The Thai finance ministry has finalised the import-tariff structure for more than 1,000 electrical and electronics products, which will enjoy lower import duties in a bid to turn Thailand into an electrical and electronics manufacturing centre.
Somchai Sajjapong, deputy director-general of the Fiscal Policy Office, says his unit has spent the past two months finalising the new structure. This involved discussions with the private sector and related state agencies, including the Federation of Thai Industries, the Thai Chamber of Commerce, the Board of Investment, and the National Economic and Social Development Board. Finance minister Thanong Bidaya has already screened it, he adds.
“This is in line with the policy to make Thailand a regional electronics manufacturing centre, and to improve medium-sized manufacturers “competitiveness,” Somchai says. “It will also complement free-trade agreements, whereby import tariffs will eventually be cut to 0%.”
Theoretically, upstream (component) items will be subject to lower tariffs than downstream (finished) items to help manufacturers lower their production costs.
The short-listed items are in two categories: manufacturing-related and finished products. Most are in the first category, where tariffs may be as low as 0%, while finished products will be incrementally reduced over a specified time to allow local manufacturers to adjust.
In the manufacturing-related category there are about 1,400 items. Those for basic manufacturing include copper, which is used in all industries. The intermediate manufacturing level includes machines. Some 80% of items in the category should enjoy 0% tariffs and will lower local manufacturers “production costs.
“The finance minister’s policy is to lower small and medium-sized manufacturers “costs and increase their competitiveness. Local manufacturers also agree with this plan,” Somchai adds.
The office is also preparing to restructure tariffs for cars and car parts as well as processed food and agricultural products, which have a combined value exceeding half of Thailand’s exports.
“These sectors also rely largely on imports. If the tariffs are lowered, the private sector’s manufacturing costs will be lowered and this will increase their competitiveness without having much impact on the country’s tax revenue,” he says.
The office estimates that tariff restructuring could cover 5,000 items, from which the customs department collects between Bt40bn and Bt50bn in annual revenue.