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2. Introduction to trade and investment regime
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2.1 Legislation on trade and investment

The Thai legislation governing trade and investment promotion mainly includes Controlling Importation and Exportation of Goods Act of B.E. 2522 (1979) Customs Act (No. 12), BE 2497, Export Standard Act (N0. 2), B.E. 2522 (1979), Anti-Dumping and Countervailing Duty Act, B.E. 2542 (1999), Safeguard Measures Act, B.E. 2542 (1999), Foreign Business Act, B.E. 2542 (1999), Counter Trade Act, Direct Sales and Direct Marketing Act, B.E. 2543 (2002), Electronic Transactions Act, B.E. 2545 (2002), Trade Association Act, B.E. 2509, Exchange Control Act, B.E. 2485, and Trade Competition Act, B.E. 2542 (1999), etc.

2.2 Trade administration

2.2.1 Tariff system

The average tariff rate of Thailand is 12.7 percent. Pursuant to the Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China, Thailand exercises reduction in tariff rates on products imported from China. Accordingly, tariff rates of over 20 percent in 2005 should be reduced to below 20 percent; tariff rate of 15 percent on products should remain unchanged; tariff rates between 10 percent and 15 percent should be lowered to 10 percent; those of 5 percent to 10 percent should be lowered to 5 percent; and those at 5 percent should remain unchanged.

2.2.2 Import administration

The free import policy is in place in Thailand. Most products can be imported to Thailand freely. Any importer able to open a letter of credit can conduct import business. Thailand applies import ban, tariff quotas and import licensing on some products.

Products subject to import ban mainly include those related with public health and national security, including second-hand motorcycles and spare parts, household refrigerators using chlorofluorocarbons, renovated medical equipment and gambling machines.

Tariff quotas are applied to 23 agricultural produces such as longan, but they are not applied to imports from ASEAN members. Animal feed is levied MFN quota rate as corn plus additional import fees.

Import licenses are required for 26 categories of items, including raw materials, petroleum, industrial materials, textiles, pharmaceuticals, and agricultural items. Import of food, pharmaceuticals, certain minerals, arms and ammunition, and art objects require special permits from the competent government authorities.

2.2.3 Export administration

The Thailand economy is export oriented. Most products can be exported freely to other countries. Export administration mainly includes export registration, export quotas, license, export duties, export ban or other restrictive measures. Export products subject to export duties include rice, skins and leathers, teak and other kinds of wood, rubber, scrap steel or iron, and hiders.

2.2.4 Foreign exchange control

Inward remittances are free of controls in Thailand, but foreign currency must be deposited in a foreign currency account or converted at an authorized bank within seven days of being remitted to Thailand. Foreigners staying in Thailand for less than three months, embassies, and international organizations are exempt from this requirement, however. The proceeds of exports with a value of more than Baht 50,000 (US$12,900) must be remitted as soon as received and within 120 days of export, and deposited within seven days of receipt.

Commercial banks are authorized to undertake most routine foreign remittance transactions without prior approval of the Bank of Thailand.

2.3 Investment administration

The Thai legislation provides that any natural or legal person without Thai nationality shall enjoy the same rights of a Thai company when conducting business in Thailand unless otherwise stipulated in laws. According to Foreign Business Act promulgated in 1999, there are three categories of restrictive industries for foreign investment. Foreigners are forbidden to do business in the first category for special reasons, and the category involves such activities as planting, animal husbandry, forestry, newspapers, etc. The second category involves activities that are deemed to affect Thailand's national security, or have possible negative impact on arts and culture, customs and folk craftsmanship, or cause possible damages to natural resources or ecological environment such as the production, sales, and repairing of arms and components, domestic transportation and aviation industry. Foreign investment in this category shall seek business license from the Minster of Commerce of Thailand based on the approval by the Thai Cabinet. The third category contains those activities that are deemed to be areas in which Thai businesses are not yet ready to compete with foreigners, including rice milling, rice powder and other plant powder processing, aquaculture, lime production, accounting service, legal service and catering. Foreign investment in this category shall seek the approval from the Director-General of the Department for Business Registration.

2.4 Competent authorities

The major competent authorities responsible for trade and investment in Thailand include the Ministry of Commerce, the Investment Promotion Committee of the Ministry of Industry and the Department of Customs of the Ministry of Finance. The Ministry of Commerce is responsible for the formulation and implementation of policies concerning foreign trade administration and export promotion, promoting trade, solving problems in domestic and foreign trade, and developing information technology system for trade. The Investment Promotion Committee of the Ministry of Industry is responsible for reviewing and implementing preferential measures for investment promotion, encouraging investment to be oriented towards the priority regions beneficial for national economy and social development, providing services for investors by helping them obtain business licenses, seeking partners for investors, and resolving specific problems for joint ventures after they start to operate. The Department of Customs of the Ministry of Finance is mainly in charge of collecting duties, levying value added tax and excise duties in the process of import and export. It also shoulders the responsibility of supervision and administration of the Customs over cracking down on smuggling and tax evasion as well as promoting international trade facilitation.

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