วันพฤหัสบดีที่ 11 กันยายน พ.ศ. 2557

Regulatory Reform in Thailand

Pakorn Nilprapunt[1]


[1]      Regulatory reform plays important role in economic, social and political development of all democratic States. In economic perspective, the objective of regulatory reform is to bring all regulations to be in line with current economic conditions.  The regulations which are efficient, effective and efficacy will so far facilitate economic activities at all levels upon fair administrative and compliance costs and eliminate duplications and red-tape. In term of social development, regulatory reform is going to bolster regulations which are in compliance with the real needs of the people via the essential element of regulatory reform; public consultation.  As for political dimension, regulatory reform enables the public to take part in the making of such public policy as regulatory policy.  The accomplishment of regulatory reform therefore will not only strengthen the competitiveness of individual entrepreneur and national competitiveness which is good for national economy, but it also abounds social and political healthy. 

[2]      The concept of regulatory reform in Thailand does not deviate from the mainstream as above mentioned. We have exercised the techniques for reform in accordance with international best practices as well.  Many existing regulations however evidence that Thai regulations are not in line with current global conditions as well as current needs of the public. The most distinguished example could be found by through ‘legal mechanism’ used in the existing legislations.  As we all aware that the current international trade bases upon liberalization, more than ninety per cent of Thai legislations still base on ‘strict control system’ which is inherited from the outdated protectionism.  That is the main reason why the national competitiveness ranking of Thailand still in the middle-low of the table and democratic development is quite slow. The main purpose of this article is to survey the hurdles of regulatory reform in Thailand through historical approach.

[3]      Akin to any other country, regulatory reform in Thailand was conducted from time to time for hundreds years, but the greatest one had emerged from an initiative of King Rama V in 1897.  At that time, Thailand and other peaceful countries in Indochina Peninsular faced with serious threat of colonization of the western countries.  Many had been colonized upon different ‘accusations’.  Particularly to Thailand, the super powers claimed that Thai laws were barbaric, so they requested the extraterrestrial right for their subjects living in Thailand until Thai legislations became ‘civilized’ upon the ‘western standards’.  His Majesty realized that this might be the first step of full colonization process. His Majesty reacted to this ill will responsively by establishing the ad hoc Laws Drafting Commission in 1897 to prepare the Penal Code, the Civil and Commercial Code, the Civil Procedure Code and the Criminal Procedure Code along the same line with the laws of the European countries. This ad hoc Commission composed of experienced legal practitioners and law professors from the United States and European countries with a view to bar the western imperials from denying the Codes to be done.  The Penal Code came into force in 1908, the Civil and Commercial Code came into force in 1925 while the Civil Procedure Code and the Criminal Procedure came into force simultaneously two years after Thailand adopt the democratic regime of government with the King as the Head of State in 1932.

[4]      When the four Codes came into force, the extraterrestrial right of all western countries over Thai jurisdiction had been lifted up country by country. After the last one was released, regulatory reform seemed to be an unimportant work. The government left this duty to each Ministry or Department dealing with the problem in which the reform was required.  However, the key player in regulatory reform during this period was the Office of the Council of State (OCS), a central legal agency of the government and the successor of the Laws Drafting Commission of 1897. Since the main function of OCS was regulatory drafting, OCS had to monitor and observe the ‘social reality’ domestically and abroad for the purpose of both drafting and reviewing the existing regulations to meet with any ‘change’. It could be said that this institution has dealt with regulatory reform for very long period. 

[5]      In 1988, the Cabinet launched the Regulatory Impact Assessment Initiative based upon the ‘deregulation policy’ which was fashionable at that time. This initiative required the government agency which proposed the bill for Cabinet’s approval to annex the regulatory impact assessment (RIA) report altogether with the bill for its consideration.  The objectives of this initiative were to reduce State regulation in doing businesses of private sector, to increase self-regulation of operators in each business sector, and to enhance competitiveness of individual entrepreneur.  In the RIA report, the government agency had to clarify the following questions rooted from the ‘Blue Checklists’ of the Federal Republic of Germany:
·        Is regulation unavoidably required to solve that problem?
·        What are the adverse effects to State administration and public service if there is no such proposed regulation?
·        Is the proposed regulation creating additional step of work?
·        Is that step of work necessary?
·        Is duration of that step of work specified?
·        Is the proposed regulation use permission or licensing system?
·        Is it possible to use other system in lieu of permission or licensing?
·        If permission or licensing system is unavoidable, rules and period thereof has been clearly specified?

[6]      The 1988 initiative unfortunately came up with unfruitful result.  In the writer’s view this failure based on two grounds.  Firstly, the government failed to entrust specific government agency to be responsible for quality control of RIA report. Many evidences supported that the RIA reports of that day clarified nothing about the 8 questions, just yes or no. Secondly, the RIA initiative was a newly imported idea at that time.  The government official had no technical knowledge and experience thereon and the government failed to educate the officials on how to prepare the RIA report properly. In political perspective, just a few politicians other than the Prime Minister General Chartchai Chunhawan and the Minister without portfolio named H.E. Meechai Ruchuphan paid serious attention to deregulation policy. Without strong political back up as such, this initiative had then been forgotten shortly.  The 1988 initiative did not totally fail nevertheless. It sowed the seed of thought on regulatory reform to many academics and progressive politicians and produced fruitful result in the next few years.

[7]      Lessons learnt from the failure of the 1988 initiative plus the frog-leap development of information technology that made the World closer as well as the relaxation of protectionism of international trade and the portrayal of regional trade regime urged the numbers of policy makers and academics realize the significant of regulatory reform.  This time they emphasized the need for regulatory reform in term of economic that if the regulation was unable to response the rapid changing environment, Thailand shall inevitably lost her national competitiveness in the global market.  The government decided to establish the Law Reform Commission (LRC) in 1992 so as to assure the continuity of regulatory reform work and established the Law Reform Revolving Fund especially for regulatory reform work. Statutory mandates of LRC are:
·        Considering and proposing to repeal of obsolete or unnecessary regulations;
·        Bringing the regulation in the line with current conditions and ensuring that it meets current needs;
·        Removing defect in the regulation;
·        Simplifying the regulation.
By realizing that OCS has dealt with regulatory reform work for many years, this institution has been entrusted as secretariat unit of LRC by the provisions of the Council of State Act of 1979. With strong government back up and financial support, LRC initiated many regulatory reform projects.  The first priority was to bring the regulation in the line with current conditions and ensuring that it meets current needs.

[8]      Unluckily, long political turbulence in Thailand which began in the mid of 1992 in conjunction with Tom Yum Kung crisis in 1997 had frozen LRC initiative. After recovery from economic crisis in 2002, regulatory reform became dominant policy of the Thai government once again until 2006. During that period, the government invested much effort and resources for regulatory reform work. It had been annexed, as a critical part, with the flag ship policy of the government, i.e. the public sector reform policy. The key performance indicator for the achievement of regulatory reform had been designated and all government agencies had to come across the median. Output of this regulatory reform was impressive, more than 40 Acts of Parliament which were obsolete or unnecessary had been repealed while more than 100 Acts of Parliament and numbers of subordinate legislations were amended in the line with global economic and social conditions of those days. RIA had been reincarnated with an advice of the former H.E. Meechai Ruchuphan, but upon OECD regulatory checklist this time. In this regard, OCS as secretariat of LRC had been entrusted by the Cabinet to prepare manual for the making of RIA report while the Office of Cabinet Secretariat had been entrusted to provide training on the preparation of RIA report to government officials and to be Quality Control Unit of RIA report. In preparing the RIA report, the government agency required to hear the voice of all stakeholders concerning with the proposed regulation prior to making of decision thereon. The outcome of this effort was quite impressive as well. Thailand National Competitiveness assessed by many international institutions during 2003-2005 was in satisfactory ranking.  In the writer’s view, this was the golden period for regulatory reform in Thailand since 1934.

[9]      Unfortunately, Thai politics has become unstable once again since late 2006 till 2014. The government had nothing to do other than solving political turmoil and daily street protests. The problem became harder since Thailand had also affected by the World worst financial crisis 2007. These situations had adverse effects not only to State administration, but regulatory reform as well.  Outcome of this hard time evidenced by sharply plunged of Thailand National Competitiveness ranking during this period.

[10]   The light of regulatory reform however shined brightly in the mid 2014 when political chaos came to an end and the Constitution of the Kingdom of Thailand (Interim) 2014 came into force. Section 27 of this Constitution establishes the National Reform Council to incite reformation in many aspects, including regulatory reform.  Though the selection for the members of the National Reform Council is in process, the Cabinet established under the provisions of the Interim Constitution of 2014 pays high attention to regulatory reform. The administration policy stated to the National Legislative Assembly on September 12, 2014 clearly shows industrious effort of the Cabinet in regulatory reform.  The Administration promises to ‘bring the laws and regulations in the line with current global conditions’ and to ‘ensure that laws and regulations meet current needs’.  The key objective of this policy is to accelerate the National Competitiveness of both individual and the country.

[11]   What the writer found from historical analysis as above mentioned is that the hurdle of regulatory reform movement in Thailand is ‘continuation of government policy.’ Whenever Thai politics was stable like 1897-1932 period and 2002-2006 period, regulatory reform policy was driven strongly and continually and the output and outcome of this effort produced satisfactory effect to the country as a whole.  The continuation of this policy however depends on ‘political stability’ which is not within the arms’ length of Law Reform Commission or the Office of the Council of State.  If the government could come across this hurdle, it is possible for Thailand to move forward dramatically.

[12]   As a Law Reform Commissioner, the writer views that regulatory reform ideology is now generally accepted by Thai government officials, academics, politicians and private sector since the result thereof produce impressive output and outcome for the past years. We have the statutory institution like Law Reform Commission to be responsible directly and continually for regulatory reform function and best practice in so doing has been set up. We are able to reap additional knowledge and experience in regulatory reform from many successful countries like OECD and APEC member countries. The vision of the existing LRC on regulatory reform, after analyzing the international trade perspective is ‘Better Regulation for Better Lives’.  The first step is to bring the existing regulations to be in line with the existing global conditions.  With strong political support and the call of the public for ‘Country Reform’ nowadays, LRC plans to take 3-5 years from now on to complete this pace. During this period, the Sub-committee shall be set up so as to develop, through public participation process, the ‘better lives index’. In the next session, LRC is going to apply such developed index as an indicator for the achievement of regulatory reform in each field.











[1]Full-time Law Councilor and Law Reform Commissioner, Office of the Council of State of Thailand <pakorn.nilprapunt@gmail.com> © 2014

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