Doing business in Thailand
Before entering the Thai business market, there are a number of factors to take into account including culture, politics and business etiquette.
Austrade can help Australian companies familiarise themselves with local market conditions, as well as assist in developing export opportunities through a range of in-market and Australian-based services.
There is extensive information about doing business in Thailand on this website: please check the Thailand profile under 'Country Profiles'.
For further information go to the following:
For the full text of the Thailand-Australia Free Trade Agreement go to
The Thailand-Australia Free Trade Agreement contains a number of measures which streamline the movement of business people between Australia and Thailand.
Business visitors
Thailand does not require a work permit for Australian citizens who are business visitors conducting business meetings in Thailand for up to 15 days, and up to 90 days for APEC Travel Card Holders.
Australia permits Thai citizens on business visits to enter and stay for up to 90 days.
Intra company transfers
Thailand will grant a visa and work permit for up to five years’ stay for all Australian citizens being transferred to work in Thailand within the same company (to be renewed annually).
Australia will grant a visa for up to four years’ stay for all Thai citizens being transferred to work in Australia within the same company (renewable up to a maximum stay of 10 years).
Contractual service suppliers
Thailand will grant a visa and work permit for up to three years’ stay for all Australian citizens entering Thailand to work on the basis of a contract with an Australian or Thai company other than their employer in Australia (to be renewed annually).
Australia will grant a visa for up to three years’ stay for all Thai citizens entering Australia to work on the basis of a contract with an Australian or Thai company other than their employer in Thailand.
For further information go to the Australian Department of Immigration and Citizenship at www.immigration.gov.au and the Thai Ministry of Foreign Affairs at www.mfa.go.th.
Under the Thailand-Australia Free Trade Agreement, Thai tariffs will be eliminated by 2010 on almost all goods imported from Australia. Tariffs not already eliminated are being reduced according to agreed phasing timetables.
Agriculture
Grains
Thailand immediately eliminated the previous tariffs on wheat (ad valorem equivalent of 12-20%), barley, rye and oats (ad valorem equivalents of up to 25%), and the tariff and tariff rate quota on rice.
It also immediately eliminated the tariffs on unroasted malt (ad valorem equivalent of 28%) and wheat gluten (31%), and will phase the tariffs on wheat flour (32.6%) and starch (31%) to zero in 2010.
Meat
Thailand immediately reduced the tariff on beef to 40%, down from 51%, and for beef offal to 30%, down from 33%, and will phase these rates to zero by 2020. Under TAFTA, Thailand will phase out the current 32% tariff for sheep meat to zero in 2010. It will also phase the current 33% tariff for pork to zero in 2020.
Dairy
Thailand immediately eliminated the previous tariffs on infant formula (5%), lactose (up to 20%), casein and milk albumin (10%), and will phase the tariffs on butter fat, milk food, yoghurt, dairy spreads and ice cream to zero in 2010.
It provided an immediate additional quota for Australia of 2,200 tonnes for skim milk powder and 120 tonnes for liquid milk and cream, expanding by 17% at five-yearly intervals until 2025, when all tariffs and quotas will be eliminated.
Thailand will also phase the tariffs for butter and cheese, other milk powders and concentrates to zero in 2020.
Fruit and vegetables
Under TAFTA, Thailand will phase tariffs on most fresh fruit and vegetables (current rates mostly 33% or 42%) to zero in 2010. Tariffs on mandarins (42%) and grapes (33%) were immediately reduced to 30%, and will be phased to zero in 2015. Thailand also eliminated tariffs on most tropical fruit and the previous 30% tariffs on canned mixed fruit and canned pineapple.
There is now an additional quota for fresh potatoes, expanding yearly until 2020, when all tariffs and quotas will be eliminated. The current 30% tariffs for processed potatoes will be phased to zero in 2015.
Thailand also immediately reduced to 24% the previous tariffs of 30% on fruit juices and canned fruit, and will phase the tariff to zero in 2010.
Sugar
Under TAFTA, Thailand provided immediate additional quota for sugar, expanding annually by 10%, with tariff and quota free access in 2020.
Automotive sector
Vehicles
Under TAFTA, Thailand removed the 80 per cent duty on large passenger motor vehicles and reduced its 80 per cent tariff on other passenger vehicles to 30 per cent, phasing to zero in 2010. One-tonne pick-up trucks account for approximately 60 per cent of the total vehicle sector in Thailand, with passenger cars representing around 30 per cent.
Automotive components
Thailand has 15 car manufacturers, a 1-million unit capacity, and enjoys the status of the 'Detroit of Asia'. Under TAFTA tariffs on all automotive parts, components and accessories, formerly up to 42 per cent, were reduced to a ceiling of 20 per cent and will be phased to zero by 2010.
Rising demand for quality and new suppliers to cater for international automakers moving into, or expanding their operations in Thailand, means that there are good opportunities for Australian suppliers, especially of such product lines as engines, transmissions and brakes.
Machinery and equipment
Prior to January 2005, Thai tariffs on machinery and equipment ranged up to 30 per cent. Machinery and equipment tariffs not immediately eliminated will be phased to zero by 2010 with the exception of three tariffs covering electric power boards, which will be eliminated in 2015.
Tariffs of 20 per cent for electric transformers and inductors were eliminated immediately, as were the 30 per cent tariffs on fully-automatic washing machines and combined refrigerator-freezers.
Pharmaceuticals
Under TAFTA, Thailand will phase current tariffs on pharmaceuticals of 10% or 20% to zero in 2009.
Plastics
Under TAFTA, Thailand immediately reduced tariffs of 30% on plastic articles to 20% and will phase these to zero in 2010. For the most significant item of current trade, i.e, miscellaneous plastic articles not separately identified in the tariff schedule, Thailand immediately eliminated the previous 30% tariff.
Thailand will also phase the tariffs on polymers from 5% to zero in 2010.
Metals
Steel
Under TAFTA, Thailand immediately eliminated its 1% tariff on slab steel and halved its tariffs on flat-rolled steel products of interest to Australia, including hot-rolled coil (previous tariff of 10%), cold-rolled coil (12%) and coated steel (15%). Tariffs will be eliminated in 2015, with the exception of most coated steel products, for which the tariffs will be phased to zero in 2008.
On long products, Thailand will generally reduce tariffs to zero by 2010. On a limited number of products, including structural sections and merchant bar, Thailand immediately halved its tariffs, which will then be held until elimination in 2015.
On steel articles, where Thailand's previous tariffs were generally 20%, Thailand eliminated some tariffs immediately, with the remainder to be phased to zero by 2010.
Non-ferrous metals
Thailand will eliminate the tariff on unwrought copper cathode in 2010.
Thailand immediately reduced the tariff of aluminium bars, sheets and foils to 5%; items of specific interest were eliminated in 2007, while remaining tariffs will phase to zero in 2009. Thailand immediately eliminated its 1% tariff on unwrought aluminium once TAFTA came into effect in 2005.
Beer, wine and spirits
Thailand immediately reduced its previous 54% tariff on wine to 40%, and will phase the tariff to zero in 2015.
Thailand reduced the previous tariffs on beer and spirits from 60% to 30%. Tariffs will be phased to zero in 2010.
TAFTA’s key provisions on services are modelled on international obligations under the World Trade Organisation’s General Agreement on Trade in Services (GATS). Thailand made a number of changes that improve the environment for bilateral services and investment.
The principal investment and services outcomes for Australia under TAFTA are as follows:
- Thailand now permits majority Australian ownership of mining operations up to 60 per cent. The limit previously was 49.9 per cent.
- Thailand now permits Australian companies which manufacture goods in Thailand to provide distribution services in relation to those goods, without limitation of Australian equity, up to 100 per cent. The limit previously was 49.9 per cent.
- Thailand now permits up to 100 per cent Australian ownership of companies providing certain construction services. The limit previously was 49.9 per cent.
- Thailand now permits 100 per cent Australian ownership of companies providing management consulting services through a regional operating headquarters, or associated company or branch. The limit previously was 49.9 per cent.
- Thailand now permits majority Australian ownership of major restaurants or hotels up to 60 per cent. The limit previously was 49.9 per cent.
- Thailand now permits majority Australian ownership of tertiary education institutions specialising in science and technology up to 60%, provided it is located outside Bangkok. The limit was 49.9per cent.
- Thailand now permits majority Australian ownership of companies providing certain maritime cargo services (up to 60 per cent). The limit previously was 49.9 per cent.
TAFTA benefited Australia by providing greater market access in Thailand for Australian investors, and a strong framework for the promotion and protection of investment between the two countries. In addition, Australian investors and investments in certain sectors benefit from equal treatment (national treatment) with Thai businesses.
Thailand also liberalised its foreign investment policy by relaxing foreign equity caps in some sectors and sub-sectors and now permits majority Australian ownership in mining, distribution, construction, management consulting and hospitality ventures, science and technology institutions and maritime cargo services.
Foreign equity caps remain more restrictive in sensitive sectors such as telecommunications and banking. Annex 8 of the Agreement outlines which sectors benefit from preferential treatment and reduced foreign equity caps.
TAFTA Investor Certification
To be able take advantage of TAFTA provisions, Australian investors must obtain Certification that they are a majority Australian-owned company or an Australian citizen.
Certification can be gained through Austrade by completing the form:
Request for Certification Under the Thailand – Australia Free Trade Agreement (TAFTA) – Pre-Establishment Investment
The terms for Certification are outlined under Chapter 9 - Investment of TAFTA.
Additional protection for Australian investments
TAFTA incorporates a number of investment promotion and protection provisions which guarantee that both countries’ investors and their investments can enjoy fair and equitable treatment, full protection and security against expropriation, the right to prompt and adequate compensation, and the right to transfer their funds out of Thailand.
The Agreement also gave Australian investors the right to seek impartial resolution of any disputes with the Thai government over their admitted investments.
In addition, Australia and Thailand agreed not to expropriate investments except where the expropriation is for a public purpose, on a non-discriminatory basis, and appropriate compensation is paid. Both countries now permit each others’ investors to transfer their funds freely, except where a country is facing balance of payments crisis or external financial difficulties.
If there is a dispute over post-establishment investment issues, Australian investors have recourse to the investor-state dispute settlement process. This provides an investor of one country with the right to challenge the Government of the other country for a breach of the obligations in the Investment Chapter in an international arbitration tribunal.
Future commitments
Thailand has made an undertaking to enter into further negotiations on services and investment to enhance its commitments across the board, and has also agreed specifically to explore the scope for improving its commitments in a number of areas of priority interest to Australia, including financial services and telecommunications services.
Before exporting, it is also necessary to determine whether any Thai product standards and/or regulations affect the importation of specific products, and whether any Thai sanitary and/or phytosanitary measures affect the import of a product.
A Five Step Guide has been produced which provides advice on how to benefit from TAFTA preferential rates. The Guide sets out information on how to:
- identify the classification code for a product
- check Thailand’s tariff schedule to determine the TAFTA preferential rate applying to a product
- determine the Rule of Origin
- register as an exporter, and
- obtain a Certificate of Origin.
Taking Advantage of TAFTA's Benefits and Opportunities: A Five Step Guide for Australian Exporters
What is the purpose of Rules of Origin?
Rules of Origin provide objective criteria for determining whether or not goods are eligible for the benefit of preferential rates of duty provided under TAFTA.
For products from Australia or Thailand to be eligible for preferential tariff rates, they must be declared ‘originating’ goods of the exporting country and must be accompanied by a Certificate of Origin.
Originating goods are either:
- wholly obtained or produced entirely in Australia or Thailand, or
- produced in Australia or Thailand partly from non-originating materials.
Goods containing inputs from third countries must satisfy requirements agreed between the parties. The main consideration is whether any third country input has undergone a specified change in tariff classification as a result of production processes occurring in the territory of either party. This is known as the ‘change in tariff classification’ approach to determining origin.
The required change for each product is set out in Annex 4.1 of the Agreement.
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Tip: For goods exported from Australia and imported into Thailand, the onus of proving that the good ‘originated’ in Australia lies with the Thai importer. Therefore, it is vital that the Australian exporter provides a valid Certificate of Origin and, if requested by Thai Customs, full supporting documentation to Thai buyers. Australian law requires exporters to keep records of the component origin/s, ratios of various inputs /value-adds, and detailed costs.
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Regional value content
For a number of manufactured products, particularly textiles, clothing and footwear, the exported products must also contain a defined amount of local content as a proportion of the overall value of the good. This is known as ‘regional value content’. Where there is a regional value content requirement for a particular product, this is also set out in Annex 4.1 of the Agreement.
The World Trade Organization (WTO) Customs Valuation Agreement provides a number of methods for calculating the value of goods. The primary method is the transaction value method, which is based on the actual price paid or payable for the goods. Under TAFTA, the WTO Customs Valuation Agreement will be used to determine the value of goods and inputs (or materials), as adjusted to reflect the FOB or CIF value.
Goods will not qualify for a tariff preference if, following export from either country, they undergo further production in a third country prior to importation by either Thailand or Australia.
Certificate of Origin
Under TAFTA, goods can only benefit from tariff preferences if they are accompanied by a Certificate of Origin, which confirms that the goods meet the Rules of Origin. A separate, valid Certificate of Origin is required for each shipment of goods and an exporter must forward a copy of each Certificate to the Thai importer.
Once an exporter has confirmed that goods satisfy their Rules of Origin, it is necessary to become a Registered Exporter and obtain Certificates of Origin for each shipment of goods claiming preferential tariff treatment. The Australian Industry Group [AIG] and the Australian Chamber of Commerce and Industry [ACCI] are authorised under TAFTA to conduct both of these processes.
The Australian Industry Group provides information on certificate of origin and other necessary documentation.
The ‘Most Favoured Nation’ (MFN) tariff
Exports which do not meet the Rules of Origin, or which do meet the rules but lack a Certificate of Origin, are still permitted; however, they are subject to the ‘Most-Favoured Nation’ (MFN) tariff rate rather than the TAFTA rate.
MFN tariffs are the general rates that Australia and Thailand apply to goods from all countries, and are generally higher than the rates applying under TAFTA. But where the Australian or Thai MFN rate for a particular product is zero, or equal to or below the TAFTA rate for any reason, that product does not have to meet the Rules of Origin and a Certificate of Origin is not required.
Determine the Rules of Origin
Rules of Origin are needed to provide objective criteria for determining whether or not goods are eligible for preferential rates of duty and to avoid transhipped goods from markets other than Australia or Thailand seeking to claim TAFTA preference.
For further information on Rules of Origin see the Australian Customs Service TAFTA website.
Wholly obtained
If goods are wholly obtained in Australia (for example, if they were grown, fished or mined entirely in Australia, or were produced in Australia entirely from those goods), the letters ‘WO’ (wholly obtained) must be marked in the Origin Criterion column of the Certificate of Origin.
Not wholly obtained
If a product is not wholly obtained in Australia, then it is necessary to check the TAFTA specific Rule of Origin requirements for the product. A full listing of the TAFTA product specific rules can be found in TAFTA Annex 4.1.
If there are goods listed on the Certificate which do not meet the TAFTA Rules of Origin requirements, they should be listed as ‘NA’ in the Origin Criterion column.
For goods that must meet the product specific rules, it is necessary to mark the Certificate of Origin with the letters ‘PS’ (product specific) in the ‘Origin Criterion’ column of the Certificate form.
Chapter 6 of the Thailand-Australia Free Trade Agreement affirms that decisions on matters affecting quarantine and food safety will continue to be made on the basis of existing procedures, including scientific assessments of the risks involved in the commercial trade of food, animals and plants and their products. This affirmation is made to reflect the primacy of existing rights and obligations under the World Trade Organization (WTO) Agreement on Sanitary and Phytosanitary Measures (SPS Agreement).
TAFTA recognises that both Australia and Thailand are major agricultural producers and exporters but with different systems and different pest and disease status. Nothing in Chapter 6 of the Agreement undermines the right of either country to determine the level of protection it considers appropriate.
The two countries have agreed to enhance consultation and cooperation on SPS issues to improve understanding of each country's measures and regulatory systems, and to work together to improve efficiencies in quarantine operations and associated regulatory processes. They are also cooperating internationally in these areas.
Under TAFTA, Australia and Thailand aim to harmonise their technical regulations where feasible, recognise each other’s standards as equivalent where they meet objectives of their own standards, and make conformity assessment procedures mutually compatible.
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