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Thailand Slashes Export Duty on 500 Electronics Goods Categories

More than 500 categories of electronics goods are to have their import duties slashed in a move announced by Thailand’s National Legislative Assembly (NLA). The tariff reductions have been triggered by the expansion of the World Trade Organisation’s (WTO) Information Technology Agreement (ITA) and will reduce import duty to zero on 94% of such items.

The tariff reductions will be phased in from 1 July 2016, with full implementation due by 1 July 2019. This is line with the schedule adopted by the other 54 WTO member countries.

The major product categories covered under the agreement include:[1]

  • New generation multi-component integrated circuits (MCOs)
  • Touch screens
  • GPS navigation equipment
  • Portable interactive electronic education devices
  • Video game consoles
  • Medical equipment (e.g. magnetic resonance imaging products and ultra-sonic scanning apparatus)

At present, product tariffs vary hugely by category. GPS navigation equipment, for instance, is currently taxed at 30%, while the customs duties on video game consoles are 20%. By contrast, touch screens will already be tariff-free by the time the ITA bill comes into effect.

These tariff reductions are expected to have a significant impact on the information technology (IT) sector in Thailand. The Thai Commerce Ministry estimates that the move will result in savings of more than US$130 million in duty payments for companies operating in the country.[2]

The sector currently accounts for a significant share of Thailand’s overall production. In 2015, Thailand’s exports of electronic equipment totalled more than US$29 billion[3] making it the country’s fifth largest export sector and accounting for some 10% of the entire ASEAN market share.[4] Aside from boosting current operations in China, the move is expected to attract increased foreign investment to Thailand, as well as to raise domestic employment levels.

Thailand and the other WTO member countries will convene again prior to January 2018 to discuss further additions to the tariff reduction list. In the case of Hong Kong, it is expected to have completed its own ITA expansion schedule by the end of 2016.[5]

[1]  World Trade Organization, Briefing Note
[2]  The Nation, 21 March 2016
[3]  World's Top Exports
[4]  International Trade Centre official website
[5]  World Trade Organization

Content provided by Picture: HKTDC Research
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