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Regulatory Relaxation on Liquor Production in Thailand

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Regulatory Relaxation on Liquor Production in Thailand

Regulatory Relaxation on Liquor Production in Thailand

Effective as of 2 November 2022, the Ministerial Regulation on Liquor Production 2022 (“Ministerial Regulation 2022”) was enacted to repeal and replace the Ministerial Regulation on Liquor Production Permit B.E. 2560 (2017) (“Ministerial Regulation 2017”), which was previously the main regulation governing the production of liquor in Thailand. The Ministerial Regulation 2022 removes some of the requirements and limitations imposed by the Ministerial Regulation 2017, and at the same time  provides some new ones. 

1 Liquor Production for Non-commercial Purposes

The Ministerial Regulation 2017 did not distinguish between the production of liquor for commercial use and non-commercial use, or the production of liquor at home for use in the household. Consequently, the production of liquor at home for use in the household was strictly prohibited. However, under the recently enacted Ministerial Regulation 2022, production of liquor for non-commercial use is recognised and explicitly allowed if the producer obtains the requisite licence from the Excise Department. 

There is no definition of ‘liquor production for non-commercial use’ under the Ministerial Regulation 2022. However, ‘liquor production for commercial use’ is defined as: “production of liquor for the purpose of sale, exchange or any other purpose that receives benefits in return, including production of liquor exceeding 200 litres per year”. This implies that liquor production for non-commercial use cannot exceed 200 litres per year.

2 Liquor Production for Commercial Purposes

2.1 Production of Beer

Production of beer for commercial purposes requires a licence from the Excise Department, the applicant for which must be a juristic person established under Thai law with Thai shareholder(s) holding not less than 51 per cent of the total shares, unless prescribed otherwise in an applicable treaty.

The Ministerial Regulation 2022 revokes the requirements imposed by the Ministerial Regulation 2017, which required: the beer producer to have a minimum registered capital of Baht 10 million; the brewery producing beer for sale at the place of production (i.e. brew pub) and the brewery producing bottled beer to have the production capacity of at least 100,000 litres and 10,000,000 litres per year respectively.

The Ministerial Regulation 2022 also introduces new requirements for breweries. In the case of brew pubs, the brewery is required to obtain a factory licence in accordance with factory law. It must also use machinery or equipment that meets the prescribed standard, as well as comply with laws concerning the environment and public health.

Regarding a brewery producing bottled beer, in addition to the factory licence, the Ministerial Regulation 2022 requires this type of brewery to have the machinery, equipment and bottling line which are able to incorporate a printing system for the government’s excise paid mark. For this type of brewery to be established, it is required to obtain an approved environmental impact assessment report in accordance with the law pertaining to enhancement and conservation of national environmental quality.

2.2 Production of Distilled Liquor

Production of distilled liquor for commercial purposes requires a licence from the Excise Department, the applicant for which, except for a licence to produce triple-distilled liquor, must be a juristic person established under Thai law with Thai shareholder(s) holding not less than 51 per cent of the total shares, unless prescribed otherwise in an applicable treaty. 

A distillery that produces whiskey, brandy and/or gin is now required by the Ministerial Regulation 2022 to obtain a factory licence. The minimum requirement for the production capacity of this type of distillery remains at 30,000 litres per day.

Meanwhile, a distillery producing other types of distilled liquor, such as rice whiskey, must also obtain a factory licence. The minimum requirement for the production capacity remains at 90,000 litres per day, except in the case of small and medium-size factories - which will be elaborated on further later in this article. The Ministerial Regulation 2022 also requires a distillery to comply with the law concerning the environment and the law concerning public health in respect to operation of the distillery business.

2.3 Production of Community Liquor

Production of community liquor for commercial purposes, both distilled and fermented, requires a licence from the Excise Department, the applicant for which must be one of the following entities:

(1) a cooperative or farmers’ group registered under the law regarding cooperatives;
(2) a community enterprise under the law regarding community enterprise promotion;
(3) a farmers’ organisation formed under the law regarding Farmers' Reconstruction and Development Fund; or
(4) a juristic person in the type of a registered ordinary partnership, limited partnership and limited company under the Civil and Commercial Code, where every partner or shareholder is a natural person with Thai nationality (subject to exceptions under each treaty that Thailand is a party to).

In general, community liquor producers are allowed to produce rice whiskey and all types of fermented liquor except beer, such as wine and sparkling wine. 

Under the Ministerial Regulation 2017, the production capacity of community liquor production was limited to machinery with less than 5 horsepower and less than 7  workers. Under the Ministerial Regulation 2022, this kind of distillery is instead recognised as a “small-size distillery”. 

The Ministerial Regulation 2022 also recognizes a new type of distillery, i.e. a “medium-size distillery” - which refers to a distillery that uses machinery with more than 5 horsepower but less than 50 horsepower, or has more than 7 workers but less than 50 workers.

This reduces the limitation imposed by the Ministerial Regulation 2017 and allows the community liquor producer to upscale their production to machinery with less than 50 horsepower and less than 50 workers. However, this is subject to the condition that the applicant for a licence to operate a medium-size distillery must have already obtained a licence to operate a small-factory for at least one year.

Authors

ジラポン・スリワット

He advises on a wide range of merger-and-acquisition transactions, joint ventures, foreign direct investments, general corporate, international corporate finance, and restructurings. His expertise is advising, structuring and leading complex transactions both within and outside of Thailand. He regularly represents, among others, Japanese, Thai and international investors, international investment banks, international private equity investors, hedge funds and international corporations and financial institutions. His main areas of practice include public and private mergers and acquisitions (takeover rules), legal due diligence, joint ventures, fund raising, listings, block trades, stock exchange and securities exchange related laws, restructuring of shareholdings and general corporate advice. His additional areas of practice also cover banking and finance, renewable energy in Japan and Thailand, exchange control law, labor law, and debt restructurings. Before setting up the Bangkok office of Nishimura & Asahi in 2013, he worked with Linklaters for almost a decade. He is also a registered arbitrator of the Thai Arbitration Institute (TAI) with the areas of expertise in corporate M&A, joint venture, banking and finance, capital markets, debt restructurings and energy.

アピンヤー・サーンティカセーム

Apinya’s extensive practice covers a wide array of matters ranging from business set-up, domestic and cross-border transactions to day-to-day business operations, to name a few. Her clientele includes both local and international conglomerates, trading companies, aircraft operators, real estate developers, petroleum and energy companies, financial institutions, securities companies, venture capitalists, and fund managers. Well-read and a holder of law degrees from three different jurisdictions - Thailand, the United States and Japan, Apinya is able to leverage her international experience and cultural insights to effectively and efficiently resolve complex cross-border legal issues and provide tailored legal services and solutions to her clients. In addition to being a practicing lawyer, Apinya is regularly invited to teach business law at various prestigious universities in Thailand, and serves as a counsellor to the Ad-hoc Committee of the House of Representatives of Thailand for consideration of amendments to the Civil and Commercial Code. Her other notable achievements include being registered as a Barrister-at-Law, Attorney-at-Law, and Notarial Services Attorney in Thailand.