THAILAND Law and Practice Contributed by: Jessada Sawatdipong, Sarunporn Chaianant, Supawich Nimmansomboon and Supawin Pongthananikorn, Chandler Mori Hamada
8.7 Natural Resources While there is no particular legislation dealing with the ownership of natural resources in Thailand, under the Thai constitution, the state possesses the pow- er to manage, utilise, organise and safeguard natu- ral resources. Since regulations concerning natural resources vary by type of natural resource, should a person aim to obtain the rights to any particular natu- ral resource, they must comply with the relevant laws enacted for that resource. Regarding beneficiation, there are no regulatory requirements that restrict the beneficiation of minerals in Thailand before export. 8.8 Environmental, Health and Safety Laws The Office of Natural Resources and Environmental Policy and Planning Environment is the main regu- latory body that imposes a requirement to conduct an environmental impact assessment or an environ- mental health impact assessment for certain types of projects under the Enhancement and Conservation of National Environmental Quality Act B.E. 2535 (1992). The Department of Industrial Works oversees vari- ous environmental, health and safety issues, such as electrical system safety, chemical and radioactive safety, workplace safety, fire hazard safety and gen- eral management of air and water pollution, as well as the submission of Environmental Safety Assessments in accordance with the Factory Act B.E. 2535 (1992). In addition to the two major regulators, there are vari- ous governmental agencies responsible for environ- mental, public health and safety issues, including: • the Hazardous Substance Control Bureau, which is responsible for the management of hazardous substances, namely, oil, gas and fuel; • the Department of Energy Business, which is responsible for the operation and construction of large oil storage facilities; • the local authorities, which are responsible for con- struction and public safety; and • the Department of Health, which is responsible for general public sanitation.
on the mortgaged ship, the ship will need to be dereg- istered and to exit Thai waters. 8.5 Structuring Deals In structuring deals, several types of risk need to be carefully considered by lenders and their advisers. To ensure lenders’ protection, specific issues relating to cashflow projections, project operations and the identities of relevant counterparties should be taken into account. The project company is usually a limited liability com- pany newly set up as an SPV for the construction and operation of a project. Certain businesses, such as service businesses, are prohibited from being oper- ated by a company wholly or majority owned by for- eigners, except when a business licence is issued to allow the operation of such foreign businesses. 8.6 Common Financing Sources and Typical Structures Bank loans are a major source of project financing in Thailand. The structure of the financing can be either bilateral or syndicated financing, depending on the risk exposure of the project. Lenders normally require capital contribution commitments by the project’s sponsors up to a certain ratio, with no or only limited recourse. Security packages range from security over fixed assets to mere contractual rights of the project owner under project-related agreements. Export and import credit financing is used to support the export of products and services from Thailand as well as the import of overseas products and services into Thai- land. Forms of financing include a letter of credit, packing credit, trust receipt and shipping guarantee. Issuance of bonds is another common way for com- panies to raise funds for investments in projects. There has been an increase in the issuance of green bonds, social bonds and sustainability bonds in the Thai bond market. These bonds are intended for investment or the refinancing of loans for projects that are envi- ronmentally friendly, with the objective of promoting social and sustainability initiatives. Nowadays, SLBs are more prevalent where issuers set a sustainability performance target whereby interest payment of the bonds will tie with their – or their subsidiary’s – per- formance in achieving such target.
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