Thailand luxury goods import duties may be cut in a move to make the nation a more attractive shopping destination for foreigners, a direct challenge to Singapore.
Such a move would put Bangkok, already a fast-growing regional retail destination, in direct competition with Singapore and Hong Kong for regional tourist spending. Both Singapore and Hong Kong have long since culled such duties.
Thailand’s Customs Department believes removing the 30 per cent tax on luxury goods would make the country the leading tourist destination for luxury goods shopping in Asia, potentially boosting tourist spending on shopping by 15 to 20 per cent.
The argument in favour of the cut is that if Thailand’s luxury goods tax was no different from those in Hong Kong and Singapore, Thailand could become the preferred destination, because the country overall offers more attractions at a lower cost.
The cut might also encourage Thais to shop at home instead of abroad.
Foreign tourists in Thailand spend about US$33 a day on average on shopping – just half the figure tourists in Singapore spend and a quarter that spent in Hong Kong (it is not clear if those figures were calculated before the current downturn which has impacted on Chinese Mainlanders’ spending in Hong Kong).
While Thailand retail prices overall are regionally competitive, import duties on so-called luxury items and a seven per cent sales tax make luxury branded goods, and items like fragrances, are more expensive than elsewhere.
Thailand Customs Department director Kulit Sombatsiri says the department is studying the implications of the move to ensure it will not affect local businesses, and might limit the reduction to selected products that Thailand does not make.