The ASEAN Free Trade Area (AFTA)'s tariff reductions to duty-free status on January 1 is a benefit to business within ASEAN. Now businesses can import raw materials and intermediate goods from member countries at lower cost. AFTA also attracts Foreign Direct Investment (FDI) to set up production in Thailand where ASEAN investors can benefit from intra-regional raw material supplies, export privileges to other ASEAN countries, as well as to markets outside ASEAN that have entered into FTAs with ASEAN, e.g., China, Japan, South Korea, India, Australia and New Zealand.
The advantage of FTA tariff reductions will also help expand export markets. Moreover, the FTA between ASEAN and China is helping substantially because the normal track goods account for 90 percent of all goods getting duty-free status on January 1. This leads to the prediction that Chinese investors will be attracted to set up more production within ASEAN (including Thailand) to benefit from the duty-free intra-regional raw material access for the production of goods to re-exported to China, especially where production is still insufficient to meet domestic demand. Investments into rubber products in Thailand for re-export to China will not be subject to import tariffs there. But, imports of Thai raw material rubber for production in China will still be assessed high tariffs.
Thai businesses that could potentially benefit the most from reductions or revocation of import tariffs on primary and semi-raw material goods would likely be those in the food industry (including beverages), as well as the automotive, computer and electronic manufacturing industries. However, it is inevitable that Thailand's agricultural sector will be hurt by more imports pouring into our market. In seeking FDI, although Thailand is one of the top-ranked ASEAN members for our FDI industrial production potential, we face competition from other ASEAN countries. The current uncertain political situation and the Map Ta Phut environmental impact cases obscure our investment appeal. In particular, the Map Ta Phut cases are a major problem that Thai authorities should seek to swiftly solve.
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