Thailand Legislative Update: March 2019


March 29, 2019

1. Several Rulings Solidify Coronation and Election Dates, Candidates and Parties

On January 1, Thailand’s Royal Household Bureau declared that the coronation of Rama X, King Maha Vajiralongkorn, would take place from May 4-6 at the Grand Palace in Bangkok. In response, the Election Commission (EC) announced it would set a new date for Thailand’s general elections—originally slated for February 24—to avoid any possible overlap between the King’s coronation and election activities. This marked the seventh delay in Thailand’s elections. On January 23, the EC announced that the general election will be held on March 24. The announcement came in response to a royal decree issued by His Majesty King Maha Vajiralongkorn and signed by Prime Minister Prayut Cahn-o-cha that same day. According to the Prime Minister’s Office, it is expected that the new government will “be in place by the middle of this year.”

On February 8, the Thai Raksa Chart party announced that former Princess Ubolratana, the elder sister of the current King Maha Vajiralongkorn, would be their candidate for Prime Minister. The move was completely unprecedented, as a senior member of the royal family has never participated in a Thai election before. The announcement of Princess Ubolratana’s candidacy was closely followed by a Palace statement declaring it “highly inappropriate” and unconstitutional. These sentiments were echoed by other parties, which submitted a letter on February 8 to the EC requesting that it suspend Thai Raksa Chart’s nomination of the former Princess. The EC rejected Thai Raksa Chart’s nomination of Princess Ubolratana on February 11. On March 7, Thailand’s Constitutional Court ordered the dissolution of Thai Raksa Chart and banned its party executives from participating in politics for 10 years. The Court’s decision was based on constitutional norms of separating members of the royal family from Thai politics which, if violated, could undermine the royal institution.

On February 22, the EC ruled that Prime Minister Prayut Chan-o-cha—premiership candidate for the Palang Pracharath Party—can participate in election campaigning, so long as he refrains from using the powers vested in him as Prime Minister to seek an advantage in the elections. Palang Pracharath leader Uttama Savanayana had encouraged Prime Minister Prayut to take part in electioneering before the ruling, but the Prime Minister refused, noting his platform of “stability, prosperity and sustainability under King Rama IX’s sufficiency economy plan” was already known to the public.

Elections took place on March 24, constituting Thailand’s first general election in eight years. Thais voted for 350 constituency seats in the 500-seat House of Representatives. The 150 remaining party list seats will be allocated based on the number of constituency seats won by each party. The 250 Senate members were selected by the current Government, per the 2017 Constitution. While initial, unofficial tallies of votes and seats won have been released, the Election Commission announced that it will not share final tallies until the final constitutionally-mandated deadline of May 9, after the coronation ceremony is complete.

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2. Digital Bills

On February 28, Thailand’s National Assembly (NLA) passed the Cybersecurity Bill and approved the Personal Data Protection Act (PDPA). The bills are designed to lay a foundation for the Thailand 4.0 initiative to transform the country into a digital and innovation hub and provide a framework to launch Thailand’s digital economy and digital governance movements.

The Cybersecurity Bill will establish a National Cybersecurity Commission, which will be chaired by the Prime Minister and invested with policymaking powers. Also included in the bill is a provision establishing a committee that is designed to supervise cybersecurity, which will be headed by the Minister of Digital Economy and Society and authorized to take measures—including gathering information and witnesses— that will enable analysis of cybersecurity threats. Stakeholders have expressed concern that the bill endows authorities with considerable leeway to determine what constitutes a cyber threat, allowing them to bypass courts to collect information, monitor information and traffic in real time, and confiscate and search personal property if there is a cyber threat to national security. Drafters of the Cybersecurity Bill as well as NLA cyber committee members have countered that the bill is primarily intended to protect national critical infrastructure and will not affect the public.

The PDPA mirrors much of the EU’s General Data Protection Regulation (GDPR), but there are differences between the frameworks, meaning compliance with GDPR does not necessarily ensure compliance with PDPA. Tilleke & Gibbins has released some of the most notable requirements of PDPA as follows: PDPA will require data controllers to obtain consent from consumers before using their personal data, has greater requirements to ensure protection of sensitive data, restricts the transfer of personal data to a 3rd country, maintains extraterritorial applicability, and mandates that data controllers outside of Thailand appoint a representative within the jurisdiction. However, PDPA does not require international firms to store data locally.

Following passage by the NLA, the bills require royal assent before they can be published in the Royal Gazette. The bills will come into effect 180 days after being publishing (around mid-June, if the bills are published this month). Following passage, it is likely that implementation of the bills will take place in the final quarter of 2019, following Thailand’s elections and coronation activities in March and May, respectively.

The NLA has also endorsed a series of amendments to the Electronic Transaction Act (ETA) over two sessions in January and February 2019. According to Baker McKenzie, some of the key amendments to the Act cover e-signatures, revised protocol for electronic contracts, introduction of an automatic electronic data exchange system (AEDES), digital ID and digital ID system, and e-service businesses. The ETA will be sent to King Maha Vajiralongkorn for approval before it is published in the Government Gazette.

Director-General of the Revenue Department, Ekniti Nitithanparpas, does not expect a draft bill on e-business tax to pass in time before the next government assumes office. As of January 29, the draft bill was under the review of the Council of State and had yet to appear on the NLA agenda. Though the draft law was proposed over two years ago, the Council of State has yet to reach a decision. The bill would apply to foreign firms conducting business and providing services over online platforms in Thailand.

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3. Medical Price Controls

On January 22, 2019, the Cabinet of Thailand approved a measure to introduce price controls on medicines, medical supplies and medical services. Commerce Minister Sontirat Sontijirawong commented that the addition of these items to the price controls list would not necessarily lead to their prices being capped. A sub-committee, comprising the Ministry of Commerce (MOC), the Ministry of Public Health (MOPH) and the National Health Security Office, as well as insurers, private hospitals, and consumer groups will be formed to discuss an implementation plan.

MOC had proposed new price controls to the Cabinet in response to public outcry surrounding exorbitant prices of medical goods and services. Supatra Nacapew, Chief of the Independent Consumer Protection Committee’s sub-panel on food, drugs, and other health products, stated that while medicine already falls under the Internal Trade Department’s list of price-controlled goods, private hospitals continue to charge 70 to 400 times the controlled price. Private hospitals also add a 33% profit margin to the sale of medications—well above the 10-12% needed to cover hospital overheads.

Private hospitals have in turn argued that price controls will interfere with plans to transform Thailand into a medical hub and limit consumers’ alternatives. Those in favor of price controls counter such claims by highlighting countries like Singapore, where price controls on medical supplies have not detracted from its status as a medical hub. Those opposed to price controls assert that health insurance policyholders in particular will be affected by the price controls. Currently, private hospital medical bills subsume certain medical services under the price of medication. The introduction of price controls would require a detailed cataloguing of all medical services, and, as policyholders can only claim reimbursement on medications, they may witness a hike in their medical bills.

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4. Agriculture Related Bills

In a Cabinet meeting statement on Monday, February 18, Prime Minister Prayut Chan-o-cha declared that he is not opposed to the Hazardous Substance Committee’s decision on February 14 to delay a ban on the agrochemical paraquat, which 53 countries have banned as a hazardous substance. Since its announcement, the 29-member committee has faced opposition from over 600 civic groups as well as the Public Health Ministry. The civic groups mounted a campaign imploring the committee to review its decision and to also place a ban on the agrochemicals glyphosphate and chlorpyrifos. Prime Minister Prayut explained that while the government agrees that toxic substances should not be used in farming, it must not interfere with the committee’s inviolable decision. In what appears to be an effort to satisfy all interest groups, both businesses and civic groups, Prime Minister Prayut stated that the government will work to reduce and phase out the three chemicals, a call echoing a statement made by Agriculture and Cooperatives Minister, Grisada Boonrach, on February 15. Minister Grisada also indicated that the ban could be implemented within two years, pending the discovery of alternatives to the agrochemicals. These plans coincide with the government initiative to promote organic farming in Thailand.

On December 24, 2018, the Government of Thailand issued a notice that all U.S. exports of distillers’ dried grains with solubles (DDGS)—an ethanol byproduct—to Thailand would be subject to methyl bromide fumigation. The notice was issued after beetles were found in two shipments of DDGS in August and November of last year. The new regulation went into effect on January 1, 2019, giving very little time for the industry to consult with the Thai Ministry of Agriculture and Cooperatives to come up with an alternative solution to the new regulations which would be consistent with US industry fumigation practices. U.S. DDGS exports had been temporarily suspended, and Thai government officials stated that future shipments of DDGS must be accompanied with a certificate indicating they have been properly fumigated. U.S. exporters have viewed this development alarmingly, as Thailand now constitutes a major market for DDGS due to a decrease in Chinese consumption as a result of the U.S.-China tariff conflict. In 2017, Thailand imported 738,413 tons of DDGS, making them the fourth largest importer of DDGS. While U.S. shippers will take care not to suffer any losses in the Thai market, demand for DDGS remains robust in parts of Asia and Mexico.

On December 25, 2018, the NLA voted to amend the Narcotic Act of 1979 and approved marijuana for medical use and research. As of January 15, 2019, Thailand’s Food and Drug Administration (FDA) was drafting regulations on marijuana framing covering the cultivation, manufacturing, and imports. FDA Deputy Secretary-General, Dr. Surachoke Tangwiwat, indicated that the FDA would consult public opinion in drafting regulations.

Further Reading:

5. Southern Economic Corridor

On January 22, 2019, the Thai Cabinet approved the development of the Southern Economic Corridor (SEC), which will cover 116 projects and have a budget of 106.79 billion THB (around $3.39 billion USD). The development will last from 2019-2022 and take up approximately 300,000 square meters of land in the Chumphon, Ranong, Surat Thani, and Nakhon Sri Thammarat provinces. The infrastructure development projects that have been announced as part of the SEC are similar to those that fall under the Eastern Economic Corridor (EEC), which covers the Chachoengsao, Chonburi, and Rayong provinces in the upper Gulf of Thailand. The EEC complements the Thailand 4.0 initiative, which endeavors aims to fuel Thai growth through investments in new technologies and innovations.

While a detailed plan for the SEC has yet to be released, the National Economic and Social Development Board (NESDB) indicated that the SEC will comprise of four key strategic plans.

  • First, the SEC is planned to connect coasts along the Gulf of Thailand and Andaman Sea with those of South Asia to link up with Thailand’s Eastern Economic Corridor (EEC). This part of the SEC will cover 10 projects—including an upgrade to Ranong’s deep-sea port and several airports—worth roughly 50 billion THB (around $1.59 billion USD).
  • The second component of the SEC will feature 31-33 projects worth around 39.6 billion THB (around us$1.26 billion USD) and will expand Thailand’s “Royal Coast” tourist infrastructure project around Hua Hin—approved by the Cabinet in March— to include areas along the upper portion of the peninsula from the Kra Isthmus up to Samut Songkram province. This dimension of the SEC will coincide with a planned high-tourist campaign along the western coast designed to increase income in the region. To facilitate travel, the government has begun construction on a 107-km highway that will traverse the peninsula and connect the southern provinces. Nathporn Chatusripitak, an adviser to the Prime Minister’s Office, also indicated that a 167-km railway linking Chumpon and Ranong will be completed by 2022.
  • The third part of the SEC will support 32-33 projects worth anywhere from 6.49-7.37 billion THB (around $205-233 million USD) and will be committed to the development of Thailand’s bio-based and processed agriculture industry. Additionally, the government will open research centers dedicated to the study of aquatic animals and rubber innovations.
  • The SEC’s final component covers 38-39 projects worth 7.12-9.6 billion THB ($225-304 million USD) and will promote natural resource preservation, smart city design, and the development of telecommunications infrastructure. The Cabinet has also approved another five SEC projects that will be financed with 448 million THB (around $14.2 million USD) from the FY 2019 budget.

While it is still not clear from whom the Thai government will source the majority of its investments for the SEC, its focus on South Asia under the first dimension of the SEC will certainly broaden the scope of the EEC’s “Prime Gateway to Asia” design while attracting a greater diversity of investors. As the EEC and SEC schemes are closely aligned and geographically contiguous, it is possible that the SEC will both spark competition between China and India and facilitate greater cooperation between East and South Asia.

Further Reading:

6. Power Development Plan

The National Energy and Policy Council (NEPC) has approved the newest iteration of Thailand’s power development plan (PDP) for 2018-2037. According to the Bangkok Post, the plan will attempt to privatize Thailand’s energy sector while increasing energy capacity from 46,090MW in 2017 to 56,431MW. As a result, EGAT is gearing up to become a system administrator in Thailand’s energy production and will guide the country’s transition toward a more renewable-based energy portfolio. Contracts with small power producers, due to expire over 2016-2025, will be revised and extended. As a part of the plan, the Ministry of Energy will discuss the prospect of purchasing power from Laos and Cambodia. The new PDP stipulates that roughly 5,857MW will come from imports.

Notably, PDP will reduce the power production share of the state-run Electricity Generating Authority of Thailand (EGAT) from 35% to 24%. Under the new PDP, Thailand will also expand renewable energy production from waste, biomass, hydropower, and solar to 20,766MW. The plan was approved by the council head, Prime Minister Prayut, on January 24. And will likely be implemented in Q2 of 2019.The NEPC has also authorized the Ministry of Energy and EGAT to develop a smart grid in Thailand’s EEC to increase energy efficiency and bolster Thailand’s position as a regional power purchaser. As of February 6, EGAT submitted a plan to the Cabinet calling for investment in a floating solar hybrid power generation at nine dams in the country. Upon Cabinet approval, EGAT will begin to seek investments from international and domestic companies and begin signing contracts. Under the PDP, energy production from the dams is to total 2,725MW.

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7. Labor Protection

On December 13, 2018, the Thai government passed several amendments to the Labor Protection Act (LPA) designed to promote safety in the work place, workers’ rights, and to punish employers who violate labor law. Notable amendments cover the following:

  • Extended severance pay for employees who have worked for 20 years or more;
  • Increased maternity leave from 90-98 days;
  • Paid leave for necessary business for a minimum of three days;
  • Advanced notification of 30 days for employee relocation;
  • Required consent from employees transferred as a result of a change of employer;
  • Payment of 75% of an employee’s wages in the event business is suspended;
  • Payment of 15% per annum interest for wages on which employer has defaulted;
  • Payment to an employee on the day of his or her termination;
  • Gender equality in the workplace; and
  • Sanctions on employers who violate the LPA

On February 14, the NLA passed the Bill on Labor Protection in the Fisheries Sector. According to The Nation the bill is expected to elevate the conditions on commercial shipping vessels to the standard of the C188 Work in Fishing Convention. The bill will apply to fishing vessels operating out at sea for more than three days and mandates that vessel owners provide food and accommodation as well as ensure safe and proper working conditions for employees. The bill has been met with backlash from operators who claim its stipulations are too strict and unrealistic.

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8. Ban on e-cigarettes

As of January 16, the Ministry of Commerce has tasked the Tobacco Control Research and Knowledge Management Centre (TRC) with reviewing Thailand’s ban on e-cigarettes due to difficulties in enforcement. Thailand banned the import, sale, and servicing of e-cigarettes in 2014, though there are no laws governing the smoking of e-cigarettes. This has led to confusion among consumers—including tourists—as well as law enforcement, prompting the TRC to study regulation and develop a solution. The study is expected to take six months and may result in a continuation of the ban or a mandate on import licenses and registration for e-cigarette imports. The issue has been contentious within the Thai government, with agencies advancing different solutions. For example, the Ministry of Public Health has advocated that the ban remain in place while the Customs Department has indicated it is prepared to tax imports of e-cigarettes in the event the ban is lifted.

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