The Ministry of Industry can thus decide upon the following items:
- The size of the factory
- The quantity of each type of factory, with the power to disallow the establishment of certain factories if there are already too many in Thailand
- The type, quality, source of origin, and ratio of raw materials to be used in the factory
- The type or quality of the products to be manufactured in the factory, with the possibility that one is obliged to wholly or partly export their products (or that the manufactured products are limited to certain industries)
- The type of energy to be used in a factory
A factory is defined as “a building, place or vehicle that uses a machine from five horsepower or more or an equivalent, or which 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, and that are not owned or operated by government agencies for the purpose of national security or safety.”
Not all factories, as described here above, need a license. Some just need to notify the officials beforehand and can start a business as soon as they receive a letter from the Ministry stating that their report has been received well.
The intensity of the control is based upon the probability of pollution and the required protection of the environment, which is at its turn based upon the output of the factory:
- Factories that use machinery equivalent to 5-20 horsepower and/or that employ 7-20 people for manufacturing do not require a license. However, the manufacturer has to follow the ministerial regulations
- Factories that use machinery equivalent to more than 20 horsepower but less than 50 and/or that employ more than 20 but less than 50 people for manufacturing: the manufacturer has to inform the officer before starting business and, of course, has to be compliant with ministerial regulations
- Factories that pollute and that use machinery equivalent to more than 50 horsepower and/or that employ more than 50 people for manufacturing have to receive a license from the officer before the start of the operations
The issuance of the factory license is subject to the Ministry’s discretion. Since, in most cases, the start-up is time sensitive, one may be granted a certificate allowing them to already start building parts of the factory.
Every license holder is obliged to additionally inform the Ministry in case of the following changes and/or incidents:
Factories that use machinery equivalent to 5-20 horsepower and/or that employ 7-20 people for manufacturing do not require a license. However, the manufacturer has to follow the ministerial regulations
- An accident that causes death, injury, or sickness that incapacitates a worker for more than 72 hours: obligation to notify the Ministry within three days from the date of the accident
- An accident that causes the factory to stop operations for more than seven days: obligation to notify the Ministry within 10 days from the date of the accident
- Removal of machinery or the factory to another site for temporary operations: obligation to notify the Ministry within seven days
- Decease of the licensee: the heir or administrator must submit an application for the transfer of the license within 90 days
- Factory expansion (increase of the number or the power of the machines or if a part of the factory building would be added or alternated so that the foundation of the factory can bear a load of an additional 500 kilograms or more): an additional approval has to be requested within 7 days and a fee of 100,000 THB will be due
The factory may always be inspected to ensure continuous compliance with the Factory Act. This can be done by government officials or by a private body. If the factory would be endangering the public, the Ministry can oblige the license holder to make improvements or even cease business. A violation of the Factory Act’s provision may also incur penalties such as fines or imprisonment (for the company and/or its directors).
Validity of the license and renewal.
The license is valid for five years. Before the expiration of the (first) license, a renewal should be requested. The fee, therefore, is again 100,000 THB. It is a personal license in the sense that a new one will have to be requested if the factory is transferred or leased.
Apart from a notification or license, please take note of the fact that the Ministry of Industry has issued regulations for many different items such as:
- The description, category, or type of machinery and equipment to be used in the operation of the factory business
- The location and environment of the factory (e.g. no factories can be build in residential areas or within 50 meters of public places)
- The interior and description of the factory
- Requirements for workers
- The process of manufacture and provision of equipment