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Online Gaming Act: Push for a Balanced and Thriving Digital Economy

Thailand’s Ministry of Digital Economy and Society (MDES) is taking significant steps to regulate and promote the online gaming industry through the draft Film and Game Act (Draft Act). This legislative effort aims to balance the rapid growth of the gaming industry with the need to protect society, particularly children and youth, from potential negative impacts. The Draft Act seeks to establish a comprehensive framework for the industry, focusing on content regulation, industry promotion, and consumer protection.

Key Provisions of the Draft Act:

1. Content Regulation and Age-Appropriate Classification

The Draft Act introduces a content rating system for films and games, ensuring that media content is appropriate for different age groups. This system will help parents and guardians make informed decisions about what their children consume. Games and films must display their content ratings, brief descriptions, and identification codes to inform consumers about their suitability.

The content rating system will categorize games and films based on their themes, such as violence, sexual content, or language. For example, games with violent content may be restricted to players aged 18 and above, while games with educational content may be suitable for all ages. This system will be enforced by the Content Classification Committee, which will review and classify media content before it is released to the public. Developers and publishers must ensure their products comply with these classifications and display the appropriate labels prominently.

2. Establishment of Regulatory Bodies

The Draft Act proposes the creation of a National Film and Game Industry Promotion Committee, chaired by the Prime Minister, to oversee the industry. This committee will include representatives from various ministries, experts in media, psychology, culture, and marketing, as well as stakeholders from the gaming and film industries. Additionally, a Content Classification Committee will be established to review and classify media content.

The National Film and Game Industry Promotion Committee will be responsible for setting policies, promoting the industry, and ensuring compliance with the law. It will also work to attract international investments and foster innovation in the gaming sector. The Content Classification Committee, on the other hand, will focus on reviewing and classifying media content to ensure it meets the standards set by the law. These bodies will play a crucial role in shaping the future of Thailand’s gaming and film industries.

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3. Streamlined Licensing and Registration

The Draft Act simplifies the licensing process for gaming and film businesses, replacing the previous stringent approval system with a notification-based system. This change aims to reduce bureaucratic hurdles while maintaining standards to protect consumers and public interests.

Under the new system, businesses will only need to notify the relevant authorities of their operations, rather than obtaining prior approval. This streamlined process will make it easier for startups and small businesses to enter the market. However, businesses must still adhere to the standards set by the law, such as content classification and consumer protection measures. The authorities will conduct periodic inspections to ensure compliance.

4. Promotion of Local Industry and Talent

The draft law emphasizes the development of Thailand’s gaming and film industries by promoting local talent, encouraging innovation, and attracting international investments. It also aims to create a fund to support the growth of these industries, ensuring they remain competitive on a global scale.

The government plans to establish a fund to provide financial support to local game developers, filmmakers, and other stakeholders. This fund will be used to finance innovative projects, provide training and development programs, and support international collaborations. Additionally, the government will work with educational institutions to develop curricula that align with the needs of the gaming and film industries, ensuring a steady pipeline of skilled talent.

5. Protection of Youth and Society

The Draft Act prioritizes the protection of children and youth from harmful content. It mandates that games and films with inappropriate content, such as violence, explicit material, or content that undermines national security or morality, must be restricted or banned. The law also empowers authorities to take action against media that violates these standards.

The law includes strict provisions to prevent the dissemination of harmful content to minors. For example, games with violent or explicit content must be clearly labeled and restricted to appropriate age groups. The authorities will have the power to take down or block access to games and films that violate these standards. Additionally, the law encourages the development of parental control features in games to help parents monitor and restrict their children’s access to inappropriate content.

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6. Penalties for Non-Compliance

The Draft Act introduces administrative fines and criminal penalties for businesses that fail to comply with content classification, licensing, or other regulatory requirements. Penalties can range from fines of up to 5 million baht to imprisonment, depending on the severity of the violation.

Businesses that fail to comply with the law may face significant penalties. For example, a company that releases a game without the required content classification could be fined up to 5 million baht. In severe cases, such as the dissemination of content that undermines national security or morality, the responsible individuals could face imprisonment. These penalties are designed to ensure that businesses take their regulatory obligations seriously and prioritize consumer protection.

What the Online Gaming Industry Needs to Prepare For:

1. Compliance with Content Classification

Game developers and publishers must ensure their products are reviewed and classified according to the new content rating system. This includes displaying appropriate labels and ensuring that games are marketed responsibly to the right age groups.

Developers will need to submit their games to the Content Classification Committee for review before release. The committee will assess the game’s content and assign an appropriate rating. Developers must then display this rating prominently on the game’s packaging, marketing materials, and digital storefronts. Failure to comply with these requirements could result in fines or other penalties.

2. Adaptation to New Licensing Requirements

Businesses in the gaming industry will need to familiarize themselves with the new notification-based licensing system. This includes registering their operations and adhering to the standards set by the regulatory bodies.

The new licensing system will require businesses to notify the authorities of their operations and provide details about their products and services. While this process is less burdensome than the previous approval system, businesses must still ensure they meet all regulatory requirements. This includes adhering to content classification standards, protecting consumer data, and ensuring fair business practices.

3. Focus on Youth Protection

The industry must prioritize creating content that is suitable for younger audiences or clearly labeling games that are intended for mature players. Developers should also consider implementing parental controls and other safeguards to protect minors.

Developers should design games with youth protection in mind, ensuring that content is appropriate for the intended age group. For games aimed at mature audiences, developers must implement robust age verification systems and parental controls. Additionally, developers should avoid using manipulative design practices, such as excessive in-game purchases, that could exploit younger players.

a dad watching her daughter play a game console

4. Investment in Local Talent and Innovation

With the government’s focus on promoting the local gaming industry, businesses should invest in developing Thai talent and creating innovative games that can compete globally. Collaboration with educational institutions and participation in government-led initiatives will be key.

Businesses should partner with universities and vocational schools to develop training programs that equip students with the skills needed in the gaming industry. Additionally, companies should invest in research and development to create innovative games that appeal to both domestic and international audiences. Participation in government-led initiatives, such as industry forums and innovation grants, can also help businesses stay ahead of the curve.

5. Preparedness for Regulatory Inspections

Gaming companies should be prepared for inspections by regulatory authorities to ensure compliance with the new law. This includes maintaining proper records, adhering to content guidelines, and cooperating with authorities during investigations.

Companies should establish internal compliance teams to ensure they meet all regulatory requirements. This includes maintaining detailed records of their operations, content classifications, and consumer complaints. Regular internal audits can help identify and address potential compliance issues before they are flagged by authorities.

6. Engagement with Regulatory Bodies

The industry should actively engage with the newly established regulatory bodies to provide feedback and stay informed about any updates or changes to the law. Participation in public consultations and industry forums will be crucial.

Businesses should participate in public consultations and industry forums to share their perspectives and provide feedback on the Draft Act. This engagement will help ensure that the final regulations are practical and effective. Additionally, businesses should establish regular communication channels with regulatory bodies to stay informed about any updates or changes to the law.

Conclusion:

Thailand’s Draft Act represents a significant step toward regulating and promoting the online gaming industry while safeguarding societal interests. By balancing growth with responsibility, the law aims to create a thriving digital economy that benefits both businesses and consumers. For the gaming industry, this means adapting to new regulations, prioritizing youth protection, and seizing opportunities for growth and innovation. As the Draft Act moves closer to implementation, stakeholders must prepare to navigate this evolving landscape and contribute to the sustainable development of Thailand’s gaming sector.

Related Article: Thailand’s – Landmark Gaming Industry Bill – The Legal Co., Ltd.

Author: Panisa Suwanmatajarn, Managing Partner.

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Updated : Thailand Unveils Draft Entertainment Complex Bill: A Path to Casino Legalization

Following our previous article on “Thailand Unveils Draft Entertainment Complex Bill: A Path to Casino Legalization”, Thailand’s Cabinet has approved the Draft Entertainment Complex Act (“Draft Bill”), marking a significant milestone in the country’s efforts to boost its tourism sector and diversify its entertainment offerings. The Draft Bill, which aims to regulate and promote investment in entertainment complexes—including casinos—is now set to be submitted to the Parliament for further deliberation. This development comes as Thailand seeks to strengthen its position as a leading global tourist destination, with tourism playing a crucial role in the country’s economy.

The approval of the Draft Bill follows a public hearing where the majority of participants expressed support for the initiative. However, the Draft Bill has also sparked debates and concerns, particularly from the Office of the Council of State, which has raised questions about its alignment with government policies and its effectiveness in addressing illegal gambling.

Key Features of the Draft Bill:

The Draft Bill introduces a comprehensive framework for the establishment and operation of entertainment complexes, which are defined as integrated venues that include a casino alongside at least four other types of businesses. Below are the key aspects of the Draft Bill:

1. Definition and Scope of Entertainment Complexes

Under Sections 3 and 41 of the Draft Bill, an entertainment complex must include a casino and at least four additional businesses, such as shopping malls, hotels, restaurants, nightclubs, pubs or bars, sports and entertainment facilities, yacht and cruising clubs, gaming establishments, swimming pools, amusement parks, OTOP centers (promoting local Thai products) and/or other businesses as prescribed by the Policy Committee.

Each business within the complex must comply with its respective laws and regulations. However, operational details such as hours of operation, alcohol sales, and designated smoking areas will be determined by the Policy Committee.

2. Casino Regulations

The Draft Bill defines a casino as a facility designated for gambling activities within a specific location. Key regulations include:

  • Designated Areas: Casinos will operate only in zones approved by the Policy Committee.
  • Debt Enforcement: Debts arising from casino activities without any formal agreement will be legally enforceable.
  • Online Gambling: License holders are prohibited from facilitating online gambling beyond the physical premises of the complex.
  • Advertising Restrictions: License holders cannot advertise or promote casino activities unless explicitly permitted by the Policy Committee.
  • Loans to Gamblers: License holders may extend loans to gamblers, subject to the Policy Committee’s regulations.
shallow focus photo of woman wearing black knit cap and eyeglasses

3. Licensing Framework

Licenses for operating entertainment complexes will be valid for 30 years, with an initial fee of 5 billion THB and an annual fee of 1 billion THB. License holders must undergo performance evaluations to ensure compliance with approved plans. Renewals will be considered in 10-year increments, subject to additional fees.

4. Eligibility Criteria

Applicants must meet the following criteria:

  • Be a limited or public limited company registered under Thai law.
  • Have a minimum paid-up capital of THB 10 billion.
  • Public limited companies holding licenses will be exempted from the restriction of the Foreign Business Act (FBA) and will not require a Foreign Business License (FBL). However, limited companies with more than 50% foreign ownership must comply with the FBA unless further exemptions are announced.

5. Operational Obligations

License holders must adhere to the operational plans submitted during the application process. Any deviations require prior approval from the Policy Committee. Failure to comply may result in license revocation.

6. Designated Locations

The locations for entertainment complexes will be specified in a forthcoming Royal Decree. Unofficial reports suggest potential sites in major tourist destinations such as Bangkok, Pattaya, and etc.

Concerns from the Office of the Council of State:

Despite the Cabinet’s approval, the Office of the Council of State (“Office”) has raised several concerns about the Draft Bill:

  • Alignment with Government Policies: The government’s seventh policy emphasizes creating man-made tourist attractions, such as amusement parks and shopping malls. The Office questions whether enacting a specific law for entertainment complexes aligns with this broader vision.
  • Redundancy and Legal Conflicts: The Draft Bill’s inclusion of businesses already regulated by specific laws (e.g., hotels and restaurants) may lead to redundancy and interpretative conflicts.
  • Unclear Intentions: The Draft Bill’s objectives remain ambiguous. While it claims to address illegal gambling, the Office argues that existing laws, such as the Gambling Act B.E. 2478 (1935), could suffice. Alternatively, if the goal is to promote tourism, the bill should focus on creating integrated tourist destinations rather than solely regulating casinos.
  • Public Perception and Communication: The Office emphasizes the need for clear communication with the public to avoid confusion and ensure transparency.

Minister of Interior’s Stance on Gambling:

Adding another layer to the discussion, the Minister of Interior, who oversees gambling laws, has indicated that certain forms of gambling may be permitted without waiting for the Draft Bill to pass. This statement suggests a potential shift in the government’s approach to gambling regulation, possibly allowing limited gambling activities under existing laws while the Draft Bill undergoes further review.

Next Steps:

With the Cabinet’s approval, the Draft Bill will now be submitted to the Parliament for further deliberation. During this process, amendments may be made based on feedback from relevant authorities. Additionally, the Policy Committee will issue further announcements to clarify operational details, such as hours of operation, alcohol sales, and other regulatory aspects.

Conclusion:

The approval of the Draft Bill by the Cabinet marks a significant step toward diversifying the country’s tourism offerings and addressing the issue of illegal gambling. However, concerns raised by the Office of the Council of State highlight the need for clarity, alignment with government policies, and effective communication with the public. As the Draft Bill moves through the legislative process, stakeholders must remain vigilant and prepare for potential changes. In the meantime, the Minister of Interior’s remarks suggest that the government may explore interim measures to regulate gambling activities, signaling a dynamic and evolving landscape for Thailand’s tourism and entertainment sectors.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand’s – Landmark Gaming Industry Bill

Thailand’s Digital Economy Promotion Agency (DEPA) is spearheading efforts to revolutionize the country’s gaming industry through a comprehensive draft bill. The proposed legislation, aimed at supervising and promoting the gaming sector, is expected to play a pivotal role in establishing Thailand as a regional gaming hub.

DEPA, along with other government authorities, such as the Ministry of Commerce, Revenue Department, Cybercrime Investigation Bureau, and Bank of Thailand, announced that the agency is in the process of drafting the bill, which is aimed to come into effect by 2025. The legislation is designed to address the rapid changes in the digital landscape, acknowledging that gaming has evolved beyond internet cafes to encompass various online platforms.

A key component of the draft bill is the registration of game entrepreneurs, developers, and platform providers operating in Thailand. This measure is intended to create a structured framework for the industry while offering benefits to registered entities. These benefits include tax deductions and other fiscal privileges aimed at fostering the development of the gaming sector and promoting employment opportunities.

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Content regulation forms another crucial aspect of the proposed bill. DEPA plans to implement a game rating system and measures to prevent issues such as online gambling and excessive violence in games. To ensure effective supervision, the agency will collaborate with relevant authorities, including cybercrime units and digital payment agencies.

The draft bill also focuses on enhancing the competitiveness of Thai entrepreneurs in the global market. It aims to promote various aspects of game development, including storytelling, character design, animation production, and esports tournaments. This comprehensive approach is designed to attract foreign game developers and solidify Thailand’s position as a regional gaming hub.

To gather input from stakeholders, DEPA has scheduled public hearings on the draft bill for September 2024. Following these consultations, the bill will be presented to the Cabinet, the Office of the Council of State, and the House of Representatives for consideration and approval.

The proposed legislation represents a significant step towards creating a well-regulated gaming ecosystem in Thailand. By balancing supervision with promotion, the bill aims to foster a thriving gaming industry that adheres to local laws and societal standards while attracting investment and driving economic growth in the digital sector.

As the gaming landscape continues to evolve, this forward-thinking approach positions Thailand to capitalize on the opportunities presented by the global gaming market while ensuring a safe and regulated environment for consumers and industry players alike.

Key Takeaways:

  • The Digital Economy Promotion Agency (DEPA) is drafting a bill to supervise and promote Thailand’s gaming industry.
  • The bill aims to establish Thailand as a regional gaming hub and is expected to come into effect by 2025.
  • Public hearings on the draft bill are scheduled for September 2024.
  • Key features include registration requirements, tax incentives, and content regulation measures.
  • Collaboration between various government agencies is planned to ensure comprehensive oversight.

Author: Panisa Suwanmatajarn, Managing Partner.

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Project Nexus: Pioneering the Future of Cross-Border Instant Payments

In a groundbreaking initiative, the Bank of Thailand (BOT) has joined forces with the central banks of Malaysia, the Philippines, Singapore, and India, alongside the Bank for International Settlements (BIS), to develop Project Nexus. This innovative platform aims to revolutionize cross-border transactions by seamlessly connecting various countries’ instant payment systems (IPS), with the Bank of Indonesia participating as a special observer.

As of July 2024, the collaborative effort between regional central banks and the BIS has successfully culminated in the development of a multilateral international money transfer system, marking the completion of Project Nexus’s third phase.

Transformative Benefits

Project Nexus is set to significantly enhance cross-border transactions across multiple dimensions:

  1. Speed: The platform will facilitate near-instantaneous cross-border payments, operating on a 24/7/365 basis.
  2. Cost-Effectiveness: Aligned with G20 and UN Sustainable Development Goals, Nexus aims to keep transaction costs below 3% of the transfer value.
  3. Accessibility: Any bank or non-bank payment service provider (PSP) eligible to join their domestic IPS will have access to Nexus for cross-border transactions.
  4. Transparency: Senders will benefit from clear information regarding transaction costs and payment status.
people sitting on gang chairs

Functional Capabilities

Nexus is designed to support a wide range of account-to-account payments:

  • User Categories: The platform accommodates person-to-person (P2P), business-to-business (B2B), business-to-person, and person-to-business payments.
  • Payment Types: Currently, Nexus supports account-to-account push payments, with potential future expansions to include pull payments, point-of-sale merchant payments, and same-currency cross-border transfers.
  • Transaction Limits: While Nexus itself does not impose an overall cap, it respects limits set by domestic IPSs and PSPs, applying the lowest applicable cap automatically.

Implementation Strategy

The project’s success hinges on three key workstreams:

  1. Governance Framework: Establishing robust governance, scheme, and oversight structures to ensure safe and efficient operations.
  2. Sustainable Business Model: Developing an attractive business and revenue model to encourage participation from key industry players.
  3. Technological Infrastructure: Finalizing a state-of-the-art technology architecture and operational model to support secure and smooth transactions.

Looking Ahead

As Project Nexus enters its fourth phase, the Bank of International Settlements Innovation Hub (BISIH) Singapore Centre will spearhead efforts to establish a central organization. This body will drive the integration of member countries’ payment systems and facilitate the connection of their domestic IPS through Nexus, working towards live implementation.

The Nexus project exemplifies how innovation can dramatically improve the efficiency of international payments. Thailand’s involvement signifies a crucial step towards deeper regional cooperation, with ASEAN central banks united in their ambition to expand Nexus beyond Southeast Asia. This collaborative effort underscores a shared vision of extending this service globally, potentially reshaping the landscape of international financial transactions.

As Project Nexus continues to evolve, it stands as a testament to the power of international cooperation in addressing the challenges of cross-border payments in an increasingly interconnected global economy.

Key Takeaways

  1. Regional Collaboration: Project Nexus represents a significant collaborative effort among the central banks of Thailand, Malaysia, the Philippines, Singapore, India, and the BIS, with Indonesia as an observer.
  2. Instant Cross-Border Payments: The platform aims to enable cross-border transactions within seconds, operating 24/7/365.
  3. Cost Reduction: Nexus targets transaction costs below 3% of the payment value, aligning with G20 and UN SDG goals.
  4. Increased Accessibility: Both banks and non-bank PSPs can access cross-border payment capabilities through their domestic IPS.
  5. Flexible Participation Model: Financial institutions can participate as Payment Service Providers, FX Providers, or Settlement Access Providers.
  6. Sequential Processing: Nexus processes payments sequentially through the IPS in the sender’s and recipient’s countries, ensuring reliable transactions.
  7. Broad Use Cases: The platform supports various payment types including P2P, B2B, B2P, and P2B transactions.
  8. Scalable Architecture: While initially focused on account-to-account push payments, Nexus is designed to potentially incorporate additional features in the future.
  9. Regulatory Compliance: The project prioritizes the development of appropriate governance and oversight structures to ensure safe and efficient operations across different regulatory environments.
  10. Global Ambitions: While starting with ASEAN countries and India, Project Nexus aims for potential global expansion, signifying a major step towards more efficient international payment systems.

These key takeaways highlight the transformative potential of Project Nexus in reshaping cross-border payment systems, emphasizing its focus on speed, cost-efficiency, accessibility, and scalability in the evolving landscape of global finance.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand Unveils Draft Entertainment Complex Bill: A Path to Casino Legalization

Thailand has taken a significant step towards transforming its entertainment and tourism landscape with the introduction of a draft Entertainment Complex Bill. This proposed legislation aims to establish a comprehensive framework for integrated entertainment venues, including the legalization of casinos. The Bill currently is under consideration. Key provisions for the establishment and operation of these complexes are as below.

Key Components of the Bill

The proposed legislation defines an Entertainment Complex as a venue incorporating various entertainment businesses, including five-star hotels, conference centers, health centers, and cultural promotion areas. Crucially, this model would permit the operation of legal casinos within these complexes.

Licensing Requirements

1. Licensee Eligibility:

  • Applicants must be legal entities incorporated in Thailand
  • A minimum registered capital of 10,000 million Baht is required
  • Applicants must not be subject to certain legal restrictions

2. Licensing Process:

  • Licensees will be selected through a bidding process

3. License Type and Duration:

  • Licenses may be categorized based on investment value into sizes S, M, L, and XL
  • Initially, only the XL size license may be available, requiring a minimum investment of 100 billion Baht
  • The initial license period is set at 20 years, renewable every five years

Location of the Entertainment Complex

The Bill stipulates that these complexes should be established within a 100-kilometer radius of major airports and in designated tourist and border provinces.

Taxation

The proposed taxation structure includes:

  • A 17 percent tax on Gross Gambling Revenue (GGR)
  • Corporate progressive tax calculation at the rate of 20, 25, and 30 percent
  • Value-added tax exemption for these complexes
playing card and poker chips and dices

Casino Entry Levy

To deter vulnerable groups from entering casinos, the Bill proposes:

  • A reasonably affordable entry levy for Thai nationals
  • Registration requirements for Thai citizens wishing to enter casinos
  • Exclusion of individuals subject to court orders, those requested by family members to be barred, and minors

Gambling Prevention Fund

The Bill includes provisions for a specific fund to finance:

  • Rehabilitation services
  • Gambling education programs
  • Measures to prevent crime

Safeguards and Concerns:

To address potential social issues, the Bill includes provisions for a gambling prevention fund and strict entry regulations for Thai nationals. These measures aim to balance economic benefits with social responsibility.

Next Steps:

While this development marks a significant shift in Thailand’s approach to casino gambling, the proposal still faces several hurdles. The Cabinet’s approval is pending, and if granted, the Bill would need to pass through Parliament for further debate and potential amendments.

This Bill marks Thailand’s initial step towards developing a regulated entertainment complex industry, including casino operations. As the proposal progresses through legislative channels, it is expected to generate significant discussion regarding its economic potential and social implications. Stakeholders across various sectors will be closely monitoring these developments as Thailand considers this major policy shift.

Author: Panisa Suwanmatajarn, Managing Partner.

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Thailand Modernizes Foreign Business Licensing: New E-Foreign System and Legislative Updates

Thailand’s Department of Business Development (DBD) is taking significant steps to modernize the process for foreign businesses operating in the country. In line with the government’s policy to leverage technology for improved public services, the DBD has introduced the e-foreign system for issuing Foreign Business Licenses (FBL) and Foreign Business Certificates (FBC). This digital transformation necessitates updates to the existing regulatory framework, prompting the proposal of four draft subordinate laws under the Foreign Business Act of 1999 (Act).

The primary objective of these legislative updates is to streamline the application and issuance procedures for FBLs and FBCs, aligning them with the new electronic system. To ensure transparency and gather stakeholder input, these draft regulations have been opened for public hearings until June 25, 2024. The proposed changes encompass:

  1. Revised application forms and formats for FBLs and FBCs
  2. Updated procedures for issuing license and certificate substitutes
  3. Enhanced online filing options for certain categories of foreign businesses
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Key aspects of the proposed changes include:

  1. Simplification of Forms: The new forms (Tor. 2, Tor. 3, Tor. 6, and Tor. 7) remove redundant information, such as taxpayer identification numbers, to facilitate easier online data entry.
  2. Standardization of Substitute Documents: The formats for substitute licenses and certificates will now mirror their original counterparts, with the addition of a “substitute” designation.
  3. Expanded Online Procedures: Particularly for FBCs under Section 12 of the Act, the draft regulations aim to elevate online applications to the same status as in-person submissions.

While these changes may seem subtle, they represent a significant step towards a more efficient and digitally oriented business environment for foreign entities in Thailand. The DBD’s initiative not only modernizes the licensing process but also aligns with broader government efforts to enhance Thailand’s appeal as a destination for foreign investment.

As these amendments will have far-reaching implications for the foreign business community in Thailand, stakeholders are encouraged to participate in the public hearing process. The final implementation of these measures, pending approval, promises to create a more streamlined and user-friendly system for foreign businesses seeking to establish or maintain their presence in the Thai market.

Author: Panisa Suwanmatajarn, Managing Partner.

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Streamlining Thailand’s Industrial Operations: Amending the IEAT Act

Thailand’s industrial sector, a key driver of economic growth and investment, is poised for a significant overhaul with the proposed amendments to the Industrial Estate Authority of Thailand Act, B.E. 2522 (1979) (“Act”). On May 7, 2024, the Industrial Estate Authority of Thailand (IEAT) initiated a public hearing process on the draft of the new Industrial Estate Authority of Thailand Act, B.E. …. (“Draft Act”). This legislative effort aims to address longstanding challenges and obstacles encountered during the enforcement of the original Act, aligning its provisions with contemporary conditions and future developments in industry and commerce.

At the heart of the Draft Act lies a redefinition of IEAT’s mission and objectives. The current Act lacks an explicit delineation of IEAT’s role, leaving its focus somewhat ambiguous. The amendments seek to clarify and expand IEAT’s powers and objectives. This clarity is crucial in determining whether IEAT’s primary emphasis should be on promoting investment in industrial estates with a focus on profitability, fostering a conducive investment environment, or striking a balance between these aims while considering environmental impacts and ensuring harmonious coexistence between the industrial sector and society.

A significant aspect of the Draft Act revolves around the amendment of the permit system. Recognizing the potential impact of various activities conducted within industrial estates, such as pollution or resource utilization, on surrounding communities and environmental quality, the Draft Act proposes the establishment of pollution control standards and waste emission regulations. To effectively control and oversee activities that significantly affect life, rights, freedoms, society, or public interests, the Draft Act introduces measures prohibiting such activities or businesses until the necessary permissions are granted.

aerial view of white buildings

Furthermore, the Draft Act seeks to enhance the committee system by granting broader authority to issue regulations, rules, criteria, and policies to support the operations and activities of IEAT, industrial operators, and commercial operators. This expanded power encompasses the committee’s ability to issue regulations or rules concerning engineering specifications, environmental standards, and safety standards for activities and operations within industrial estates, as well as sale prices, rental rates, hire-purchase rates, and the duration of leases and hire-purchase agreements for real and personal property, as well as maintenance fees for facilities and service rates within industrial estates.

Recognizing the potential risks of accidents or damages affecting public order, the Draft Act grants enhanced authority to officials to prevent and maintain public order, address urgent situations requiring immediate resolution, and manage obstacles that may hinder their efforts to prevent and maintain order. Officials will be empowered to apply the principles of the Disaster Prevention and Mitigation Act, B.E. 2550 (2007) in such circumstances.

Additionally, the Draft Act proposes adjustments to various penalty provisions. While some criminal penalties will be replaced with disciplinary fines to provide appropriate punishment for offenders and avoid criminal records, certain criminal penalties will remain in place for specific offenses to prevent misconduct and effectively regulate industrial and commercial activities.

The public hearing process for the Draft Act is currently underway and will continue until June 15, 2024. The proposed revisions to the IEAT Act reflect a proactive response to the evolving challenges of the industrial sector, tailored to modern demands and focused on promoting sustainable development while reinforcing Thailand’s industrial prowess for future competitiveness and growth.

Author: Panisa Suwanmatajarn, Managing Partner.

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BOI Launches New Measures to Boost Affordable Housing Investment

BOI Launches New Measures to Boost Affordable Housing Investment

The Board of Investment (BOI) has unveiled special new measures aimed at stimulating investment in residential housing projects priced at 1.5 million baht or less. This initiative is part of a collaborative effort with the Government Housing Bank to expand homeownership opportunities for low-income Thai families.

Under the new promotion, property developers can apply for BOI investment incentives to construct housing projects capped at 1.5 million baht per unit. The Government Housing Bank will evaluate and certify qualifying developers, who can then submit applications for BOI promotion by the end of 2025.

“Affordable housing is a national priority to ensure all Thai citizens can realize the dream of home ownership,” said BOI Secretary General. “These new measures provide tax incentives to developers to increase the supply of moderately priced housing stock.”

low angle photography of white and purple concrete building

To be eligible, residential projects must meet specific criteria set by the Government Housing Bank:

  • For condominiums, a usable area must be at least 24 sq.m. per unit
  • For townhouses/detached homes, the usable area must be at least 70 sq.m.
  • Projects must include amenities like parking, security, cleaning services, and common areas

Developers must first obtain construction permits and Government Housing Bank certification before applying to the BOI for promotion privileges.

Once approved, developers will receive corporate income tax exemption for 3 years capped at their total investment amount. Only construction costs for utilities, roads, and public amenities within the project qualify for the tax break.

aerial view of buildigns

“The high costs of land and construction make it very difficult for developers to profitably build housing below 1.5 million baht,” noted BOI Secretary General. “This incentive helps make those moderately-priced projects financially viable.”

The Government Housing Bank has already opened an online application portal at www.ghbank.co.th for developers seeking certification to apply for BOI promotion.

Both the BOI and Government Housing Bank see this joint investment promotion as critically enhancing residential options for lower-income Thai families striving for home ownership.

Author: Panisa Suwanmatajarn, Managing Partner.

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NCSA Tackles Cloud Security with New Measures

The National Cyber Security Agency (NCSA) has recognized the growing reliance on cloud services by both government agencies and private sectors, along with the increasing number of cyberattacks targeting users. In response, the agency has drafted the Notification on Cloud System Cyber Security Standard (“Notification“), aiming to establish a robust standard of security measures for cloud systems.

Applicable Entities and Scope: The draft Notification is applicable to government agencies, supervising or regulating organizations, and organizations of critical information infrastructure (as defined under the Cybersecurity Act B.E. 2562 (2019)) that utilize cloud services and have official contracts with Cloud Service Providers (CSPs). These entities are collectively referred to as Cloud Service Customers (CSCs).

Risk Assessment and Categorization: According to the draft Notification, the risks associated with cloud system usage can originate from either the CSC or the CSP. Despite the fact that the draft Notification’s applicability is extended to only the CSCs, the CSPs are to be bound by its service agreement with CSCs to comply with the requirements of the draft Notification as well. CSCs and CSPs are mandated to assess the level of risk in accordance with the security objectives prescribed by another NCSA’s notification. The risk levels are categorized as low, moderate, and high, each with different minimum requirements for security standards, CSC and CSP assessments, and certifications.

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Minimum Requirements: The minimum requirements for cloud security depend on the assessed risk level and the related security objectives. These requirements may encompass various aspects, including:

  1. Cloud security governance, encompassing information security policies, organization of information security, supplier relationships, and compliance with rules and regulations.
  2. Cloud infrastructure security and operations, covering human resources security, asset management, access control, cryptography, physical and environmental security, operations security, communication security, system acquisition, development and maintenance, supplier relationships, and information security incident management.

Assessment and Certification: Depending on the risk level and the related security objectives, CSCs or CSPs may be required to conduct compliance assessments as follows:

  1. Self-assessment, conducted in accordance with NCSA’s prescribed requirements.
  2. Assessment by a regulator or regulatory agency (attestation).
  3. Assessment by an advanced certified body.

The frequency of assessments and certifications will also depend on the assessed risk level.

The draft Notification provides greater details, and CSPs and CSCs subject to its provisions are required to carefully assess their associated risks and obligations.

Conclusion: The NCSA’s draft Notification aims to establish a comprehensive framework for ensuring the security of cloud systems used by government agencies, regulatory bodies, and critical infrastructure organizations. By introducing risk-based minimum requirements, assessments, and certifications, the agency seeks to address the growing cybersecurity threats and enhance the overall resilience of cloud services within the country.

Author: Panisa Suwanmatajarn, Managing Partner.

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Understanding the Foreign Business Act in Thailand

The Foreign Business Act, B.E. 2542 (1999) (“FBA”), in Thailand furnishes the government with mechanisms to oversee and manage the operations of foreign enterprises within the country, ensuring alignment with national developmental goals and regulatory benchmarks.  This legislation is geared towards safeguarding Thailand’s economic integrity, national security, and cultural heritage by imposing regulatory measures on the involvement of foreign entities in designated sectors.

The FBA delineates precise restrictions on businesses to uphold national objectives and regulate foreign investment activities. Specifically, it set regulatory provisions on sectors such as real estate development and live entertainment organizing, ensuring control over foreign participation in these areas.

The FBA specifies both restrictions and benefits by categorizing businesses into 3 lists. List 1 comprises businesses strictly prohibited for foreign operations. Conversely, businesses listed in Lists 2 and 3 necessitate a Foreign Business License/Certificate for operation, reflecting concerns regarding national security or impacting on arts, culture, traditions, customs, folklore handcrafts, or natural resources and the environment (List 2) and unprepared competitiveness by Thai nationals (List 3). In the light of live entertainment organizer and real estate development businesses, both are categorized as businesses listed in List 3 (21) which are specified as service businesses that require a Foreign Business License/Certificate prior to operating.

To emphasize the difference between a Foreign Business License/Certificate, they both are official written evidence of the permission to operate the businesses. For a Foreign Business License, it is issued for granting permit for operating of the businesses listed in List 2 as permitted by the Minister of the Ministry of Commerce with approval of the Council of Ministers and List 3 as permitted by the Director-General of the Department of Business Development with approval of the Foreign Business Commission of the FBA. On the other hand, entrepreneurs who operate businesses listed in Lists 2 or 3 by virtue of a treaty to which Thailand becomes a party or by which Thailand is bound in consequence of obligations or which they have been promoted by Thailand’s Board of Investment (BOI) shall apply for a Foreign Business Certificate.

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Additionally, considering the minimum capital requirement for foreign business operation in Thailand in accordance with the FBA, it stipulates that a foreigner shall inject no less than 2 million THB as capital for the commencement of the operation of any business except for businesses prescribed in Lists 2 and 3 of the FBA which required minimum capital of no less than 3 million THB.

The said minimum capital shall reflect the estimated expenditure which refers to the amount of money the foreigner intends to spend in Thailand to conduct such a business which must be submitted to the Department of Business Development along with the application for a Foreign Business License/Certificate. The aforementioned requirement determines that the minimum capital must be imported into Thailand from overseas within a timeframe of three years, commencing from either the date of business commencement or the date of permission granted.

The FBA enhances the attractiveness of Thailand as an investment destination for foreigners, promoting economic growth and fostering international collaboration together with the protection of Thailand’s national interests and at the same time safeguarding the country’s economic, security, and cultural interests.

Author: Panisa Suwanmatajarn, Managing Partner.

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