Everything You Need to Know About Getting a Factory License in Thailand

14 February 2023

On October 27th, the Factory Act came into effect, creating adjustments to aid factories in becoming more comfortable and adaptable in the market. According to this new act, a factory is define as a building, place, or vehicle with at least 50 employees or machinery with a total power of 50 horsepower or more. This marks a major change from the 1992 Factory Act, which set the criteria for 5-20 horsepower and/or 7-20 employees.

This blog will discuss the Factory Act (No. 2) BE 2562, its main requirements and the modifications it brings, whether you need it, how to apply for a factory permit, and all the important stuff you need to know!

 

Does your factory need a license?

The Factory License Act 1992 outlines which businesses require licenses and the different regulations they must follow regarding waste output, pollution emission, and the environment.

In the past, unlicensed factories were small operations with machines of up to 20 horsepower and between 7-20 employees.

Currently, the new act introduces additional exemptions for obtaining a license.

These types of factories are exempted:

  • A factory that belongs to the Government Agencies
  • A factory for educational and research purposes
  • A factory for training at an educational institute
  • A family-owned factory
  • A factory conducting non-factory activities

Nonetheless, if your factory uses a total of 50 horsepower or more in machinery and employs at least 50 staff, you will have to notify the government before commencing operations in accordance with the new act.

 

How to obtain a factory license?

If you need a factory license for your business, it's important to know how to apply and what documents you'll need.

  1. A complete factory license application form to the provincial industrial office.
  2. A company affidavit.
  3. A qualified engineer or an authorized representative from the Ministry of Industry must sign off on the factory plan.
  4. A list of all the factory equipment and machinery certified by an engineer or representative appointed by the Ministry of Industry has been created.
  5. Lastly, the proposed safety measures should address hazards, dangers, waste control, and environmental concerns in detail. Frasers Property has created an extensive sustainability plan for factories and warehouses to adhere to.

Once it's all ready you can submit the form to the Provincial industrial office with a fee which after then an inspector will come to audit your factory. Under the former Factory Act, only a governmental official had the authority to do so, but now a private individual may do it, provided they are qualified.

 

What qualifications should a private inspector have?

To qualify, an individual should have a background in engineering, science, or technology with at least five years of experience in environmental, electrical, civil engineering, mechanical, and other related departments. They also need to be certified by the Ministry of Industry to demonstrate they are qualified.

 

Upon submission of the factory license form, a report must be submitted within the same month. Within the next 50 days, government officials will make a decision on whether to accept or decline your factory's application. During this time, you can still revise the application or factory plan.

 

Key point: It is critical to note that if any alteration to the factory plan is made or if you are transferring/leasing it to another person or entity, then a new license must be obtained by the new factory owners.

 

How to transfer a factory operation permit?

Within 30 days of buying, selling, or renting a factory with a permit, you must submit a transfer application to transfer or lease the license to another operator.

 

The factory operator who applied for the license is allowed to keep operating for 30 days while the application is being considered. Once the factory permit has been transferred, the original license holder will no longer have the right to lease or buy the factory.

 

Do you need to renew the factory operation permit (Ror.Ngor.4)

Under the first Factory Act, businesses were required to locally register their factory every 5 years in order to give national governments stricter control and oversight of their activities. Factory owners no longer have to do so if they keep using their existing equipment until the factory ceases operations.

 

If you have new machines, you'll need to update your machinery list and renew your license. This is a better option because it bypasses bureaucratic procedures and slow processes. Also, this applies to both large companies and SMEs, regardless of their size or number of employees.

 

Conclusion

The Factory Act (No. 2) Amendment, which was implemented in 2019, offers more convenient conditions for businesses while still being protective of the environment and the public. This amendment also increases economic returns for the country as it encourages potential investors.

 

If you have an existing license according to the old regulations, your license holds even if you reduce the power or number of employees, as long as you don't discontinue the factory operations; therefore, there's no need to get a new one.

 

Frasers Industrial Property can help you select the right factory location, type, and size of your factory in Thailand and make sure that it is compliant with zoning laws and ministerial regulations to avoid any legal issues.

With a plan in place, Frasers Property can help you navigate the legalities of filing paperwork and getting a factory rental. Contact us today for more information.

 

For more information on the Factory acts, or any other questions you may have, please don't hesitate to email us at FPT.sales@frasersproperty.com or give us a call at +66 (0) 2483-0000. We look forward to assisting you with all your factory needs.

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