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Cabinet OKs Draft Digital-Regulation Decree That Could Push Startups Out, Favor Foreign Firms

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The Cabinet on Monday approved a draft of a royal decree to that will greatly increase regulation of digital platforms despite widespread criticism it will favor foreign firms, crush startups and open the door to corruption.

Government spokesman Thanakorn Wangboonkongchana described the decree as requiring operators to elaborate on their business, verify users’ identities and supervise online buyers and vendors in an effort to maintain financial and commercial stability and prevent damage to the public.

But the fact the regulation is being done as a decree, rather that a law that could be debated, amended and even rejected, showed that the government isn’t interested in addressing the many objections raised during earlier public hearings.

Thanakorn said the Cabinet endorsed the draft decree in principle to protect service users. It requires the operators of digital platforms to report information about their business and services to the Electronic Transactions Development Agency before starting their business.

The decree tasks the ETDA with supporting digital platform operators, introducing guidelines for their operations which include the identity verification of platform users and opening central channels to receive complaints.

Digital platform operators must comply with the new law within 180 days after it is published on the Royal Gazette. The operators who start business before it takes effect have 210 days to do so.

The ratification comes a full three months after the government first tried to ram the decree – intended to be a subordinate law of the Electronic Transactions Act – through the bureaucracy, and failed.

At a late July hearing, Thai digital companies raised concerns about unequal enforcement between domestic and foreign firms, additional burdens on operators and the risk of abuse of power.

A representative of the Thai Startup Trade Association testified then that the decree will increase the burden on local startups, while making it difficult to enforce against foreign platform operators.

“This new legislation could push local startups out of Thailand,” he said.

Attorney Dhiraphol Suwanprateep, a partner with Baker & McKenzie, pleaded that overly burdensome legislation would create significant costs to businesses for legal compliance. That, in turn, can become a barrier for new digital platforms or push existing operators out of the country.

Suthikorn Kingkaew with Thammasat University’s Research and Consultancy Institute called the draft decree an impediment to Thailand’s digital economy, creating more regulation without tangible benefits, as there already are many laws and regulations that can be used to protect the public.

Chaichana Mitrpant, executive director of the ETDA, justified the decree by saying it was drafted to address complaints from consumers and businesses who felt digital platforms treated them unfairly.

Many consumers complain about inferior goods and services being sold online, as well as fraud, price gouging, personal data leakage and unfair terms and conditions, he said.

Platforms need to run businesses with standards and guidelines, Chichana insisted.

Pawoot Pongvitayapanu, an e-commerce market pundit, questioned how serious the government really was about cracking down on foreign firms: “Are we going to block or close them down?”

The legislation also gives power to low-level bureaucrats to enforce the rules, opening the door wide to bribery demands, other corruption and abuse of power, Thai executives complained.