New Draft Factory Act Update

A draft amendment of the Factory Act, 2535 B.E. (1992 A.D.) (“the Amendment”), was approved by the National Legislative Assembly on 26 February 2019. After the Draft is approved by His Majesty the King, it will be published in the Royal Gazette and become effective 180 days later.

Keywords: Mazars, Thailand, Legal, Factory Act, National Legislative Assembly, Royal Gazette

18 April 2019

The key differences between the current Factory Act and new Amendment are summarized below:

Subject

Current

New

  • Definitions of Certain Terms used in the act amended

‘Factory’ - A factory has a minimum of 7 workers, or machinery equivalent to 5 horsepower.

‘Factory’ - A factory has a minimum of 50 workers, or machinery equivalent to 50 horsepower.

‘Factory set-up’ – (1) Construction of buildings for the installation of machinery to engage in operating a factory; or (2) Installation of machinery for engaging in operating a factory in buildings, premises, or vehicles for engaging in such operations.

‘Construction of buildings’ has been removed from the definition of ‘Factory set-up’.

As a result, ‘Construction of buildings’ is no longer considered part of setting up a factory.

  • Factories partially exempt from complying with the factory act

- None –

 

  1. A factory of a governmental authority which is not a factory operated for the safety and security of the country
  2. A factory for study and research
  3. A factory for training at an educational institute
  4. A family-owned factory
  5. A factory necessary for or related to a non-factory business and located in the same space.
  • Validity of factory license

The factory licence is valid for 5 years from the start of operations, except when it is relocated or ceases to operate, and the licence is considered expired on the issue date of a new factory licence or the date of cessation, as the case may be.

The factory licence does not expire until the factory ceases doing business.

 

  • Expansion of a factory for which permission in advance must be obtained

A factory must obtain permission in advance from the licence grantor in order to expand for the following reasons:

  1. An increase in the number of machines, or the replacement or modification of machinery to increase their total power by 50% or more where the original machinery had a total of not more than 100 horsepower or the equivalent of not more than 100 horsepower, or an increase of 50 horsepower or more where the original machinery had total power of more than 100 horsepower or the equivalent of more than 100 horsepower; and
  2. Addition to or remodelling of any part of the factory buildings to allow any of their original foundations to carry an additional 500 kilograms or more.

A factory must obtain permission in advance from the licence grantor in order to expand for the following reasons:

  1. An increase in the number of machines, or the replacement or modification of machinery to increase their total power:
    1.   Examples
      • A minimum increase of 50 horsepower where the original machinery had a total power of not more than 100 horsepower
      • A minimum increase of 100 horsepower where the original machinery had a total power of more than 100 horsepower, but not more than 500 horsepower
  2. Actions undertaken under point 1 on a new plot of land next to the land on which the factory was originally situated or on previously extended land.

However, it is not necessary to obtain permission in advance for a factory to some things. Instead, the factory must give the licence grantor notice at least 30 days in advance before doing the following:

  1. Installing pollution control devices or increasing the efficiency of pollution control devices.
  2. Taking anti-disturbance measures or increasing the efficiency of an anti-disturbance measures, such as noise reduction.
  3. Increasing the efficiency of original machinery.
  • Transfer of factory operations

The application to transfer the factory licence must be submitted to the licence grantor within 7 days of the transfer date, and no fee will be charged for applying for a new licence.

During the consideration process, the factory can continue to operate.

 

The application to transfer the factory licence must be submitted to the licence grantor within 30 days of the transfer date, and no fee will be charged for applying for a new licence.

During the consideration process, the factory can continue to operate.

Furthermore, where the factory is not able to complete set-up, or is not able to start operating, the licensee can transfer its licence. The licensee must apply for a new licence within 30 days of the date on which the transfer occurred.

  • Cessation of factory operations

A factory must give the licence grantor at least 15 days’ advance notice in writing of ceasing to operate.

 

A factory must give the licence grantor at least 30 days’ advance notice in writing of ceasing to operate.

If the factory to cease operating is in a condition that would cause damage or a nuisance to a person, property, or its surrounding environment, the licence grantor is empowered to postpone the cessation of operations and to set a deadline by which the factory must be restored to a proper condition.

  • Fees
  1. Application – THB 100 per application
  2. Licence/Factory expansion licence – THB 100,000 per licence
  3. Replacement of a licence – THB 1,000 per replacement
  4. Renewal of a licence – THB 100,000 per licence
  5. Annual operations – THB 30,000 per year
  1. Application – THB 100 per application
  2. Licence/Factory expansion licence – THB 300,000 per licence
  3. Transfer of a licence – THB 5,000 per licence
  4. Replacement of a licence – THB 5,000 per replacement
  5. Notification of factory expansion exemption/reduction or increase of machinery not considered a factory expansion/expansion of factory space or construction of a new factory – THB 15,000 per time
  6. Annual operations – THB 100,000 per year

Remarks:

  1. The Amendment applies to any factory licence which was issued before the Amendment became effective and applies until the factory ceases operations or its licence is revoked.
  2. The Amendment applies to applications and notifications which were submitted before the Amendment became effective and which are currently being considered.

References:

www.senate.go.th

www.diw.go.th

www.krisdika.go.th

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