Thailand’s Facilitation Act:
Easing Business Regulations and Upgrading Transparency
Full-time Law Councillor
Office of the Council of State of Thailand
The American Chamber of Commerce’s Legal Committee
Monday 20 July 2015
Plaza Athenee Hotel, Bangkok
Members of American Chamber of Commerce’s Legal Committee,
Ladies and Gentlemen,
First of all, I would like to thanks the AmCham’s Legal Committee in providing my friends, Khun Chintapun Dungsubutra, and I an invaluable opportunity to talk about Thai regulatory reform initiatives to all of you today. It is very much appreciated. My special thanks go to Chris for his industrious works. He actually contacted me to talk on this topic to AmCham first time when I attended ASEAN-OECD meeting on Good Regulatory Practice Conference in KL in March. Unfortunately, I am unavailable at that moment because of my tough schedule. However, Chris never give up though he is a very busy man! He came to see me at my office last month and finally bring me here. Thank you so much Chris.
Ladies and Gentlemen, I am going to provide all of you the overview of regulatory reform initiatives in Thailand since the present Government took office last year, and then Khun Chintapun is going to clarify details of the Licensing Facilitation Act of 2015 which is one of many products of the regulatory reform initiatives of this Government to ease of doing business and to lift up transparency in Thai administrative procedure to you. Talking to this Act today is very appropriate moment because it will come into force tomorrow!!!
Ladies and Gentlemen, let’s me turn back to regulatory reform initiatives of the current Government. When the Government of General Prayuth Chan-o-cha took office last year, it had found that the past Governments, almost all, invested really big public money in the provisions of such hard infrastructure as construction of roads, power and water supply system, airport, seaport, IT and so on with a view to enhance trade and investment of the country.
However, the researches of international trade and investment institutions, both WEF and IMD, on national competitiveness indicate that those investments are not attractive enough. Additionally, corruption index climbs up to considerable level while government efficiency is at the middle low.
The current Government was therefore of opinion that perhaps hard infrastructure may not be problem of our national competitiveness, but such soft infrastructure as laws and regulations and normal day-to-day working procedure of government officials as well as their attitude which strict to the outdated bureaucratic fashion may be the real iceberg for our progress. The Government then entrusted the Law Reform Commission of the Office of the Council of State, or you may know this Office in Thai name as “Krisdika,” to do research on this matter.
After the research, the Law Reform Commission which is now chaired by H.E. Meechai Ruchuphan; the former Speaker of the National Assembly, found 3 main problems:
Firstly, legal mechanism of most of Thai’s laws and regulations still based upon the close government control system which was fashionable style of regulations during the 50s to the 70s.
This sort of regulation is fit for trade protectionism regime of that day, but it becomes hurdle for market-orientated economy of the World today. Under the close government control system, permission or license of the authority is required before doing almost all activities, even in our daily lives. Tons of document and evidence have to be submitted to the authority for consideration in granting of any permission or license. Step of works, work flows and duration for consideration of the government officials of each step is known to the government officials only, they are not disclosed to public. Significantly, there is no standard rules on licensing procedure. Granting of license, therefore, depends on the “mercy” or “efficiency” of each responsible government official which is variety.
In business ankle, all these unclear practices make the applicants of license to be in dumb daze, and they generate unnecessary administrative cost and burden to all who have to apply for such license. Further, this outdated legal mechanism provide the authority with very broad discretion in granting of license. This loophole is the ground for the misuse of discretionary power of dishonest authorities and may lead to the most disgusting of all; the corruption.
Secondly, the review of Thai legislations in the past was made from time to time, mostly depending on the order of the portfolio Minister. You may assume by this fact easily that most of Thai legislations are not fit for global super-dynamic character of the World today. Many backbone regulations such as town and city planning law, consumer protection law, energy law, petroleum law etc. have been amended only for 3-4 times for the past 30-40 years as from the date these laws comes into force, while the important law related directly to trade and investment such as competition law has never been amended since it was enacted in 1999!!
Thirdly, most of all politicians, officials and the public
do not aware of impacts of regulations. Once problem happened, almost all Thai politicians, officials or the public always though that there were no legislations to cope with such problem despite we have more than 650 Acts of Parliament that are in force today. They always cry out for “new” legislations without regard to the existing one or the alternative measures other than legal measure which are capable to solve that problem. They do not aware of duplication of the newly proposed regulation with the existing. The most important issue is that they do not realize the impact which may be caused by the outcome of such legislation even in short term or long term.
Actually, the Regulatory Impact Assessment Statement has to be annexed with all bills which are submitted for approval of the Cabinet since 1988, but the RIA statements which had been submitted to the Cabinet for legal policy approval composed of only rough information or summary of legislations rather than detailed analysis of positive or negative impact of the proposed legislations to economics, social, environment and politics. Further, the cost-benefit and cost-effectiveness relationships had never been assessed scientifically and systematically. So, RIA Statement of the past years seem to be just a form for filling such short answer as yes or no in the blanket!
Therefore, the Law Reform Commission proposed 3 regulatory reform initiatives to the Government; that is to say:
1. to ease of doing business in Thailand and to enhance transparency in Thai administrative procedure through the enactment of Licensing Facilitation Act. This bill passed by the National Legislative Assembly in the early of this year and it is going to come into force tomorrow. In summary, this initiative aims to narrow discretionary power of the government official and it will make licensing process, work flow and duration of the process known to public so as to establish transparency and accountability environment in licensing procedure. According to this initiative, the government officials shall have to do their works at their best as it should be if they do not want to go to the Court. Upon the Open Government Doctrine, transparency is the most efficient champion against corruption. The details of which shall be explained to you all by my colleague, Khun Chintapun, in the next session;
2. to establish mandatory review of all legislations and regulations through the enactment of law of what all lawyers call “the Sunset Law.” This law requires the Minister having charge and control of the execution of each law and regulation to conduct review the law and regulation under his portfolio every 5 years or earlier, with close consultation with stakeholders. The result of the review shall be disclosed to the public and shall also be tabled to the Cabinet and the Parliament as well. This initiative is going to make all Thai laws and regulations become dynamic as it should be, rather than sitting still as ever. At this moment, this law has already been introduced to the King for His signature;
3. to lift up the regulatory impact assessment process to be the legal procedure that “must-do” prior to submission of any regulations to the Cabinet for policy approval. The draft law on RIA is now under consideration of the Law Reform Commission. This initiative will help the Government in making decision on regulatory policy upon sufficient and scientific evidences for sustainable development and better lives of the public rather than political popularity. The Law Reform Commission is of opinion that this initiative is going to raise the quality and reliability of Thai legislations for better lives of the people. The Commission plans to propose this law to the Cabinet for approval in the mid of August.
In evaluation of achievement of the 3 regulatory reform initiatives as I have mentioned, the Law Reform Commission is going to use the ranking of Thailand in both WEF and IMD reports as our KPI. Our target is to lift up our ranking for two levels from the existing stances in the first two years after the completion of all three initiatives.
By now, I think I should stop my speaking on the overview of regulatory reform initiatives of the existing Royal Thai Government and let my college, Khun Chintapun, to go through the key principles and details of the Licensing Facilitation Act of 2015 which is the main topic of this meeting.
Thank you very much for your attention. Thank you.