In brief
Thailand is considering a comprehensive legislative framework for the regulation of digital infrastructure service operators.
The Draft Digital Infrastructure Services Business Act B.E. … ("Draft Digital Infrastructure Services Business Act"), proposed by a member of the House of Representatives together with other co-sponsors, seeks to regulate data center services, cloud services, digital platform services and other digital infrastructure services that may subsequently be prescribed by ministerial regulations.
The Draft Digital Infrastructure Services Business Act imposes licensing requirements for digital infrastructure service operators. For data center operations, operators must comply with requirements relating to project location, environmental and health impact assessment, clean electricity, electricity and water procurement, resource-use efficiency, data localization and Thai national personnel. Many important thresholds and implementation requirements would be determined through subordinate legislation.
The Draft Digital Infrastructure Services Business Act has not been enacted and does not currently impose binding obligations. However, if advanced, it could materially affect the development, operation and financing of data center projects in Thailand.
In more detail
Background
Thailand is attracting substantial investment in data centers and related digital infrastructure. At the same time, government agencies are increasingly considering how large-scale data center development may affect electricity demand, grid stability, water availability, land use, the environment and Thailand's wider digital and investment policies.
Thailand does not currently have a single dedicated law governing all aspects of data center operations. Instead, data center projects are generally subject to a combination of laws and regulatory requirements concerning town-planning, construction, energy, foreign business activities and telecommunications.
Against this background, the Draft Digital Infrastructure Services Business Act seeks to establish a licensing regime and regulatory framework intended to protect Thailand's energy security, prevent data center water use from adversely affecting household consumption, agriculture and other industries, manage noise and other impacts on surrounding communities, protect national digital data sovereignty and establish regulatory oversight of digital infrastructure services.
Scope of the Draft Digital Infrastructure Services Business Act
The Draft Digital Infrastructure Services Business Act would cover the following businesses:
- Data center services
- Cloud services
- Digital platform services
- Other digital infrastructure services subsequently prescribed by ministerial regulations
Operators within the scope of the Draft Digital Infrastructure Services Business Act would be required to obtain a license and comply with applicable general and business-specific requirements.
The most significant implications for physical infrastructure development arise from the provisions governing data center location, electricity, water, environmental impacts, resource efficiency and operational standards.
New overarching license
An operator carrying on a regulated business would be required to obtain a license from the Minister for Digital Economy and Society. The criteria and procedures for applying for, issuing, suspending, revoking and surrendering licenses would be prescribed separately for each category of business through ministerial regulations.
Operating a regulated business without the required license could result in imprisonment for up to five years, a fine of at least THB 10 million, or both. A continuing fine of up to THB 1 million per day could also apply until the noncompliance is remedied.
Key requirements for data center operators
The Draft Digital Infrastructure Services Business Act proposes the following key requirements for data center development and operations:
| Issue |
Proposed requirement |
| Location and land use |
A data center must be located in an area where a factory may be established under the town planning laws. |
| Environmental and health impacts |
A data center project must undergo an assessment of its potential effects on environmental quality and the health of surrounding communities in accordance with the enhancement and conservation of national environmental quality laws. |
| Licensing qualifications and operating security |
The license applicant must be a limited company or public limited company incorporated under Thai law, meet prescribed data center service standards and provide performance security in an amount to be determined. |
| Clean electricity |
A data center license applicant must use clean electricity in the proportion prescribed by the Minister. Clean electricity is defined as renewable electricity and electricity from other sources meeting a prescribed greenhouse-gas emissions threshold. |
| Electricity procurement |
A data center exceeding a prescribed electricity-consumption threshold must generate its own electricity under an appropriate energy business license, purchase electricity directly from a licensed private electricity producer, or use a combination of both. |
| Water supply |
A data center exceeding a prescribed size threshold must maintain a water source sufficient for its operations without using water from public water sources. |
| Electricity- and water-use efficiency |
Data center operators must maintain prescribed electricity- and water-use efficiency standards throughout the operating period. |
| Heat and noise control |
Data center operators must control heat emissions and noise pollution within limits prescribed by the Minister. |
| Electronic waste and fire safety |
Data center operators must comply with requirements concerning electronic-waste management and fire prevention and control. |
| Data localization |
Specified information, including personal data of Thai nationals and information relating to Thai entities and government agencies, must generally be stored in Thailand. Cross-border transfers, storage, processing or backups would be permitted only where justified and subject to prescribed conditions. |
| Thai personnel |
At least half of the personnel performing the system-supervision functions prescribed by the Minister. |
| Local content |
Data center operators may be required to use a prescribed proportion of materials or equipment manufactured in Thailand. |
Several commercially important matters, including applicable thresholds, standards and implementation arrangements, would be determined through future ministerial regulations or notifications. The ultimate impact on individual data center projects will therefore depend substantially on the subordinate legislation.
Transitional arrangements
An operator carrying on a regulated business before the Draft Digital Infrastructure Services Business Act takes effect would be required to apply for a license within 180 days after the relevant ministerial regulation governing licensing becomes effective.
Current status of the Draft Digital Infrastructure Services Business Act
The Draft Digital Infrastructure Services Business Act was published for public consultation. It has not been enacted and should not be treated as an operative legal requirement. It may be amended, withdrawn or replaced as it proceeds through the legislative process.
Recommended actions
Data center developers, operators, investors and lenders should monitor the Draft Digital Infrastructure Services Business Act's legislative progress and the development of any subordinate legislation, particularly the thresholds, standards and implementation requirements that could affect existing and planned projects.
How we can help
Our energy, infrastructure, technology and finance teams can assist data center developers, operators, investors, electricity suppliers and lenders in assessing the implications of the Draft Digital Infrastructure Services Business Act and related regulatory developments.
We can support clients in relation to project and investment structuring, licensing strategy, land and site constraints, electricity procurement, grid connections, renewable-energy arrangements, water supply, environmental requirements, data localization, investment promotion, project contracts and project financing.
If your existing or proposed data center project may be affected by the Draft Digital Infrastructure Services Business Act or related regulatory developments, please contact us to discuss the potential implications and practical next steps.
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Ekarin Tengchiew, Hongrat Jungwanitchakun and Prachaya Apibansri, Senior Associates, have contributed to this legal update.