Thailand's foreign policy emphasizes a close and longstanding security relationship with the United States. It also strongly supports ASEAN's efforts to promote economic development, social integration, and stability throughout the region.
It has developed increasingly close ties with Indonesia, Malaysia, the Philippines and Singapore. Regional cooperation is progressing in economic, trade, banking, political, and cultural matters. Thailand continues to take an active role on the international stage. As part of its effort to increase international ties, Thailand has reached out to such regional organizations as the Organization of American States (OAS) and the Organization for Security and Cooperation in Europe (OSCE). Thailand has contributed troops to reconstruction efforts in Afghanistan and Iraq. As well as being a part of the Asian Free Trade Area (AFTA) and the ASEAN - China Free Trade Area, Thailand is now working closely with other ASEAN members to establish a free trade area with other countries such as India, China, Japan, Korea and the Closer Economic Relationship (CER) with Australia and New Zealand. For more information on the Foreign Trade membership of Thailand you can access the web site of the Thai Ministry of Foreign Affairs. The country have signed a trade agreement with 21 other countries in the São Paulo Round of the Global System of Trade Preferences among Developing Countries (GSTP).
Non Tariff Barriers
Most of the goods can be imported freely. However, certain products require the presentation of a license given by the Ministry of Commerce. This is the case for certain textile items and certain food-processing products. The licenses must be applied for one month before the goods shipment, they are valid for 6 months and can be extended only once. All food products, pharmaceuticals and cosmetics are subject to a license and must be registered and must seek authorization of the Food and Drug Administration.
Thailand uses the Nomenclature of the Harmonised System for the Designation and Codification of Goods. Most of the duties are ad valorem and are calculated on the CIF value at the customs office, or they are specific (calculated per unit, per volume or per weight).
Most of the duties are ad valorem and are calculated on the CIF value at the customs office, or they are specific (calculated per unit, per volume or per weight) or further, ad valorem duties and specific duties are cumulated.
The most favoured nations benefit in average of a tariff rate of 10%. Processed food from those countries pay tariffs ranged from 30 to 50 %. All agricultural products and 70% of industrial products have bound tariffs. Imported motor vehicles pay a tariff of 80%, motorcycles pay 60% and certain articles of plastic pay 30%.
All import or export procedure require the submission of a Customs' export entry form. This document must be accompanied by standard shipping documents (commercial invoice, packing list, bill of lading or airway bill, and letter of credit).
Samples and advertising materials without commercial value are duty and tax free if they are useless for sale and use only for promotion proposes. If those materials are not used or re-exported within six months duties are taxes are charged. For more information, please visit the Thai Customs Department website.
As accommodation is plentiful and thus relatively cheap in Thailand, Thai consumers spend less on accommodation than the majority of their western counterparts. Accordingly, the larger portion of disposable income that may be spent on goods increases the country’s attractiveness to retailers. On average the Thai consumer spend around 30% on food, beverages and tobacco, 18% on housing, 18% on transport and communication and 13% on recreation, reading and education, 12% on clothing and footwear and 8% on medical care and personal care.
Consumers appreciate given away free examples campaigns. They are deployed in supermarkets and shopping malls. The price factor is an important selection criteria for customers. Customer support, training and availability of spare parts are also very important selection criterias. Periodic technical updates and information from suppliers are also very appreciated. Word of mouth recommendations have big impact in suppliers' sales and reputation.
Consumer Profile and Purchasing Power
The growth of the Thai citizen average revenues is a driver for the economy. The top 10% of the population in term of revenues and the middle class are earning more money and is willing to spend on western type of products. The minimum wage has also increased recently. Consequently, the Thai retail market is highly competitive, but also very dynamic and there is still potential for further growth as the economy continues to grow. With its large population and unsaturated consumer market, Thailand is still an attractive market for foreign retailing investment.
The presence of a local agent is indispensable; the main agencies of international advertising are operating in Thailand. The distribution of machinery and equipment is usually carried out by wholesale importers who take the responsibility of the after-sale service function. Department stores, supermarket chains and discount stores are present and the market segmentation is in full development. There are 3 market levels in Thailand : importing companies (small companies managed by Chinese people); big supermarkets (Central, Yahoan, Robinson), supermarket chains (Foodland) and convenience stores (Seven Eleven) and finally, a number of small stores managed by families. In Bangkok, the standard of living is nearly twice higher than in the rest of the country. One must notice the continuous emergence of the middle class, the purchasing power of which is continuously growing.
The retail trade is one of the most important economic sectors in Thailand, in 2008, total retail sales are expected to reach U.S. $78 billion. (Source: MillwardBrown, Marketfocus Thailand, October 2007). During the last ten years Thailand's retail landscape, particularly in prime locations in Bangkok and other major urban centres, has changed dramatically. Traditional small independent retailers have gradually been replaced with modern and often foreign-owned, large retail chains. The traditional stores typically sell all basic items required for day-to-day living and are traditionally located in every small community throughout the country. Normally, these stores operate out of a shop house and do not use or have any electronic data processing in any sequence of their operations. The majority of modern trade stores and outlets are concentrated in the Bangkok metropolitan area. This concept includes department stores, discount stores or hypermarkets, convenience stores, specialty and category killer stores, and supermarkets. Thai consumer behavior has also been dramatically changed and modern trade stores have gained very high popularity and quickly reached a high retail market share. As the number of discount stores continues to grow, the number of family shop houses and family-run department stores still operating has fallen. Some shop house operators have transformed their stores into 7-Eleven franchises, while others have installed air conditioning, brighter lighting and less-cluttered display units. Some have begun offering delivery services and off-premises sales of consumer products at weekend markets in order to survive in the intense competition. The Hypermarket and Supermarket shares are around 50% in Thailand.
Organizing Goods Transport
Main Useful Means of Transport
Sip Lo or "Ten Wheelers" are the mainstay of the transportation network in Thailand. These articulated trucks are the lifeblood of the factories up and down the country and to the chagrin of motorists who have to travel on the same often poor roads. There are hundreds of logistics companies in Thailand as well as freight and shipping companies whose main task is to get the raw materials and finished goods to and from the ports and airports.