VZCZCXRO5758
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #3520/01 1770827
ZNR UUUUU ZZH
R 260827Z JUN 07
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 7866
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 02 BANGKOK 003520 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON TH
SUBJECT: THAI RETAILING LAW:  LEAVE IT FOR THE COMMITTEE TO 
DECIDE 
 
REF: A. BANGKOK 2008 
     ¶B. BANGKOK 2736 
 
¶1.  SUMMARY.  The draft Retail and Wholesale Business law has 
produced no shortage of polemics, pitting small versus large 
retailers (Ref. B).  A close reading of the bill itself does 
little to dispel the uncertainty generated in anticipation of 
the law.  The draft law lays out a variety of structures and 
procedures, including provisions for National and Provincial 
Wholesale and Retail Business Supervision Boards, but leaves 
key questions about policies, licensing, criteria for 
punishments, and even which businesses will be considered 
controlled to the boards themselves to decide.  If the law 
passes in its current form uncertainty will persist for 
investors until the boards flesh out the rules that will 
apply.  Depending upon how the rules are defined, it is not 
yet clear how much of an ongoing role the boards will play, 
and hence to what extent retail investment will be vulnerable 
to the boards' subjectivity.  End summary. 
 
¶2.  Thailand's new draft Retail and Wholesale Business law 
has been hotly debated for what it will do for the country's 
small retailers and the impact it will have on the rapid 
expansion of large retailers.  The polemics have carried 
before the draft law was completed, and during the time it 
was being revised, sometimes with little reference to it's 
actual content.  The knowledge that the law was in the works, 
with little known definitely about what it would actually do 
in practice has increased the level of uncertainty for 
potential investors in the Thai retail market.  Examination 
of the now-available draft law reveals little about the 
actual rules that retailers and wholesalers will be subject 
to. 
 
¶3.  Key features of the draft law are the establishment of 
National and Provincial Wholesale and Retail Business 
Supervision boards.  The boards have significant authority. 
To a great extent, in fact, it is the boards that will 
determine the actual regulatory regime that the retail and 
wholesale industry will operate in.  The National board will 
have the authority to define the policy regulating such 
things as location, surroundings or business size for 
business operation, store concentration levels, or 
surroundings (????).  The National board will also define the 
types of controlled businesses by specifying the type, 
characteristics or size of retail and wholesale businesses, 
as well as defining the criteria, means and conditions for 
operating any type of retail or wholesale business.  The 
board will define the criteria, means and conditions for 
business licensing, as well as the criteria for 
administrative punishments. 
 
¶4.  Provincial boards will notably consider business's 
applications for operation, change, expansion or reduction of 
branches.  They will also act as the responsible body for 
several provisions of the new law, including monitoring 
retail and wholesale businesses, retail and wholesale 
business promotion, and administrative punishment.  They will 
also provide opinions to the National board as it formulates 
its decisions establishing policies and regulations. 
 
¶5.  The composition of the boards is a mix of fixed and 
selected positions.  At the national level half of the 
members of the boards will be the incumbents in government 
positions, including the Minister of Commerce as chairman and 
the permanent secretaries or secretary generals of the 
Commerce, Interior, Industrial, Public Health ministries, the 
State Council, the NESDB, the Consumer Protection Board, the 
Small-Medium Enterprise Office, and the Bangkok Metropolitan 
Authority Governor.  The remaining members will include four 
experts and five representatives of institutions or NGOs. 
These members will go through a nomination process by a 
selection committee, which will also set procedures for the 
nominees to self-select the board members for Cabinet 
approval.  The slightly smaller provincial boards have an 
analogous composition and selection process. 
 
¶6.  The effect of these provisions of the draft law is to 
transfer the formulation and application of the regulatory 
regime for the retail and wholesale business from the 
government to the yet to be formed supervisory boards. 
Accordingly, the extent or absence of limits to expansion of 
large retailers, or protections or assistance provide to 
small retailers - the issues of most prominent concern - 
remain unknown.  Even after this uncertainty is resolved, 
potential investors will need to account for potentially 
different application of the regulations by different 
provincial boards. 
 
¶7.  Another significant element of the draft law relates to 
 
BANGKOK 00003520  002 OF 002 
 
 
the transition period.  Once the law comes into effect, it 
stipulates that existing businesses will need to apply for 
licensing within 90 days.  Although it is not expected that 
existing businesses would be denied a license, they would 
need to comply with the provisions of the law and the 
regulations determined by the national board in their future 
operations.  In cases where the new regulations would create 
situations where existing businesses are automatically out of 
compliance (rules governing store location, for example) it 
is not clear whether existing businesses would be 
grandfathered or forced to bring their operations into 
compliance, perhaps following an adjustment period. 
 
¶8.  When this draft law will take effect is itself unclear. 
Recent reports indicate that the Council of State's review of 
the draft has been progressing slowly.  If the Council fails 
to complete its review of the draft for submission to the 
National Legislative Assembly by the end of July it may not 
be possible for it to complete the legislative process under 
the current government. 
 
Comment 
 
¶9.  Thailand's first-ever Retail and Wholesale Business law 
has been in the works since its first drafting in 2002.  It 
is now much closer to becoming a reality, but the uncertainty 
surrounding what it will mean for the retail and wholesale 
business environment is still great.  To date this 
uncertainty has not prevented significant investment and 
expansion by mostly foreign owned large retailers in the Thai 
market, and this is unlikely to change unless and until the 
proposed supervisory boards establish restrictive policies 
governing the retail industry.  Businesses requiring a long 
lead time for investment face a substantial uncertainty risk, 
as do current investors who may face the need to take 
corrective action to come into compliance with future 
regulations.  Nevertheless, at the moment some businesses 
aparently feel that, to paraphrase, presence is nine-tenths 
of the law, and are seizing the opportunity to expand now 
before more restrictive regulations are formulated. 
BOYCE