The Industry Ministry is set to scrap the factory licence renewal requirement, a key factor in chronic kickback problems experienced by factories and investors, with 60,000 factories expected to benefit from the change.
Section 15 of the Factory Act of 1992 requires that factories renew the licence, also known as Ror Ngor 4, every five years. For both new and renewal licences, an official will sometimes ask for under-the-table money from factory owners.
Industry Minister Uttama Savanayana wants to get rid of the licence requirement in order to tackle corruption and ease the regulatory burden on investors and factory owners.
Under the act, Category 3 factory operators must obtain the Ror Ngor 4 permit from the Industrial Works Department before starting operations and must renew the licence before expiry.
If a firm makes the renewal 60 days after expiry, it is subject to a fine of 20% of the licence fee.
Mr Uttama said the ministry will unlock Section 15 in the act, meaning business operators will hold permanent Ror Ngor 4 permits that will be granted once and pay an annual maintenance fee.
"The ministry will soon propose the change to the cabinet for approval, then the new iteration will be considered by the Office of the Council of State and the National Legislative Assembly," Mr Uttama said. "The Section 15 abolishment is expected to be effective from early next year, and it means that the operators who will be eligible for renewal during 2019-23 will not need renewals."
Mr Uttama said the measure is aimed at bypassing the complex procedure of Ror Ngor 4 renewal, as the department can speed up other requests from new factory operators.
Furthermore, the ministry will follow up Prime Minister Prayut Chan-o-cha's directive to make the department more transparent.
Each new Ror Ngor 4 permit requires 30 days for approval, but if approval is not granted, a company can appeal the decision, which will require another 30 days.
Corruption has been rife under the rules as operators become more desperate to obtain licences faster.
"The ministry aims to recover the department's reputation and hopes to reduce complaints from business operators about staff taking bribes," Mr Uttama said, adding that greater investor confidence is expected as a result of the change.
Thongchai Chawalitpichact, the department's director-general, said the department will lose more than 10 million baht per year that was earned from the licence fees.
Thailand has 120,000 Category 3 factories, but half of them are located in industrial estates, where the Ror Ngor 4 is not required.
The ministry will set up a collaboration with government agencies and business operators to agree on the new licence rules.
Supant Mongkolsuthree, chairman of the Federation of Thai Industries, said the FTI agrees with the change, as it will help factories of all sizes to carry on with operations, particularly small and medium-sized enterprises (SMEs).
"More than 80% of factories are SMEs, and they need support from the government more than large factories do," Mr Supant said.