Are you thinking about starting a manufacturing business in Thailand? Then you must know about the Thai legal framework which governs the industry. Information on the relevant acts and licenses ruling the manufacturing industry in Thailand is very important for you in the process.
Let us help you in the process. This article intends to provide you with the basic yet most important information you need to know before you start your manufacturing business in Thailand.
You should know about the Factory Act of Thailand to commence your production activities. It is because a Factory or Production Unit is the most basic and unavoidable requirement though.
The Factory Act
The Factory Act of 1992 updates the Factory Acts of 1969, 1975, and 1979. This sets guidelines for factory building and operation, expansion as well as safety standards. The Act’s most recent revision also places tight limits on industrial waste. The Ministry of Industry’s Department of Industrial Works is in charge of enforcing the Act.
A factory can be any site that uses machinery with a horsepower rating of five or more. It can employ seven or more people, with or without machines. The purpose of the unit can be manufacturing, producing, assembling, packaging, repairing and maintaining. It can also involve testing, upgrading, sorting, conveying, storing, or destroying anything in the list of specific categories of the Ministerial Regulations.
The Act is not applicable for government-run factories that runs for the purposes of national security and defence. Exceptions of such factories must follow the Act’s standards and protocols as a checklist for their operations.
Therefore, whatever you are planning to manufacture in Thailand must be in a process adhering to the standards and protocols of the Factory Act 1992. Starting from construction till the expansion of your site through all stages of operations and setting up of safety standards must satisfy the guidelines of the Factory Act 1992.
Now let us know about the licensing segment which is very essential for the registration of your manufacturing unit in the Thailand business directory and government records.
Factory License
Generally, factories falls in three distinct categories as per the legal framework prevalent thereby. The categories are as follows:
- Factories with no requirement of a license.
- Factories that only need notice of officials prior to the start of operations. The operators can begin operations as soon as they obtain a receipt form from the Ministry acknowledging receipt of their report.
- Factories that need a license from the Ministry of Industry’s Department of Industrial Works before they can operate. The operators can be given a permit enabling them to develop parts of the factory prior to the license, at the Ministry’s discretion.
A factory operator in Category 3 must notify the responsible authority at least 15 days before a factory test-run starts. The other one 15 days before real production begins.
Regulation of Ministry of Industry of Thailand
Note that generally, the amount of government enforcement equals the level of need of environmental protection. The more likely a factory is to pollute the atmosphere from its production process, the more it is regulated.
The Ministry of Industry has the authority to issue regulations for any of the following categories:
- Definition of activity, description, grade, or type of machinery and equipment for use in factory operations;
- The factory’s location, environment, interior, and description;
- Requirements for factory employees with specialization in skills to perform some task;
- Manufacturing process and provision of equipment to avoid, stop, or mitigate risk, harm, or disruptions to the public or property in the factory or nearby premises;
- Standards and protocols for the control or release of waste, emissions, or something else that can impact the environment as a consequence of factory operations;
- Factory operators must have appropriate documentation and paperwork to ensure that the legislation is followed;
- Anything that might jeopardize the safety of work operations.
If a factory or machinery needs inspection is essential to ensure conformity with the Act. A private party can inspect and report in place of government officials. As long as the private persons obey the Act’s regulations as published in the Government Gazette.
License Validity and Fees
Licenses remain valid until the end of the fifth calendar year from the year in which the business begins operations. It is not applicable in the case of plant move or closure of the factory business. The license expires on the day of issuance of a license to the factory’s new operators, or on the day of the factory’s dissolution.
License renewal applications must be submitted with a fee of 100,000 baht prior to the expiration date. If there is a formal order to the contrary, renewal is deemed to have been extended after request. Receipt of the document within 60 days of the expiration date, has normal acceptance, although there will be a fine of 20,000 baht. Within 60 days of the expiration date, applicant must submit the renewal application. The application is a new application after the sixty-day limit of its expiry.
Before your start executing your business ideas for manufacturing or production in Thailand, you must know about the legalities. But above all, you must know about the registration process of your business in Thailand and obtaining your work permit in Thailand. For all types of relevant and competent guidance and legal services in Thailand, feel free to mail us at [email protected]
