E-commerce players urge reform of sector

E-commerce players urge reform of sector

Foreign competition worries online retailers

The influx of Chinese products on Thailand's e-commerce platforms has affected local small and medium-sized enterprises.
The influx of Chinese products on Thailand's e-commerce platforms has affected local small and medium-sized enterprises.

Tech pioneers are urging policymakers to address the country's digital deficit, which is expected to reach 200 billion baht per year.

They have also called on policymakers to tackle the influx of Chinese products on Thailand's e-commerce platforms, which has affected local small and medium-sized enterprises (SMEs).

It is thought that Thailand is suffering a digital deficit from consuming the digital services of foreign digital service providers worth around 200 billion baht per year, Pawoot Ponngvitayapanu, the former president of the Thai e-Commerce Association, recently told Parliament's economic steering committee.

He advised the committee to conduct a study on the deficit and make the finance ministry aware of this issue.

Moreover, the country should identify foreign operators that have made over 1.8 million baht per year in revenue in Thailand as they are subject to value-added tax (VAT) payments.

As of Sept 1, 2021, foreign electronic service providers and electronic platforms providing online services in Thailand are required to register for the 7% VAT liability if their annual income exceeds 1.8 million baht.

Mr Pawoot said Thailand collected around 6.4 billion baht in VAT from e-services in 2022, and the top three payers are online advertising platforms, which accounted for 63% of the tax value, followed by online products at 25% and subscriptions of music/movies/games at 10%.

In 2023 such VAT stood at 6.7 billion baht and the top three payers were similar to 2022 with a percentage share adjustment to 61%, 24% and 11%, respectively. The VAT collection as of January is 2.3 billion baht.

Thanawat Malabuppha, honorary president of the Thai e-Commerce Association, said Thailand needs to have a proactive measure to tackle the serious issue of the influx of Chinese products, both illegal imports and sales on e-commerce platforms.

He added that overseas products, including those from China, gain a customs tax benefit privilege by sending products to be parked in Thailand's e-commerce free-trade zones, from where the merchants can bring out the products at prices below 1,500 baht apiece for sale in the local market without the need to pay customs tax.

People browse handheld battery fans at the Samphanthawongse market in Bangkok. The influx of Chinese products on Thailand's e-commerce platforms has affected local small and medium-sized enterprises (SMEs). (Photo: Wichan Charoenkiatpakul)

Over the past few years, Chinese manufacturers have also invested in their own warehouses in Thailand and have their own direct logistics fleets for importing products to Thailand.

Mr Thanawat said in Southeast Asia the waiver of customs tax on e-commerce products varies by country. Thailand's rate is at products priced below 1,500 baht, Indonesia at US$3 (100 baht), Malaysia at 500 ringgit, Philippines at 10,000 pesos (6,350 baht), Singapore at S$400, (10,600 baht) Vietnam at 1 million dong (1,460 baht), and Brunei at B$400 (10,600 baht).

He said that in Indonesia last year, the Minister of Trade Regulation introduced significant new restrictions on the activities of foreign merchants and e-commerce operators.

As part of Indonesia's new regulations, foreign and local e-commerce operators are required to impose a minimum price of $100 per unit on purchases of finished goods moving from offshore to Indonesia, to assist local merchants that sell lower-value items.

Thailand's e-commerce gross merchandise value tallied 980 billion baht in 2023, making the country the second-largest e-commerce market in Southeast Asia.

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