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Thailand Industrial Policy
The Thai industrial sector was under the supervision of seven
governmental agencies. The Ministry of Finance administered taxes
and duties and provided tax refunds on exports. It was involved
in large-scale industrial projects in the role of deciding on
government equity participation, arranging public foreign
borrowing to support the project, and extending protection
through tariffs. The Board of Investment provided investment
incentives, and the Ministry of Commerce controlled prices and
international trade. The Ministry of Industry issued factory
licenses, drew up industrial regulations, and enforced zoning
laws. It also provided technical assistance, management training,
and financing for small- and medium-sized enterprises. The
Industrial Finance Corporation of Thailand lent long-term funds
to medium- and large-scale firms from credit given by the
government. The Bank of Thailand provided foreign exchange and
rediscount facilities to selected industries and exporters at
concessionary terms. Finally, the National Economic and Social
Development Board established policy guidelines and targets for
the industrial sector. In 1982 the Industrial Restructuring
Committee was created to coordinate the various agencies and to
formulate detailed policy proposals in line with economic
development plans.
Import tariffs were the most important protective measure
used for the industrial sector. In the 1960s, the nominal tariff
rates were low, ranging from 25 to 30 percent. In the 1970s, the
rate went up to a range of 30 to 55 percent for consumer goods.
By the end of 1978, nine import categories had tariff rates above
90 percent, including alcoholic beverages, shoes, perfume,
cosmetics, and automobiles. In the early 1980s, the government
attempted a more uniform tariff structure and lower protectionism
in conformity with the Fifth Economic Development Plan. The
adjustments included a reduction in tariffs to 60 percent on 270
categories of imported commodities; a change in tariffs to 30
percent for 1,970 items; and an increase in rate to 5 percent for
those nonessential items that had been exempted. Goods considered
essential, such as milk for infants or fibers used in textiles,
remained exempted.
Other protective measures included price controls, which were
quite pervasive in the 1970s but were relaxed at the beginning of
the 1980s, except on petroleum products, white sugar, and
sweetened condensed milk. Quantitative restrictions on imports
were increased in the early 1980s to cover forty-six products.
Regulations requiring a certain percentage of domestic content in
manufactured imports included 30 to 40 percent for commercial
vehicles, 45 percent for automobiles, and 70 percent for
motorcycles.
In order to encourage investment, the Board of Investment
provided incentives, such as guarantees against nationalization
and price controls, tax exemptions of up to 8 years, and tariff
surcharges of up to 50 percent to protect against competing
imports. The basic objectives of the board were to promote laborintensive industries, exports, and regional decentralization of
industry.
Data as of September 1987
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