The Factory Act of 1992 is the primary act governing factory establishment and operation, factory expansion, safety, and imposing strict controls on industrial pollution. The Act is administered by the Department of Industrial Works, Ministry of Industry.

A factory means a building, place, or vehicle which uses a machinery equivalent to at least 5 horsepower or which employs at least 7 workers for manufacturing, producing, assembling, packing, filling, repairing, maintaining, testing, improving, processing, transporting, storing, or destroying anything included in the types of factories listed in the Ministerial Regulations.  The Act does not apply to the factories run by government agencies.

Factories are divided into three categories:
1. Factories that do not require a license – use machinery equivalent to 5-20 horsepower and/or that employ 7-20 people for manufacturing
2. Factories that only require a notification to officials in advance of the commencement of operations – use machinery equivalent to 20-50 horsepower and/or that employ 20-50 people for manufacturing
3. Factories that require a license from the Department of Industrial Works, Ministry of Industry, prior to operation – Factories that pollute and use machinery equivalent to more than 50 horsepower and/or that employ more than 50 people for manufacturing

In order to obtain the Factory License, the factory owner must notify the competent authority at least 15 days before a factory test-run commences and again at least 15 days before actual manufacturing begins. Until the license is obtained, a certificate may be granted so that the owner can start building parts of the factory.

Within 30 days after the request of the License, the factory site, structures, components, and pollution control systems will be inspected by government officials or by a private body to ensure continuous compliance with the Factory Act.
If the factory is putting in danger the public or the property in the factory or its vicinity, the Ministry can force the license holder to make improvements, cease business, or even remove all or part of the factory to a location where no one will be threatened.

The officials will decide upon the license application within 60 days. The fee for obtaining a Factory License is 1 million Baht.
The License is valid for 5 years from the year in which the business starts operations. In case of relocation or dissolution of factory business (which also includes factory transfer, lease, or hire purchase), the license is considered expired on the date of issuance of a License to the factory’s new operators or on the date of dissolution.

Before its expiration, the (first) license must be renewed and a fee of 100,000 Baht must be paid. If the expiration date is reached, the application must be made within 60 days of the expiration date and an additional fine of 20,000 Baht must be paid, otherwise the application will be treated as a new one.

Every license holder is obliged to additionally inform the Ministry in case of the following changes and incidents:
• The operations have been stopped for more than 1 year – an approval must be obtained within 7 days before restarting the operations
• An accident that causes death, injury or sickness that incapacitates a worker for more than 72 hours period
• An accident that causes the factory to stop operations for more than 7 days
• Removal of machinery or the factory to another site for temporary operations (no longer than 1 year)
• Transfer, rent, offer for hire, purchase, or sell a licensed factory – obligation to apply for a new license within 7 days, no fee is required
• Decease of the licensee – the heir or administrator must submit an application for the transfer of the license within 90 days of the date of death (otherwise, the license shall be deemed to expire)
• Factory expansion (increase of the number or the power of the machines or if a part of the factory building would be added or alternated so that the foundation of the factory can bear a load of an additional 500 kilograms or more) – an additional approval has to be requested within 7 days and a fee will be due

The license holder must comply with other government requirements, and in case he is producing and selling food and drugs, he must also apply for a FDA license with the Ministry of Health.

In case of violations of the Act or for failure to carry out orders issued by competent officials, the License may be suspended and a fine or imprisonment not exceeding 4 years may be applied. In case the offense was committed with the knowledge or consent of the directors, managers, or other persons responsible, they will be subject to the same punishment.