RegulatoryReforminThailandPakornNilprapunt1

[1] Regulatory reform plays important role in economic, social andpoliticaldevelopmentofalldemocraticStates.Ineconomicperspective,theobjectiveofregulatoryreformistobringallregulationstobeinlinewithcurrenteconomicconditions. Theregulationswhichareefficient,effectiveandefficacywillsofarfacilitateeconomicactivitiesatalllevelsupon fair administrative and compliance costs and eliminateduplications and red‐tape. In term of social development, regulatoryreformisgoingtobolsterregulationswhichareincompliancewiththerealneedsofthepeopleviatheessentialelementofregulatoryreform;public consultation. As for political dimension, regulatory reformenables the public to take part in themaking of such public policy asregulatorypolicy. Theaccomplishmentofregulatoryreformthereforewillnotonlystrengthenthecompetitivenessofindividualentrepreneurandnationalcompetitivenesswhichisgoodfornationaleconomy,butitalsoaboundssocialandpoliticalhealthy.[2] The concept of regulatory reform in Thailand does not deviatefrom the mainstream as above mentioned. We have exercised thetechniquesforreforminaccordancewithinternationalbestpracticesaswell.ManyexistingregulationshoweverevidencethatThairegulationsarenotinlinewithcurrentglobalconditionsaswellascurrentneedsofthepublic.Themostdistinguishedexamplecouldbefoundbythrough‘legalmechanism’usedintheexistinglegislations.Asweallawarethatthe current international trade bases upon liberalization, more thanninetyper centofThai legislations still baseon ‘strict control system’which is inherited from theoutdatedprotectionism. That is themainreasonwhythenationalcompetitivenessrankingofThailandstillinthemiddle‐lowofthetableanddemocraticdevelopmentisquiteslow.Themain purpose of this article is to survey the hurdles of regulatoryreforminThailandthroughhistoricalapproach.

1Full‐timeLawCouncilorandLawReformCommissioner,Officeof theCouncilofStateofThailand<pakorn.nilprapunt@gmail.com>©2014

2 [3] Akin to any other country, regulatory reform in Thailand wasconducted from time to time forhundredsyears, but thegreatest onehademerged froman initiativeofKingRamaV in1897. At that time,Thailand and other peaceful countries in Indochina Peninsular facedwithseriousthreatofcolonizationofthewesterncountries.Manyhadbeen colonized upon different ‘accusations’. Particularly to Thailand,the super powers claimed that Thai laws were barbaric, so theyrequestedtheextraterrestrialrightfortheirsubjectslivinginThailanduntilThai legislationsbecame ‘civilized’upon the ‘western standards’.HisMajestyrealizedthatthismightbethefirststepoffullcolonizationprocess.HisMajestyreactedtothisillwillresponsivelybyestablishingthe ad hoc Laws Drafting Commission in 1897 to prepare the PenalCode,theCivilandCommercialCode,theCivilProcedureCodeandtheCriminal Procedure Code along the same line with the laws of theEuropeancountries.ThisadhocCommissioncomposedofexperiencedlegal practitioners and law professors from the United States andEuropean countries with a view to bar the western imperials fromdenyingtheCodestobedone.ThePenalCodecameintoforcein1908,theCivilandCommercialCodecame into force in1925while theCivilProcedure Code and the Criminal Procedure came into forcesimultaneouslytwoyearsafterThailandadoptthedemocraticregimeofgovernmentwiththeKingastheHeadofStatein1932.[4] WhenthefourCodescameintoforce,theextraterrestrialrightofallwesterncountriesoverThai jurisdictionhadbeenliftedupcountrybycountry.Afterthelastonewasreleased,regulatoryreformseemedtobeanunimportantwork.ThegovernmentleftthisdutytoeachMinistryor Department dealing with the problem in which the reform wasrequired. However, the key player in regulatory reform during thisperiodwastheOfficeoftheCouncilofState(OCS),acentrallegalagencyofthegovernmentandthesuccessoroftheLawsDraftingCommissionof 1897. Since themain function of OCSwas regulatory drafting, OCShadtomonitorandobservethe‘socialreality’domesticallyandabroadforthepurposeofbothdraftingandreviewingtheexistingregulationstomeetwithany‘change’.Itcouldbesaidthatthisinstitutionhasdealtwithregulatoryreformforverylongperiod.[5] In1988,theCabinetlaunchedtheRegulatoryImpactAssessmentInitiativebaseduponthe‘deregulationpolicy’whichwasfashionableat

3 that time. This initiative required the government agency whichproposedthebillforCabinet’sapprovaltoannextheregulatoryimpactassessment (RIA) report altogetherwith the bill for its consideration.TheobjectivesofthisinitiativeweretoreduceStateregulationindoingbusinessesofprivatesector, to increaseself‐regulationofoperators ineach business sector, and to enhance competitiveness of individualentrepreneur. IntheRIAreport,thegovernmentagencyhadtoclarifythefollowingquestionsrootedfromthe‘BlueChecklists’oftheFederalRepublicofGermany:

Isregulationunavoidablyrequiredtosolvethatproblem? What are the adverse effects to State administration and

publicserviceifthereisnosuchproposedregulation? Istheproposedregulationcreatingadditionalstepofwork? Isthatstepofworknecessary? Isdurationofthatstepofworkspecified? Is the proposed regulation use permission or licensing

system? Is it possible to use other system in lieu of permission or

licensing? Ifpermissionor licensingsystemisunavoidable,rulesand

periodthereofhasbeenclearlyspecified?[6] The1988initiativeunfortunatelycameupwithunfruitfulresult.In the writer’s view this failure based on two grounds. Firstly, thegovernment failed to entrust specific government agency to beresponsibleforqualitycontrolofRIAreport.ManyevidencessupportedthattheRIAreportsofthatdayclarifiednothingaboutthe8questions,justyesorno.Secondly,theRIAinitiativewasanewlyimportedideaatthat time. The government official had no technical knowledge andexperiencethereonandthegovernmentfailedtoeducatetheofficialsonhowtopreparetheRIAreportproperly. Inpoliticalperspective, justafew politicians other than the Prime Minister General ChartchaiChunhawan and the Minister without portfolio named H.E. MeechaiRuchuphanpaidseriousattentiontoderegulationpolicy.Withoutstrongpoliticalbackupassuch,thisinitiativehadthenbeenforgottenshortly.The1988initiativedidnottotallyfailnevertheless.Itsowedtheseedofthought on regulatory reform to many academics and progressivepoliticiansandproducedfruitfulresultinthenextfewyears.

4 [7] Lessonslearntfromthefailureofthe1988initiativeplusthefrog‐leapdevelopmentofinformationtechnologythatmadetheWorldcloseraswellastherelaxationofprotectionismofinternationaltradeandtheportrayalofregionaltraderegimeurgedthenumbersofpolicymakersand academics realize the significant of regulatory reform. This timethey emphasized the need for regulatory reform in term of economicthat if the regulation was unable to response the rapid changingenvironment,Thailandshallinevitablylosthernationalcompetitivenessin the global market. The government decided to establish the LawReform Commission (LRC) in 1992 so as to assure the continuity ofregulatory reform work and established the Law Reform RevolvingFundespeciallyforregulatoryreformwork.StatutorymandatesofLRCare:

Considering and proposing to repeal of obsolete orunnecessaryregulations;

Bringingtheregulation inthe linewithcurrentconditionsandensuringthatitmeetscurrentneeds;

Removingdefectintheregulation; Simplifyingtheregulation.

Byrealizing thatOCShasdealtwith regulatory reformwork formanyyears, this institutionhasbeenentrustedassecretariatunitofLRCbythe provisions of the Council of State Act of 1979. With stronggovernment back up and financial support, LRC initiated manyregulatory reform projects. The first priority was to bring theregulationinthelinewithcurrentconditionsandensuringthatitmeetscurrentneeds.[8] Unluckily,longpoliticalturbulenceinThailandwhichbeganinthemid of 1992 in conjunction with Tom Yum Kung crisis in 1997 hadfrozen LRC initiative. After recovery from economic crisis in 2002,regulatoryreformbecamedominantpolicyoftheThaigovernmentonceagain until 2006. During that period, the government invested mucheffortandresourcesforregulatoryreformwork.Ithadbeenannexed,asacriticalpart,withtheflagshippolicyofthegovernment,i.e.thepublicsector reform policy. The key performance indicator for theachievement of regulatory reform had been designated and allgovernment agencies had to come across the median. Output of thisregulatory reform was impressive, more than 40 Acts of Parliamentwhich were obsolete or unnecessary had been repealed while more

5 than 100 Acts of Parliament and numbers of subordinate legislationswere amend in the linewith global economic and social conditions ofthosedays.RIAhadbeenreincarnatedwithanadviceoftheformerH.E.MeechaiRuchuphan, but upon OECD regulatory checklist this time. Inthisregard,OCSassecretariatofLRChadbeenentrustedbytheCabinetto prepare manual for the making of RIA report while the Office ofCabinet Secretariat had been entrusted to provide training on thepreparation of RIA report to government officials and to be QualityControlUnitofRIAreport.InpreparingtheRIAreport,thegovernmentagency required to hear the voice of all stakeholders concerningwiththe proposed regulation prior to making of decision thereon. Theoutcomeof thiseffortwasquite impressiveaswell.ThailandNationalCompetitiveness assessed by many international institutions during2003‐2005was in satisfactory ranking. In thewriter’s view, thiswasthegoldenperiodforregulatoryreforminThailandsince1934.[9] Unfortunately,Thaipoliticshasbecomeunstableonceagainsincelate 2006 till 2014. The government had nothing to do other thansolvingpoliticalturmoilanddailystreetprotests.Theproblembecameharder since Thailand had also affected by theWorld worst financialcrisis 2007. These situations had adverse effects not only to Stateadministration, but regulatory reform as well. Outcome of this hardtime evidenced by sharply plunged of Thailand NationalCompetitivenessrankingduringthisperiod.[10] Thelightofregulatoryreformhowevershinedbrightlyinthemid2014whenpolitical chaos came toanendand theConstitutionof theKingdomofThailand(Interim)2014cameintoforce.Section27ofthisConstitution establishes the National Reform Council to incitereformationinmanyaspects, includingregulatoryreform. ThoughtheselectionforthemembersoftheNationalReformCouncilisinprocess,theCabinetestablishedundertheprovisionsoftheInterimConstitutionof 2014 pays high attention to regulatory reform. The administrationpolicy stated to the National Legislative Assembly on September 12,2014 clearly shows industrious effort of the Cabinet in regulatoryreform.TheAdministrationpromisesto‘bringthelawsandregulationsinthelinewithcurrentglobalconditions’andto‘ensurethatlawsandregulationsmeet currentneeds’. Thekeyobjectiveof thispolicy is to

6 accelerate the National Competitiveness of both individual and thecountry.[11] What the writer found from historical analysis as abovementioned is that the hurdle of regulatory reform movement inThailandis‘continuationofgovernmentpolicy.’WheneverThaipoliticswas stable like 1897‐1932 period and 2002‐2006 period, regulatoryreformpolicywasdriven stronglyandcontinuallyand theoutputandoutcomeof this effort produced satisfactory effect to the country as awhole. The continuation of this policy however depends on ‘politicalstability’ which is not within the arms’ length of Law ReformCommission or the Office of the Council of State. If the governmentcould come across this hurdle, it is possible for Thailand to moveforwarddramatically.[12] AsaLawReformCommissioner,thewriterviewsthatregulatoryreformideologyisnowgenerallyacceptedbyThaigovernmentofficials,academics, politicians and private sector since the result thereofproduceimpressiveoutputandoutcomeforthepastyears.Wehavethestatutory institution like Law Reform Commission to be responsibledirectlyandcontinuallyforregulatoryreformfunctionandbestpracticeinsodoinghasbeensetup.Weareabletoreapadditionalknowledgeand experience in regulatory reform from many successful countrieslikeOECDandAPECmembercountries.Thevisionof theexistingLRCon regulatory reform, after analyzing the international tradeperspective [the picture below], is ‘BetterRegulation forBetter Lives’.The firststep is tobringtheexistingregulations tobe in linewiththeexistingglobalconditions.Withstrongpoliticalsupportandthecallofthepublic for ‘CountryReform’nowadays,LRCplanstotake3‐5yearsfrom now on to complete this pace. During this period, the Sub‐committeeshallbesetupsoastodevelop,throughpublicparticipationprocess,the‘betterlivesindex’.Inthenextsession,LRCisgoingtoapplysuchdevelopedindexasanindicatorfortheachievementofregulatoryreformineachfield.

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