FTI slams plan to halve import duty

The Federation of Thai Industries (FTI) has criticised a plan to slash import car duty from 80% to 40%, saying the measure will harm the country’s automotive industry in the long run.

The FTI’s automotive cluster, consisting of the automotive and auto parts industry clubs, together with the Thai Automotive Industry Association and the Thai Autoparts Manufacturers Association, wants the government to maintain the 80% import duty to preserve the country’s local manufacturers.

In a release, the FTI cited an announcement on Feb 9 by the Independent Car Importer and Distributor Association that the Finance Ministry had accepted the association’s request to cut the import duty and that a new rate of 40% would be proposed for cabinet approval and take effect soon.

The FTI said that once the duty declines to 40%, local car production will lose attractiveness and car imports will surge.

“The FTI is much concerned because the overall automotive industry contributes more than 10% a year to the country’s GDP,” the federation said. “Moreover, there are 850,000 workers in the sector from upstream to downstream, consisting of carmakers and auto parts makers that combine for over 2,500 firms.”

The automotive industry club said last month that overall car output last year totalled 1.989 million units, up 2%.

In 2016, Thailand ranked 12th in terms of world car production and was the top producer in Southeast Asia.

The FTI said a cut in import car duty would not suit the government’s goal of supporting long-term foreign direct investment in the automotive industry and local production.

Moreover, the government is keen on the flagship Eastern Economic Corridor (EEC), which the automotive industry plans to use for a supercluster to attract further investment from foreign makers.

The Independent Car Importer and Distributor Association, representing grey operators, has asked the Finance Ministry and Customs Department to cut import duty on cars for the past several years.

According to association chairman Somsak Sriratanaprapas, Thailand’s import duty is high relative to other countries’ rates and local manufacturers and distributors have a monopoly in the car market.