Growth of Thai SMEs hinges on streamlining customs

To stay healthy, however, requires more than just greater digital capabilities; SMEs also need a more streamlined approach to customs and regulation if they want to grow globally.
The Thai government is investing heavily in digitalising businesses and the economy, and for good reason. Thailand’s ecommerce market is set to grow with an annual compound annual growth rate of 15.9 per cent to 2021. The government’s “Intelligent SME” programme – a part of Thailand’s Industry 4.0 policy — alongside major investments by government agencies such as the Department of Industrial Promotion – will do much to digitalise SMEs and make them more internationally competitive. 
Investment in digital transformation, however, cannot come at the neglect of the fundamentals for growing SMEs, like the performance of the logistics infrastructure and cusฌtoms clearances that underpin any ecommerce business. Only when these issues are tackled by both enterprise and government can SMEs, and Thailand’s economy, reach their full growth potential.

Roadblocks to growth
Many of Thailand’s ecommerce enterprises have big plans to grow overseas. However, they must first overcome certain challenges. DHL Express’s experience with SMEs in Thailand tells us that logistical processes frequently overwhelm the already lean teams, most of which have little to no logistics expertise. Regulatory codes feature high volumes of technical detail, and equally high penalties for noncompliance to those details. Licensing and regisฌtration procedures often incur significant costs, and may not always be clear to newcomers. Often, SMEs are not even sure which party is liable for certain duties, levies and other customs costs. 
The growth of SMEs, particularly those adopting more agile ecommerce models, are often hampered as they struggle to navigate these processes. 
When faced with a lack of clear guidelines, transparent rules or consistent paperwork requirements, these SMEs often find themselves in conflict with the authorities – and even slapped with taxes and duties that can severely hurt their margins.
The issue goes beyond export procedures. The nature of the ecommerce business means that Thailand’s SMEs also deal with the customs and regulation regimes of destination countries, as well as import duties for return goods. When handling returns, for example, we find that many SMEs struggle to accurateฌly calculate import duties back from the country they sent their goods to. Often, they choose to sacrifice the goods themselves, rather than risk unexpected costs on return – ultiฌmately affecting business bottomlines.
Clearing the path overseas
All this indicate that SMEs are in urgent need of support when shipping overseas, particularly in navigating Thailand’s complex customs procedures. Simpler, more flexible crossborder regulations will lift the burden off SMEs and allow them to focus on growing globally through ecommerce and other critical channels. Both the public and private sectors have a role to play in streamlining how SMEs access overseas markets.
The private sector can take on the burden of comฌpliance and regulation on behalf of SMEs. Many smaller businesses have thirdparty logistics providers handling the movement of their goods through customs, so they can prioritise their other business needs. Toptier international logistics providers already have the expertise in negotiating complex crossborder regulations, and the scale to keep the time and costs of customs clearances to a minimum. SMEs that capitalise these logistics providers’ critical mass can often bypass the issues that might otherwise slow them down or eat into their margins.
For logistics providers to do this, they need to maintain rigorous knowledge of the latest customs clearance processes worldwide, while also adding value through reliable services such as ondemand delivery, managed warehousing and online tools to calculate import duties. 
This is only possible and sustainable if they work handinhand with publicsector authorities to understand and simplify crossborder regulations.
Keep customs simple
The government’s priority should be to remove the guesswork from compliance. Providing clear guidelines in simple, easily understood language would help SMEs to meet export requirements with minimal hiccups. Services such as paperless clearances, prearrival shipment processing, and a de minimis thresholds for lowvalue items – all commitments made to the World Trade Organisation in the past – would not only make processing more transparent, but also greatly accelerate and simplify the flow of their goods. And taking a leaf out of the ecommerce book, information and payment of custom duties could be made possible through a website or app, alongside the process for claiming customs duty refunds on return shipments. 
Thailand has an interest in making sure SMEs can fulfil growing demand domestically and internationally. The government could work closely with logistics providers and SMEs to not only understand where small businesses currently face roadblocks, but also understand their preferred routes – from specific policy changes to mobileaccessible information – to overcome them. The sort of digital transformation proposed by Industry 4.0 cannot reach its full potential without a similar transformation to customs and regulations. When this happens, SMEs will be able to sell and gain marketshare far more easily abroad, and continue to drive the economy back home.