Laem Chabang Port, Importers and Exporters Aided by New Proposed Customs Law

The new law will provide transparent rules on product classification and evaluation methods to help businesses to better estimate importation and exportation costs. Now, an item may be classified in a category much more expensive for duty charges than the category most commonly associated with that item. This will change, the Deputy Finance Minister says.

"We frequently hear complaints of how judgments by Customs seem to be arbitrary," he said.

This overhaul of the Customs Department is the largest and most pronounced since the department was established more than 135 years ago. The new law will also make the Customs Department more open to judicial scrutiny. Meanwhile, all the information relevant to import duties will be made public from the first day of September. Pradit said, the reforms were designed to make the Customs Department more of a service provider that facilitates trade and less of a collector of duties.

"My vision is for the department to transform from a 'duty collector to a trade facilitator'. The world is moving toward a free-trade environment and we have to adjust to those realities," he said.

In addition, Thailand attributes about 70 per cent of its gross domestic production (GDP) to exports. "The Customs Department should become easier to deal with if the country wants to boost foreign trade and accelerate economic recovery," Pradit said. Docking fees at Lam Chabang are quite high. The US Navy recently paid US $300,000 just to dock one ship overnight with no off-loading of cargo.

Moreover, he added, the department would also be providing clearer rules on product classification and evaluation methods to help businesses to better estimate importation costs. The newly appointed director-general Wisut Srisuphan will lead this change.

After meeting with representatives of various trade associations and the Chamber of Commerce, Pradit concluded the most common complaint is that companies cannot get the Customs Department to confirm exactly how a particular product will be classified, which leads to vague duties and a waste of time. He also said the department would confirm the classification of duties and the evaluation of products before they are imported. It will also commit to a single, consistent evaluation method for duties on a product, regardless of when and how it is imported.

"These are services that we will provide our customers to help facilitate trade from September 1," Pradit said.

He said that once the new law was approved, it would help encourage transparency and consistency in all rulings and allow citizens to appeal for independent judicial review more easily. Previously, the Customs Act required a fixed "five-times the import value" penalty to be imposed on an importer if he lost a case in court and a substantially lower penalty if the case is settled out of court.

"This stopped cases from going to court. Now we are proposing to cut the ceiling down to 'four times the import value', as well as give judges more flexibility on assessing penalties so they have a chance to recognize genuine mistakes," he said.

Meanwhile, Wisut said the department would cut out a lot of unnecessary paperwork by eliminating redundant forms duplicating information submitted to the department, such as the Cargo Control Form used at Suvarnabhumi Airport. He said the department will also amend the draft law to allow importers bond-based monthly payments so they do not waste time tending to repetitive processes for each shipment. This way, they will be able to consolidate all their payments to the Customs Department into a single payment at the end of the month from a bond they post with the department.

In addition, the department is accelerating the implementation of a "single window" for the submission of paperwork, so shippers do not have to waste time running from one ministry to another.

"With these reforms, I expect the Customs Department to increase its revenues for the state by around 15 per cent," Pradit said.

He added that the next priority would be to enhance the countries cross border trade in the next three to five years. The department will also train its customs officials at the borders to ensure they have the know-how to deal with complex transactions.

"We will also work with our Asean neighbors to encourage them to set up a 'single window' system to make trade easier for our exporters," Pradit said.