Executive Dinner Talk
European Association for Business
and Commerce
Ease of Doing Business and
Transparency Upgrade:
Thailand’s Facilitation Act
9th June 2015
by
Mr. Pakorn Nilprapunt
Full-time Law Councilor
Office of the Council of State
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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,
Distinguished
guesses,
Ladies and Gentlemen,
[1] 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.
[2] 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?
[3] 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.
[4] 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.
[5] 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.
[6] 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.
[7] 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.
[8] 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.
[9] 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!!
[10] 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.
[11] 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.
[12] 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.
[13] 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.
[14] 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.
[15] 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.
[16] 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?
[17] 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.
[18] 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.
[19] 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.
[20] 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.
[21] 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.
[22] 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.
[23] 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.
[24] 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.
[25] 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.
[26] 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.
[27] 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.
[28] 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.
[29] 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.
[30] 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.
[31] 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.
[32] 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.
[33] 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.
[34] 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.
[35] 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.
[36] 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.
[37] 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.
[38] 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.
[39] 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.
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