BANGKOK – Thailand may impose value-added tax (VAT) on Chinese goods shipped through free trade zones to shield local producers hit by a flood of cheap imports.

Prime Minister Srettha Thavisin ordered officials on Feb 15 to consider levying VAT on goods priced at less than 1,500 baht (S$56) that are routed through tax-free zones to prevent false declarations.

Cheap Chinese goods were also making their way into the South-east Asian nation through e-commerce platforms and smuggling, Mr Srettha said.

The influx of Chinese products was hurting local manufacturers who are unable to compete on price, he said in a statement on X.

The products lacked standard certifications from government agencies and often infringed intellectual property rights, according to Mr Srettha.  

Thailand has seen a surge in imports of cheap goods, prompting the nation’s main business groups to seek the Prime Minister’s intervention.

The Customs Department was recently ordered to ban Chinese imports of the so-called elephant pants as Thailand registered copyright of the pattern, according to a Bangkok Post report, citing Commerce Minister Phumtham Wechayachai.

The imports of low-cost Chinese goods will take a toll on local small and medium-sized enterprises as their sales could be drastically affected, Thai Chamber of Commerce chairman Sanan Angubolkul said.

China was Thailand’s largest trade partner in 2023, with a total trade value of US$105 billion (S$141 billion) and US$36.6 billion in trade deficit, according to the Thai Commerce Ministry. BLOOMBERG