THE AMERICAN CHAMBER OF

COMMERCE IN THAILAND

Customs Meeting
with
Deputy Minister of Finance
H.E. Mr. Pradit Phataraprasit
April 24, 2009
 AMCHAM Delegation

Mr. David Alden Board Liaison-Customs AMCHAM / President Ford Thailand

Mr. Phil Bell Chair-Customs AMCHAM / Director Ernst & Young
Mr. Dennis Grover Co-Chair-Customs AMCHAM / General Manager DHL Express International
Mr. Paul Sumner Co-Chair-Customs AMCHAM / Director PricewaterhouseCoopers
Mr. Pongsathorn Ansusinha Committee-Customs AMCHAM / Manager Fiscal Affairs Philips Morris
Ms. Judy Benn Executive Director AMCHAM
Overview of U.S. Trading Relationship with Thailand

- Long lasting relationship since 1833 (176 years)

- U.S. investment in Thailand of more than USD 35 Billion

- U.S. exports to Thailand in 2008: USD 9.06 Billion

- U.S. is Thailand 3rd largest Trading Partner

- Constructive dialogue and AMCHAM working to

develop a closer partnership with The Royal Thai Customs
on behalf of Joint Foreign Chambers of Commerce
 Key Competitiveness Issues Currently faced
by business in their dealings with the Customs
Department

••Penalty
Penaltyand
anddispute
disputesettlement
settlement
Transparency ••Custom
CustomValuation
Valuation
••Audit
AuditProcess
Process

••Appeal
AppealProcess
Process
Certainty & ••Licenses
LicensesComplexities
Complexities
Predictability ••Guidance
Guidanceto tobusiness
business
••Operational
OperationalIssue
Issue

International Standards/ ••International

InternationalCustoms
CustomsStandards
Standards
Simplified Procedures ••Simplified
SimplifiedProcedures
Procedures
 Key Competitiveness Issues

Transparency

Penalty and Dispute Settlement

• Excessive and inappropriate
• Inconsistent with WCO minimum standards (Revised Kyoto Convention) and
international best practice
• Reward/incentive system impairs fair and impartial decision-making
• Fundamental roadblock to Customs aim of achieving “World-Class”

Customs Valuation
• Customs valuation procedures sometimes constitute a serious import barrier
(eg. Arbitrary re-determination of import values, at both port and post audit levels)
• Collection of import duties on the IP content (most countries only levy duty on
the value of the carrier medium eg. Business documentation and software)

Audit Process
• Lack of consistent processes and procedures
• Impact on Importer’s/Exporter’s rights, as no timeframes, findings and formal signoffs
are provided
• Excessive audit periods (10 years) inconsistent with document retention requirements
(5 years)
 Key Competitiveness Issues

Certainty & Predictability

Appeal Process
• Lack of consistent processes and procedures
• Impact on Importer’s/Exporter’s rights, as no timeframes, generally
“behind-closed-doors” considerations, no detailed notification of the basis for
the findings
• System deters independent appeals due to punitive penalties

License Complexities
• Multiple licensing authorities - Lack of clarity and consistency
• Lack of clear guidance on license requirements

Guidance to business
• Lack of written rulings
• Non availability of decision publication

Operational differences
• Inconsistent interpretations decisions between Customs operational units
 Key Competitiveness Issues

International Standards/Simplified Procedures

International Customs Standards (WTO/WCO-Revised Kyoto Convention)

• Many Customs procedures do not meet the minimum standards
• Missed opportunity for new Customs Law to implement all WCO minimum standards
• Lack of appropriate public consultation process a further missed opportunity to move
Customs to “World Class”

Simplified Procedures
• Air Express Clearance
o Inefficient process for express shipments, including the payment of customs
fees, tax and duty, non-standard enforcement of Exporter of Record, formal
entry paperless procedures for informal export shipments.
• Drawback
o Manual and bureaucratic procedures eg. obtaining drawback of import duty
on exports; minor differences in description impede clearance delivery of
BOI promoted goods,
• Temporary Import
o Lack of appropriate procedures for temporary imports eg. returnable/
reusable containers; goods imported for testing purposes
Customs Penalty Regime Survey 2009
• Survey recently conducted
• 116 respondees to date, from Traders (Importers/Exporters),
Manufacturers (Importers/Exporters) and Shipping/Airline Companies, Customs Brokers/
Freight Forwarders

Key Preliminary Findings

* Overwhelmingly respondees believe that:
- Impartial decisions may not be reached if the decision-maker shares in any penalties
- The system of sharing of penalties may impair the proper use of Customs discretion to
determine matters in favour of importers
- The Customs Penalty Regime is a barrier to fair trade and is a disincentive to investment in
Thailand
- Standard penalty calculations of the kind typically applied under the Customs penalty
system may result in penalties that are not proportionate to the circumstances of each matter
- Penalty system forces companies into settlements with Customs even though those
companies may believe they have done nothing wrong.
- While a Court is more likely to reach a fair judgment, companies would never appeal to
Court under the current penalty system. In contrast:
* Respondees indicated they would choose the court route if there was no threat of
increased penalties
* In other countries, Respondees would go to court on principle if they felt they had a strong
position
 Recommendations

Proposed Customs Law

• Defer the submission of proposed Customs Law to Cabinet
• Establish a Customs Law Review Advisory Committee consisting of all stakeholders and
reporting to the Minister of Finance, to review the current Draft and recommend
appropriate changes

Penalty and Reward System

• As a priority, set up a Committee reporting to the Minister of Finance to recommend
an appropriate penalty and reward system that reflects international best practice
and the WCO Standards including:
o Penalties that are effective and proportionate
o Level of penalties reflect the circumstances and culpability level
o Removal of disincentives to pursue external court appeals
o Reward system that is appropriate and does not prevent impartial decision-making

Simplify Processes and Procedures

• Convene Committee of Cooperation between Customs and Business Community to rectify
inefficient Customs processes and procedures. Suggested priority issues for early action:
o Eliminate the Goods Control List for air cargo.
o Gold card exporters / importers to sign an agreement on transparency and
anti-corruption
o Temporary import procedures
o Coordination problems with other government authorities
o Drawbacks