Firms miss out on FTA advantages

Firms miss out on FTA advantages

The Industry Ministry is encouraging companies to capitalise on the benefits of free trade agreements (FTAs). 

If they take full advantage of the FTAs by 2017, it could cut costs and add profit of more than 300 billion baht, it said yesterday.

Udom Wongviwatchai, director-general of the Office of Industrial Economics, said if firms used all tariff-free advantages, it could save export costs of up to 252 billion baht and import tax of up to 132 billion baht.

He said many firms did not know how to capitalise on these tax privileges.

"The Industry Ministry is about to discuss this matter with private firms to seek ways to slash tariffs as soon as we can," said Mr Udom.

The ministry will arrange formal talks to be chaired by Prime Minister Prayut Chan-o-cha and Deputy Prime Minister MR Pridiyathorn Devakula, who oversees economic issues.

Thailand has signed FTAs with several countries and joined economic zones, with agreements including the Asean Free Trade Area, Thailand-Australia Free Trade Agreement, Japan-Thailand Economic Partnership Agreement and Thailand-India Free Trade Agreement.

Thailand has also reached out to faraway countries to liberalise trade with the Thailand-Peru Free Trade Agreement and the Asean Free Trade Agreement with China, India, Japan, South Korea, Australia and New Zealand.

The FTAs cover 17 industrial sectors including auto parts, iron and steel, and food and plastics, allowing Thai firms to produce and export at lower costs.

Despite Thailand signing many FTAs, Thai companies have benefited from only about half of the tax-free privileges in recent years, Mr Udom said.

Vallop Vitanakorn, vice-chairman of the Federation of Thai Industries, said the major problem preventing firms from using all the privileges from FTAs was that they did not understand how the agreements provided them with a chance to do business at lower costs.

That hurts them by cutting their competitive advantage, he said.

Some trade partners also had non-tariff barriers to help protect their domestic industries, which was another major problem that prevented Thai companies from taking advantage of FTAs.

"It's a crucial problem that the government will have to tackle immediately by completing more campaigns to let Thai firms realise those FTA privileges and encourage them to understand and use them to greater benefit," Mr Vallop said.

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