Thailand: When Urban Sprawl Meets Industry – Risk and Liability


A recent explosion at a factory producing plastic foam and pellets in Samut Prakarn on 5 July 2021 located on the outskirts of Bangkok caused significant damage to surrounding communities. This incident has started a debate that is pinning industrial factory operators against residential developers as the borders of Bangkok continue to expand. Zoning laws are tools to control and manage the utilization of land and structures built in designated areas. The goal of zoning is generally to ensure that land will be developed in accordance with the country’s policies, to protect the welfare of people in the community, the economic landscape and the environment. In Thailand, zoning laws have a long history of continuous development with changes to regulations and rezoning occurring frequently. Rezoning and changes to zoning regulations can be problematic for factory operators in zones that are affected by rezoning or changes to zoning regulations. As such, it is vital for factory operators, or those interested in starting a business that requires factory operations to understand Thai zoning regulations.

Thai Zoning Laws

The main zoning law in Thailand is the Town Planning Act, B.E. 2562 (2019) (the “Town Planning Act”). Under the Town Planning Act, land possessors under a general exception may continue to operate restricted activities, if those activities were conducted prior to a change in the zoning restrictions. To clarify, when the zoning regulation is enacted to restrict some industrial purposes in a specific area, existing factory operators whose factories are located in the restricted area may continue their usual operations.

Grandfather provisions

In general, factory operators can rely on grandfather provisions in the Town Planning Act allowing continued operations in the wake of zoning changes. However, and as recently seen in the aftermath of the plastics factory explosion, the Town Planning Committee has the authority to order a factory operator to change operations or cease use of land. Such orders can be issued if the Town Planning Committee determine that the existing purpose of a factory is conflicting with the zoning policy (e.g., hygienic condition, public safety, social welfare, or the public interest). Compensation may be granted to the land possessor in cases where the committee finds that the change or cessation of operations will result in damages or reduced rights of the relevant land possessor.

Factory modification and expansion

The modification and expansion of an existing factory would be subject to the zoning regulation applicable to the area in which the factory is located. Factory operators in an area that has been re-zoned must carefully observe the relevant zoning laws when considering any modification or changes to their factory operations. For example, the zoning regulation in the Samut Prakan Province, where the chemical factory explosion occurred, is the Ministerial Regulation prescribing the comprehensive zoning for Samut Prakan, B.E. 2556 (2013) as amended. This Ministerial Regulations prescribes the permitted size of any expansion and conditions for expansion. Some minor modifications to a factory may be carried out if the changes are not considered as a “modification” defined under Thai building control laws. For example, if the modification of a building (except related to its structure) does not increase the overall weight of the building by more than 10%, that modification would be permissible.

Other Thai laws related to factory operations

In addition to zoning laws under the Town Planning act, there are several industrial laws which also need to be considered. Two important laws are the Factory Act, B.E. 2535 (1992) (as amended) and the Hazardous Substances Act, B.E. 2535 (1992) (as amended). These authorize relevant officers to order a factory operator and/or the persons related to operations that involve hazardous substances to rectify operations so that they follow proper measures if it has been determined that there might be any danger to the factory’s surroundings arising from the factory or hazardous substances. Failure to comply with such orders can ultimately lead to criminal penalties and/or, cessation of factory operations.

Liabilities of factory operators in the case of an incident

Duty of care and negligence

Factory operators can be exposed to liability for any unlawful injury (i.e., personal injury, property damage, or any other rights) caused by an incident or accident from its operation whether willfully or negligently. Factory operators have the duty of care. If they neglect to perform such duty, resulting in the harm of others, the incident or accident will usually amount to negligence. In these cases, affected or injured persons are entitled to file a civil claim against the factory operators to pay compensation for their wrongful acts.

Environmental liability (‘Polluter Pays’)

In terms of the environmental repercussions, factory operators are also subject to the Enhancement and Conservation of the National Environmental Quality Act, B.E. 2535 (1992) (as amended) (the “Environmental Act”) as an owner or possessor of a source of pollution. In the event that there is any leakage or dispersion of pollutants caused by or originated from a factory, which causes death, bodily harm, injury, or ill health of a person, or has caused damage in any manner to the property of a private person or of the state, factory operators will be liable for damages. As opposed to a general wrongful act claim, the civil liability under the Environmental Act is strict liability meaning that the owner or possessor of the offending factory will be liable regardless of whether the damage is a result of a willful or negligent act. The burden of proof is shifted to the defendant for environmental damage claims arising out of factory operations.

In addition to the “Polluter Pays Principle” embodied in the Environmental Act, polluters (in this case the factory operators) can be exposed to liability for all expenses incurred by the government for clean-up operations arising from an incident or accident. In severe cases where an unlawful or negligent act by factory operators causes damages to natural resources owned by the state or belonging to the public domain, the state can claim compensation for the total value of the natural resources destroyed, lost, or damaged.
Currently, there is no legal requirement for factory operators to carry liability insurance provided that the factory does not fall under the scope of controlled building laws as a high rise or edifice. There is no mandatory minimum liability coverage specified under controlled building laws.

Conclusion and key takeaways

Zoning regulations continue to develop in accordance with situations. As a result, zoning changes occur regularly. As urban centers continue to expand their borders, residential and commercial development is occurring in locations that have been industrial and manufacturing centers. Factory operators are encouraged to stay up to date on relevant zoning regulations and any future changes to such regulations, even if their operations existed prior to any zoning changes. This is especially true for operators that plan to expand their factory operations. If the nature of the business can potentially cause pollution or environmental damage, factory operators should remain vigilant in maintaining proper protection measures to prevent contamination to surrounding residential developments, and therefore prevent third-party claims for damages. In the event of an incident, they may also have to reimburse the government for expensive clean-up operations. General liability insurance and/or policy extensions to cover environmental liability is recommended.

For more information and queries on the bidding submission, please contact the key contact person(s).

Nuanporn Wechsuwanarux

Nuanporn Wechsuwanarux

Supavadee Sirilerkwipas

Supavadee Sirilerkwipas

Tachatorn Vedchapun

Tachatorn Vedchapun

Kanchana Suchato

Kanchana Suchato

Chandler MHM

Chandler MHM Limited
36th Floors Sathorn Square Office Tower 98 North Sathorn Road Silom, Bangrak, Bangkok 10500, Thailand

Related Articles by Firm
New regulation on the prohibition of sales of alcoholic beverages online
In line with evolving trends in technology, certain entrepreneurs and retailers have started using online channels to sell alcoholic beverages, which makes it difficult to ensure the sale of such beverages is in accordance with existing laws ...
Nok Air Rehabilitation Proceedings – Updates for Creditors and Lessors
As the global travel industry continues to grapple with the effects of COVID-19, many companies are now beginning to seek protections under various insolvency regimes ...
Thai data privacy act exemptions
A cabinet resolution has approved a draft Royal Decree on temporary exemption of PDPA enforcement for some organisations and businesses.
Procurement of power from community-based power projects
These projects are intended to help generate and distribute income to local communities and promote their participation in local power projects.
Updated standards for e-meeting security
The Emergency Decree requires that electronic meetings follow the security protocols set forth under a notification from the Ministry of Information and Communication Technology.
Waste to energy projects in Thailand
A brief overview of the legal issues related to the development of a municipal solid waste to energy project.
Scrutinising CP Group’s acquisition of Tesco
The decision of Thailand’s competition authorities will set a precedent regarding merger control and provide clarity on market definitions.
PPP projects in Thailand’s EEC
Thailand will continue to aggressively move forward with legislation that streamlines implementation of important PPP projects. This legislative trend presents new opportunities for foreign and local investors alike, with a focus particularly in Thailand’s infrastructure sector ...
Community-based power projects in Thailand
A feed-in tariff scheme for power generated by community-based projects has been approved.
Thailand Plus incentives under BOI
The two new incentives encourage companies to move from overseas to Thailand.
Thailand’s OTCC issues first industry-specific conduct guidelines
Guidelines on the conduct between wholesale and retail business operators and their trade partners announced by the Office of Trade Competition Commission.
Amendment to the Consumer Protection Act 
The Act strengthens the law relating to the safety of products and services.
Personal Data Protection Act published in the Government Gazette
Business operators should ensure that their businesses comply with the PDPA.
Amendment to Thai Arbitration Act
The Amendment expands the ability of foreign arbitrators and representatives to act in arbitral proceedings.
Update on Stamp Duty regulating electronic transactions
A new notification requires parties who enter certain electronic transactions to pay stamp duty in cash.
Ministerial Regulation removing back office services from the Foreign Business Operations Act announced
Certain back office service businesses will no longer require a foreign business licence.
Developments in Thai M&A
Corrupt practices, environmental breaches and merger filing are becoming more significant priorities for clients ...
Thailand: Projects and Energy
Commentary on the latest developments in the Thai projects and energy sector ...
Secondary laws under the Trade Competition Act BE 2560
The enactment of these five Notifications represents a significant leap of progress.
Thailand Update: Amendment to Work Permit Law
In response to criticism, the government decided to amend the Emergency Decree on Managing of Foreigners with relaxed penalties ...
Leasing of residential buildings − A contract-controlled business
The Contract Committee of The Consumer Protection Board recently announced a new Notification which designates the lease of residential property as a “contract-controlled business”.
New Mining Regulations for Thailand
On 30th January 2018, the Ministry of Industry issued a new notification regarding prohibited actions for foreigners ...
Mergers and acquisitions in Thailand
A number of factors are making Thailand a target of choice for international and regional investment ...
Thailand Anti-Corruption Update
National Anti-Corruption Commission Guidelines to Supplement Section 123/5 of the Organic Act on Counter Corruption ...
Amendment to the Thai Civil and Commercial Code
Part IX: Combination of Limited Companies ...
Thailand: Amendment to the Public Company Act
The National Council for Peace and Order has considered the lack of clarity on conditions, procedures and time limitations related to the laws governing business operations ...
Thailand: The Act on the Amendment to the Civil Procedure Code (No. 30) B.E. 2560 (2017)
There are a number of amendments to the current Civil Procedure Code (CPC) as part of its legal execution ...
Projects & Energy Special Report: Thailand: New Minerals Act
A new Minerals Act (BE 2560 (2017) was published on March 2, 2017 and took effect on August 30, 2017 (180 days after the publication date) ...
Thailand: ERC Announcement - Purchase of Electricity From Hybrid-Renewable Energy Small Power Producers
The Energy Regulatory Commission (ERC) issued an invitation to bid for the sale of electricity from Hybrid-Renewable Energy Small Power Producers (SPP) on 4 August 2017 ...
Thailand: New Amendment to the Labor Law
The Labor Protection Act B.E. 2541 (“LPA”) was first enacted in February 1998; the LPA has been amended several times ...
Thailand: Extension of the Reduced VAT Rate
Value added tax (VAT) is an indirect, non-cumulative, consumption tax levied on the supply of goods or provision of services in Thailand ...
Thailand: Ten year visa extension
Due to the rapidly increasing number of foreign senior-citizens seeking Thailand as a retirement destination, Thailand’s Cabinet recently approved the ten-year retirement visa extension ...
Thailand: The New Trade Competition Act
On 24 March 2017, the National Legislative Assembly (the “NLA”) in Thailand passed the final reading of the draft Trade Competition Act ...
Thailand: Amendment to BOI Act to create new BOI benefits
The Thai government has recently been promoting “Thailand 4.0”, which refers to creative and innovative industries ... as a master plan to pull Thailand out of the middle-income trap and toward becoming a high-income country ...
Energising Thailand’s M&A sector
With a focus on the energy and natural resources sector, Chandler & Thong-ek Partner Ratana Poonsombudlert answers our questions on Thailand’s M&A present and future
Related Articles
Related Articles by Jurisdiction
Anatomy of a business rehabilitation in Thailand
Key considerations for Thai and foreign creditors.
The Licensing Facilitation Act of Thailand
The Licensing Facilitation Act, effective from 21st July 2015, will enhance the transparency and accountability of the government procedures and boost Thailand’s competitiveness and the investor’s confidence ...
Latest Articles