Government considers repealing thousands of regulations

2Regulations2A government-appointed committee will begin reviewing approximately 5,000 rules and regulations over the next 12 months with an eye to repealing or eliminating those that pose obstacles to legitimate business activities and lessen Thailand’s competitiveness, a committee member said last week.

The news is expected to be welcomed by businesspeople who bristle at red tape and corruption, as committee members and analysts have pointed out that excessive rules and regulations also create openings for payoffs and graft. “As we all know, the process to obtain licenses takes time and opens opportunities for bribery,” said Banyong Pongpanich, chief executive officer of Kiatnakin Bank and a member of the committee.

Banyong, speaking at a seminar hosted by the Thailand Development Research Institute (TDRI), one of the most prominent domestic think tanks, said the committee is planning a “regulatory guillotine,” because it will axe so many rules. He added that Thailand has requirements for 1,544 different licenses if businesses want to invest in regulated areas. In the real-estate sector alone, he said, a developer needs to obtain 17 licenses to develop a project.

In the past five years, Banyong said more than 620 royal executive decrees were issued, along with 1,015 announcements and other kinds of written rules. Also, 191 royal acts were enacted in the same period, boosting the total number to about 900. During the same timeframe, 661 ministerial regulations were announced in the Royal Gazette, bringing the total to nearly 18,000. There are an estimated 100,000-plus regulations in existence, placing controls on all aspects of business activities.

“It is time to use the regulatory guillotine, like what South Korea did years ago,” Banyong said. “This is institutional reform to unlock the system.”

South Korea, similar to Thailand, suffered heavily during the financial and economic crisis of 1997, but South Korea took a different approach during its recovery. According to TDRI research, South Korea embarked on the painful task of stripping away regulations. Of 11,125 rules and regulations, about 5,000 or 48.8 percent were abolished, with 21.7 percent revised and only 29.5 percent left intact. The number of licenses needed was also cut from 800 to 280.

Within the Association of Southeast Asian Nations, Viet Nam, since opening its doors to foreign investment, axed 8.8 percent of 5,500 laws and revised 77 percent, leaving only 14.2 per cent unchanged.

Duenden Nikomborirak, TDRI research director, said too many laws and regulations without adequate impact assessment had hampered Thailand’s ease of doing business and hindered some investment.

Banyong said a legal review was necessary because some rules were enacted with good intent, but they may be obsolete or too costly.