Effective 21 December 2009, the application fee for a work-permit in Thailand rose by 600%.

There are two fees to be paid for a work-permit in Thailand, an application fee, and a successor issuance fee.  The former is controlled and set by the Work Permit Section of the Employment Division of the Ministry of Labour.  The latter is controlled and set by the Cabinet under Parliamentary approval via the Working of Aliens Act.

Resetting the issuance fee requires both cabinet and parliamentary approval, and amendment of the Working of Aliens Act.  As such, any changes are subject to public scrutiny and judgement all the way through the approval process.  This affords the opportunity for public, business, and organisational comment and criticism, as well as lobbying and media scrutiny of the justification for any cost increase.

During past proposals for increases to the issuance fee, prime critics have included the Immigration Police Division (the issuers and enforcers of visa extensions and changes), as well as Thai-located Foreign Chambers of Commerce, Consulates, and Embassies.   With this pressure, the issuance fee has only increased once in the last fifteen years (in 2002 from Thai Baht 1,000 per annum to 3,000 per annum).

The application fee was introduced without announcement in 2004.  It falls under the jurisdiction of the Ministry of Labour and is not included within the Working of Aliens Act, therefore does not seem to require either Cabinet or Parliamentary scrutiny and approval, nor to undergo public comment and consultation prior to any changes being introduced.  When it was introduced, due to lack of public announcement, it was widely seen as a form of official “tea money” – the polite name for bribery – most especially due to the then fee being only Thai Baht 100.

As a Christmas present to the foreign working community, the Ministry of Labour increased the application fee (payable whether or not your application is successful) from 100 Baht to 600 Baht.

The Ministry is in a tight spot …

News reports, late last year, revealed a reverse-migration of transient and migrant workers back to their home countries for varying reasons, including Thailand’s internal and border troubles, the global economy, and increasing anti-foreigner sentiment apparent in foreign-public belief (whether true or not).  The Labour Ministry has to maintain offices and staff in all Thai provinces, and the costs for these have not decreased due to a reduction in “foreigner customers” for their services.  Economic effects and a general tourism decline have increased the Ministry’s Thai-nationals customer-base, inflationary pressures are driving operational costs upwards at the same time.  Overall employment-office costs would appear to be rising.

With a smaller foreign-customer base, and increasing costs, the fee increase may therefore be higher than it would have been had the number of domestic and foreign customers remained unchanged.  It is certain that had the increase been levied on the success fee, the increase itself, and the overall revenue from it, would have been smaller due to public pre-scrutiny and pressure.

The foreigners’ work-permit application fee is also paid by unsuccessful applicants, and is therefore a two-tier windfall for the Ministry, which gains from failed applications as well as the fee-increase.  Because re-application is permitted and encouraged, some foreigners are voicing opinion that this will lead to falsely rejected applications, in order to increase departmental revenues – such is the lack of trust in government offices amongst some groups of the foreign community.  However, there is marginal justification for these fears based on news from November 2009, which is related below.

Concurrent with these fee-increases comes the news that the Foreign Business Act (FBA) rules, regarding permitted business types and occupations, are to be amended and re-issued sometime prior to 21 February 2010.

Reported from the Nation Newspaper, on 28 December,

The planned liberalisation of certain business sectors currently limited to Thai firms will be accompanied by the imposition of more stringent restrictions on foreign-owned businesses operating in the Kingdom if a series of proposals by the Commerce Ministry are accepted by economic ministers.

Under the ministry’s proposed amendments to the Foreign Business Act (FBA), voting rights of foreign shareholders will be more tightly controlled. In addition, all new retail and wholesale businesses would have to be approved by the ministry. Currently, retail and wholesale operators investing between Bt1 million and Bt99.99 million have to be approved by the ministry.

In an effort to boost foreign investment, the government is considering removing some industries from the FBA’s Annex III, which lists industries that are off-limits to non-Thais.

Annex III businesses that might be opened up include tour guide operators; trading in agricultural futures; stock trading; derivatives trading; commercial banking; insurance and assurance; pawnshop operators; warehousing; schools; and credit fonciers.

Initial expatriate reaction is that the relaxation of business-type restrictions will be good news, however the paragraph-2 mention of investment value has the expatriate small business community worried.  Additionally, there is some confusion regarding the unconfirmed comment by the Nation’s reporter that, “amended regulations would only apply to new foreign-owned companies”.  Although that statement seems clear enough, it will cause distress “in the trenches” if local officials apply pressure to existing companies making use of the new rules, and those officials refuse to accept the “new / old company” differentiation and talk about “engines needing oiling”.

Further debate and trepidation amongst expatriates has been fired by a November post on the Integrity-Legal blog regarding next month’s changes to the work and business opportunities in Thailand,

Currently, there is a list of jobs that foreigners can and cannot engage in, an updated list of the types of employment which foreign nationals will be permitted to engage in will be promulgated on or before February 23, 2010. Pursuant to recent drafts of the updated Ministerial Regulations on the kinds of work that foreign nationals are permitted to engage in, these updated rules and will impact on currently valid work permits as they will be reevaluated upon extension.

The new protocols will force foreign nationals, when submitting a request for a work permit to be issued or renewed, to explain both the type of work (apparently, there will be between six and eight employment categories) and the actual job title that the foreign national will apply for.

Information regarding Ministry approved positions will not be available to the public as only officers at the Thai Ministry of Labour will have the list of approved positions. This list will be in an “internal guidebook,” which will only be distributed within the Ministry.

If a foreigner applies for a position that is not listed in the Ministry’s “internal guidebook,” the application will likely be denied. The foreign national may submit a new application but it will be placed under heavy scrutiny by the officers.

The sponsoring company’s business plan will also be required as well evidence showing that the company attempted to employ a Thai national in the position, but was unsuccessful in finding anyone to fill the role.

Expats, with realistic perceptions of how Thailand operates, are stating bluntly in public forums (internet-wide) that the hidden list of permitted employment and business types is simply a massive opening for increasing the corruption demands before work permits will be issued.

Transparency and bureaucratic honesty have never been Thailand’s strong suit.  Records of local officials corruption activity towards foreigners exist in travelogues and chronicles going back for centuries.

Are the Thai government handing on a plate to local officials nation-wide, a route to blackmail and extort foreign investors and workers with legitimate reason for employment, whilst ignoring those who ignore the rules and never apply for work permits in the first place?  Only time will tell.