Thailand: What happened in 2019 and significant events in 2020

Thailand: Year in Review 2019 and Year to Come 2020 summarises a selection of the major developments last year, and major developments expected over the coming year, with links to further reading, where available.

Key updates to

17

pieces of legislation in 2019 and 2020

Thailand Law in 2019

2019 saw many notable legal and regulatory developments that aim to modernise the general legal framework and creating attractive investment opportunities

Capital Markets

Preferential public offering of TSR: The Securities Exchange Commission (SEC) has extended filing exemption for an offering of transferable subscription rights (TSR) where the issuer elects to exclude certain shareholders from the offering to avoid additional legal requirements imposed by the home country of those shareholders. Previously, TSR must be offered to all shareholders in proportion to their shareholdings in order to qualify for the filing exemption.

Competition

Trade Competition: Thailand’s Trade Competition Commission (TCC) has been very active in 2018. The TCC has continued to issue and develop guidelines on unfair trade practices, the newest being the guideline which imposes certain requirements on wholesale/retail business operators (including hypermarkets, cash and carries, supermarkets, specialty stores, department store and convenience stores) when dealing with manufacturers, suppliers or distributors. Following the effectiveness of Thai merger control regulations in December 2017, the TCC has considered a number of pre-merger filing and post-merger notifications in 2018 and continued to refine its position with respect to merger control regulations.

Data Protection

New Data Protection Law: Thailand’s first specific data protection law, the Personal Data Protection Act B.E. 2562 (2019) (the “Thai PDPA”), came into effect on 28 May 2019. It is modelled on Europe’s GDPR, which means that it imposes a number of duties on businesses when they collect, use and disclose customers’ and employees’ personal data. The law also imposes higher standards in relation to ‘sensitive personal data’ such as health, criminal records, religion and biometric data. Cross-border transfers of data will also be subject to certain requirements. The operative provisions of the Thai PDPA will become effective on 27 May 2020, allowing one year for businesses to prepare for compliance. A new data protection regulator, the Personal Data Protection Commission, will be formed and charged with the powers and duties to implement the Thai PDPA.

Dispute Resolution

The long-awaited Mediation Act 2019 came into force: The Mediation Act 2019 which became effective on 23 May 2019 allows for a system of private mediators to be set up to mediate:

  • (i) civil disputes such as disputes concerning land (except land ownership), disputes relating to inheritance, other disputes prescribed in the regulations or any other dispute not exceeding Baht 5 million and
  • (ii) limited types of criminal cases that satisfy the criteria.

Employment

Key amendments to labour protection law: Thailand’s Labour Protection Act 2019 (No. 7), effective on 5 May 2019, imposed an increase of statutory severance pay for employees whose terms of service is longer than 10 years, increase of maternity leave entitlements and a requirement for employees’ consent to be obtained for a transfer of employment as a result of an amalgamation.

Exchange Control

Relaxation of exchange control regulations: The Bank of Thailand has relaxed the exchange control rules to facilitate capital outflows to help promote capital flow balance and lessen pressure on Thai Baht. Such relaxations include permitting Thai residents to keep foreign currency funds overseas up to USD 200,000 per transaction, permitting retail investors to invest directly in offshore investment products up to USD 200,000 per year without the need to go through a local intermediary (e.g. brokers) and allowing businesses and individuals to transfer funds abroad more freely. Outward remittance of foreign currencies, which used to be permitted based on a positive list of specific purposes, can now be done freely, except for a few restricted purposes, such as for settlement of FX/THB transactions with financial institutions abroad. Documentation is no longer required to be provided to commercial banks when conducting outward transfers of less than USD 200,000 (an increase from the USD 50,000 threshold). These relaxations became effective on 8 November 2019.

Financial Regulation

Consumer financing: Lending against title to a motor vehicle has been recognised as a ‘personal loan’ under the supervision of Thailand’s central bank (Bank of Thailand: BOT). This provides certainty that non-bank providers of personal loans against title to a motor vehicle may charge effective interest (including fees and other forms of charges) over 15%. per annum.

Foreign Direct Investment

Foreign ownership - Additional exemptions for intra-group services: Foreigners are no longer required to obtain a Foreign Business Licence for providing the following services to their affiliates and subsidiaries:

  • (i) providing a loan;
  • (ii) lease of office space and utilities; and
  • (iii) providing consultation services relating to management, marketing, human resources, and information technology.

These additional exemptions are only applicable to the provision of services to foreign entities.

General

Modernisation of the Electronic Transaction Act 2019: The Electronic Transaction Act 2019 was amended and became effective in April 2019 to provide more flexibility and practicality for electronic transactions through recognising contracts entered into by automated electronic data exchange system (AEDES), revising the criteria for a valid e-signature, recognising the concept of electronic invitation to offer and establishment of the Electronic Transaction Development Agency to oversee e-service businesses.

Hospitality – ease of obtaining licences and amnesty: The Thai Government issued another extension to enable independent hotel operators to be eligible for obtaining hotel operating licences. The measure involved temporarily lifting town planning restrictions and providing amnesty for non-compliance with the relevant laws, provided that the property complies with requisite fire safety systems.

Projects

Promotion of Public-Private Joint Investment: In order to promote PPP projects in Thailand, the Public Private Partnership Act 2019 (“PPP Act 2019”) was amended and became effective on 11 March 2019. The PPP Act 2019 sets out clearer criteria and procedures for PPP projects including: step-in right by the project owner for public benefits, establishment of the PPP Policy Committee and Contract Management Committee and PPP promotion fund. The amendment is to provide transparency, create confidence as well as to encourage the private sector to participate in PPP opportunities in the pipeline.

Real Estate

Right over leasehold assets – new type of property right under Thai law: The Rights over Leasehold Asset Act 2019 became effective from 27 October 2019, allowing a new type of property right over (i) land with a title deed, (ii) land with a title deed and buildings constructed on such land and (iii) condominium units. Under this new law, the owner of any of these three types of immovable assets can create and register a right over such assets for a maximum period of 30 years.
2019 saw many legal and regulatory developments affecting our clients and their sectors, both directly and indirectly. Our overview aims to help our clients navigate through the notable changes to the legal landscape in 2019 which may affect their assessment of the risks and opportunities in doing business in Thailand, and insight into what is to come in 2020.

Wanwisar Nakarat, Partner, Thailand

Wanwisar quote

Thailand Law in 2020

2020 will see continued development of secondary regulations and guidelines under various new legal frameworks introduced in recent years, including personal data protection, trade competition and digital assets. Further changes to existing regimes to support the digital economy may also be introduced

Competition

Trade competition - More guidelines expected: In 2020, the TCC is expected to issue more guidelines for business operators including online trading platforms and online travel agency businesses to regulate fair competition among the business operators in those markets.

Data Protection

Data protection - Various secondary regulations under the Thai PDPA to be issued: While there is a grace period of one year for the operative provisions in the Thai PDPA to be fully applicable from May 2020, a number of businesses are preparing for compliance with this new law. The Personal Data Protection Commission, expected to be functional before the Thai PDPA is in full effect, will need to issue various secondary regulations under the Thai PDPA to clarify certain practical issues under the Act. These include the ‘sufficiency’ of the data protection standards of the destination receiving personal data which is transferred out of Thailand, guidelines to notify the regulator in case of a data breach, and the threshold of the amount of data processed by a business that will require them to appoint a Data Protection Officer.

Digital Assets

Digital Assets – Investor Protection Fund: Within Q1 of 2020, the SEC expects to conclude details on the establishment of the Investor Protection Fund. The purpose of the fund is to protect investors who suffer losses caused by authorised intermediaries due to delays, fraudulent acts, inappropriate advice etc. for all types of investment assets including digital assets. The fund will be an improvement and will be based on the current Securities Investor Protection Fund (SIPF) which only offers protection to investors for investment in shares and compensation which is limited to Baht 1 million per intermediary.

General

Ride-hailing platform to be legalised: In light of growing consumer demands, the Thai Government is considering proposals to legalise ride-hailing platforms, such as Grab, and its drivers. The law may impose consumer protection measures including requirements on service quality and safety standards, drivers’ qualifications and a pricing policy. The regulators will also need to provide appropriate measures to protect the interest of existing taxi and transport service providers who may be subject to more stringent licensing requirements.

Insurance

Insurance – Proposed amendments to insurance laws to promote M&A: On 19 November 2019, the Cabinet approved in principle the draft of the Amendment to the Life Insurance Act B.E. 2535 (as amended) and the Non-life Insurance Act B.E. 2535 (as amended) which contain amendments that would ease the process for merger and acquisition (M&A) between insurers licensed in Thailand. The most notable proposed amendment is to lessen the burden of obtaining policyholders’ consent in order to transfer their policies to the surviving insurer.

Explore our Year in Review 2019 and Year to Come 2020 series across 20+ jurisdictions and a number of topics.

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