Starry Research | "Land Purchase and Factory Construction"Series, Issue 2  Classification of Factories in Thailand and Key Points for Construction and Operation

 In the previous issue of our 'Land Purchase and Factory Construction' series, we introduced the classification of land and title deeds in Thailand, as well as the eligibility requirements for land purchase. In this issue, we will introduce the classification of factories under Thailand's Factory Act and the key points for their construction and operation.

Competent Authority for Factories

The competent authority for factories and their operations in Thailand is the Ministry of Industry and its subordinate Department of Industrial Works (DIW).

Definition of a Factory

Legal Definition of a Factory

Pursuant to Thailand's Factory Act as amended in 2019, a 'factory' refers to a building, premises, or vehicle used for carrying out factory operations, where the total power of machinery used is not less than 50 horsepower or equivalent, or where not fewer than 50 workers are employed, regardless of whether machinery is used, and whose type or category is determined in accordance with ministerial regulations.

Classification of Factories

Factories are classified into three categories based on their nature: Type 1 Factories, Type 2 Factories, and Type 3 Factories. The operational regulatory requirements for each category are as follows:

•   Type 1 Factory: May commence operations immediately upon meeting the applicable type, kind, and scale requirements; no licence application is required.

•     Type 2 Factory: Must  notify the competent authority in advance before operations may commence.

•        Type 3 Factory: Must apply for and obtain a factory licence before construction and operation may begin.

At the same time, the Ministry of Industry issued ministerial regulations in 2020 classifying factories into 107 types based on their respective business activities. Each type of factory is assigned to a corresponding factory category according to indicators such as the power of machinery used and the number of employees, and is subject to the corresponding regulatory measures.

For example, a factory engaged in the processing of tea leaves or tobacco leaves that uses machinery not exceeding 75 horsepower is classified as a Type 2 Factory; if it uses machinery exceeding 75 horsepower, it is classified as a Type 3 Factory and must obtain a factory licence before construction and operation may commence.

Requirements and Licences for Factory Construction

Land Use Restrictions (Urban Planning and Industrial Zones)

The land intended for factory construction must not contravene applicable legal requirements. For instance, the land use must comply with the city master plan or specific plans, the intended use must be consistent with the nature of the land, construction is not permitted in areas where factories are prohibited or in pollution control zones, and construction is not permitted in special-purpose areas designated under other laws (such as environmental law).

Documents and Licences Required for Factory Construction

Before commencing construction of a Type 3 Factory, a Factory Licence (RorNgor.4) must be obtained. The specific application documents and application procedures are as follows:

To establish a Type 3 Factory, an application must be submitted using Form 'RorNgor.3' (Factory Establishment Permit Application). Upon approval, the Director of the Department of Industrial Works or the Provincial Industrial Works Office will issue the 'RorNgor.4' Factory Operating Licence.

The list of application documents is as follows:

• Factory Establishment Permit Application Form (RorNgor.3) – 2 copies;

•   Power of attorney (if applicable);

•   Copy of national ID card/household registration for natural persons, or certificate (affidavit) of company for legal entities;

•  Factory layout plan, building structural drawings, and machinery and equipment layout drawings;

•   Building permit and land title documents;

•  For Type 3 Factories, an Environmental Impact Assessment report (EIA) must be submitted;

•    Other relevant documents depending on the type of factory.

Detailed Procedure and Timeline for Obtaining a Factory Licence

 Overall processing time: 15 working days (for reference only; actual time depends on the completeness of the documents, the category of factory business, and other approval considerations)

In the event of a rejection, the applicant may appeal to the Director of the Department of Industrial Works within 30 days of receiving the notification.

Preparation and Operational Start-Up after Factory Construction Completion

Notification Procedure Prior to Formal Operations

 After the completion of construction, a Type 3 Factory must submit a 'Notice of Commencement of Operations' to the Department of Industrial Works or the Provincial Industrial Works Office within the prescribed time period.

•       Application deadline: The application must be submitted within the time specified in the Factory Establishment Permit Application Form (RorNgor.3) or the Factory Licence (RorNgor.4).

•      Notification timing requirement: There must be an interval of not less than 15 days between the date of notification and the actual commencement date.

•        If operations cannot commence as scheduled: An extension must be applied for; otherwise, the licence may be revoked.

 If the factory is not yet ready to commence operations, an extension of time to submit the commencement notice must be applied for; failure to do so may constitute grounds for revocation of the factory licence. However, the company may apply to conduct machinery test runs. Each test run, including the first and all subsequent ones, must not exceed 60 days, and relevant information must be reported as required, including the start date of the test run, the amount of energy consumed, raw materials used, and products produced.

Application and Requirements for Machinery Test Runs

 Before conducting machinery test runs, a Type 3 Factory must submit an application to the Department of Industrial Works or the Provincial Industrial Works Office.

•        Application location:

•        Bangkok area: Department of Industrial Works;

•        Other areas: the Provincial Industrial Works Office of the relevant province;

•        Test run duration: Not exceeding 60 days; extension may be applied for;

•        Data to be reported: Start date of the test run, amount of energy consumed, raw materials used, and products produced, etc.;

•        Recording obligations: Test run data must be recorded in the prescribed forms of the Department of Industrial Works for future inspection.

Notification of Business Activities for Type 2 Factories

 For Type 2 Factories, a notification must be filed before commencing business activities, by submitting the notification application materials to the Department of Industrial Works or the relevant Provincial Office.

Document requirements:

(1) Factory Business Activity Notification Application Form (RorNgor.1) – 2 copies;

(2)    Power of attorney (if applicable);

(3) Copy of national ID card/household registration for natural persons, or certificate (affidavit) of company  for legal entities;

(4)   Factory layout plan, building structural drawings, and machinery and equipment layout drawings;

(5)    Building permit and land title documents;

(6)    Other relevant documents depending on the type of factory.

Processing time: can be completed on the same day of application.

Procedural steps: The receiving officer reviews the Factory Business Activity Notification Application Form (RorNgor.1) and supporting documents to verify whether all submitted documents are complete and correct and meet the listed documentary requirements, after which the receiving officer will issue the Notification Certificate (RorNgor.2).

•       After a factory commences operations, an annual licence fee must be paid each year.

•     If a factory needs to add equipment, change its production line, expand its scale, or make similar changes, the relevant notification procedures must be followed or a new licence application must be submitted.