eTrade: How Thailand’s SMEs Seize the Day

Thailand’s small and medium-sized enterprises (SMEs) are becoming increasingly internet-savvy. According to a report by Google-Temasek, Thailand’s internet economy is ranked second in Southeast Asia, behind Indonesia. It was worth US$ 2 billion in 2018 – that’s equivalent to 2.7% of Thailand’s GDP. 

eCommerce provides an attractive value proposition for businesses in emerging markets like Thailand. Research by Transport Intelligence and Agility found that SMEs in emerging markets are going to leverage eCommerce as an export growth driver over the coming years, as it reduces the complexity of global trade and enables sales to international markets.

Already today, Thai SMEs have realized the potential of eCommerce and are increasingly making use of eTrade tools to reach international markets. In 2018, Thailand’s total SME export value accounted for 25 percent of total exports.

Thailand: playing field for eCommerce businesses

Thailand provides an ideal environment for SMEs engaging in eTrade. There are 57 million internet users in Thailand, out of a total population of 69 million, according to Internet World Statistics. Thailand’s middle-class is growing fast, and electronic payment transactions in Thailand have experienced double-digit growth over the past three years. 

Thus, the infrastructure is in place, and SMEs are increasingly taking advantage of the opportunity. In September 2018, for example, Thai and U.S. businesses pledged to set up an economic and business promotion committee to promote Thailand’s digital economy and Thailand-U.S. digital trade.

Moreover, the Thai government has realized the chances eTrade provides to SMEs and supports the trend. 

In December, JD Central Commerce, a joint venture between Chinese internet giant JD.com and Thailand’s largest retail firm Central Group, has teamed up with the government to improve the competitiveness of Thai SMEs via an online platform. Chairman Yol Phokasub said the agreement aims at increasing export volume to more than US$ 3bn in the next three to five years. 

Challenges: unclear regulations and customs duties 

So far, the growing eCommerce practice has remained largely unregulated in Thailand and its neighboring countries. However, as the industry grows, governments are increasingly looking at ways to tax the fast-growing sector. Singapore, for example, has recently introduced a Goods and Services Tax (GST) on eCommerce goods and services from overseas. 

Moreover, relatively high shipping costs and the lack of clarity in customs duties and taxes are barriers to eTrade in the region. That’s why in January 2019, the ASEAN member countries have joined forces to implement the ASEAN Single Window (ASW) by the end of this year. 

The goal of the ASW is to integrate the different national single-window systems to expedite cargo clearance and boost cross-border trade by enabling the electronic exchange of trade-related documents among ASEAN members.

Auramon Supthaweethum, director-general of the Thai Department of Trade Negotiations, explains, “The tariffs on goods imposed between different ASEAN countries have been reduced to nearly zero percent. Our next goal is to ensure a faster and more effective physical flow of goods between the ASEAN members, specifically, through pushing for the development of the ASW digital system in 2019.” 

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