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(Last updated: 6 Oct 2008)
Trends and opportunities
The market
Thailand has a reasonably sized marine industry. The industry is capable of building a range of vessels from small fibreglass vessels to commercial ships. High percentages of marine products are imported to Thailand. Demand for marine products continues to increase as a result of the government’s policy on zero boat tax on leisure vessels, which started in February 2004. In particular, marine products and services from Australia are competitive compared to the USA and Europe. This is due to the depreciation of Thai and Australian currencies against the US dollar, proximity to the market and the Thailand-Australia Free Trade Agreement (TAFTA) that benefits in tariff reduction of most marine products.
Good prospects for charter boats, chartering service, pleasure crafts and marina facilities exist in the major tourist areas along seaside and island resort areas, particularly in the south of Thailand. Some of the more important areas are the west coast of the peninsular including Phuket, Phang-Gna and Krabi. Also, the east coast including Samuii, Pha-ngan, Ang-thong, Pattaya, Koh Chang and several nearby offshore islands. There are also opportunities to supply boat equipment and parts to local boat building industry.
The travel and transport services to the major tourist destinations on both sides of the southern peninsular are lacking in reasonable comfort and safety. The current operators are reluctant to upgrade to more luxurious, faster, safer vessels due to the following reasons:
- Considerable competition, which keeps fare structures low.
- Minimum requirement for speeds in excess of 20 knots.
- Return on investment in a vessel is usually required within two to five years.
- Despite their shortcomings, the current vessels carry numerous passengers reasonably efficiently, cheaply and, to date, without too many major accidents.
For more general information please visit the Austrade Marine website. This site provides information to Australian marine companies looking to internationalise.
Opportunities
Opportunity areas in Thailand’s marine industry include:
- Fast ferries (including second hand)
- Pleasure crafts
- Patrol boats
- Fire-fighting and rescue boats
- Cargo vessels
- Fishing vessels
- Off-shore oil and gas service vessels
- Marine infrastructure
- Marina facilities
- Education and training
Australian marine design features are regarded as equal or superior to other imported products in Thailand. Australian ferry builders should explore the demand for both basic and sophisticated vessels.
In the short-term, there are opportunities for leisure crafts as a result of boat tax abolishment, and marina equipment with new marina projects developing in Phuket and Samui.
In the longer term, there is a growing demand from some government agencies for specialised vessel applications such as patrol boats and off-shore oil and gas service vessels.
Business opportunities for the Australian marine industry in Thailand are closely related to the tourism industry. In 2007, the number of international tourist arrivals reached 14.46 million. The number of incoming ‘quality tourists’ (ie. tourists with high purchasing power) from Europe, Japan, Australia and USA influence the types of vessels available in Thailand. |
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Tariffs, regulations and customs
The Thai Government has endorsed zero import taxes on boats. Since February 2004, boats in the following categories imported into Thailand don't have to pay import or excise taxes:
- Inflatable boats
- Sailboats (with or without auxiliary motor)
- Motorboats (other than outboard motorboats)
- Others
However, Value Added Tax (VAT) at seven per cent will still apply. Prior to this announcement, tariffs for imported recreational boats were high. The abolishment of import and excise duties on boats will help to increase demand of boats and marine products in Thailand.
There is no quota on the type or number of vessels imported to Thailand. Vessels are freely transportable provided duty and excise taxes have been paid. You don't need an import licence for the importing of vessels.
Industry standards
Thailand’s Harbour Department at the Ministry of Transport and Communications is currently responsible for granting a licence to own and operate various vessel types, but there is no agency governing the standards of the vessels used in the marine industry.
The Harbour Department also checks and controls the conditions of the vessels used in the country for the safety of the passengers. There are six classification societies who are authorised by the Harbour Department to check the standards of the vessels. They are:
- American Bureau of Shipping
- Bureau Veritas
- Det Norske Veritas
- Germanischer Lloyd
- Lloyd Register of Shipping
- Nippon Kaiji Kyokai
Most ferries and cruise vessels in Thailand are currently sub-standard. Many are wooden vessels, which carry up to 250 passengers across a distance of up to 80 kilometres. They also have minimal safety, fire-fighting and navigation equipment.
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Marketing your products and services
Market entry
It is recommended that the Australian shipbuilding industry consider three approaches to Thailand’s shipping industry:
- Australian-built new vessels
Australian shipbuilders need to offer more basic vessels, as the ones that they normally build are currently too sophisticated, fast, luxurious and expensive for Thailand at this point in time.
- Second-hand vessels
Most Thai operators are interested in the availability of suitable imported second-hand vessels, and several second-hand vessels are already in service. If Australian shipbuilders have clients (either in Australia or overseas) who are considering a new vessel but need to dispose of an existing vessel first, then Thailand may be in a position to buy the existing vessel.
- Joint venture with Thai shipbuilders
A few Thai shipbuilders already build ferries and cruise vessels for local operators. They are usually basic steel and fibreglass vessels although a couple have been built with aluminium superstructures. With low wage costs in Thailand, it is usually difficult for Australian yards to compete with the locally built vessels. However, there are opportunities for Australian yards to enter into a licensing or joint venture arrangement to supply the expertise to build better vessels in local Thai yards at competitive prices.
Australian suppliers should be aware of the following issues when exporting marine products to Thailand:
- Thai operators, other than in the public sector, prefer to import second-hand vessels for financial reasons.
- Loans for vessel and boats are expensive. They are often secured with mortgages over land and (now devalued) real estate.
- If you can offer some financial packages and arrangement, you will have a better chance of success in Thailand.
- In the public sector, counter purchase to at least 50 per cent of the contract value is the norm and higher commitment to counter purchase is well regarded.
Depreciation of the Australian dollar and proximity to the market has provided a competitive edge against the USA and Europe for marine product suppliers. This has resulted in Australia being able to capture some new business, albeit in a contracting market. The ability to gain market share and introduce Australian marine technology at a time of downturn will, however, position them well for the future when economic growth resumes.
The ordering of vessel building products or services online for Business-to-Business (B2B) in Thailand is currently available. However, a direct order placed by the buying company or via a broker is preferred. A website with full detail information of product or service is considered as an essential tool.
For Business-to-Consumer (B2C) trading, there are no buyers using the Internet to order pleasure vessels. However, it is advisable for you to use the Internet as an ‘online brochure’ to reach Thai customers.
Distribution channels
Most marine equipment is shipped by sea freight. Shipping time to Thailand takes approximately two weeks and shipping frequencies are twice weekly from major ports.
It is recommended that you use a customs broker or agent to clear the goods from customs. Your local agent or distributor usually handles the import procedures and documentation, as it is required that imports are done by a Thai registered company.
It is advisable to investigate a variety of service providers.
Payment is usually by irrevocable letter of credit.
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Contact details
The Australian Trade Commission (Austrade) is the Australian Government’s trade and investment development agency, operating as a statutory agency within the Foreign Affairs and Trade portfolio.
Austrade assists Australian businesses contribute to national prosperity by succeeding in trade and investment, internationally, and promoting and supporting productive foreign investment into Australia.
Austrade:
- Delivers services that assist Australian businesses initiate, sustain and grow trade and outward investment.
- Promotes Australia as an inward investment destination and, with the States and Territories, supports the inflow of productive foreign direct investment.
- Administers the Export Market Development Grants scheme.
- Undertakes initiatives designed to improve community awareness of, and commitment to, international trade and investment.
- Provides advice to the Australian Government on its trade and investment development activities.
- Delivers consular, passport and other government services in designated overseas locations.
A list of Austrade offices (in alphabetical order of country) is available.
More information
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au |
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