Industrial Licensing and Regulations
1. The
Factory Act
The Factory Act of 1969 (amended in 1972, 1975, 1979,
and 1992) stipulates regulations for factory construction
and operation, factory expansion, and safety requirements.
The latest revision of the Act also imposes strict
controls on industrial pollution. The Act is administered
by the Department of Industrial Works of the Ministry
of Industry.
A factory is defined as any premise that uses machinery
equivalent to five horsepower or more, or that employs
seven or more workers for manufacturing, producing,
assembling, packing, repairing, maintaining, testing,
improving, processing, conveying, storing or destroying
anything included in the classes or types of factories
presently listed in the Ministerial Regulations.
The Act does not apply to factories owned or operated
by government agencies for the purpose of national
security or safety, except that such factories must
use the procedures of the Act as guidelines for their
operations.
2. Factory
Licenses
Factories are divided into three categories:
- Factories that do not require licensing
- Factories that only require notification to officials
in advance of the start of operations. Operators
may commence operations as soon as they receive a
receipt form from the Ministry stating their report
has been received.
- Factories that require licenses from the Department
of Industrial Works, Ministry of Industry, prior
to operation. Subject to the Ministry’s discretion,
operators may be granted, prior to the license, a
certificate allowing them to build parts of the factory.
The operator of a group three factory must notify
the competent authorities at least 15 days before a
factory test-run commences, and again 15 days before
actual manufacturing begins.
Note: In general, the degree of government
control required is dependent on the degree of environmental
protection deemed necessary. The more likely a factory,
based on its output, is to cause pollution, the more
that type of factory is regulated.
The Ministry of Industry has the power to issue regulations
for all of the categories regarding:
– Description,
category, or type of machinery and equipment to be used in the operation
of the factory business
– Location,
environment, interior and description of the factory
– Requirements
for workers who have specific knowledge to carry out any duties
in the factory
– Process
of manufacture and provision of equipment to prevent, stop, or alleviate
danger, damage or disturbances that may occur to the public orproperty
in the factory or nearby premises
– Standards
and procedures for the control or release of waste, pollution or anything
else arising from factory operations which may affect the environment
– Provision
of necessary data and documents by the factory operators to ensure
compliance with the law
– Provision
of anything that may affect the safety of work operations
If there is an inspection of a factory or machinery
to ensure compliance with the Act, a private body may
carry out the inspection and report in place of government
officials, provided the private persons follow the
regulations concerning the Act as per the Government
Gazette.
Licenses granted are valid until the end of the fifth
calendar year from the year in which the business started
operations, except when the factory is transferred,
leased or subject to hire purchase, or if operations
stop. In these cases, the license is regarded as having
expired on the date of issuance of a license to the
factory’s new operators, or on the date of cessation
of operations.
Applications for renewal of licenses must be submitted
prior to the date of expiration, along with a fee of
100,000 baht. Following submission, renewal is considered
to have been extended unless there is a specific order
otherwise. If the application is submitted within 60
days of the expiration date, it will be processed normally,
but an additional fee of 20,000 baht will be levied.
Once the expiry date is reached, an application for
a renewal must be made within 60 days.
3. Factory
Operations
The Ministry of Industry has the power to designate:
– The
size and quantity of the type of factory in each category that should
not be established or expanded in
any locality in the Kingdom
– The
type, quality, source of origin and ratio of raw materials to be used in a
factory
– The
type or quality of products to be manufactured in a factory
– The
type of energy to be used in a factory
The Ministry may also prescribe that a factory’s
products be used in certain industries or be wholly
or partly exported.
If a factory in Category 2 or 3 stops operation for
more than one year, the operator must notify the Ministry
in writing within seven days of the date the one-year
period has lapsed, and must inform the Ministry before
restarting operations. If the operator’s factory
is in category 3, he must receive written permission
from the Ministry before restarting operations.
If there is an accident that causes death, injury
or sickness that incapacitates a worker beyond a 72-hour
period, the operator must inform the Ministry within
three days from the date of the death or the lapse
of the 72-hour period. If there is an accident that
causes the factory to stop operations for more than
seven days, the operator must notify the Ministry within
10 days from the date of the accident.
Factory operators must obtain permission to remove
machinery from its original place of installation to
another site for temporary operations, or to move a
factory to another site. Permission must also be obtained
to transfer, rent, offer for hire purchase or sell
a licensed factory. In these cases, the prior license
is considered to have expired, and a new license must
be applied for within seven days, although no fee is
required. If the licensee dies, the heir or administrator
of the estate must submit an application for the transfer
of the license within 90 days of the date of death.
4. Factory
Expansion
An application must be filed, and granted, prior to
factory expansion. A fee of 100,000 baht is charged.
As defined in the Act, the following undertakings constitute
factory expansion:
– An
increase in the number of machines, or change or modification of machinery
to increase its power by 50% or more
– The
addition to, or alteration of, any part of the factory building which causes
any part of the foundation of the factory to bear a load of an additional
500 kilograms or more
Or when a licensee:
– Increases
the quantity of machinery
– Changes
or modifies machinery used for production or generation of power,
but by less than 50%
– Constructs
or increases factory space by more than 100 square meters
The application must be filed within seven days of
the date of the change.
5. Other
Provisions
Any factory that is seriously endangering the public
may be ordered to cease operations or to make specified
improvements. The Minister has the authority to order
removal of all or part of the plant to a location where
the public will not be threatened. Officers of the
Ministry of Industry have broad powers of inspection,
and are authorized to issue written orders requiring
a factory to cease operations, modify or repair machinery,
or undertake other remedial measures.
Issuance of either a factory establishment license
or a factory operator’s license does not exempt
the licensee from compliance with other central or
local government requirements for carrying out a proposed
industrial activity. Licenses may be suspended for
violations of the Act or for failure to carry out orders
issued under the Act by competent officials.
Factories established to produce and sell food and
drugs must also apply for production licenses from
the Ministry of Health.
Violation of certain provisions of the Act may incur
penalties in the nature of a fine or imprisonment not
exceeding four years. A Case Settlement Committee of
three experts is appointed by the Ministry to carry
out penalties for violations of the Act. If the offender
is a partnership, company or other juristic entity,
the directors, managers or other persons responsible
for committing the offense are subject to the same
punishment unless it can be proved that the offense
was committed without their knowledge or consent.
Updated 30 October 2009
Source: Thai Board of Investment
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