The Thai government is considering imposing a 7% value-added tax on Chinese goods priced less than 1,500 baht (US$40) routed through Thailand’s free trade zones to protect local businesses impacted by the flood of cheap imports. Currently, goods not exceeding the 1,500 baht value are exempted from duties and VAT.
The government is aiming to curb the influx of low-cost products and protect small and medium enterprises (SMEs) which contribute about 35.2% of Thailand’s GDP, account for 99% of all businesses, and employ 70% of the country’s workforce.
The Federation of Thai Industries (FTI) has claimed that Chinese imports have caused local manufacturers to reduce production by 50%. Moreover, according to the Bank of Thailand, imported consumer goods accounted for 24% of total imported goods for the first quarter of 2023. Of this, 9.1% came from China.
Imposing tariffs on Chinese imports could affect bilateral relations, especially since China is Thailand’s largest trade partner. Bilateral trade reached US$135 billion in 2023.
Chinese investment and technology transfer have benefited Thailand’s industrial development, particularly in supporting the country’s ambition to transform into a regional EV hub. Direct investment from Chinese firms was valued at $4.6 billion in 2023.
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