State agencies and organisations are seeking ways to stem the flood of cheap Chinese products into Thai markets, especially via e-commerce platforms, as the influx has damaged small local producers of household goods.
Recently Prime Minister Srettha Thavisin urged the Revenue and Customs departments to speed up efforts to curb the deluge of cheap goods.
The premier also urged all related agencies to keep an eye on customs declarations, as there have been several incidents in which importers under-declare the value of the goods they are bringing in to benefit from value-added tax (VAT) and import tariff waivers.
Q: WHAT ARE THE TAX AND TARIFF WAIVERS?
A major factor attributed for the wave of Chinese products entering Thailand is a tax and tariff waiver.
Thailand waived the import duty and VAT on imported parcels with combined prices and cost, insurance and freight fees of no more than 1,500 baht per piece. The price was set at 1,000 baht from 2018 before a recent hike.
Every year more than 30 million parcels are shipped into Thailand, of which half importers claim the item price is lower than 1,500 baht.
Q: How does the influx of Chinese products affect the Thai manufacturing sector?
Up to 20 industrial sectors, including steel, aluminium, plastics, ceramics, petrochemicals and medicine, are struggling to deal with tougher competition, with small and medium-sized enterprises (SMEs) the most negatively affected, according to the Federation of Thai Industries (FTI).
Chinese imports have caused some local manufacturers to reduce production by 50%, said Kriengkrai Thiennukul, chairman of the FTI.
The federation continues to ask for more government assistance, while Industry Minister Pimphattra Wichaikul earlier instructed the Thai Industrial Standards Institute (TISI) to work with the Customs Department to inspect the quality of imported goods, especially those under the supervision of the TISI.
The move aims to stop the influx of cheap, substandard goods, which are still flooding the local market, said Mr Kriengkrai, forcing entrepreneurs to change their production plans.
Some local businesses even temporarily shut down their factories and became importers of Chinese products, he said.
Large companies in the steel industry are worried about cheap steel imports from China. Tata Steel Thailand Plc (TSTH), a unit of India's largest steelmaker, said Thailand's capacity utilisation in the steel industry continues to decrease as the nation has a slow economic recovery and low-priced steel from China is shipped.
The dumping of steel wire rods into the Thai market was partly blamed for causing a drop in capacity utilisation to 28% in 2023, down from 33% in 2022, according to TSTH.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) said the influx, especially via e-commerce platforms, is affecting the incomes of local producers of household goods who cannot compete on price.
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said China is a major global manufacturing hub with ample raw materials and developed supply chains, leading to low production costs and cheaper products.
Coupled with the boom in e-commerce, this led to the growing influx of low-priced Chinese products in the Thai market, he said.
"The Thai private sector, represented by JSCCIB, has expressed concern regarding this influx into both Thai and Asean markets as it further compounds the challenges faced by Thai SMEs," said Mr Sanan.
He said certain imported products such as electrical appliances are worrisome because they may lack certification based on Thai industrial standards.
Insufficient manpower for rigourous inspections contributes to the challenge of handling the large volume of imports, said Mr Sanan.
According to Kasikorn Research Center, the local retail sector is expected to expand this year, but will face intensifying competition from imported products, especially those from China.
Last year Thailand imported consumer goods worth 470 billion baht from China, up 2.8% year-on-year. Electrical appliances account for 43.3% of total imports, followed by fruit and vegetables at 10%, according to the Commerce Ministry.
Thanawat Malabuppha, honorary president of the Thai e-Commerce Association (THECA), said the tensions between the US and China have nudged Chinese companies to extend their reach into Southeast Asia and other markets, aiming to reduce dependence on shipments to North America and escape intensifying domestic competition.
Many e-commerce operators in Southeast Asia rely on imported products from China, South Korea and other countries. He said China invested in its own warehouses in Thailand and established direct logistics fleets to import products.
Q: WHAT ARE THE PROPOSED SOLUTIONS?
Recently the Finance Ministry considered slapping a 7% VAT on imported goods worth less than 1,500 baht, yet maintaining the import tariff waiver, aiming to reduce the tax gap between Chinese and domestic manufacturers.
Mr Sanan said the government should implement measures to protect local businesses, such as enforcing anti-dumping and anti-circumvention measures, beefing up customs inspections of imported goods, and expediting the establishment of standards for industrial products.
He said the VAT exemption for imported goods valued at 1,500 baht or less needs to be reviewed to ensure fairness for Thai businesses.
The government should also review policies and conditions for utilising benefits in free trade zones, said Mr Sanan.
Deputy Commerce Minister Napintorn Srisunpang said there is no official information assessing the impact of imported goods entering the Thai market.
However, he said one effect on Thai businesses is lower prices, as the imports are cheap.
Mr Napintorn said the Commerce Ministry recently proposed the Finance Ministry reconsider the exemption of VAT for such products, with tax collection starting from the first baht.
The quality of imported products is crucial, as many online products lack standards and they are often packaged, making it difficult for consumers to inspect them, he said.
Measures are needed to certify product standards, said Mr Napintorn.
Keerati Rushchano, the permanent commerce secretary, said if businesses find imported goods are priced lower than those produced in the country, causing market disruptions, they can file complaints with the Foreign Trade Department for investigation under related laws.
Mr Thanawat said the Indonesian government introduced new restrictions on foreign merchants and e-commerce operators.
He said the approach offers an interesting model to prevent substandard products and control the trade deficit, while safeguarding local SMEs and manufacturers.
Thailand's e-commerce gross merchandise value tallied 980 billion baht in 2023, making it the second-largest market in Southeast Asia.
Kulthirath Pakawachkrilers, president of THECA, said the association is in discussions with Wuhan city in China to bring local SMEs to sell products in China, hiring Chinese influencers to do live commerce promoting the Thai products.
