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May 17, 2019

Amendments to Thailand’s Factory Act

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The Factory Act (No. 2) B.E. 2562 (2019) and Factory Act (No. 3) B.E. 2562 (2019) were published in Thailand’s Government Gazette  on April 30, 2019. These will amend the Factory Act B.E. 2535 (1992). The Factory Act (No. 2) will become effective 180 days after publication—that is, on October 27, 2019—while The Factory Act (No. 3) became effective on May 1, 2019. 

The main changes introduced by Act (No. 3) are administrative, laying down the definitions, appointment procedures, and duties and responsibilities of the local government authorities tasked with enforcing the law related to factories. 

The key amendments of Act (No. 2), which has a more practical impact on business operators, are laid out below.

Definitions

Under the new legislation, the definition of “factory” is updated to mean a building, place, or vehicle using machinery of 50 horsepower or more, or having a minimum of 50 workers (increased from 5 horsepower or 7 workers under the previous legislation), with or without machinery, in its operations. In addition, “construction of buildings” will no longer fall within the definition of “factory set-up.”

Increased Exemptions

The following types of factories will now be partially exempted from complying with the Factory Act: 

  1. A factory belonging to a governmental authority;
  2. A factory for study and research;
  3. A factory for training at an education institute;
  4. A family-owned factory; and
  5. A factory necessary for or related to a non-factory business and located in the same space.

License Renewal

Prior to the amendment, a factory license was valid for a period of five years from the start of operations, subject to certain exceptions. However, under Act (No. 2) a factory license will not expire until the factory ceases doing business.

Private Inspector

Act (No. 2) authorizes machinery and factory inspection duties to be carried out by private inspectors who are qualified and licensed in accordance with requirements laid down in Act (No. 2).

These amendments mean that business operators will be able to set up factories with greater ease. The amendments will also apply to all currently valid factory licenses as well as applications now under consideration.

For more information on the Acts, or for any other enquiries, please contact our Bangkok office at [email protected] or +66 2056 5555.

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