Exporting to Thailand – Overview
Exporting to Thailand – Thailand is the second largest economy in the ASEAN trade block.
Thailand is an export-dependent economy; it exported a total of $236 billion in 2017. It’s top ten export items were machinery including computers (17%), electrical equipment (14.4%), vehicles (12.1%), rubber (6.9%), gems (5.4%), plastics (5.4%), minerals (3.5%), meat and seafood preparations (2.7%), optical/technical/medical apparatus (2.4%), and cereals (2.3%).
Thailand has a revered monarchy however it suffers from frequent military coups. These coups have little effect on day to day business and exports.
Thailand has a population of 68.5 million people with 30.1% of the population under 25 years of age (source cia.gov).
Thailand is also a significant international tourist destination with around 35 million visitors in 2017.
Thailand’s growing affluent middle class and well-developed infrastructure along with the ability to reach 50% of the world’s population within a five hour flight makes Thailand an attractive destination for international business.
Thailand Business culture
Use of English is widespread among larger Thai companies, but proficiency is low among Small and Medium sized Enterprises (SMEs).
As with most Asian countries, relationship building is an essential factor of success when exporting to Thailand. It is expected that Thais will spend time building a relationship with you prior to committing to a deal.
Other useful information you should remember:
- Avoid pointing with your finger at a person, or snapping your fingers.
- Always give government officials and VIPs a gift if they are the guests of honour at an official event.
- Have the reverse of your business card translated into Thai.
- Never point your foot at a person or an object.
- Never sit with your feet up against parts of furniture.
- Never sit in a position where your feet are stretched out in the direction of a Buddha image.
- Take age, seniority and rank seriously.
- Use ‘Khun’ (Thai for Mr, Mrs, Ms or Miss) as the formal term of address followed by the first name.
Setting up in Thailand
Companies can grow exports to the Thailand market in several ways, including:
- Appointing an Agent or Distributor.
- Exporting direct to Thailand.
- Forming a joint venture.
- Partnering with a franchisee.
- Setting up a local representative office, regional office or regional operating headquarters.
After cost, technical support is the second most important issue for prospective Thai buyers. A local presence demonstrates companies are serious about the market and willing to provide local technical support to partners and customers.
In many cases, a foreign entity cannot own more than 49% of the enterprise, with the majority owned by Thais. However, exceptions for majority foreign ownership exist for certain types of industries and are often granted for projects approved by the Thai Board of Investment.
You should conduct due diligence and seek legal advice once you’ve identified your mode of entry into the market.
Banking and Finance
The unit of legal tender in Thailand is the Thai Baht ฿ (THB).
Thailand has a developed banking and financial system. Currently there are 14 Thai Commercial Banks and 11 Foreign Bank Branches in Thailand.
Foreign Exchange Controls exist in Thailand. Non-residents in transit may bring foreign currency and negotiable instruments into Thailand without limit. Non-residents may also freely take out of the country all foreign currency they had brought in, without limit. Individuals in transit, however, may not take out Thai currency exceeding 50,000 baht per person, except for trips to countries bordering Thailand (Myanmar, Laos, Cambodia, Malaysia and Vietnam), where an amount of up to 500,000 baht is allowed. There is no restriction on the amount of Thai currency that may be brought into the country.
Thailand – Tariffs and Non-Tariff Barriers
Thailand is a member of ASEAN. This means that Thailand is subject to the agreed import duty reduction plan applying to trade between all the ASEAN countries.
The majority of products imported into Thailand are subject to two different types of taxes: tariff duty and Value Added Tax (VAT). Tariff duty is applied by multiplying the CIF value of the goods by the duty rate. This is added to the value of the goods to determine a final tax. VAT is then levied on the total sum of the CIF value, duty and excise tax, if any. Goods imported for re-export are generally exempt from import duty and VAT.
Further information on excise taxes can be obtained from the website of the Excise Department, Ministry of Finance. Import-export statistics and import tax rates can be accessed from the customs website at Thai Customs Department.
Most products are freely transportable within Thailand provided import duties are paid. However there are import restrictions on certain products.
Prohibited Goods are goods for which either the import into or export out of Thailand are prohibited. It is prohibited by law to bring the following items into Thailand:
- Obscene objects/literature/pictures.
- Pornographic materials.
- Goods with Thai national flag.
- Narcotics e.g., marijuana, hemp, opium, cocaine, morphine, heroin.
- Fake currency, bonds, or coins.
- Fake Royal Seals/official seals.
- IPR infringing goods e.g. musical tape, CD, VDO, computer software, etc.
- Counterfeit trademark goods.
Restricted Goods are goods of which the imports and exports are restricted by law and therefore require a permit from the related government agencies. A number of goods are also subject to import controls under or other relevant agencies. These include:
- The import of drugs, foods, and supplementary products requires prior licensing from the Food and Drug Administration, the Ministry of Health.
- The import or export of antiques or objects of art, whether registered or not, requires permission from the Fine Arts Department.
- The imports of weapons and ammunition, explosives, fireworks and real and replica firearms requires appropriate license from the Ministry of Interior. Other weapons such as electric shock devices must also be declared. Some of these items may require a permit, before importation.
- The Cosmetic Act stipulates that for the purpose of protection of public health, any importer of controlled cosmetics must provide the name and location of the office and the place of manufacture or storage of the cosmetics, the category, or kind of cosmetics to be imported, and the major components of the cosmetics.
- The import of wild fauna, flora, fish and other aquatic fauna requires permission from the National Park, Wildlife and Plant Conservation Department, the Department of Agriculture, or the Department of Fishery as the case may be.
Please click on the link to find a list of items which are prohibited to be imported into Thailand.
Product labelling, certification and packaging
Thailand has strict requirements governing the labelling of dairy foods, baby foods, canned foods, vinegar, beverages, edible oil and fats, and gourmet powder (defined as an article containing monosodium glutamate (MSG) and used for food seasoning).
Food products imported into Thailand must display the following information:
- Any additives used.
- Date of manufacturing and expiration.
- Health and nutritional claims (if any).
- Name and address of the importer.
- Name and address of the manufacturer.
- Name and brand of the product (both generic and trade).
- Net weight and volume.
- Registration number.
Labels for alcoholic beverages must display the % of alcohol content. There must also be a health warning, printed in Thai, on the label or on a sticker, with specific government-approved wording.
There are also regulatory requirements related to cosmetic labelling. Local agents or importers can help to register a product and ensure labelling requirements are met.
Certifications and licenses are required for the import of many raw materials, petroleum, industrial, textiles, pharmaceuticals, and agricultural products. Frozen fruit & vegetables may require a certificate of condition.
Certain types of seeds, plants and animals require phytosanitary certificates issued by the approved authority in the country of origin.
Meat imports must be accompanied by a veterinary health certificate signed by the official authority in the country of origin certifying that:
- The country of origin has been free from endemic diseases for the specified period.
- The animal has been processed in an approved establishment in sanitary conditions under constant veterinary supervision.
- The products are fit for human consumption and do not contain preservatives, additives or other substances in quantities harmful to human health.
- They have not been stored for more than three months (the date of processing or packing must be stated).
Thai officials may request a Certificate of Free Sale from exporters of medical & pharmaceutical products before shipment will be allowed to be sent to Thailand.
Exporters should make sure that any packaging used is capable of protecting the products from extreme weather and climate changes as well as the rigours of transport and handling.
Methods of quoting and payment
Quotes are usually on CIF (Incoterms 1990) basis.
An irrevocable letter of credit (L/C) payable at sight is commonly used for settlement of international transactions. It offers protection to both the exporter and the importer.
Payment terms must be agreed to in advance. Whatever payment terms are agreed upon, make sure they are understood by all parties and that your client, representative or contact signs a mutually agreed document.
It is best practice for sellers dealing with new customers to use secured payment terms such as 100% payment prior to shipping, letters of credit, sight drafts or bills of exchange.
Documentary & Clearance Requirements
General customs clearing procedures for both imports and exports in Thailand require the submission of a Customs’ export entry form or import entry form.
The form should be accompanied by:
- Import Declaration
- Bill of Lading (B/L) or Air Waybill
- Packing List
- Import License (if applicable)
- Certificates of Origin (if applicable)
- Other relevant documents such as catalogue, product ingredients, etc.
When exporting to Thailand, some products may require import/export license and/or authorization from relevant agencies. These include food products (processed or unprocessed), pharmaceuticals, medical devices, healthcare products, cosmetics, hazardous substances, animals, and some agricultural product
The use of a freight forwarder to deal with import and export customs clearing in Thailand is highly recommended when exporting to Thailand.
Exporters who are exporting to Thailand can find information about the Import requirements of Thailand from the Thailand Customs website.
When a shipment arrives in Thailand, importers are required to file a Goods Declaration and supporting documents for the imports with a Customs officer at the port of entry.
Imported cargo are not legally entered Thailand until after the shipment has arrived within the port of entry, delivery of the merchandise has been authorized by Customs, and applicable taxes and duties have been paid.
When exporting to Thailand, It is the responsibility of an importer to arrange for examination and release of the imported cargo.
Companies exporting to Thailand or wishing to operate in Thailand should commit to the highest level of corporate behavior and familiarize themselves with the laws of the country and the penalties pertaining to bribery of foreign officials.
Intellectual Property Protection
Thailand is a member of the World Trade organisation (WTO) and is thus a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which sets international standards for various aspects of IP.
It is also a signatory to a number of international intellectual property (IP) treaties administered by the World Intellectual Property Organisation (WIPO).
**IP Tips for Thailand**
- Thailand works under a first to file system, meaning the first person to file an IP right there will own that right when granted.
- It is essential to register your rights in Thailand in order to be able to defend and enforce them.
- Thailand is part of the ASEAN Patent Examination Co-operation (ASPEC), a regional patent work-sharing programme among 9 participating ASEAN Member States (AMS). The purpose of this programme is to share search and examination results between the participating offices to allow applicants in participating countries to obtain corresponding patents faster and more efficiently. ASPEC is free of charge and operates in English.
Thailand has a predominantly civil law legal system. The Thai legal system is a statutory law system, which means it is mostly based on written law passed by the legislature. Primary sources of law include the Constitution, which is the supreme law, legislation such as Codes and Acts, decrees and custom. Judicial decisions are not binding, but in practice Supreme Court decisions are persuasive, have some precedential value, and are often used as secondary authoritative sources of law.
Hiring a local legal representative is best advice for companies exporting to Thailand.
Thailand Web Resources