Currently, Thailand ranks 31st place on the World Economic Forum's "Competitiveness Rankings" and 30th place on the 2015 IMD World Competitiveness Scoreboard. It is understood that the Law Reform Commission (LRC) of Thailand researched how this ranking can be improved and found that the closed control approach of Thailand's regulatory system are creating burdens on ease of doing business and transparency.
Such closed control system is the approach which was taken during the protectionism era from the 1950s, whereby vast areas of economic activity in the private sector was subject to licensing and extensive government control, primarily to promote protectionism. It is understood that the LRC found that such extensive licensing requirements together with the delegation of power to governmental agencies to create subordinate laws (ie regulations) has given broad discretionary powers to the officers of the relevant governmental agency. As a result, the licensing process in Thailand is, in some situations, not transparent and not predictable. It is understood that the LRC found that such process can also create opportunities for corruption.
With the goal of improving:
- the ease of doing business
- easing the burden arising from government regulation, and
- eradicating corruption,
the Licensing Facilitation Act B.E. 2558 (A.D. 2015) (the LFA) has been approved by the National Legislative Assembly (NLA) and has become effective as of July 21, 2015. It is understood that the government's key performance indicators (KPIs) are improvements in Thailand's ranking in global competitiveness. It aims to improve by two spots by the end of 2016, and four spots by the end of 2017.
The LFA is a relatively short act comprised of 18 sections. Some of the interesting provisions are the following.
The scope of the act covers all types of permissions, licensing, registrations or notifications (collectively Licenses), which are required by law, for the relevant person (individual or company) to obtain or notify, prior to engaging in the regulated activity. However, this LFA does not apply to the following:
- The National Assembly and the Council of Ministers
- The Court’s rules, procedures and judgments 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
- Execution under criminal procedures
- Licensing under the law on natural resources and environment
- Licensing related to military strategic operation, including the law related to arms control and private armory and,
- Any other activity or agency as prescribed by Royal Decree, if any.
The Office of the Public Sector Development Commission ("OPDC") will effectively monitor the compliance or non-compliance with the LFA by governmental agencies, consult with governmental agencies and report and make recommendations to the Council of Ministers.
All relevant agencies were required to create Licensing manuals (LFA, Section 17). The manual must, at least contain the following (LFA, Section 7):
- The rules
- Procedure and conditions (if any) for the submission of the application
- Work flow
- Period of time for the granting of License, and
- A list of documents or evidences to be attached with the application.
Such Licensing manual for the public must be posteded at the place designated as the place for submission of application and shall be available via the internet.
If the OPDC is of opinion that such work flow or period of time may cause unnecessary delay in the granting of Licenses, the OPDC must notify such matter to the Council of Ministers and recommend revision to the Licensing procedure in question (LFA, Section 7).
A key feature of the LFA is the responsibilities this act imposes on the government officer who accepts and considers License applications (Competent Officer) (LFA, Section 8). If the submitted application has any defect or the attached documents or evidences are not satisfactory, the Competent Officer must suggest to the applicant to fix or fill up at once. If the fixing of defect or the fulfilling of requirements cannot done immediately, the Competent Officer must make a record of the identity of the defect or the requirements to be satisfied, as well as the period of time in which such shortcomings must be fixed or fulfilled. Furthermore, the Competent Officer and the applicant of the License shall sign their names on that record. Moreover, the Competent Officer must deliver a copy of such record to the applicant as evidence. If the applicant thereafter satisfies the shortcomings as identified in such record, the Competent Officer may not require any other documents or evidences and shall not refuse to consider the application on the ground of defect of the application or of insufficient documents or evidences. However, the grant of a License may be denied if negligence or dishonesty on the part of the relevant Competent Officer was involved. In such case, disciplinary action or a charge against the relevant Competent Officer must be made without delay (LFA, Section 8).
Another interesting provision is that, if upon the expiration of the period for consideration as specified in the relevant licensing manual, the relevant governmental agency is unable to finish its consideration, it shall clarify, in writing, as to the reason for the delay to the applicant, every seven (7) days until the consideration is finished. The governmental agency must also submit a copy of such writing to the OPDC each time. If the governmental agency fails to make a such written clarification, it shall generally be presumed that it has committed an omission to act causing damages to the relevant person (LFA, Section 10).
The service by the Licensing agency should also be enhanced because each government agency are required to establish its Service Link Center (LFA, Section 7) to accept all relevant license applications, and One Stop Service Centers (LFA, Section 14) may be established (especially in the provinces) to be the center for receiving ALL applications under the laws relating to Licensing.
License renewals should become more efficient, as the Council of Ministers may authorize for certain types of Licenses, the mere payment of the License fee for renewal (LFA, Section 12). Moreover, we may possibly see a reduction in Licensing requirements because every five (5) years, Licensing governmental agencies must review and report whether any Licensing should be repealed or replaced by other measures. Such recommendations will then be considered by the Council of Ministers (LFA, Section 6).
It still is unclear how transparency and the ease of doing business will enhance in terms of Licensing requirements, but all should agree that the introduction of the LFA is in the right direction in achieving such objectives.