Calls for duty-free reform mount

Calls for duty-free reform mount

End to duty-free monopoly sought

Retailers on Friday reiterated their calls for the government to end the duty-free concession monopoly, liberalise duty-free pickup counters and reduce import tariffs for some luxury items.

They claimed that Thailand could generate up to 270 billion baht worth of sales from duty-free shops, up from 50-60 billion in 2018, if the existing system is abolished.

The Thai Duty-Free Shop Trade Association and Thai Retailers Association submitted an open letter to Prime Minister Prayut Chan-o-cha, asking the government to tackle what they deem as obstacles to the domestic retail industry's development and growth.

One of their key proposals is the revision of the delayed terms of reference for the Suvarnabhumi airport duty-free concession to allow more players to run duty-free shops and avoid the continuation of the monopoly.

Currently, Airports of Thailand Plc (AoT) administers duty-free for both Suvarnabhumi and Don Mueang airports as a master concession that is considered to be a de facto monopoly for the holder, King Power International.

Worawoot Ounjai, president of the Thai Retailers Association, said the new concession should be split into product categories such as liquor and tobacco, cosmetics and beauty products, fashion and perfumes, dried food and sweets.

This approach has already been adopted by leading international airports such as Incheon in South Korea, Changi airport in Singapore and Hong Kong International Airport.

Mr Worawoot insisted that a concession system by product category has greater transparency and more efficiency while creating a greater benefit for the country and passengers.

"Incheon airport, which now operates duty shops on 12 concessions, generates revenue six times higher than Suvarnabhumi airport," said Mr Worawoot.

He also asked the government to liberalise the duty-free goods pickup counter, proposing the pickup counters at all international airports be under the management of the AoT without any concession granted. Duty-free shop operators should instead lease the space directly from the AoT.

In addition, the government is also being urged to cut import tariffs on popular products both for foreign visitors and Thai tourists such as cosmetics, apparel, bags and shoes.

Thailand's import tariffs, particularly on luxury goods, are relatively high compared with those of Malaysia and Indonesia.

"Malaysia and Indonesia have reduced import duties over the last few years to encourage shopping sprees among foreign visitors," said Mr Worawoot.

He added that this would also stimulate domestic consumption, reduce purchasing from abroad and help to curb the grey market.

Deputy Prime Minister Somkid Jatusripitak said the decision on the duty-free concession at Suvarnabhumi airport rests solely with the Transport Ministry.

The Suvarnabhumi duty-free concession, held by King Power since the airport opened in 2006, is set to expire in September 2020.

The group was allowed to be the sole operator of the duty-free pickup counters, where tourists collect their purchased items upon departure, at the two Bangkok airports. It is also currently the sole duty-free concessionaire for all of Thailand's international airports.

Airports of Thailand said earlier that it would finalise the bidding terms last November and would hold a new auction before the end of 2018, but no progress has been announced so far.

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