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Tambon as a subdivision are quite old already. They were the second-level subdivision of the area administrated by a provincial town in the 19th century already. The governor of the province was supposed to appoint a commune elder (kamnan or phan). Phan also means 1000, which refers to the fact that a tambon was supposed to have about 1000 abled-bodied men.
In the administrative reforms started in 1892 under Prince Damrong Rajanubhab, the first Thai minister of Interior, the three levels of subdivision of provinces were continued. Additionally in 1898 the first sukhaphiban (sanitation districts) were created, the sukhaphiban of Bangkok as the first urban and Tha Chalom as the first rural. As the name suggest their prime purpose was to oversee the sanitary developement of the areas.
In the Local Administration Act of 2457 ( 1914) the roles of the subdivisions were first codified into law. Two levels of sukhaphiban were introduced, the sukhaphiban mueang for towns and sukhaphiban tambon for rural areas.
With the Tambon Council and Tambon Administrative Authority Act BE 2537 ( 1994) and later by the constitution of 1997 the tambon were decentralized into local government units with an elected Tambon Council. In a grace period 1994-1999 the kamnan was a member of the council, since then the council only consists of two elected representatives for each village.
In 1999 the later Thai prime minister Thaksin Shinawatra started a project, in which every tambon should select a typical local product. The project then does the promotion for the product, as well as assists in modernizing the production.