THAILAND. Thailand’s government is to abolish import duties on luxury watches, clothes and cosmetics as it seeks to compete more strongly with Hong Kong and Singapore for wealthy travellers, according to a report from business news service Bloomberg.
Thailand’s Permanent Secretary for Finance Areepong Bhoocha-Oom told reporters that the duty on some luxury goods will be cut to zero from 30% by the end of the year.
The move will not only encourage wealthy Thais to buy luxury goods in Thailand instead of flying abroad for them, it will also drive the sale of local products, the finance ministry’s Fiscal Policy Office told Bloomberg.
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The news as reported by Bloomberg |
The waiver on import duties is expected to catalyse travel demand and deliver a boost to Thailand’s tourism sector, with visitors from China a key target.
Chinese tourists, who spent US$105 billion overseas in 2012, are forecast to make 94 million trips this year – almost double the level in 2009 – according to the China Tourism Academy.
The Thai government expects tourist arrivals to increase by +18% to 26.4 million this year, helping to counter a slump in exports and domestic consumption that may cause the economy to grow as little as +3.8%, Bloomberg said. Thailand’s tourism and services industries account for 50% of gross domestic product.
Last year, Thailand’s tourist arrivals increased +16% to 22.4 million, buoyed by a surge in the number of visitors from China by +62% to 2.8 million.
According to data for the second quarter of 2013 from tax refund specialists Global Blue, Chinese travellers were the number one nationality when it comes to spending on tax free shopping abroad. Spending by Chinese shoppers during the period April-June grew by +22% year-on-year, with average spend at €836. Significant growth was seen among Thai travellers, with a year-on-year rise of +42% during the quarter, making them the fourth biggest spenders.
Thailand will initially cut import duties on some luxury goods to between zero and 5%, from 30%, said the Finance Ministry, adding that the government will discuss the plan with local retailers to ensure “they aren’t adversely affected by the measure”.
A Bangkok Post report, the finance ministry said the cut on import duties may only apply to some luxury goods that are not made in Thailand such as fragrances and high-end watches. The ministry may also encourage these luxury brand producers to relocate their production base to Thailand.
While the import duty cut will result in substantial revenue loss for the government, it is expected to compensate by contributing to employment, corporate income tax and higher revenue for the country’s hotels and restaurants. The finance ministry is said to be examining the effects of the tax cut on local producers.
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The news as reported by the Bangkok Post |
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