On December 16, 2024, the Thai government announced via the Royal Gazette a Ministry of Finance notification that from January 1 to December 31, 2025, imported goods with a total value (including freight and insurance) not exceeding 1,500 Baht will be exempt from customs duties. The Thai Customs Department will implement this policy, including reviewing imported goods, verifying duty-free eligibility, and optimizing declaration procedures. Additionally, customs will strengthen collaboration with logistics companies, promote the use of electronic declaration systems, and enhance enforcement to combat potential smuggling and tax evasion.

I. Background of the Policy

Addressing Tax Inequity

Previously, foreign goods entering the Thai market often did not incur value-added tax, while local businesses had to bear such taxes, resulting in an imbalance in price competitiveness. To address the issue of unequal taxation between domestic and foreign sales, the Thai government introduced this policy.

Regulating Cross-Border E-Commerce

With the rapid growth of cross-border e-commerce, a large volume of low-cost imported goods has entered the Thai market via e-commerce platforms. Issues such as underreporting of goods value, false declarations, and tax evasion have arisen. This policy is intended to regulate import transactions and promote the healthy development of cross-border e-commerce.

Promoting Economic Development

Duty-free allowances for small parcels can further reduce the cost of overseas goods entering the Thai market, enhance consumer purchasing power, and encourage SMEs to expand their operations through cross-border platforms. This, in turn, fosters trade flow, boosts the development of cross-border e-commerce and logistics-related industries, and enhances fairness and transparency in the Thai market environment. Moreover, it strengthens Thailands role as a trade and logistics hub in Southeast Asia, injecting new momentum into economic growth.

II. Implications for Chinese Goods Exported to Thailand

Benefits

1. Cost Reduction and Sales Growth Potential:Chinese exports to Thailand, especially low-cost goods priced under 1,500 Baht, will benefit from duty exemptions, directly reducing export costs. This cost advantage further enhances the price competitiveness of Chinese goods in the Thai market, potentially driving sales growth, particularly among price-sensitive consumers who are more likely to purchase Chinese products.
2. Market Expansion Opportunities:The policy adjustment makes the Thai market more attractive to Chinese SMEs and e-commerce sellers. More businesses are likely to seize this opportunity to enter the Thai market, expand market share, and introduce products tailored to Thai consumer demands, enriching the variety and scale of Chinese exports to Thailand.
3. Enhanced Supply Chain Advantage:Chinas robust manufacturing supply chain can quickly respond to market demands and provide a diverse range of low-cost goods. Under the duty-free policy, this supply chain advantage becomes more pronounced, enabling Chinese businesses to compete effectively with local Thai companies and other international rivals.

Potential Risks

1. Increased Competition Impacting Local Businesses:While the duty-free policy is beneficial for Chinese exports, it could lead to dissatisfaction among local Thai businesses and result in further competitive measures. The Thai government has previously expressed intentions to protect local SMEs from the impact of low-cost Chinese goods. Future policies aimed at supporting local businesses may introduce uncertainties for the long-term development of Chinese products in the Thai market.
2. Risk of Trade Friction:If the market share of Chinese goods in Thailand grows too rapidly, it may trigger trade tensions. There could be domestic criticism in Thailand over the impact of Chinese goods on local industries, potentially leading to disputes and challenges in trade policy and market access, necessitating bilateral communication and coordination.

Conclusion

With the growth of cross-border e-commerce, numerous high-quality and affordable Chinese goods have thrived through online channels. China remains Thailands key trading partner, with export products penetrating various sectors, including consumer goods and industrial materials. Now, Thailands duty exemption for imports valued under 1,500 Baht opens new doors for small-scale exports. By seizing this opportunity and addressing potential challenges effectively, relevant businesses can explore broader and more prosperous markets ahead!