Import & Export in Thailand (2023): Trade Policies & Regulation

Last Updated: October 31, 2023

Trade Policy Overview of Thailand in 2023

In 2022, Thailand’s merchandise exports reached a sum of US$287 billion, a growth from US$272 billion in the previous year. The merchandise imports for the same year were US$303.2 billion, leading to trade deficit. In addition, the deficit in services widened to US$22.1 billion in 2022, a slight decrease from previous year.

As per the Ministry of Commerce in Thailand, key exports in 2022 encompassed items such as cars, computer equipment, rubber products, precious stones, and chemicals. The principal imports consisted of crude oil, machinery, chemicals, electrical equipment, and circuit boards, with the US leading as the top export market, followed by countries including China, Japan, Vietnam, Malaysia, and Hong Kong.

As a member of the World Trade Organization and other regional entities like the Asian Development Bank and the Asia-Pacific Economic Cooperation forum, Thailand engages in various trade agreements. Through the Association of South-East Asian Nations (ASEAN), Thailand has participated in free-trade agreements, including the Regional Comprehensive Economic Partnership initiated in 2020. Thailand also maintains bilateral FTAs with countries such as Australia, Chile, Japan, and New Zealand, and is in negotiations with others like Pakistan and Turkey.

In September 2022, Thailand and the EU drafted a bilateral Partnership and Cooperation Agreement (PCA), outlining collaboration in areas like the environment, energy, trade, and combating corruption. Though the PCA hasn’t been officially signed as of end-November 2022, it marks a step towards normalizing relations between the two regions. The potential Thailand-EU FTA’s future is still uncertain, and negotiations may take several years due to domestic resistance in Thailand and the need to align with EU standards.

In October 2021, a crucial government committee endorsed Thailand’s bid for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but the move was halted due to popular opposition. While the plan to join remains delayed, expectations are that a formal application will occur in the near term. Not joining could risk excluding Thailand from a global realignment that would favor regional competitors like Vietnam and Malaysia.

Thailand benefits from the generalized system of preferences (GSP) with Australia and Canada, and enjoys similar access to Japanese markets. However, the EU revoked Thailand’s GSP benefits in 2015, and the US suspended GSP eligibility for certain Thai exports in 2020. The full restoration of Thailand’s GSP privileges in the US market hasn’t occurred as of end-November 2022.

Thailand continues its engagement with superpowers like the US and China, who are both keen on fostering closer relations. Thailand has embraced the Indo-Pacific Economic Framework promoted by the US but also acknowledges strong economic ties with China. The absence of territorial disputes in the South China Sea is expected to further strengthen relations with China, as Thailand focuses on attracting Chinese investment under its Thailand 4.0 and the Eastern Economic Corridor initiatives.


Import Taxes

Thailand adopted the Association of South-East Asian Nations (ASEAN) Harmonized Tariff Nomenclature, comprising eight digits, in 2007. This tariff structure is relatively intricate, with the World Trade Organization (WTO) data indicating the simple average most-favored nation (MFN) tariff rate dropped to 11.5% in 2021 from 14.5% the previous year, including measurable equivalents where applicable.

According to the WTO’s sectoral definitions, the average tariff rate on agricultural products is significantly higher at 31.2%, compared to non-agricultural products at 8.4%. There’s a notable emphasis on full protection for fully processed products, with the lowest tariffs applied to semi-processed items.

There’s a substantial difference between bound rates (ceiling rates committed by Thailand to the WTO) and applied duties (those charged on imports). This difference provides Thailand with a significant opportunity to increase applied tariffs up to the bound level. All tariffs on agricultural products are bound within the WTO, but only 73% of industrial product tariff lines are bound. The average bound tariff for non-agricultural products stands at around 29.3%.

Non-ad valorem duties make up 8% of tariff lines, with specific duties applied to seven tariff lines, and alternate duties to 1,904 lines. The remaining lines carry ad valorem rates, with the highest such rates applying to raw silk (226%), onion seeds (218%), and milk and cream without added sugar (216%), all of which are out-of-quota rates. Excluding these, the highest ad valorem rates apply to solid residues from soya bean oil extraction (119%) and motor vehicles (80%).

In 2021, the most substantial average applied MFN duties were imposed on product groups such as beverages and tobacco (51.1%), coffee and tea (43.9%), sugars and confectionery (41.1%), fruits and vegetables (40.5%), and dairy products (37.5%). These substantial tariffs hinder similar imported products from competing in Thailand’s market. The lowest MFN tariffs were on cotton products (0%), chemicals (2.6%), and non-electrical machinery (3.0%).

Restructuring of tariffs has been delayed by conflicts between various industries, although authorities have reduced select import duties according to commitments to the WTO and ASEAN Economic Community, mainly on locally unproduced raw materials and inputs.

Thailand’s Customs Law was overhauled in 2017, replacing the previous 1926 statute. This modernized legislation simplifies procedures and reduces penalties, also limiting the transshipment and transit of goods to 30 days.

A national single window (NSW) operates in Thailand, streamlining the access process to all 36 authorities and permit-issuing agencies. In 2013, Thailand launched the Authorized Economic Operator (AEO) program, granting preferential treatment to qualifying importers, exporters, and customs brokers.

Thailand fully implemented electronic processing for imports and exports and began the Single-Point Additional Duty Program in 2018. The latter allows businesses to submit self-disclosure if they have failed to comply with regulations, possibly leading to the waiving of fines and penalties. This program will continue until September 30th, 2026.

Import Restrictions

Being a part of the World Trade Organization and a beneficiary of financing from the World Bank and IMF, Thailand has certain limitations on imposing import bans. The country exercises import restrictions to safeguard various aspects such as health, human, animal or plant life, intellectual property rights, national security, and public morals.

Absolute prohibitions are placed on items like counterfeit goods, manufacturing equipment for fake products, narcotics, pornographic content, and fraudulent notes or coins. Additionally, the import of certain endangered species of amphibians, coral, fish, and mollusks is banned under the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

The Controlling Importation and Exportation of Goods Act 2 of 1979 empowers the Ministry of Commerce to enforce temporary controls on imports to shield local industries. Generally, a license is needed to import goods that compete directly with Thai products.

Information on prohibited and restricted imports can be found on the Customs Department’s website. In response to the COVID-19 pandemic, Thailand has eliminated tariffs on goods related to coronavirus treatment and protection until the end of December 2023.

When registering food products, companies in Thailand must disclose detailed and often confidential information about the manufacturing process and composition. This applies to both domestic and foreign-made foods. Importers may also be required to purchase a certain quantity of locally produced products before obtaining licenses for imports.

Various goods are subject to import controls under different laws and regulations. For instance, drug imports require prior licensing from the Food and Drug Administration, while arms and explosives need a license from the Ministry of Interior. The import of cosmetics is governed by the Cosmetics Act of 1992.

The Hazardous Substances Act of 1992 regulates the handling of chemicals in Thailand, classifying them into four categories based on hazard levels. The 2019 amendment generally simplified controls on the first three types of chemicals.

In October 2022, the government announced a phased ban on plastic scrap imports by 2025. In June 2022, Thailand became the first Asian country to legalize cannabis, though import restrictions remain. A controversial bill on cannabis is expected to be debated in parliament by the end of 2022.

Imported goods are also subject to customs controls, duties, taxes, and currency controls. While some regulations have eased, many products still face stringent requirements. Private-sector companies, distributors, or end-users typically handle imports.

In 2002, the Department of Foreign Trade clarified rules on dumping margins. Investigations may proceed if the margin is more than 2%, and anti-dumping duties are reviewed annually.

The 2019 amendment of the Anti-Dumping and Countervailing Act aims to protect domestic industries against imports that evade anti-dumping or countervailing measures. If circumvention is found, the duties are extended to the imports of the circumvented goods, not exceeding the highest rate imposed on goods from the exporter’s country.


Free Trade Zones

Thailand’s infrastructure limitations mean that industrial estates (IEs) are likely to continue attracting foreign investors. The Board of Investment in Thailand sometimes ties investment incentives to location within these estates. Concern arose in 2011 when seven IEs experienced flooding, causing a loss of confidence in the country’s ability to manage natural disasters. By 2012, protective barriers were built, but criticisms remain regarding the inadequacy of the country’s water-management systems. Two estates encountered minor flooding in 2013.

Managed by the Industrial Estate Authority of Thailand (IEAT) under the Ministry of Industry, 12 special free zones and over 50 privately-owned industrial estates are currently in operation. Around 95% of these are concentrated in and around Bangkok and the eastern seaboard. Major private-sector developers include Hemaraj, Amata, and Rojana, operating over 30 private industrial estates or “industrial parks,” distinct from IEAT developments. Many of these private estates are specialized, such as the Sinsakorn Industrial Estate for printing, Kantana Movie Town for film production, Gemopolis for jewelry, and Southern Industrial Estate for rubber processing.

Some IEs are partitioned into two areas. General industrial zones accommodate both domestic and export manufacturing, while export-processing zones (EPZs) or free zones are exclusive to export-oriented manufacturing. Most EPZ-inclusive IEs have customs houses for quick clearance. Foreign investors within IEAT-approved estates can own freehold land rights without restrictions and hire more foreign workers than usually permitted. These investors also benefit from exemptions from import duties and taxes on essential equipment and raw materials, with further incentives available in the Eastern Economic Corridor (EEC).

Regardless of their location, EPZs offer duty and VAT exemptions on imported construction materials, machinery, and raw materials, as well as exemptions from export taxes. They may supply the local market by paying the requisite taxes in full. Other non-tax incentives include special permissions for land ownership by foreign investors, hiring foreign technicians, and remitting foreign currency. As of the end of November 2022, there were nine EPZs, mostly around Bangkok and the adjacent EEC.

In 2014, the government designated five border areas as special economic zones (SEZs) to complement adjacent zones established by Thailand’s neighbors. These include locations bordering Myanmar, Cambodia, Laos, and Malaysia.

IEAT is also working on a Bt2.37bn Smart Park in Rayong province, within the EEC. Spanning 221 hectares, this Smart Park targets investments in innovative sectors like next-generation automotive, smart electronics, automation, robotics, aviation, logistics, digital industries, and medical hubs, with plans to open to investors in 2024.

There are no free ports in Thailand, and the government is reluctant to provide duty-free facilities for tourists for fear of leakage into the domestic market. However, tourists can reclaim VAT paid for goods bought in Thailand upon departure.

Export Restrictions

Thailand imposes minimal restrictions on exports, with exceptions for concerns involving national security, environmental protection, cultural interests, or compliance with trade agreements. Under the Export and Import of Goods Act of 1979, the Ministry of Commerce is empowered to enforce export controls on certain products. Specifically, the export of unmilled rice and rice bran is strictly forbidden. Certain goods, including seeds, trees, and tobacco leaves, must have export licenses.

Thailand, being a leading global exporter of rice and sugar, mandates export licenses for these commodities under the Export Standards Act of 1979. Other prohibited items include images of Buddha and culturally significant artifacts considered national heritage. Agricultural commodity exporters might find mandatory membership in trade associations, which may implement their specific membership regulations. Export quotas are also applied to various items like cassava, coffee, sugar, and tin as part of international agreements. Specific restrictions, aiming to foster downstream industries and avoid domestic shortages, are placed on fuel, paper, raw timber, tin ore, and tin slag.

The country’s regulation of the manufacture, import, export, and possession of chemicals is governed by the Hazardous Substances Act of 1992, which also encompasses import restrictions.

Thailand made significant changes in its drug policy, notably removing cannabis from the banned narcotics list in June 2022, leading in Asia’s legalization of the substance. Despite legalization, the import of cannabis is still barred under various food laws. In November 2022, slight revisions were made in the sale and use of cannabis as a “controlled herb,” pending a controversial bill subject to parliamentary debate before the end of 2022. Licensed businesses are now mandated to report controlled-herb stocks, sourcing and usage, and to notify the government of each export.

The Trade Controls on Weapons of Mass Destruction (WMDs) Act of 2020 allows Thailand to maintain a list of dual-use items (DUIs), mirroring the EU Dual-Use Regulation goods list of 2018. The law classifies three categories of controlled goods, requiring different licensing and declaration procedures for DUIs, Harmonized System (HS) Code list, and the military list. Non-compliance can lead to severe penalties, including imprisonment and fines, with harsher punishments for offenses related to WMDs. This law supersedes a 2015 Notification on DUIs, granting the Department of Foreign Trade (DFT) the ability to investigate and halt risky DUI exports or re-exports as of the end of 2021.

Finally, a task force within the DFT actively monitors selected imports from neighboring countries and Thailand’s own exports to clamp down on re-exporting. The focus is generally on companies from countries lacking access to generalized system of preferences benefits, facing anti-dumping charges, or attempting to evade these issues by re-exporting products from Thailand.

Export Credits & Insurance

The Export-Import Bank of Thailand (Exim Bank), a financial institution entirely owned by the Ministry of Finance, offers a comprehensive array of export insurance and credit facilities, either in baht or foreign currencies.

Among the bank’s well-received short-term export credit insurance offerings is the Exim Flexi, a product designed to provide policyholders with advantages like reduced premiums, swift approvals, and enhanced benefits, covering up to 90% of any realized loss. Exim Sure, another short-term solution, provides specialized insurance service tailored to exporters who prefer the bank’s close monitoring of each shipment and vigilance over delayed payments.

Exim Bank also extends medium- and long-term credit insurance to safeguard against default, resulting from commercial or political setbacks. This insurance coverage is available to both exporters and financial entities providing credit to international purchasers or borrowers of Thai products or services. Depending on the nature of the export, be it services or goods, contract terms for this coverage can range up to five years, and payment terms may fall between six months and five years.

Beyond its insurance services, Exim Bank also furnishes both short-term and longer-term loans, designed to support various needs including production expansion, machinery procurement, trade show participation, and specialized lending for logistics service providers. A notable program, the Long-Term Credit for Export of Capital Goods, enables Exim Bank to grant credit directly to international buyers of Thai capital goods or provide loans to domestic exporters. This program can finance up to 85% of the capital goods’ value based on the borrower’s financial standing, with a potential payment term extending to seven years. Importers’ banks may also access this facility for re-lending purposes.

Additionally, Exim Bank deploys liquidity enhancement programs. Notable examples are the Exim for medium-sized businesses (Exim for M Credit), offering revolving credit up to Bt50m for pre and post-export needs, and the Loan for Thai Franchise/Thai Chain Buyers, a long-term financing solution for entrepreneurs investing in Thai franchises abroad. A recent addition, launched in September 2022, is a new revolving credit scheme designed to improve liquidity for entrepreneurs servicing exporters, with loans up to Bt2m at an initial yearly interest rate of 7.75%, available for application until the end of June 2023.

Besides the export insurance and credit provisions, Exim Bank furnishes investment insurance, assessments of buyer and bank risks, and a wide array of trade finance amenities, like guarantees. Thanks to a 2018 reform, the bank’s scope of services has been broadened to support Thai entrepreneurs in contract bidding and their expansion endeavors outside Thailand.

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