Liquor Law Reform: A Step Towards Revitalising the Industry

The Liquor Act B.E. 2493 (1950) (“the Act”) was enacted in Thailand to regulate liquor production, requiring producers to obtain government licenses. However, the Act imposes stringent requirements that have created significant barriers for small and medium-sized enterprises (SMEs) to participate in the industry. These restrictions have allowed large corporations to monopolize the market, thereby stifling competition and innovation.

In response to these challenges, Thailand introduced the Ministerial Regulation on the Production of Liquor B.E. 2565 (2022) (“the Regulation”). This Regulation seeks to address some of the difficulties posed by the Act by introducing measures to support SMEs and community-based liquor production. Key provisions of the Regulation include:

1. Defining Small to Medium-Scale Industrial Breweries:

• Small producers are permitted to use machinery not exceeding 5 horsepower and employ fewer than 7 workers.
• Medium-sized producers may utilize machinery up to 50 horsepower and employ a maximum of 50 workers.

2. Requirements for Commercial Liquor Production:

• Production requirements are tailored to the type of liquor (e.g., fermented or distilled).
• Conditions include shareholder composition, machinery specifications, and adherence to environmental and public health regulations.

3. Requirements for Non-Commercial Liquor Production:

• Producers must specify production locations and processes.
• Annual production is capped at 200 liters and must not create nuisances or violate safety and environmental standards.

While the Regulation provides some relief by enabling the growth of community-based breweries, numerous limitations remain. To address these issues, three draft legal instruments have been proposed to the House of Representatives.

Proposed Draft Laws

1. The Draft Progressive Liquor Law

• Proposed by the People’s Party, this draft sought to eliminate minimum requirements for commercial liquor production, such as factory size, horsepower, employee count, and registered capital. It also allowed home brewing without regulatory conditions. However, the House of Representatives did not approve the draft’s principles.

2. The Draft United Thai Liquor Law

• Proposed by the United Thai Nation Party, this draft obtained the principle’s approval from the House of Representatives. It emphasizes supportive and less burdensome conditions for SMEs seeking liquor production permits.

3. The Draft Community Liquor Law

• Proposed by the Pheu Thai Party, this draft also gained the principle’s approval. It encourages the use of agricultural products in liquor production to create distinctive flavors and styles. Additionally, it removes minimum daily production requirements, making it easier for SMEs to enter the market.

Current Developments:

On December 26, 2024, the Draft United Thai Liquor Law and the Draft Community Liquor Law successfully passed the second draft consideration stage in the House of Representatives. Both drafts are scheduled to proceed to the third and final consideration stage on January 22, 2025. If enacted, these drafts represent significant progress toward revitalizing and diversifying Thailand’s liquor industry.

Conclusion:

The Liquor Act B.E. 2493 (1950) imposed substantial obstacles for SMEs in the liquor industry, contributing to a monopolized market. The introduction of the Ministerial Regulation B.E. 2565 (2022) provided initial reforms, but additional measures are necessary to address lingering challenges.

The proposed Draft Progressive Liquor Law, Draft United Thai Liquor Law, and Draft Community Liquor Law aim to reduce barriers for SMEs, foster competition, and promote innovation through the integration of domestic agricultural products. Although the Draft Progressive Liquor Law was rejected, the remaining drafts hold promise for a more inclusive and diverse industry.

However, these reforms must be implemented with careful planning to mitigate potential risks and maximize benefits for producers, consumers, and society at large.

Stay informed with the latest legal developments @GLE News