from 21st July 2015, each authority is required by section 6 to conduct review the law that empowers him to grant license as to whether such licensing should be repealed or replaced by any other measure. If it is necessary, the authority may conduct the review prior to the completion of such period. When finish, the authority shall submit the report of the review to the Council of Ministers for consideration. In this regards, the Council of Ministers shall have to take recommendation of the LRC into its consideration as well.
 However, please note that the Licensing Facilitation Act of 2015 shall not apply to the followings:
(1) the National Assembly and the Council of Ministers;
(2) the Court’s rules, procedure and judgment and the performance of duty of the official in accordance with civil procedure and the execution of, and deposit in lieu of the performance in, any civil case;
(3) the execution under the criminal procedure;
(4) the licensing under the law on natural resources and environment;
(5) the licensing related to military strategic operation, including the law related to arms control and private armory;
(6) any activity or agency which shall be prescribed by the Royal Decree.
 Despite there are some activities or acts which have been exempted from the compliance with this as above mentioned, the Council of State has just given recommendation to the Council of Ministers that the measure under this law should be applied to the greatest extent because it enhances transparency in public governance and easing business of both local and foreign investors. If the Council of Ministers agrees with the said recommendation, just a few matters shall be exempted from this Act.
 For more details of the Licensing Facilitation Act, you can download the English translation of the Act for the English page of the OPDC website at www.opdc.go.th and the blog lawdrafter.blogspot.com which is my own blog.
 Apart from the Licensing Facilitation Act as mentioned above, the LRC has proposed the Sunset Law to the Council of Ministers for approval. This Royal Decree requires each Minister having charge and control of each Act of Parliament to conduct review all laws and regulations under his responsibility every five years. This is the ex post evaluation of legislations so as to make all laws and regulations to be compliance with the dynamic world. The review shall be conducted with close consultation with stakeholders and the report of such review shall be disclosed to public and shall also be tabled to both the Council of Ministers and the both Houses for consideration in accordance with public participation and open government doctrine. A Minister who fails to comply with the duties under Sunset Law shall be regarded as willful omission of the performance of his official duty and shall be the ground for recall from office under the organic law on Counter Corruption Commission and shall also be the ground for criminal liability under section 157 of the Penal Code. Moreover, the Sunset Law requires all government agencies to take and publish an English translation of all laws and regulations under their responsibilities to create investors’ friendly environment and transparency.
 In addition to the enactment of the Licensing Facilitation Act and the Sunset Law as I have mentioned, the present Government is going to improve the Regulatory Impact Analysis or RIA to comply with the Good Regulatory Practice or GRP of ASEAN and APEC and to strengthen capacity of officials in doing RIA so as to improve quality of legislation, to ease of doing business and to make business-friendly environment in Thailand.
 The LRC fully wish that if the Licensing Facilitation Act, the Sunset Law and the RIA have been implemented in full force with strong support and collaboration of both public and private sectors, the national competitiveness of Thailand shall be better than the present position. The LRC is going to use the ranking of Thailand on 3 pillars; that are, the ease of doing business, burden of government regulations and corruption in both WEF and IMD indexes as the key performance indicators for the achievement of the 3 measures as I have mentioned. We expect that in 2016, the related ranking should be lifted up at least 2 levels from the existing stance and 4 levels in 2017.
 His Excellency, Ladies and Gentlemen, this is the summary of the Licensing Facilitation Act, what the existing Royal Thai Government has done for the past 6 months and what are we are going to do. I fully wish that the information I’ve just presented may be beneficial for you. I would like to thank you once again for your concentration. Lastly, please accept my deeply apology that I am unable to finish my speaking on time. Thank you.