Gen Prayut affirmed his administration’s intention to tackle corruption at a ceremony that was transmitted via video-conference to provincial government offices

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BANGKOK – Thailand’s Prime Minister Gen Prayut Chan-o-cha today vowed like every other past Thai PM to eliminate  corruption in the country and to promote more integrity and responsibility within the society.

He condemned all cheats and corrupt individuals to an unfavorable fate while also asserting that more intensive checks will be made and any wrongdoing will be severely penalized irrespective of rank or standing.

Gen Prayut affirmed his administration’s intention to tackle corruption at a ceremony that was transmitted via video-conference to provincial government offices and local administrative departments throughout the country.

The main theme of the ceremony was to foster greater honesty and integrity among government officials and most importantly to curb corruption.

Foremost in his  message was for all civil servants to work tirelessly for the general welfare of the Thai people.

Answering queries from the media, the prime minister stated that all checks and monitoring that have been carried out are based on solid evidence and protocol.

He was confident that process was fair and no one was taking sides.

Anyone carrying out or allowing illicit activities will be punished regardless of rank or standing.

He went on to state that he was working to make the judiciary a strong institution that is inviolate so that Thailand can move forward.

He warns that any projects that have been signed off as a result of criminal activity or bribes will not be tolerated and any officials found to have been involved will be severely punished.

Thai junta chairman Gen. Prayuth Chan-ocha leading students government officials in an oath against corruption at the Government House,

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According to Khaosod News,  Junta Chairman Gen. Prayuth Chan-och may possibly decide to stay in power for two more years and that Thailand’s military government is not concerned with the international community’s reaction to the proposal.

“There has been no reaction from foreign governments, and it is not something that should concern us either,” said Maj.Gen. Weerachon Sukhondhapatipak.

He was referring to a measure, put forth by 26 members of the junta-appointed National Reform Council (NRC), that calls for holding a referendum on whether Gen. Prayuth should push back elections for two more years in order to complete his government’s reform projects.

Prapas Pintobtaeng, a political scientist at Chulalongkorn University, denounced the proposed referendum for Prayuth’s power extension as “nonsensical.”

“A referendum has to rest on certain principles,” Prapas said at an academic seminar yesterday. “Not everything can be put to a referendum. We have already have a procedure on how to elect governments. Referendums must not be used to violate that basic principle of democracy.”

He also called on the junta to lift its ban on political activities and free expression before the referendum on the new charter is held.

Business and Corruption

The main source of corruption in Thailand is known as ‘money politics’, a term that refers to the flow of money within the political scene. This is confirmed by the Global Corruption Barometer 2013, which reports that public officials and civil servants are perceived by Thai households to be among the most corrupt in Thailand. The report also notes that vote-buying and the purchasing of posts within the bureaucracy is common practice. The general view by the public on the government’s anti-corruption measures is somewhat pessimistic, with less than one tenth of household respondents believing that the level of corruption has decreased in the past two years.

Thailand has seen some high-level officials brought to court and sentenced for corruption in recent years. In May 2014, the National Anti-Corruption Commission (NACC) indicted former PM Yingluck Shinawatra after she oversaw a corrupt rice-pledging scheme that negatively impacted the Thai economy. Similarly, investigations into allegations of corruption in the Thaksin government brought to light many cases of corruption, as reported by the NACC, which took several of them to court in 2011. Nevertheless, the Investment Climate Statement 2013 notes that the prosecution of high-level officials for corruption still remains rare and that Thailand is lacking an adequate legal system to fight corruption in the higher echelons of the government.

Businesses in Thailand should expect to encounter corruption. The Index of Economic Freedom 2014 reports substantial declines in the rule of law as measured by property rights and freedom from corruption. Moreover, poorly enforced laws and unclear policies caused by political instability remain a source of frustration to the business sector. According to the Global Competitiveness Report 2013-2014, companies consider corruption and government instability, as well as policy instability, to constitute a substantial barrier to doing business in Thailand. This is supported by the Investment Climate Statement 2013, which notes that bribery and facilitation payments are considered a normal part of doing business in Thailand. Nevertheless, the same report notes that companies that refrain from engaging in bribery from the start are still able to compete in Thailand. Bribery is particularly concentrated in a few government sectors in charge of large financial transactions: the Land Department, Tax and Customs Department, the Transport Department and the Police Department.

Corruption is a significant problem in Thailand’s private and public sectors, but it is mainly found at the intersection between business and government, where illicit payments are widespread. According to the Investment Climate Statement 2013, bribes are considered a routine procedure for doing business in Thailand. Bribes are generally considered a “fee” or “consultants’ charges” and are, accordingly, considered a normal part of doing business. Those with political connections and administrative authority have been able to create possibilities for corruption, particularly with regard to securing monopolies, protecting against foreign competition and protecting illegal companies. These practices secure the flow of money into politics and have resulted in a high degree of interconnectedness between the business sector and the political system, as reported by a 2012 research paper, Political De-development, corruption and governance in Thailand. The close personal connections between politicians, civil servants and businesspeople reach from the heights of the central government down to local government bodies. Generally, the board memberships of Thai corporations are still characterised by an emphasis on personal connections over professional competencies. Despite civil servants being legally barred from serving on the boards of private companies, high-ranking bureaucrats are commonly found on the boards of Thai companies, which is indicative of Thailand’s patronage system and its problems concerning law enforcement.

Public procurement is an area in which the risk of corruption is particularly pronounced. The National Counter Corruption Commission (now renamed National Anti-Corruption Commission) estimated that up to 30% of the government procurement budget vanishes due to corrupt practices. To maintain a fair and a competitive public procurement market, the competition law has to be further developed and enforcement improved. The same report further notes that the recent crackdown on corrupt public officials has increased the pressure to curtail favouritism and corruption. In order to best reduce the risk of extortion and demands for bribes in the procurement process, foreign investors considering bidding on public tenders are advised to use a specialised due diligence tool on public procurement. Moreover, companies are generally recommended to develop, implement and strengthen compliance systems and to conduct extensive due diligence when considering or if already doing business in Thailand.

Regulatory Environment

Thailand is generally considered to be a business-friendly economy. For several years, it has been able to offer not only favourable investment incentives, such as tax exemptions, to foreign companies (especially if the investment includes new technology or is located in a less developed area) but also good investment protection compared to many other countries in the region. Thailand has several bilateral free trade agreements, including agreements with Australia, New Zealand and Peru. Foreign investment in Thailand must adhere to the Foreign Business Act 1999 unless exempted by a bilateral treaty or agreement. The Foreign Business Act lists a number of sectors in which non-Thais are not allowed to invest. Foreign ownership is limited to 49% in most service sectors, but majority foreign ownership is permitted in the manufacturing sector. According to the Investment Climate Statement 2013, non-Thai companies and citizens are only allowed to own land in government-approved industrial estates. Consequently, many foreign companies opt for long-term land leases instead of land purchases.

Enforcing a contract through the Thai judicial system is relatively inexpensive but time-consuming. However, Thailand’s business regulatory environment has, in general and in relation to other countries, significantly improved in recent years, particularly in the areas of registering property, paying taxes and trading across borders. Still, however, the Global Competitiveness Report 2013-2014 describes the burden of government regulation and inefficient bureaucracy as a competitive disadvantage for doing business in Thailand. Thailand´s thirty foreign chambers of commerce have criticised the heavy governmental bureaucracy, which hinders effective reform initiatives.

According to Doing Business 2014, starting a company in Thailand is easier and less inexpensive than in most countries in the East Asian & Pacific region. Despite this relative ease, the Investment Climate Statement 2013 recommends that companies seek qualified legal advice when entering the Thai market because Thai business regulations are governed by criminal rather than civil law. Furthermore, one should note that Thailand does not recognise decisions by foreign courts. As a means to remedy the inefficiencies of the court system, companies may set up their own arbitration agreements, according to the Investment Climate Statement 2013. Thailand has signed, but not ratified, the Washington Convention 1965. Thailand is also a member of the New York Convention 1958, and has enacted its own rules and procedures for conciliation and arbitration; contact the Arbitration Institute under the Ministry of Justice for information on these rules and procedures. Access the Lexadin World Law Guide for a collection of legislation in Thailand.