Thailand: Digital regulation draft bill a double-edged sword

• Jul 14, 2021

A draft of a royal decree meant to regulate digital platforms providing services in Thailand has drawn criticism among legal and tech experts about its impracticality over stringent requirements.

The Electronic Transactions Development Agency (ETDA) is set to unveil a draft royal decree on regulating digital platforms which are subject to prior notifications for public hearing tomorrow.

The decree, which is a subordinate law of the Electronic Transactions Act, stipulates a raft of requirements from these platforms, defined as operators that provide a space for connections between businesses and consumers.

Under the legislation, platform operators must inform authorities of their intent to do business in the country while the process of the notification will be announced by the Electronic Transactions Commission.

The decree also stipulates that foreign platforms that provide services in Thailand must have their representatives in the country who take responsibility for their services.

The ETDA has the authority to issue necessary and appropriate conditions for a platform’s services according to service type, including service charges, feedback mechanisms, dispute settlements, and access and use of data, alleviation measures for damage incurred from services, notices and take down mechanisms and user identity verification.

SIGNIFICANT BURDEN

“It is still uncertain what additional requirements digital platform operators will have to comply with. Stringent requirements could place a significant burden on digital platform operators,” Dhiraphol Suwanprateep, a partner at law firm Baker & McKenzie, told the Bangkok Post.

Most of those requirements are confidential in nature, he said.

“Hopefully, they will be kept as such and will not be leaked to their competitors and unrelated government agencies.”

According to the draft, digital platform operators would have to cooperate when receiving any order under the laws or court order to comply with this decree and other laws, he added.

“What this means for businesses is that it could open the floodgates for orders from authorities asking them to comply with stringent requirements. How the authorities will approach this obligation remains to be seen,” he said.

The aim of this decree is to regulate digital platforms to be fair and transparent as well as improve consumer protection.

“The law should have flexibility for digital platform operators to design their relevant terms within the appropriate framework as long as it is not against the law,” Mr Dhiraphol said.

Digital platforms outside Thailand that offer services to consumers in Thailand are also subject to this legislation.

This involves all operators whose platform is presented in Thai, has registered a Thai domain name (.th), allows payment in Thai currency, uses Thai law as a governing law of the contract governing transactions, pays a search engine provider to allow consumers in Thailand to access the service, has an office, unit, or personnel in Thailand to support users in the country, issues tax invoices to consumers in Thailand, or others as prescribed.

“The implication of this is that the decree could possibly apply to all digital platforms across the world, even those platforms which do not target or intend to market in Thailand but merely have some customers residing in the country,” Mr Dhiraphol said.

The violation could result in the prohibition of operations or the withdrawal of the business notification, he said.

ENFORCEMENT IN QUESTION

“The enforcement of this extraterritorial application could also be an issue in practice,” Mr Dhiraphol said.

“Even though the draft royal decree would require offshore digital platforms to establish a local representative, it would be questionable whether the regulator could effectively address non-compliance with this draft royal decree through a local representative, especially where criminal punishment is involved.”

According to him, the stringent regulations, which involve significant costs to business operators for legal and regulatory compliance, could lead to a barrier to entry for new digital platforms and even lead to the exits of existing ones in the country.

This would also mean that users in Thailand would lose opportunities to use global platforms which may be beneficial to them in every day life.

“The question is whether Thai authorities are ready to pay the cost of imposing such strict regulations by providing users with equally-effective local alternatives. This is yet another issue that needs consideration,” he said.

Paiboon Amonpinyokeat, an independent legal expert, indicated the draft decree is not likely to be pushed through by the Council of State as it has overruled various laws such as the Consumer Protection Act, Direct Selling and Direct Marketing Act, the Computer-Related Crime Act and Unfair Trade Competition Act.

As the draft decree was formulated based on the Electronic Transactions Act’s Section 32 and 33, which are aimed at promoting financial and commercial stability, the details of the draft appear to go against this principle by enforcing stringent control.

DOUBLE-EDGED SWORD

Suthikorn Kingkaew, a project leader at Thammasat University Research and Consultancy Institute, said the new decree will give the government a strong tool to control digital platforms as it will require registration and full compliance.

However, this control may present a double-edged sword for Thailand, he said.

“This law can be used for the benefit of Thai society by leading to better consumer protection and fairer treatment for local businesses operating on digital platforms,” Mr Suthikorn said.

“At the same time, it can allow government to interfere with global operations of platforms, especially of social media and audio-visual services that provide Thai society with freedom to access information.”

Pawoot Pongvitayapanu, an e-commerce market pundit, said even though the legislation does not apply to small platform operators with less than 1.8 million baht in annual revenue, it still affects 70-80% of the operators in the market.

This will put a burden on digital operators to notify and inform officials about new services, he said.

“How can we ensure the number of officials receiving such notification will be enough?,” he asked.

Source: https://www.bangkokpost.com/business/2148167/digital-regulation-draft-bill-a-double-edged-sword