Introduction
In our September 2026 Legal Update titled “Thailand Strengthens Oversight of Data Center Businesses“, we discussed the establishment of the Data Center Business Policy Committee and the Thai government’s increasing oversight of data center investments.
Attention has now shifted to a more fundamental regulatory question: whether Thailand should regulate data centers under existing regimes, or develop a framework tailored to their operational, environmental and infrastructure characteristics.
This Legal Update considers the potential licensing and environmental implications of either approach, together with the resulting considerations for investors and developers.
Licensing Considerations
As data center investment grows in Thailand, regulators are considering whether existing laws adequately govern a sector spanning digital infrastructure, energy, environmental sustainability and industrial operations. Large-scale facilities require substantial electricity and water resources, extensive cooling systems, backup generation and, in some cases, significant fuel storage capacity. These characteristics raise questions about energy security, utility infrastructure adequacy, environmental impact and effects on surrounding communities.
Against this backdrop, the Director-General of the Department of Industrial Works (“DIW“) recently indicated that the DIW is considering whether data centers should be regulated as factories under the Factory Act B.E. 2535 (1992) (as amended) (“Factory Act“). This consideration raises a broader policy question as to whether a regime designed for industrial operations is appropriate and fit for a business whose principal function is the provision of digital infrastructure services.
The primary issue is which agency should take the lead in regulating the sector and how and to what extent other relevant agencies should be involved. It is worth noting that data centers are also closely linked to the policy objectives of the Ministry of Digital Economy and Society (MDES), energy and telecommunications regulators, environmental authorities and investment promotion agencies. The establishment of the Data Center Business Policy Committee, comprising representatives from multiple agencies, may itself suggest a move towards a more integrated regulatory approach.
One possible outcome is that data centers are ultimately classified as factories under the Factory Act. If so, additional regulatory requirements would apply, including:
- Site selection and zoning: Operations may be restricted in certain areas or subject to additional land-use and local planning controls.
- Infrastructure: When selecting a site, utility connections and the availability and adequacy of electricity and water supply in the area should be taken into account.
- Operational compliance: Operators may face legal requirements concerning machinery, workplace safety, emissions, waste, and noise, as well as inspections by government authorities.
- Project timeline: The need for a factory licence or related approvals could affect conditions precedent for the financing, construction sequencing and the target commercial operation date of the data center.
Another possibility is the development of a legal framework tailored specifically to data center businesses. Such framework could address issues such as digital infrastructure licensing, zoning, energy procurement, environmental standards, cybersecurity and infrastructure planning in a more integrated, suitable and direct manner than legislation originally designed for industrial activities. However, this approach would definitely take longer to implement and may not address public concerns promptly enough.
Environmental Review and EIA Considerations
Environmental review, including whether an environmental impact assessment (“EIA“) would be required, should be considered alongside licensing. Classification as a factory under the Factory Act would not, in itself, trigger an EIA requirement. This should, however, be assessed under applicable environmental legislation based on the project’s type, size, location and components.
Even where a formal EIA is not required, data center projects may still be subject to environmental review during the zoning, building, utility and other approval processes. Authorities may focus on energy consumption and energy security implications, water usage and cooling requirements, backup generation systems and fuel storage, noise and heat emissions, and waste management and decommissioning issues.
Developers should therefore consider the environmental and social impacts early in the site selection stage and project design, rather than deferring these considerations until the formal permit application stage.
Key Takeaways
Thailand’s regulatory discussion is moving beyond the promotion and general oversight of data center investment. The critical question now is whether existing laws, particularly the Factory Act, can adequately address the environmental, energy and infrastructure characteristics of modern data center operations, or whether a specific regulatory framework is required.
While data centers may ultimately fall within factory regulations, policymakers may also consider that a sector-specific framework is required. The establishment of the Data Center Business Policy Committee may itself indicate movement towards a more integrated approach.
Until greater clarity emerges, developers, investors and lenders should assess factory licensing, environmental review requirements, EIA screening, energy infrastructure and financing risks early in project planning and due diligence.
If you have any questions regarding the matters discussed in this Legal Update, please reach out to our Partner listed on this page.
For regional data center matters, please see Rajah & Tann Asia’s Data & Digital Economy Practice for more information.
Contribution Note:
This Legal Update is contributed by the listed Contact Partner, with the assistance of Senior Associate Punyavee Soontawnkrut.
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