Finding your way through the maze of import restrictions in Thailand

Each could impose different restrictions on companies importing goods. Depending on the product, these restrictions may include compulsory or standard labelling requirements, testing requirements, product registration, import licences, or even prohibitions.

Unfortunately, determining what import restrictions apply isn’t simple in Thailand. Different laws and regulations will designate restrictions based on product specifications and intended use. Some products could even be subject to more than one restriction. And then there may be different agencies weighing in with their own rulings.

Let’s look at plastic containers. If they are meant for sterile pharmaceutical products, they may be subject to licensing, compulsory standards, and testing and labelling requirements under the Industrial Product Standards Act, governed by the Thai Industrial Standards Institute (TISI). But if they are considered as “used” packages or containers containing restricted substances, they will be “hazardous substances” under the Hazardous Substance Act, governed by the Department of Industrial Works (DIW), which has its own set of rules and regulations. 

Companies need to consider many things before finding out what import restrictions apply to their products. These may start with checking which law (or laws) applies, and then finding out the responsible government agency and its regulations. Then there’s determining whether there are compulsory standards, testing requirements, etc and which products need what and how many rules and regulations turn out to be relevant.

As one can imagine, this makes it difficult for companies to ensure that they are fully aware of and, perhaps even more important, are fully com-pliant with import laws and regulations.

What happens if companies fail to comply?

Under the current Customs Act, the statutory fine for importing restricted goods without the necessary import licence is four times the value of the goods plus duty and taxes, or imprisonment for up to 10 years or both. However, in practice, companies normally don’t settle at the court level and prefer to settle Customs’ challenges at the Customs level, given the potential risk of the statutory fines. The fine when settling at Customs level would be surrendering the goods or, in lieu of this, the value of the goods plus duty and taxes.

How to manage this risk

When dealing with restricted goods, it’s important for companies to have proper internal procedures to identify potential exposures from past shipments as well as to ensure compliance for ongoing and future shipments.

Companies may need to be able to promptly and regularly:

check relevant laws and regulations to determine whether existing as well as future products are subject to restrictions;

track new regulations from relevant government ministries and agencies;

check whether products have been added to or deleted from lists of restricted items;

keep records of when compliance checks have been carried out; and

check the validity and renewal periods for existing licences.

What to expect in the (near) future

There are positive developments that could alleviate some of these issues. The full implementation of the Thai National Single Window (Thai NSW) would allow companies to check import restrictions through a one-stop service linking Customs and all the other 35 import/export-controlling agencies. Under this system, it should be much easier for companies to identify whether their products are restricted and which controlling agency they need to contact. Currently, 29 agencies have integrated their information with the Thai NSW.

Once fully implemented, the next step would be to link the Thai NSW with other Asean member states’ NSWs under the Asean Single Window (ASW) initiative, which is hoped to simplify and facilitate trade within Asean.

Another positive development is that the Thai Cabinet in July approved a draft Customs Law, which also proposes to change the penalty regime for importing restricted goods without the necessary import licence. Under the draft, Customs could consider imposing penalties based on the governing act rather than the Customs Law, which are typically less severe and don’t include imprisonment. 

Despite these positive steps, it’s not clear whether and when the revised penalty schemes or ASW will be fully implemented. Until then, it looks like companies will still need to put proper internal procedures in place to ensure they don’t get lost in the current maze of import restrictions.

 

This article was jointly written by Nu To Van, a director of PricewaterhouseCoopers, and Yossatorn Wattanapituksakul, a |manager.