Thailand's Manufactured Exports Key Issues and Policy Options

Report No. 5670-TH Thailand's Manufactured Exports Key issues and Policy Options (In Two Volumes) Volume l1: Annexes and Statistical Tables Public Disclosure Authorized December 1985 RegionalMission in Bangkok EastAsia ard PacificRegional Office and IndustrialStrategy and Policy Division Industry Department FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized

0 ,-,-;- Public Disclosure Authorized

Doawnent of the Wou= Bank

Thisdocument has a restricteddistribution and may be~used by recipients only-in the performance of their official duties. its contents may not otherwise be- discosed withot World Bankauthorization. CURRENCYEQUIVALENTS

The value of the baht is determined on the basis of a basket of currencies and changes daily. During 1985, the value has ranged from 26- to 27.6 baht to the US$1.00

ABBREVIATIONS AND ACRONYMS

ATI Association of Thai Industries BOI Board of Investment BOT Bank of Thailand BQ Basic Quota CCs Commercial Counselors CVD Countervailing Duty DCR Department of Commercial Relations DFT Departmen.tof Foreign Trade DIL Loans for Purchasing Domestic Inputs DLC Domestic Letter of Credit DOL Loans for Purchasing Domestic Finished Goods EAs Exporters' Associations ECIs Export Credit Insurance System EDC Export Development Committee ED Export Demand EEC European Economic Community ERP Effective Rate of Protection ESC Export Service Center ETCs Export Trading Companies FBAs Foreign Buying Agents FIL Loans for Purchasing Imported Inputs FPO - Fiscal PoLicy Office GDP - Gross Domestic Product GNP - Gross National Product GSP - Generalised System of Preferences GTCs - General Trading Companies IS - Import Substitution ISIEs- Input-SuDplying Indirect Exporters ITCs - International Trading Companies MOC - Ministry of Commerce MOF - Ministry of Finance MOI - Ministry of Industry NESDB- National Economic and Social Development Board OECD - Organization for Economic Co-operation and Development OICA - Office of Input-CoefficientAdministration OSIEs- Output-Supplying Indirect Exporters PEFG - Preshipment Export Finance Guarantee System QR - Quantitative Restrictions SITC - Standard International Trade Classification SMI - Small and Medium Industry SQ - Supplementary Quota TACs - Technical Advisory Committees VAL - Loans for Generating Value Added DRC - Domestic Resource Cost FOR OFCIAL USE ONLY

THAILAND'S MAINUFACTIREDEXPORTS:

KEY ISSUES AND POLICY OPTIONS

VOLUMEII

TABLE OF CONTENTS PAGE NO.

ANNEXTO CHAPTERII

ANNEX II Export Value and Growth Rates of Major Manufactured Exports, 1970-83 ...... 1

ANNEX TO CHAPTER IV

ANNEX IV-1 Background Information Related to Chapter IV ...... 11

ANNEX IV-2 Technical Note on Fixed Drawback Schedules of Fiscal Policy Office ...... 41

ANNEXIV-3 Announcement on Conditions, Criteria and Methodolody for Reducing Sales Tax Rates 51

ANNEXIV-4 A Note on the Domestic Letter of Credit (LWC) System and Streamlining of Export Financing 63

ANNEX IV-5 Technical Note for Duty (and Indirect Tax) - Free Import Administration...... 79

ANNEX IV-6 Proposed Task Force for Input-Coefficients Draft Terms of Reference ...... 87

ANNEXTO CHAPTERV

ANNEXV-1 Role of Trade Information, Export Marketing and Public Sector Support Services .. 93

ANNEXV-2 Export Development Committee . .101

ANNEXV-3 Organization Chart of Department of Commercial Relations.105

Thi document has a restiaod dribufion and may be used by nripnts only in the perforance of their offiCialduties Its contents may not othwse be discosed without World Bank authoZatiOn. - ii -

STATISTICA APPENDIX

TABLE OF CONTENTS PAGE NO.

STATISTICAL TABLES

TABLE 1.1 Gross Domestic Product at Current Market and at 1972 Prices ...... *...*...... *.*0...... 109

TABLE 1.2 Balance of Payments, 1982-85 ...... 110

TABLE 1.3 External Services Transactions, 1982-85 (In millions of U.S. dollars) ...... 111

TABLE 1.4 Non-monetary Capital ...... 112

TABLE 2.1 Principal Merchandise Exports ...... 113

TABLE 2.2 Other Merchandise Exports ...... 114

TABLE 2.3 Comparative Structure of Manufacturing Sector ..o... 115

TABLE 2.4 Comparative Data, Foreign Trade and Manufacturing... oo- ...... 116

TABLE 2.5 The Manufacturing Sector: Value cf Output, Value Added, Imports, Exports, Growth Rate, Ratio in 1975, 1980 ...... 117

TABLE 2.6 Manufactured Exports of Thailand and Some Other Countries - Selected Commodity Group 118

TABLE 2.7 Distribution and Growth of Manufactured Exports by Commodity ...... 129

TABLE 4.1 Product Under Import Licensing ...... 130

TABLE 4.2 An Example of Input Coefficients Used for Individual Drawback/Exemptionof Duties by Customs Department ...... ,...... 131

TABLE 4.3 An Example of Input Stock Account of Book Method of Duty Exemption 132

TABLE 4.4 Alternative Estimates on Average Duty (and Indirect Tax) Exemption Rate ...... 133 - iii -

TABLE OF CONTENTS

STATISTICAL TABLES (Contd.)

PAGE NO.

TABLE 4.5 Accumulative Value of Export Bills Refinanced by the Bank of Thailand (Head Office) Classified by Nature of Product ...... 134

TABIE 4.6 Accnmlative Value of Export Bills Extended by the Bank of Thailand (Head Office) Classified by Types of Documents ...... 135

TABLE 4.7 Estimated Average Loan Periods for Selected Products (Head Office) in 1983...... 136

TABIE 4.8 Exporters Classified by OutstandingValue of Export Loans Rediscounted by the BOT as at July 31, 1984 ...... 137

TABLE 4.9 Results of BOT Survey on Access to the Export Loan .... *****.*****...... 138

TABLE 4.10 Relative Importance of Various Documents used in Obtaining Export Loan for Selected Agricultural Products ...... 139

TABIE 4.11 Percentage Structure of Export Receipts Classified by Type of Payment Instruments and by Type of Goods ...... 140

TABLE 4.12 Percentage Structure of Export Receipts Based on L/C Classified by Credit Period ...... 143

TABLE 4.13 Outstanding Value of Export Bills Extended by the Bank of Thailand (Head Office) Classified by Nature of Documents ...... 144

TABLE 4.14 Size Distribution of Garment Export Manufacturers (Surveyed During 1982-83) ...... 145

TABLE 4.15 Size Distribution of Export Manufacturers Producing Canned Seafood in 1982 ..... 0...... 145

TABLE 4.16 Product List for BOI-Promoted Trading Companies ...... 146 - iv -

TABLE OF CONTENTS

STATISTICAL TABLES (Contd.)

PAGE NO.

TABLE 4.17 Export Performance of BOI-Promoted Trading Cmpanies ...... *. 148

TABLE 4.18 Export Commodity Composition and Annual Export Growth Rate of BOI-Promoted Trading Companies and Their Export Shares in National Exports ...... 149

TABLE 4.19 Sources of Inputs and Export Channels of Small and Medium-Scale Export Manufacturers, 1981 ...... 150

TABLE 5.1 Export Market Destinations ...... 151

FIGURES

FIGURE 1 Procedures for Individual Drawback/Exemption of Duties Administered by Customs Department ...... 153

FIGURE 2 Procedures for Duty-Free Imports Based on Input-Stock Accounting Book Method ...... 154

FIGURE 3 Effective Period of Using Preshipment Loan for Manufactured Good Exports by a Manufacturer (Final Stage Producer and Direct Exporter) ...... 155

FIGURE 4 Effective Period of Using Preshipment Loan for Primary Good Exports (or Manufactured Good Exports) by a Trading Company...... 156

FIGURE 5 Effective Period of Using Preshipment Loan Based on Warehouse Receipt by a Trading Company ...... 157

FIGURE 6 Exploiting Fully Country's Export Potentials ...... 158

(D-105f) ANNEX TO CHAPTERII

EXPORT VALUEAND GROWTHRATES OF MANUFACTUREDEXPORTS, 1970-83

I ANNEX II Page 1 of 7

EXPORT VALUE AND GROWTHRATES OF MAJOR MANUFACTURED EXPORTS, 1970-83

1. This annex provides a detailed account of the export performance of major manufactured exports, by CCCN category. The attached Table II-1 identifies the manufactured exports that achieved high growth rates during the period 1970 to 1983. The most notable among them were frozen chicken, frozen shrimp and prawns, canned fish and seafood, canned pineapple, apparel and clothing, footwear, gems and precious metals, integrated circuits, and several other products of smaller value but very high growth rates. The following paragraph7 spell out the market destinations and key characteristicsof these exports.1

2. Strictly speaking, CCCN 1-24 are composed of raw materials, while 25-99 include semi-manufacturedand manufactured products. However, a number of processed products, e.g. canned fish, seafood, vegetables, pineapple, food waste, etc., are also part of CCCN 1-24 and are therefore included in the discussion. Starting with CCCN 02--meat and offal-the export value of frozen chicken (CCCN 020201) grew at a rate of 37.6% annually in current prices during 1977-83, reaching Baht 946.3 million in 1983. The next major item is CCCN 03-fish crustaceans, i.e., frozen shrimp and prawns (CCCN 030348)-which had an export value in 1983 of Baht 3,165.4 million. These products were exported mainly to Japan. Other exports of high growth and volume, apart from sugar, were canned fish and other canned seafood (CCN 160419 and 160519) in CCCN 16, canned pineapple (CCCN 200601) in CCCN 20, and cured Virginia tobacco (CCCN 240101) in CCCN 24. The major markets for the first three items were Europe and North America, while Virginia tobacco went mainly to Japan. The products under CCCN 1-24, which are based on domestic raw materials, are mostly labor-intensivein the processing stage and generate high domestic value added.

3. For cement and mosaic cubes (CCCN 25), average growth was 13.51% a year for the seven-year period, while capacity utilizat:on was at 81%. At the

6-digit level, gypsum crude (CCCN 252001) had a high -. .wth rate of 54.1% for the seven-year period. This product could show a furtAer growth in the next few years. In terms of destinations, it is notable that cement went chiefly to ASEAN (Indonesia and Malaysia) and other Asian countries (mainly Taiwan Province, China). Since the industry has been utilizing its capacity at close to the limit, it is unlikely that exports of CCCN 25 can be boosted without added capacity.

4. The growth of processed natural rubber (CCCN 40) was about 8.7Z per year for the seven-year period. Within this category were two major items, aircraft tires, with growth of 43.3% a year, and rubber bands, at 27.8Z a

1/ This annex was prepared by the Bank Consultant, Dr. Narongchai Arkrasanee, and his associates and draws on their report entitled: "Promotion of Manufactured Exports: Destination and Barriers to Importing Countries," Industrial Management Consultant, Bangkok, 1984. - 2 - ANNEX II Page 2 of 7 year. Natural rubber went largely to the Japanese market, whereas aircraft tires were exported mainly to countries in Asia (Malaysia, Singapore and Hong Kong) and rubber bands to the US and EC (mainly the UK). Although initially rubber bands went just to the EC, by 1981 they had penetrated the US market quite successfully. The US and the EC markets will continue to be the chief outlets for this product.

5. Leather articles (CCN 42) had a 17.7% growth rate during the seven- year period with the chief market the EC, the Federal Republic of Germany or West Germany, France and Denmark). At the 6-digit level, there were two groups of products of interest--leathercontainers and leather handbags. The former had 33.9% growth; their markets were Asia (Singapore,Saudi Arabia and Hong Kong) and the EC (the UK). As to leather handbags, their growth was 53.3Z, while the dominant market was the EC (West Germany), the UK and the Netherlands). Industry sources are quite confident that the EC markets will continue being receptive to Thai leather products. However, the availability of fine grain leather is a production problem. At present, Thai exports conduct their business by subcontractingthrough designers' houses without Thai brands. The next steps should be: (a) to introduce,nurture and select Thai brands for gradual projection abroad and (b) ensure the availability of the needed raw material.

6. CCCN 44 includes all types of wood products, ranging from handicrafts to wooden toys. At the 2-digit level, CCCN 44 shows a negative rate of growth, a reflection of the shortage of wood in Thailand. While both wooden articles (cheeseboards,knife handles and so on) and .oys are emerging as small export items and have good outlets in the US, they will not enjoy growth in the EC and Asian countries, including Japan for very long. Although there is reasonable demand for this class for products, the availability of wood is a constraint.

7. Silk fabric (CCCN 500901) had a 39.7% growth rate in the 1977-83 period, with the highest Level recorded in 1981. Thai silk is a class product in its own right and it's renowned all over the word. The outlets were quite diversifiedand included Japan, the US and the EC (West Germany, Belgium, the UK, France and the Netherlands). Thai silk has been actively promoted in both the domestic and overseas markets. In addition, products of silk fabric have been increasing, albeit quite slowly. At present, household fabrics (i.e., upholstery,curtains and pillowcases)have begun to make an international impact, with the trend toward household fabrics quite clear. Certainly, this product can maintain its steady growth, provided new small niches can be exploited and new designs developed.

8. Thailand exported both semi-finished cotton yarn and finished products. At the broad 2-digit level, the growth rate was 7.1%. However, at the 6-digit level, cotton waste yarns grew at 31.6% (the outlets were other Asian countries such as Hong Kong, Taiwan Province, Cl-inaand Malaysia and the EC). Other important items at this level were cotton fabrics and sheet fabrics, both of which had lower growth rates; however, cotton fabrics had outlets in Hong Kong, Singavore and the EC (i.e. West Germany, the Netherlands,Denmark and Italy). The fabric was used for shirts by apparel industriesin Hong Kong and Singapore. Cotton sheet fabrics had markets in ANNEX II - 3 - Page 3 of 7

the EC (West Germany, Italy, the Netherlands and the UK) and the US. Again, the fabrics were turned into cotton sheets by large houses on both sides of the Atlantic. The growth of these two fab-ics categories can be maintained at previous rates. Nonetheless, better value added could be gained if Thai firms themseives produced quality shirts and quality bed sheets for export.

9. There were several items in the CCCN 60 that showed high growth potential. Cotton crocheted shirts (CCCN 600411) expanded at 40.0% a year in the 1977-83 period, with particularly high growth in 1978 and 1982. The main markets for this product were the US (a 78.3% share) and the EC (West Germany, the UK, the Netherlands and France). Man-made fiber shirts (CCCN 600412) had 58.4% growth over the seven years, with the high growth continuing in the 1980s. The main outlets were the US and the EC (i.e., the UK, West Germany, France, the Netherlands and Denmark). Wool sweaters (CCCN 600501) yielded a 74.6% growth, with 1980 a spectacular year. The demand for wool sweaters came from the US and the EC (i.e., West Germany, the UK, Italy and Denmark) and Switzerland. Sweaters made of man-made fiber (CCCN 600503) also showed good growth based on demand from the US and the EC (predominatelyWest Germany). Nevertheless, the capacity of the industry is already limited-the utilization rate is around 91.4%. Whereas exports of shirts can continue to grow rapidly, wool sweaters may face a rsw material problem, since the price of wool, which is imported from Australia, is rising. That will cut down on the competitive edge for woolen products. Therefore, productivity increases and liberal access to imported wool are the k.-..yissues relating to promotion of this product.

10. With Thailand one of the leading exporters of garments, it is not surprising that CCCN 61 (apparel and clothing) included more high-valued items than do the other categories. The export growth of this category was 30.3% a year from 1977 to 1983. The average growth rate would have been substantially high:.rhad these exports not declined in 1983. There were at least seven sub- groups that not only had high export potential but also substantialexport value: fibre jackets (CCCN 610133); fiber outwear (CCCN 610143); cotton coats (CCCN 610202); fiber coats (CCCN 610203); fiber dresses (CCCN 610223); fiber shirts (CCCN and fiber blouses 610242). These items had growth rates ranging from 23-59% a year during the last seven years. Fiber skirts and blouses showed impressivegrowth in 1983.

11. Generally speaking, Thai apparel and clothing accessories foun" their way into Asia, the US, the EC, Singapore, Kuwait, Saudi Arabia, United Arab Emertes (UAE) and Hong Kong. At least eight countries within the EC absorbed the bulk of the exports of this category with West Germany alone absorbing close to 30% of the EC demand in any given year. At present, the capacity utilization of the garment industry is high--at 91%; thus sustaining the high growth rates will require added capacity. In addition, demands from some Gulf state countries may not increase much. Other outlets should be sought. For example, the non-quota items in the EC should be explored. Thai firms have tended to concentrate on quota items because of higher profits, and correspondingly,have ignored "non-sensitive" items. Firms that concentrate on quota items are neither actively seeking nor transferring"non-quota" items that they have identified to other firms. However, many small firms could fill the orders that large firms reject. Therefore, the Ministry of Commerce should review the quota allocation system. ANNEX II Page 4 of 7

12. Under footwear (CCCN 64), there were three high growth export items, sli?pers (CCCN 640101), sports shoes (CCCN 640201) and rubber footwear (CCCN 6402_1). This group of products, grew at 102.5% a year, with demand coming chiefly from Middle Eastern (ME) countries and from the US and EC in smaller proportions. Slippers, growing at 75.9Z, had outlets in Asia, the US, and the Middle East (Bahrain, Kuwait, UAE and Saudi Arabia). In 1983, Saudi Arabia alone bought Baht 194 million worth of slippers. Sports shoes (CCCN 640210 came onto the export scene only in 1981 but have grown at a 249.6Z a year since then. The markets eere geared toward the US and the EC (predominately the UK). Rubber footwear (CCCN 640231) was another item, expanding as well over 100% during the period. Here the demand was from Asia in all cases, with strong demand again coming from Saudi Arabia, Kuwait, UAE, Jordan and Bahrain. The rise in the volume of exports to Saudi Arabia was also quite impressive, with a rate of at least 30% per year over the last four years. On the production front, capacity utilization was only about 60% in part because of the difficulty again in obtaining high quality leather. Still, there is more room to expand the marketing effort to utilize the apparent excess capacity. Given that Thai leather shoes are not designed so as to compete with products from Italy, Spain and Portugal, the Gulf states will remain the most important customers in the near future.

13. Feather articles (CCCN 67) had a 33.22% growth rate over the past seven years. Two items deserve special mention: bird down (CCCN 670910) and artificial flowers (CCCN 670201). Bird down was exported to Hong Kong and Singapore, where producers used it to produce down jackets which are exported to the US and the EC. Artificial flowers, growing at 31.8% a year, were marketed successfullyin the US and the EC (West Germany, the UK and Italy).

14. Ceramic products (CCCN 69) expanded on average at 18.3% a year. Several products attained high growth rates, although they were low value exports. As such ceramic products are reviewed as a broad group. The demand for ceramic products came from ASEAN countries and EC. The EC absorbed about 45-50% of total exports in any given year between 1977-83. West Germany and the Netherlands were the major among the EC buyers of Thai ceramic products, whereas Hong Kong purchases a substantial portion of the exports of other Asian countries. Ceramic products exporters have focused on the FC marikets, however, and recent events indicate that they might face stiffer quota restrictions. A switch in marketing toward the US and Canada, which have so far been smaller customers, would maintain a good growth rate. Capacity utilization is running about 70%; kiln capacity can be expanded if the price of liquified gas is favorable.

15. One of the industries promoted in recent years is jewelry. According to the attached table, exports of gems and precious metals (CCCN 710 expanded at 33.0% in the 1977-83 period. Three categories important to Thailand were (1) diamonds (CCCN 710231), (2) rubies (CCCN 710235 and (3) sapphires (CCCN 710236). All three were high value exports, however, the export of diamonds has not reflected this true value to the economy because of their import content. The growth rate of diamond exports was 112.3Z, but these diamonds were mainly small ones (less than 1 karat) brought in and polished before shipment overseas. Hence the domestic value added was quite small. In the case of rubies and sapphires, the value added to the economy ANNE II Page 5 of 7

was considerable,since major portions of the exports originated in Thailand, with the exception of Sri Lanka rubies which were imported for re-export. The demand for rubies came from Asia and Middle East (43%), the US (24X) and the EC (12.5%). Importing countries in Asia were chiefly Hong Kong, Singapore, Labanon, Israel, South Korea and Kuwait. In 1983, Hong Kong alone imported baht 393 million. Importing countries in the EC were West Germany, the UK, Italy, France and Belgium. Within Europe, Switzerland prrchased more than B 400 million worth in every year where rubies are used in the Swiss watch industry for mechanical analog watches. Exports of sapphires grew 31.0Z. The market was diversified-mainly including Asia, the US and the EC. Hong Kong and Singapore were the main importing countries in Asia, while in the EC France, Italy, the UK, Belgium and West Germany were important. Outside the EC, Switzerland bought B 439.9 million worth of sapphires in 1983. It is not possible to estimate the capacity utilization of the sapphire industry. However in 1984, production appears to have been constrained by the limit on credit expansion of 18%.

16. The electrical industry (CCCI 85) was almost completely dominated by the integrated circuit (I/C) industry. About 93% of the export value here integrated boards, which came to B 5,819 million in 1933. Exports grew at 31.5Z. The circuit boards and chips were imported into Thailand by subsidiariesof multinational companies such a National SemiconductorsCorp. and then assembled by Thai workers. The demand for the I/C depended on the demand for the finished products of the parent companies (chiefly in the US). However, it should be noted that the value added to the I/C industry to the Thai economy is low.

17. In the last seven years, Thailand has exported a few hundred million Baht worth of clock and watches (CCCN 91), with the rate of growth 95.6%. Four sub-groups of products contributed to this steady expansion: metal watch cases, parts of watch cases, watch dials and parts of watches and clocks. Metal watch cases (CCCN 910909) grew 33.9Z, with the demand coming from Switzerland,Hong Kong, Singapore and the UAE. Exports of parts of watch cases (CCCN 910919) increased at 9.9Z, with major markets being Hong Kong, the UK and Swiczerland. Watch dials (CCCN 911101) had a 50.9Z rate of -growth, with equal market shares in Asia and Switzerland, and with Hong Kong with largest im-porterfor Asia. Part- of clock and watches (CCCN 911109) expanded at 73.5%, with markets in Hong Kong. the UK and Australia. There is no capacity utilization index for the industry, but the indicationsare that export growth can be maintained at high levels.

18. A new Thai manufactured export is toys (CCCN 97). its export growth was 30.7% in the last seven years. In 1983, the o-or market was the US, but the EC and some other countries were quite crucial in the development of the industry. West Germany, the UK, Canada, Australia, France, Italy, Hong Kong, Singapore and the Netherlands were the major outlets outside the US. At present, 14 toy firms are promoted by the Board of Investment (BOI). Quality toys (chiefly of plastic) have been produced for maior US toy corporations such as Fisher-Price,Mattel and Hasbros. Further, the export growth in the plastic toy industry depends on a quality product with quality packaging. The trend is promising for the next few years. ANNEXII - 6 - Page 6 of 7

A TANZ Ir

Eqort Value an (rith Pates of ihbilami's Major Maacuxed Exports, 1970, 1977 and 1983

Ep Value G h Rate (XcXI l ncridm 1970 L977 1983 1977-1983

02 Mat aid -Hblp -- r offal 0.2 16&89 954.7 33.7 0201 pool fresh, chiflled firoze 0.1 157.5 %6.3 37.6

03 Fish, cincars mlbsQ 331.8 2,524.7 6,862.1 16.7 030348 sliz arid aws - 1,171.5 3,165.4 15.8

05 Pmou± of az-I odgin 57.3 2ff8 607.5 18.8 050701 Featr and dams 0.5 7.5 224.4 85.8 050709 Sdn aid pmrtsa blrds 0.6 106.9 141.4 2D.02

16 PreprtLu aE meat fish 0.1 512.0 4,323.0 41.8 160419 l fish 0.1 146.9 2,114.9 58.3 160519 Other smzo sefood - 257.4 1,640.2 35.7

17 Sinr atd fecti{ny 140.1 8,03.5 6,950.1 89 170101 Ra supr cetr1fugaL 55.1 5,026.9 5,371.0 11.4 170111 Uhite reEi sar 0.1 123.5 840.4 102.7 170300 MaIss 4.,1 745.2 609.5 2.6

19 Preppatrltc of cereal flour 5.8 115.6 361-7 23.5 190303 R oeDnon3 venuIcllIs 5.2 50.1 150.8 23.4

20 PEep. of vegetable fruit plait 68.6 998.4 2,722.4 18.6 200601 Plnnple in r 55,3 898.0 1,817.5 14.2 200712 Pineapple juice In emrs - 19.4 96.0 25.6

23 Vbste fro food 125.7 753.5 1,853.1 14.9 230109 Flour and mal. of mlluscs - 36.8 575.0 53.8

24 Tobww 202.1 924.5 1,821.6 15.2 240101 Virginia toba=ro 196.8 765.7 1,276.0 10.6

25 ment nasc cibes/tiles 332.9 646.6 939.6 13.5 25201 Gypsumcrude 82 14.8 159.8 54.1 2752321 Ibrtlanid oenet 83.3 185.2 144.4 43.8

40 Rubberatd synthetins 10,060.3 6,282.3 12,404.7 8.7 401421 Rubber _- 52.8 119.7 27.8 401130 Aircd.t tires - 13.1 249.2 43.3

42 Arteiles ofleatr 797.7 249.3 836.7 17.7 420209 Lntear containers - 20.7 123.6 33.9 -7- ANNEXII Page 7 of 7

(coi'd)

E Vale G h Rate OQI Diption 1970- 197 9837W

50 Silk ad silk wste 34.5 30.3 163.7 38.5 500901 Silk fabrir - 30.0 163.2 39.7

55 Cotta 33.8 1,17&5 1,686.3 7.1 550100 Catton nt aied 2.0 2.4 69.0 90.3 55M03 Comzitse imicmbel 6.8 30.9 179.9 31.6

60 1, crodet g3odf - 19 1,906.3 45.5 600411 SElrts croadet cat - 21.7 216.7 40.0 6O0412 len-me fiber shirts - 12.1 325.5 58.4 600503 Wboogseatem - 6.6 110.4 74.6

61 Appre and clotbixg aeories 18.2 1,576.5 7,223.6 30.3 610133 Fiber Jadcet - 100.3 559.9 36.0 610143 6102D2 610203 Flber ants - 50.6 A72.6 56.3 610223 Fiber dresses 2.2 17.9 317.5 50.9 610242 Flber blouses - 143.0 521.6 20.2 610279 Otber fiber ciar - 102.1 1,360.9 56.6

64 Footwar 0.2 24.9 1,740.7 102.5 640101 Sippers ad otber bDuse fooar - 13.6 501.3 75.9 64210 Sprt soies- - 406.3 249.6 640231 Rubber fotoear - 5.6 671.5 121.7

67 Fes:er articles 1.6 103.6 487.0 32.2 670201 ArtificLal flws 0.3 103.1 480.7 31.8

69 ec pmoducts 1.3 139.6 443.7 18.3 690603 Galz wal tiles 94.4 287.3 14.0

71 Gemsand previou netals 155.1 1,299.3 8,227.8 33.0 710235 RubLes cut, not set - 463.5 2,762.3 34.0 710236 Sbires cut, ot set - 458.9 2,465.2 31.0

85 Eleitrical mdiixy 8.3 1,307.6 6,937.6 33.2 851911 Iontg,tei circuits - 1,144.9 5,819.5 31.5 851920 CImrait bre r parts - 2.8 482.0 201.3

90 Qpi caie mwarus - 64.5 571.8 41.1 901705 Medic1. srs mits 0.7 9.5 95.6

91 Cladc, we - 67.5 253.5 95.6 910909 tal ach ses - 50.4 94.7 33.9 910919 Parts cf watch csea - 4.1 167.1 9.9

97 Top and sports euLpnt 4.1 35.5 162.5 30.7 970201 ILbls - 6.9 34.3 38.7 970O1 Other rk1rg wdels _ 11.8 82.8 40.5

(D-105f) - :-1 - ANNE TO CHAPTER IV

ANNEX IV-1

BACKGROUNDIIFRIAON RELATEDTO CHAPTERIV - /O --

H;~~ z 'Ooe;}~{-1 It /39rs A< ANNEXIV-1 Page 1 of 27

Background Information Related to Chapter IV

This Annex compiles background information for Chapter IV. It contains the following information:

Tables Page No.

Table 1. Product Under Import Licensing ...... 11

Table 2. Detailed Input-Coefficients for Integrated Circuits. 14

Tale 3. Drawback Application Form ...... 18

Table 4. Fixed Drawback Rate ...... 19

Table 5. BOI-Promoted Export Projects 1975-84 ...... 23

Table 6. Tax Revenue by the Government, FY82...... 24

Table 7. Business Tax Collected in FY82 ...... 25

Table 8. Share of -- -ue Added Tax Base with Zero Tax Rate (Export k. .vities) in Total Value Added Tax Base in Korea 1977-81 ...... 26

Table 9. Business Tax Changes During 1983 ...... 27

Table 10. Percentage Structure of Import Payments Classified by Type of Payment Instruments and by Type of Goods . . 31

Table 11. Percentage Structure of Import Payments Based on L/C Classified by Credit Period ...... 34

Figures

Figure 1. A Flowchart of General Customs Procedure: Import. . 35

Figure 2. A Flowchart of General Customs Procedures: Export . 36 I~~~ r

,y yr/ fLyt- f r , -13 - ANNEX IV-1 Page 2 of 27 T&le 1: r NIMe IMPCr LICENSiG (Accrding tn the Dport an Mqr=t Act B.E- 2q22 (1979))

A. Maiufacbmed Goods: PotentiLa nputs for Ecxwt dmmxities

hija Du d OdeSiw at (kcrc.a ad M of go. 03-dty 7.tifUstmk TRPct ULIgCf Mpt IAU

I F&tL fm m. 1 9 of dMfSmO -MCl. 28C/3fM) To p locbt piva=. Tqpwto1m Is mc _ml I L

2 mad on qrIm ID No. 9 lb _ fr Imptom Is tc Iy aUmtL ad ~f pm L MCY 54 (6/4/253 CEMMOf- Sm cc atam mm a y of 20 UIt- of v= but UCMM

!5iW lb. 73.2 of Twff Do=~ I.. 2505.

DoeiimM tyaby Gm2z BJ;- Iff256Z.

3 1 C.s t I s falli ID Vb. 9 T p d sdc Inky. Tc-tCim Is McCDM-SW aLlmw 'drdda ~1-- lb. 48.0l (b). MC NC. 55 C27/8W13) . dm., iddi ct pm ad zungatd ac . t W d by MC N7. 63 a .da yll ad-am eztiftSd Cuer vit ormi (trIMM1) by r smifm s) fall 1-011 lb. 480 of 60-2)0

(b) P2pf faUz ld I ladf1: lb. 48.01 (b) ad No. 48.Ot (b) 1 wee (*atiw uidthc ut

bealhi~lb. 48.05 of 250-

abh fllei or wdth 350 subtady ar aDte o

I - flksrn If- anrd ?w bpno oro-

!48. l

' i Minol- : tr fM RyD ft 9 To prwA= doesi mpret:eb i Mawoy no asCLq7.i witl 1 or,sR.-. 29-z0 (c!. MC: N 60 (2U//21) tC&ra

_= bu ad 81 >alf m 9 To pnesi T^wamsd is saie for ial Z L*m PE- Zo~-!.L w(id~%- No. 73.10. MC N 6 (2D/5/2514) POCO6tb i tqr&x coy bDit-tiUad md nap- mm. ao m awdd byR CLrctda 11_-1--wr 1e saU& e of Sw;tm5., M..1--ld lc h folhf: i . riea Sea stir mItlt mw- d thm1adwn ma I-Asw meNCrtl myMd by - l OJle by %bvidw-

o In :1a15dof Mt u1e lb. 710 Jl tlIz -14 - AnrX3-1 Page 3 of 27

T&hle 1: PRE r tNDER W= LJ3ENSDG (A=Omting to the Bqxrt axin lirt Act B,.E- 22 (1979)'

A. MaGofacdsd Good: Potentia irxpts for Export CamolitLes

RymiDsu acd adci de a1zdl ad O

6 Mmt. 4&W cc fwc ]I lb9 -b PMuc mnsti Pui6- Tqiaccs to1. afldB In comtmg sam dE GD-3g MClb. 61 0I9I539) tun apltcains ,t td tJpn ad c db D

7 swimck *-s c mod-wt Uol. 9 lbpo~ ~idcmgfImub Do qiMom Is we A2smd In ,nM"-%Ad= dL o Awj mE lbJl db pt duwA ad t MC b6. 35 C1U92Sr)

8 h11_c Ii1d= A- ID lb.9 ¢ d ss f Iub=n bIqZWM Is MCgI1Y *Uaud MC Wb.83 (ZVGn=) aummL 1. . (1) M-iL Cm 53-2. or (2) AL&0Cm 53-2 2. °ml lW C1)E15-M aQ W-1

(2) CaCo 51w-. or (3) 1!-ma a- 54-1. c

(6) EtE mCb54-2, (8)(7,) hj cumEiaan 5-4- 544.cc

.~~~0IlB (a)(6) ASI21-L CmOnsCms -Sw.%-2sa4 or (9) 55a-2m 5 C ccm " 3. 8n t4. (1'_ - ______5-&2, = (3) AUSaSS552. cc (4) MM-MMCI

C6) AM1 e" S62, or 0) am-d LM S3W ac (1N)AM Cbm 56-3r (9) MMfM *3

9 Men_dW de 1pl:cm RCD. 1 (7/W= D , pc - dbmwfb -Hma lupcxl IAIan cf Ml-M cc.. pSmld-S RC l. 9 (1V3{} gt qln&EY C1.I spe ld

10 _mmw : 9RCf-% N*i 8 (25M/29/2) T2 p O4 capn .ol T_ 1 Is aMme foc ebo

t I _ tf=Vtw wDOthtrt

_ - 84 X ; . -. - 15 - AN n-1

Page 4 of 2 7 TabLe 1: ERr Wt1 D4T LICDEN (AcxUrdxi to the Eqort ard xi,ort Act B.E. 2q2 (1979)

A. Mr£auftred GxdS: Omxzier GOds (Saie are FbtEitial Irts for EbpwortQ xiuties)

_~pi wm_cbjm = ef adtda ad m lb. - ~~~~~~~~00Ifev~rpm txzsripat KIE,-

I H M. -hzg Ur m ID Mb 9 lb pWtu msC laiitz bpWrnUf IMt _ vo igdt f±llq abmc MC Pa. 3 (M13125(5) aUaind c Urnt .p.du k.& h -c m p - ditmal.

2 5Su a UDVa. 9 lb p_m 4dc Tn>-nm is M mt 806 Ln em, MC Nb. 25C3f2M ad tm ipcia ed aP-m mg Uo d sult zulhli r WdUdMo dAi. Ibl *ft ad r_- &C Oak pitw..

3 DUaa & pm m IDb. 9 Lf ad p.p d RC lb. 3(3 3/515W lb b mi Puuidim TW 1I Is - DBUI alkuML in Curpeads1m -mmK

4 S 9 KIce .r dw IDU lb..dlb 9 l aI pm1p mrn. Mwottm Is 8mmmWyt mllcmd MCMm. 23(3MIMI=A

5 Sine WUJgLcus I IbDab 9 zCo ini rnmirnd m.m _rnoca In 0 I a.1UaL MC lb. 28(C293/2M05

6 Tsd icocq_m ct all iD b. 9 lb Soct dmac 1ztsacq' i act 5 y aiL &* s d MC lb. 76 (IL/6251/ ) Ur d peinL

7 ute t WAC Lmlate EDl. 8 lb captect Ic atd 1. Mt-aU".id I QcasILr ap NC lb. 67(141l/2Ls5) pxuia-Im. p-Impla d O1 b. aMl ryp MDN H- 9 lb potc de Cc h-aacry rattm Is ct allowdl Ix GE Ju or b NC g. 66( 24/1251LS) Wlmpl-

j bA. e. szcum IDb 18 (22//Y2S5) lb proct dc I1kacZy rpacxrta Is t gunllyr d IUrnU u dEpoce MC lb. 23 (23/8/2525) alloe. M. 69.12

to 1%a,1 por clll NC lb. 22 (9/8/2525) lb pews= dtIe rzwattm Is allowed saw gt %bech fMMWl dh Z EC No. 2 (16/I2V26) C (tl3Ii) Incty tcUdra lata apecfla. ar mTIOCd usd XIDt. dsTLT_m :£E 1,lao cr- me dowaumm faill'i'thn tarlI' tbahdfr 87.01 b

t1 Emts an otb r-dm, NC lb. 36 (7/8/2527) T1' pzoce mcmi ID&MCry r tac.dL to luL bly kC or- I allowed

61.02 61033 s61. 0 i

I i p , r Li i _.___ 9a:m -. lpCk_~ :t -r, C'uurm - 16 -ANNEX IV-1 Page 5 of 27

TABLE 2

Metalesd Input-Coefficiemts for IteWrated Circuits (in Table 2)

DMCE

USAGEPER 1000 UNTS OF CERAMICDIP I.C.

1. DICE PLATE 3 % IE LSS 2. 2ND OPTCAL . 7 % YIELD LOSS 3. DICE ATTACH 3 % 71ELD LOSS 4. 3 ID OPTICAL 5 % Y3lD LOSS 5. END OF LIn 2 % YIEl LOSS 6. FUNCTrCSALTEST 4 % YIE LossS

TEERJOR USAGE PER lO0O UNITs VYL BE

1000 * 0.97 i 0.93 - 5 0.97 I 0.95 f 0.98 I 0.96 - i, 2 7 9 k./1000 UNITS

USAGEPER 1000 UNITS OF CERMC DIP I.C. 1. FRAMECUT 2 % YED LOSS 2. FRAME- BASE ATTACI 3 % YIEL LOSS 3. 3RD OPTICAL XNSP. 5 % IED LOSS 4. Ew OF LINE 2 % YEDU LS 5. FUNCTIONALTEST 4 % rrD uss

IMEFORE USAGEPER 100) UITS lWL BE 1000 4 0.98 4S.97 0.95 .9 o.98 * o.96 - 1177 PCS./l000 UNr - 17 - ANNEX IV- 1 Page 6 of 27

BASE

1. RAW BASE REJECEDUE D TO;C CRHIPCP,O GLASS AVNAGE E ER HISTORICAL RECORD , 2 % TXI LOSS

2. FRAME BASE ASTCH 3 % Tim LIOSS

3. DICE ATTACH 3 % YIlD LOSS

C_. 3RD OPTICAL INSPECTION 5 % YIELD LOSS

5. END OF LINE 2 % YIELD LOSS 6. FUNCTICNAL TT 4 % TIE LOSS

1UKR PER 1000 UNI WILL BE

1000 0.98 * 0.97 x 0.97 0.95 0.98 * 0.96 . 1213 PCS./iO00 UIT

GOLD PaEWC

AIL CER DIP UNIT REQUIRE GOID PREFOR

1. DIE ATCEI 3 % YIED LOSS 2. 3RD OPTICAL INSPECTION 5 % YD LOSS 3. ND OF LIE 2 % Y LO5S 4. FUNCTINAlI TEST 4 % YIElD LOSS

5EMREFM PER a000 UNITS V3.L BE 1000 0.97 * 0.95 * o.98 o.960 _ 1154 PCS./1000 UNITS -18- ANNEX IV-1 Page 7 of 27

ALUMINU WIRE

1. AVERA 20 WIR PER UNIT_

EACH VRLE NGTH - 0.12 INC] 2. RE-THIRADM DUE TO BROIE WIRE SPOOL OF WIRE IS CMlPLETED. ALUW 13 FT. PER 1000 WNITS 3. AINTE(ANCFROUTINE 1MAZEXAKC ALLOW 10 FT. per 1000 UNITS

USAGE PER 1000 MITS BORE YIELDED 20 x 0.12 x 1000 . 12 - 200FT. 4- 3RD OPTICAL S % Ymn Loss 5 ND OF LIE 2% YIL LnT 6. FUNTONAL ST , 4 % nza ioss

TWORE USAGE PE 1000 UNITS WILL BE

200 . 0.95 x 0.98 4 0.96 m 224 FT/10O0 UIT5

LID

1. REJECT DUE TO CPACK CHIP CMGLAS HISTORICA SHOW1 2 % IOSS 2. D OF LEM II LOSS 2 % 3. FEIC2TIHAL TEST" 4 %

e PSR 1000 UaTs vILL iE

1000 4 0.98 4 0.98 * 0.96 -1085 PCSf1000 EITS -19 ANNEX IV-1 Page 8 of 27

MCK FO'R CODING DEVICES 2 C. CAN MARK 50,000 UNITS ALUt 20% FMR VASTG (MAL CLEwNwG) ;D OF LIM YID LOSS 2% USAGE PER 1000 UI2TS * (2 * 50) 0.8 00.98 - 0.051O./1.000 UMIS

PLSC BAI & PuG

1 SET OF PLASTEC RAIL COMM 0t 1 PLASC TUU AND-2 PLSU AVG. 1 SET CONTAIN 15 UNT5S A:ZWG 10% OF IU3Z WAS DAMAGE PER STORICUL BECW FIOR- ALL FAM= GROUPFOUN 10% OF RAIIS NOT N YUZX.Y .ADE 1IBM USAGEwLL BE (1000 + 15) * 0.9 , 0.9 _ 83 TESf/1000 UNITS

NIIAR SUE?

2LWAFER YAVE 230 GO0D DICE AND IMW 8 N!LLR FR WAFER -IAUX 10A1OX Me EL ALU C-DIP PRWUCT 1000 UN1T IL USE GOD DICE 1279 PC MIIR SHEET USAGEVXLL U 1279 + 230 x 8 - 45 PCS. 2n - AIIHEIV-1 Page 9 of 27 * -TARTF a

DRAWBAKAPPI CATION MRM UDE THECUSTOS ACT (NO.9) B.E. 21 SECTO .19 ES

Nameof appi3cant *- s .. o*oseese.oseee*eueReee

Acting an Behalf of ( PazjFin=) a 8009600090OW040 COnmrcial locati:o rvTrl ......

""" Of ManUfactlo.ai ry ..... s...... o ......

Type of bies...s

viMnC the piupose to inmport the foldlowing raw materialst ......

for pr0dMucing3dng, asseling or packing the fUollwing productS..

exported to a foreign port oa store for use on board a ship proaceding to a foreigL port. Ts will be c;laied for drawback unr the rtles and regulatLios prescribed under Mhe Cu.^tons Act to.9) ILE. 2482Section -9i bis.

I do,'Ao not prefer to use the bank guarantee in lieu of the payment ot import .

I hereby promise to camply with all rules and reguilatLois as st4dialte& by TMe Departzent of Custans. Signatore of the applicant,

Position ..

Dats e -21-

-ANNEX v-l Page 10 of 27

TABLE 4

Flied Drawback ate (Effective for July 1985)

ccw~ ---- ~ ~ ~ ~ ~ ~~Pa Pt

___ - mCItK - a 3

or uv 1a - 0.4 0, 2..SS 1.31 pt Eca ad edile emt ef fa 1.SS15

*13 sib ci taScW .lUae - 1.67 1.41 04 zD apy , h 1.03 0.97

OS pgmdmt of aale i a 0.97 0." 06 uw.U iteee aad 2.49 0.65 Edible wtetible 0.47 0.33 * Wtle fggit Bad out 0.43 0-34 ceffee, tea, spice 2.3 0.76

c0tai - .81 0.60 ZI rceot-o *IU-S idstry 2.70 O-as Oi seed, eleats frut 234 O_60 3 la material for dye lac 21.S6 6

46 VeVtablc pbSttag carwS 1.602- 1J49

is hAmal veSetable fat *il 2.20 1.4S

16 reparatia of meat r .66 2.43 17 Sugat and c*t lectionzy - 1.05 0.90 28 Coco md preparation 3.22 1.94

19 trc. of ccreaL fur t ar 2.66 2.37 20 Prep. of vegetable fIdt plant 3.25 1.88

21 Elsc. edible preparation 4.25 1.54

22 leverage spirit vinegar 0.95 0.66

23 llaste from food adustty 2.56 2.30 22 - ANNEX IV-1 Page 11 of 27

Table 4 .(Cont'd)

gac spi a - B

24 Trbac 7.41 0.37 25 Sat s pbac thcm 1.72 1.52 26 UllUlC *o Slag a 1.04 0.53 2? a1umza fua ol wax 0.60 0.44 23 laoalo chemical 5.04 2.94 29 oggami chmical 4.15 2.30

30 flatmacestical product S.37 1.6l

31 laztlliar 3.82 216

32 Tmaldag dyeig, extracted paint 6.01 2.39

33 Esseatial. ol pe*11 zy 3.36 2.16

34 Saap wash. rq. polish cmadl 5.38 1.39

35 AUbamindal subdta=&.91ne 4.65 3.26

36 EplUsIu., pyWtech. product 4.51 2.79

37 Photo a" dclt. goods - 4.65 3.16

33 Msc. chemical product 4.37 2.B3

39 Artificial resin plastic 7.17 1.21 40 Rubber synthetic 4.22 2.06

41 3w hide ski. lesther 2.36 1.37

42 Article of leather 3.54 1.51

43 Fuzskan minufctwr 2.37 1.SS

44 Wood article 2.27 2.06

45 Ccrk and article 2.76 2.49

46 ManufactuLes of plait material 2.76 2.49

47 Sopor making 3mtarLal 4.43 1.69.

48 Paper. papedboard article 4.31 1.94

49 Eo k. picture newspaper 4.70 1.59

o 1Silk, sllk waite 5.64 1.06

51 Man-made fibre 3.57 1.79 -23- ANNEX IV-1 Page 12 of 27

Table .4 (Cout'd)

maw Pate

S2 imtaiamd trle S.26 1.0 53 wl anlal baigr 1_02 0.94 54 PIns ran" S.5S 1.23

cotton 2.56 1.51

5 inrA-dfIbr dsincontiauu 6_1.1 1.13.

S7 Otbhe vqg. textle materIala 5.03 0.92

s fbtCacplace enbealdery 3.35 2.34 SG tsFad, rope coted fabrlc 2.71 1.6S

60° -nIo, crudiet goods _ 3.8N 2.51

61 Apparcl clothing accesserLes 2.72 0.96

62 tiLertext£e article 3.43 2.21

63 old clothing tag 2.31 1.66

64 ooetwear 3.19 1.93

65 eadgear 2.73 -0.97

66 UmbCC1U snshade whip 3.42 2.02

67 Ptepaed feathbc article 1.14 1.0

63 StOes cent pIlster article 4.00 3.09 69 Ceramic peoduct 2.60 2.21 70 CaSS MA glassware 3.1S 2.53

n Precious stoae metal 1.66 0.75

72 ColS 1.62 0.72

73 Iro and steel 3.71 1.96

74 C-VPPr 2.44 1.30

75 nickel 2.41 1.6U

76 ALuniSiUm 2.48 1.78

77 Ibgnesiu and howz7llu 2.53 1.76 78 2.41 1.21 - 24 - ANNEX IV-1 Page 13 of 27

Table 4 (Cont'd)

esc ~ ~~ Deecritim a

79 ZinC 2.41 1W1

.SO T*A 2.49 1-78

el Otat base metat 2.44 1_80

82 Toel, ctley. fork. sppam 3.s7 1.98

83 MUsc, article base metal 4.32 1.3B

84 3oiler Sahinery 5.26 1_60

45 Electrical achiLery 5.98 2_11

86 Ioopmatlw rluLing stock 6.60 1_11

87 Vehicle 8.42 1.76

8S Aircraft 2.44 1 4

Ship floeatn structur 4.58 2.1S

90 Optical photo ciae. apparatus 6.18 1.89

91 Clock watch 4.42 2:15

92 mauical 1strnment 4.86 2_1

93 Arm scnuiitios 3.42 2.02

94 Furaitare 3.66 2.19

95 Carcvig article 3'04 1_75

96 3com. blush 3.41 2_02

97 Tor, Sadd, spert requzit. 3.64 2.22

9e MIsC. aaoSfCeI, acticle 3.42 2.02

99 V*rk Of Art attique 3.42 2.02 Table 5

301- P3RI1X3IW! WOJ1CT19759-4

1975 1976 1971 1978 1979 1960 1981 1952 ' 1933 19 Total a. Nmber of Export projects

(1) Ariculture ard Coodites 14 4 13 20 13 14 24 ,*11 is 16 54? (2) ilnercland Metal I 6 2 7 6 8 7 6 t0 1 54 (3) Cheical - - - I 2 2 1 2 2 3 13 (4) Nechanroal ardElectrical I I 4 3 11 1 3 6 6 8 46 15) Other Products I 14 16 IS 19 20 17 31 24 167 (6) Service - I1 9 9 - I 4 2 - 26 Total 17 is 34 56 56 46 56 46 75 52 453 (Hanufacturlr) (2) (5) (19) (29) (37) (24) (25) (29) (47) (35) (252) b. Amomtof Invatsen: In ort Projecte (elilSon baht) 210.4 321.9 803.3 1,685,4 1,900.3 1,946.0 3,635.2 1,996.6 7,3122 5,052.4

C. bpolo'.nt Generatedbi oxort Praoecte (persona) 2,657 2,660 6,430 11,255 11,953 30,044 15,019 10,217 17,485 13,723 d, Smber of Exort Projects Cmcelled 48

*, I4inberof. Export prolects that have 242 Started Operation I. Nmb r of b!Wrt Projects under 163 Construction g, Total Itber of a0I Prmoted Prolecta 83 65 102 202 233 160 170 110 140 97 1,356

Source: T7e Industrial Managemnt Co. Ltd.

0. 1 h - 26 - hNNEX IV-1 Page 15 of27

Table 6: TAX REVENUE BY TIE GOVEREHENT,FY82

Percentage Type of Tax Amht share (million baht) (z) -

1. Personal Income Tax 11,282.94 11.7

2. Corporate Income Tax 13,090.60 13.6

3. Bustness Tax 21,987.69 22.8

4. Stamp Duty 635.15 0.7

5. Entertainment Duty 384.80 0.4

6. Customs Duty 21,645.90 22.5

7. Excise Tax 27,271.20 28.3

8. Others 31.74 0.03

TOTAL 96,330.02 100.00

Source: Industrial anagt Co. (May 1984), p.ll. - 27 -

ANNEX Iv-1 Page 16 of 27

Table 7: BUSINESS TAX COLLECTEDIN FY82 (by major activities)

Percentage Major Activities Amount share (million baht) (Z)

laiport 5,965.03 27.13

Export 1,259.10 5.73

Manufacturing and Services 12,206.70 55.51

Others 2,556.86 11.63

TOTAL 21,987.69 100.00

Source: Industrial Management Co. (May 1984), p. 1 1 . Table 8: SHAREOF VALUEADDED TAX RASE WITH ZERO TAX RATE (EXPORT ACdVIxTIES) IN TOTALVALUE ADDED TAX EASE IN KOREAN1977-81

Year 1977 1978 1979 198b 1981 and _ . . _ Period 2nd half lot half 2nd half lot half 2nd half lit half '2nd half lit half 2nd half

(a) Total value added tax baae 169,320 197,095 247,876 274,229 324,918 367,320 438,548 493,280 569,388 (million Won)

(b) Valueadded tax base for which zerotax rate X is applieddue to 49,900 54,474 68,194 72,705 86,810 108,587 142,974 167,837 193,461 l foriegn exchange earningactivities (mdillionWon)

(b) - x 100 (M) 29.5 27.6 27.5 26.5 26.7 29.6 32.6 34.0 34.0 (a)

Source: KoreaDevelopment Institute (1983), p. 162.

Jim

N -29- AN= IV-1 Page 18 of 27 TABLE 9

Business Tax Changes durg 1983

SC:EDULE 1: old Rate- 7Z New Rate- 9Z

Division ls -Food, d

--_ rter Animal meat or edible aftal, miZL, honey, baking powder,-oil used for preparing food (ezcept coconut oil), vegetable, fruit, beverage, flour, food products manufactured r-o- flour or beans.

impoxtex or manufacturer: Gourmet powder, dilute-to-taste drink products, cream, cheese, margarine but nfection, chewing gu, seasoning, flaioig or colourin Preparation.

Division 2: Cloth, leather goods, ornaments. =lothing -and clotbig accessories. . . ~~~~* - IMPorter or manufac: Coat, trouers, skirt, headgear, footwear, belt, ready-made ornament or clothing, xibbon, cloth in strips, lace in strip..

- Mmporter or manufacturer: Cloth, knitting wool, leahier, artificial leather, ruber and plastic in sheet, ornaments or clothing made by method of knitting, thread, button, zipper, brooch, ornamental chain, hair pi or hair fastener.

Division 3: Cosmetic, p eutical products,health promoting or preserving products.

- Icporter: Medicine (except used in agriculture), products used for medical purposes, licorice, ginseng, medicinal plant, carcass.

- Importer or manufacturer: Snuff, soap, dentifrice, mouth wash, deodorant, powder, artificiaL part of human bodies, cotton wool, bandage. - 30 - ANNEX IV-1

- ~~Page19 Of 27 IDLvision 4: Constriictioii materials and furnitUre.

- Ipoter or nuf r: Cmt, marble, gypsm board, asb-stos, plywood, brick, quickltme, ston, sand, ivon rod, Iron wie, door-bolt, hinge, iron beam, angle iron glazed tile, sanitary fitting, glass in sheets, plastic board, sun-shade, furnitue and ornament Umauly F metal)

Mporta orc aper tile, cement tile, *bazbed rod, vice wesh, nalI, bolt and nut, furirand ornamet (mainly frm wuood)

Division 5: Tools, appliances, utensils-.

importer 0?r Seingv iacn eq2ipmnet,appliances used in ho or office, appli:ace for making or preparing food or drinic, stationery, thermlL vessel, brsh, cmb, capet, mat, llrela, walking stick, spectacles, sports requisite and accessory, toy, measuring equipment,

Importer or manufacturer: Any tool, appliances, container, ornament, plaything, utensil or usable article only if manufactured from wood or plaitin.. ' -. : Division 6: vehicles and motor vehicles.

- bImrter or nufacturer: Bicycle, trailer, rail vehicle, boats and ships (except wooden boats), vehicle used for coveyI2ng, lifting, or handling tbings (except tractors).

Division 7: Fuel, oil, and oil products

- Dr: Petroleum bitumen or asphalt.

- Imnorter or manufacturer: Gasolene, kerosene, aircraft fuel oil, diesel oil, petroleum gas, brake fluid, lubricating grease or oil.

Division 8: Mescellaneous goods. - Importe- or manufactu-er: Ducwy for displaying models, statuary, cast, engraved figure, sculptune, commerci4l advertising matter, rubbnr tyre, firearms, amzmunit3.orL, explosive,battery, paper (except newsprint, kraft paper).

* Only for manufacturers who used domestic input. -31- - - ANNEX fV-1 Page 20 of 27

SCIEDULE 2: Old Rate- 3 New Rate i5Z

Division l Food.

- - Imorter or m f e Fish and soy bean Saucs manu- facturid in Thailand.

Division 2s Applcs and utensils.

- Morter or nuf Mattress, qit, cuhion, pllov, gas taWkezosene tin, tank, metal drm, bottle, ear:henaepJa, chatrcoal-, firewood, -fir engse guny sack,, yan.

DLvisioU Is Machines, mechanical tools.

-mPortrA or ma_ factur:' Electric generator, prim- , engine, agriculturd mach, tractor, machine used directly for manufacturing goods, printed press, machine used for rice milling and saving logs, machines used for coucton coponent, accessories and p parts usable only with mahunes.

Local m cturer: Tools for carpenters, blackwmths and building contractrw. -32- ANNE)XIV-1 - Page 21 of 27

Other Goods-

Description Old rate reAw rate

Ref igerator or cooler 7 9

Air cotion mahines, not sefontaid type (over 72,000 B.T.U. per ho=), including co eonent, -accessois i-nd spare parts 335

Other air condition 20 20

Components imported directly for manufac g regerator r air COtiOonr 1.5 1.5

Electrical applince, other appliances 7 9

Component imported directly for- ma-facturing

electric Arce cooker - 1.5 1.5

Pocked-watches, wrist-watches, stop-watch .7 9

Watch mvement, stop-watch -vemenE, assembled 3 5

Television, radio, tap-recorder, vedio 7 9

Photographic cameras for making photo-engraving 3 5

Cinenatographic or photographic camera, film 7 9

Components, accessories and spare parts for cooling machine, electrical appliances, cameras 7 9

Electric fan and electric iron 7 9

Source: Ministry of Finance Tabhi 10

PFIZMEN SIWXUB OF 11 PAY14NISE SIJEDSYIN CPPAI D SM I MDUN M1 O7m

1979 19_0

TyAMa OZf S o CVAD/A I od vC ml Awnca Ohrs!/ Totl Tye of vCI Nd Amwe, OhdM Ta s of D/P Pamt wOud D/P Fe t owa 1. road 52.77X 47.22R -S -2 10i 2,09X 71.02 28.99X -z -X 100 2.621 2. Inrgu aid7bccm 47.97 18.15 33.88 - 1 1.10 62.43 11.20 26.37 -1D 11,40 3. O1d. lhtarial, Izm1bla binpt PFla 88.38 11.62 - - 100 2.23 86,18 13.82 - - 100 1.65 4. Irearia1s, LitrcatsUia, M 28.33 71.67 - - 100 20.73 32.39 67.61 - - 100 28.72 Rlated lbtertls 5. MIMImlw %vtabla OLI md ISt 96.38 13.62 100 0.18 60.51 39.49 - - 10O 0.63 6. Ouceals 61.64 38.36 - - 100 14.57 66.38 33,62 - - 100 13.90 7. wnufatureo G, CIihile dWfly 91.22 8.78 - - 100 26.69 90.99 9.01 - - 100 21.93 by lXterWas 8. nbddnry ad Trwuport Iqmnt 72.11 27,89 - - 100 27.25 71.22 28.78 - - 100 25.89 9. HaImma.j a dcWuxd Aitclco 74.70 25.28 - - 1to 4.72 65,88 34.28 - - 100 3.18 10. ltscIa.ll a Tzwuctiam ad 24.80 75.20 - - 100 0.44 96.88 3.12 - - 100 0.07 cm&i.u N.J,S. I oypdf tf loa t Pu nt 66.25 33.38 0.37 - I02 2Ol 63.63 36.00 0.37 - lox 0

, IncLMd open accmmts,deferred payeu, smigmLt si" md oUthj

O g N OEM sunuW OflN PAfs aAWM BYWN O FAUTM INM IN iW OFMU

'1961 190 TyAWdo dA Z a dA Xo weC SW Awm Otrr. ita l of tic NW hnm MM ad "C fd DIp OW ai, IP * On& to 4e' 65.06V 34.94Z -2 -Z la1 2.99M 65.0 (63.71) 34.94 -X -X IM1 M. 2. hwrnua F1bkm 83.31 16.69 IOO- .02 8L96 17.02 - - m 0.86 3. i%doItrt1at., bTba >pt PAU 80.61 19.39 - - ID 1.61 78.71 (73.58) 21.29 - - 100 1.55 4. Ibztla^, PtMl, Iatta ad60.74 59.26 - - 100 26,82 51.42 (22,10) 48,58 _ 1- 29.06 11s1 16&41. 5. 1mmiai \ kptah1 a la d ita 70.50 29.50 - - 100 0.49 71.55 2.4S - - lCD 0.22 6. ho¢ca1 65.52 34.48 - - 10 13.45 65.40 (37.24) 34.60 - - 100 14*.0 7. 1 1dactudOa ok. I1ad Wddeny 89.12 10.88 - - 200 23.13 85.83 (58.91) 14.M7 - - lCD 22.51 by libteula I. Ihdy1*q ml 1WPOTt waIm 75.19 24.81 - - 100 26.70 66.l (u0.40) 33.69 - - t MM.12 9. teaUam IMufectWd Akttcle 66,45 33,55 - - 100 3.63 58.65 41.85 - - 1O0 3.38 10. 1MiJ..ws Ttmamia A 95.26 4.74 - - 100 0.16 M4.59 15.41 - - 1oo 0.06

X t 1 d pact 67.43 32.57 - 100 1001 66.11 33.89 - - 100 ION h pIm In pxsw1us rpres durveof t Ide.

Source: Bank of Thailand

III! 1r1 ,. N° rr)2fNs1 l C DVW= PFAUS OASSIFI2)iy rnY. (V FAUW DPWWNI AM I TrI CFG

1963 1979,- IM hMrqp

iv nf CQJu IrA 2oJd/A of i/C ml1 Advawu rtwu Total Tyr of tic am hhA" ntIhetn Total Typ o D/PP a ert look TVP P m,t Oxds

I. IW 5SM2 (66d.9) 44.951 -2 S1 Il 2JI I. 61.79 32.21 - - WIN 3.76 2. Nwn%" all Trh m 76/n5 23.94 . .O66 1. Onle l"ter1al, 1r1ibla Paept YunAs 75A5 (SI.16) 2.15 - - 00 1.54 4. 'terf.iZj, Pils, rOairts w-d 4U.17 (22.29) Sl.A3 - - 00 27.53 4. 40.21 59.79 - -hE 26.57 $0-itatl Putertals 5. Arltil aidt Vetethe oils ma Fats 49.69 50.11 - - l) 0.23 6. Chdals 63.13 (36.93) V6.67 -- 1D 14.66 7. bmnifartured 0dsa Cluiaf le adlefly 32.J7 (53.M9) 17.13 - - im 22.17 7. 86.01 11.99 - - 100 23.9 by tteri ale A. 4rhirwry aid Trmupxt Fqdpm 60.77 (93.70) 39.21 - - 100 26.90 3. 69.12 3).88 - - WIN 26.57 9. acel1itis mE%fctunrlkAtlclm 60.0 N3.1 - - 1m0.4 9. 65.2 14.RO - - lOIN 3.A7 In. HNsrulLwvwuATrnruwsttIm all r3.26 16.74 - - ln 0.07 Oiluxiitlei N.E.S. I of TryAuofFirt Pywt 62.72 17.28 - - O lOIN kq 65.23 4.6A2 0.15 - INo WIm

Satrewe B* of rlt lead.

I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

qjj Oit Tabla II PtKrMZ 1== O DOW PASWS M CN C CLASSMMBY R2MITPUtITW

MAT bwrt VC _ljht 30 3zyx 60 Dhrp 90 Dy 120 Dr, 180 Iqy 240 Dip 360Wy 360Wys UupecfUM ThU1

1979 2 57.90 1.31 5.83 1.82 2,38 23.46 0.18 6.16 0.95 0.01 100.00 198D 2 54.53 6.25 1.69 1.78 1.84 25.61 O.08 5.82 2.33 0.07 1X0.00 1981 2 48.77 20,17 1.29 2.85 2.19 16.98 0.36 5.19 2.20 - 100.00 3982 2 52.87 16.27 1.23 2.57 2.37 17.90 0.33 3.69 1.76 0.01 100.00

1983 2 53.93 14.82 1.10 3.13 2.03 17.79 0.32 3,82 3.06 - I00.00 Average 53.601 _

Saxcei Nu of ,hLmd

o .~~~~~~~~~ - 37 -

Am~ 'v-I Page 26 of 27 FIGIIRE 1

A Flow-Chartof Generl Customs Procedure Import

Cs.. ForuzaifyDw iu CustomsFoymlty Divoo Entr sppliation Check completenessof amepted 3 documents, tems entered ebzge rat check entry-

D~~~~~~~~~~~~~~~optationsD

DUy AU'6act EvideS. CaubDivison Assign duty assesso Check rates and value 4 Payment of duties - Assss duties Fial stamp of appxvd 4, ~~~~~~~~~befomegoods wreinsected cutomu Prevention=Ai Spp Dlvsion Recordimporters name and decide if its personnel n o are required to pin D the iscn

Warebouse Chief inspector of the Customs Dept. requests PAT warehousesuperintendent of prepare goods for inspection; CustomsExmier inspects the goods, endorses custms clearnce order; Warehou Supeintendet the payment of sorage fes before releasing the goods. 4, Fnal CheckingPosts Customs clearace order shown befor leaving port area -38-

ANN IV-1 Page 27 of 27

FIGE 2

A FlowChart of GeneralCRo n. ProcAmedn

Entryapp bion

, tm Fo.ii .._!. iE~~~~~~~~~~b

. . ~~~~~~~Clereexsport is loadedan ip under

COtom Fwguat Diwso Check compktn1ess of docnnents Cbeck luesand -i E speconDbW= of duty lsPctdOf of xpOrt Cbek entry cakulaons Release Order export inspeon

______,__ CastomsPreveDooo and SuppremianDlslkon 1 Decidewhethe its If dutiable If duty-free perosamelis required to l join the inspection

Cdsb *hkm Duzty-free Pq duty number issued Final smp FiDn1stamp of approval of approval -359-

ANNEXIV-2

TECHNICALNOTE ON FIXED DRAWBACKSCHEDULES OF FISCAL POLICY OFFICE I 4

I E.

V) .

- 41 - ANNEX IV-2 Page 1 of 7

Techical Note on Fixed Drawback Schedules

of Fiscal Policy Office

1. Estimates of Current Schedules

The current fixed drawback schedules of the Fiscal Policy Office

are estimated based on the following methods using 1975 input-out table

data (at Z-digit level) and 1975 effective duty and indirect tax rate

data for total 99 commodity clwasifications.

Full Ratei

ejt + ae )+ Al. Sd ,1) where

Ams = imported input (sector is - output coefficient for

sector j

Ad = domestic input (sector i) - output coefficient for ij sector j

tei = effective duty rate for sector i

sei = effective indirect tax rate for import sector i sed = effective indirect tax rate for domestic sale in sector i

Normal Rate

A'j. ,ed (2) i 1.3 i While the full rate is applied to those exporters who choose to receive

fixed drawbacks (rather than duty prior-exemptions or individual drawback

administered by the Customs Department), Che normal rate is applied to all

other exporters (who do not choose to relv on the full rate fixed

drawback) for the purpose of refunding domestic input taxes. - 42- ANNEX IV-2 - Page 2 of 7

2. Correct MethodoloQy

Usually, fixed drawback schedules are estimated in terms of fixed

money values (of duties and indirect taxes to be refunded) per physical

unit of specific export commodities (much more disaggreqated than any

input-output table classification) based on the following formula.

Fixed drawback value

(per unit of product-j)

-a.. P.:(t. + Si + t.s.)X (3) where

aij = physical (i.e. quantity rather than money value) input (i)

- output coefficient for product j.

P. = import price (c.i.f.) of input i (converted in the domestic

currency unit)

ti = duty rate (legal) for product i

si = indirect tax rate (legal) for imported product i

Note from (3) that input prices are world market prices (c.i.f.)

and duty and indirect tax rates are legal rates, because when an exporter

imports inputs these prices and rates are relevant for his duty and tax

payments (rather than domestic prices and effective r.'tes).

One can compute the corresponding drawback rates simply by dividing

fixed drawback value by the corresponding product's export price bEsed

on (3):

1I/ Note that the legal indirect tax rate for product i levied at the time of

Ilport is equivalent to:

(1 + standard profit rate) (Business tax ratei) (1 + iocai tax ratei) - 43 - ANNEX IV-2 Page 3 of 7

Drawback rate j

- - (3) (4) where

P.j= World market price (f.o.b.) of product J (converted in the 3 domestic currency unit)

Note that (3) is what an exporter is receiving and it is not computed by multiplying an lndependently calculated rate (4) with the corresponding export price. Rather, (4) is computed ex-post based on

(5). In fact, there is no need to compute (4), because (5) is all that is needed. Since the fixed drawback scheme of FPO uses a percentage rate structure, however, we would like to see the correct method of estimating a fixed drawback rate.

From (4), we obtain:

Drawback rate i

AL. (t. + s. 4 t.s.) , (5) 1)j 1 1. 11 where

Aij = money value input (i) - output coefficient for product j evaluated at world market prices.

a a.~ - ~44- ANNEXIV-2 Page 4 of7

3. Revised Drawback Rate

Let us identify those elements that contribute to the discrepancies

between (5) and (1).

Since

I" , P.01 + tN)(1 + s)

i] =. op!(I+ NPR.)(t + S

. i 3i i (6) and A =a-

d d ,~P*0( + NPR.) (1 -S. 7d A.. ad. 2 31 27 13J,( + NPR.) (1 + s.e where

a"_- = physical imported input (sector i) xJ - output coefficient for sector j

ad. = physical domestic input (sector i) 13

- output coefficient for sectgr j

NPRR = nominal protecti i rate for sector i

Domestic Price i 1

NPRj = nominal protection rate for sector j,

the correct full rate can be expressed using domestic market value

input-output coefficients ad their adjustment factors as shown below:

Correct Full Rate j

I A. .f. Ct.+s.+t.s.] + A..fd. . NPR. +s.+NPR.-s.] 1 (8) { 1 1 1 1 1]3.3 1 i I 1 i ij 1]w3

V/ Excluding indirect tax effect _ 45 _ ANNEX ,V-2 Lage 5 of7 a1 m legal indirect tax rate for domestically produced product i

-adjustment factor for iaported input (i) - output coe"fIclent of sector j (14PR ) (1¶ )ed

- adjustment factor for donestic input (1) - output coefficient of sector j

' (I4PR:) ( 1 9 .ed

(UMNPRI) (1ses)

In order to cmparecurrent Full rate (1) with the corresponding

correct full rate (5), let us rewrite (S):

Correct full iate j

1 i Am (te + Si) f " [i+ 1 i 1 + a c f[ FeS i5Ri ; i ij i ijI te + S ) 1 i L sC9* Note in (9) that: L Ci) 71 >1 ard f'i > 1 in general due to the import protection struLture which has the cascading characteristics;

(ii) t > te due to duty exemptions; i i v siii) >> s and <) ST > ied due to indirect tax exemptions.

Therefore, from (1) and (9), one can infer that the current full rate based on (1) underestimatesthe correct full rate based on (8).

It is suggested to compute the followingin order to evaluate the acscrepencies between the current rates and the corresponsdingcorrect rates:

Revision factor for imported input i for sector j

= f :: E t t +5+ s i + t5i I9 X

for all i and J

3/ Note that the legal indirect tax rate for domestically produced product i

is eauitalent to: (Business rate )(1 + local tax rate_). -46- ANNEXIV-2 Page 6 of 7

Revision rector for domestic input i for sector j = dIPR i + +iNR q (1

for all i and j

4.. Innediate Steps for Improvements

It is suggeited to estimate updated correct fixed drawback schedules

based on (8) using the following data:

(a) 1980 input-output table (at 4--iigit level disaggegation) for Am. and

Adij;

Cb) the most up-to-date nominal protection estimates and effective

indirect tax rates for fMij, fdi and NPRi;

Cc) the current duty and indirect tax rates for ti and si

S. Futher Steps for Improvements

As the Customs Department estimates the disaggregated standard

input-output coefficient (i.e. so called formulas) for all major input

and export items, it would be advisable to prepare fixed drawback

schedules based on (3) using the physical input-output coefficients every

three or six months. ANNEX-IV-2 - -47 Page 7 d 7

In turn, once the following conditions are met, it would be desirable to eliminate the normal rate fixed drawback scheme which is currently applied to all exPorterstbased on (2)] whether domestic inputs are actually used or not with the objective of compensating for the excess domestic input costs over world market prices:

(P' The duty and indirect tax prior exemption and individual drawback

system of the Crutoms Department becumnesvery efficient based on

accurate standard input-output coefficients:

(b) Exporters are gbsolutely free in choosing between imported and

domestically produced inputs;

at previous stages but do not export directly) can have access to all

export incentives that are provided to direct exporters. 4-,

'if I

X~K, I - y 9

ANNEXIV-3

ANNOUNCEMENTON CONDITIONS, CRITERIA AND METHODOLOGYFOR REDUCING SALES TAX RATES I V) A'% ?II io

q_- \1 - 51 - ANNEX IV-3 Page 1 of 9

Announcement by the Dir CIPrarn I the Revenue DeDartment Concerning Business Tax (No 31)

Subject: Delimiting Characteristics and Types of Goods, Conditions, Criteria, and Methodology for Reducing Sales Tax Rates for Goods which the Producer Sells to Industrialists

Based on the-powers vested in Article 8 [thvi-translation inknown] of the Law Code enacted pursuant to provisions in the Revenue Code concerning the reductions in rates of and exemptions for sales taxes CNo 54) 1974, as amended by the law issued pursuant to the Revenue Code on reducing sales tax rates (No 94), 1983; the Director General of the Revenue Department EDG RD]as authorized by the Minister of Finance, hereby specifies the charaEtiistics and tpeii- of goods; conditions, criteria, and methodology for reducing sales tax rates for goods which producers in the Kingdom sell to industrialists who buy them for use in producing their own goods:

Paragraph 1. The Announcement of the DO RD concerning sales taxes (No 24), Subject: Specifying conditions and types of goods, conditions, criteria, and methodology for reducing sales taxes for goods which producers sell to industrialists, dated 4 August 1980, is hereby revoked.

Paragraph 2. Goods by type of business- 1. Type 1 (A) and Type 2 (J) of the Table of Sales Tax Rates which the producer, a government organization, corporation, or juristic person limited partnership, or other juristic person produces in the Kingdom and sells to an industrialist shall receive a reducting in the sales tax rate which will oe collected at the rate of 1.5 percent of income; the industrialist who purchases the aforementioned types of goods must use them for his own production and the goods which are produced from those types of goods must:

1. Not receive exemptions or reductions in the sales tax rates or

a 2. receive sales tax rate reductionswhich when reduced still must pay 'a tax in excess of 1.5 percent of income or

3. receive a reduction in sales tax rate at the rate of 1.5 percent which is a reductionpursuant to this announcement.

The DG RD may issue orders in other ways concerning the substance of the the first phrase [wak] at his discretion.

Paragraph 3. Those industrialistswho are corporationsor juristic person partnershipswho intend to request sales tax rate reductions for the goods pursuant to Paragraph 2 which are purchased from other producers for use in production of their own goods, must perform the following:

(1) Submit a request as an industrialist to the RD or to the Provincial Revenue Office [PRO] in accordancewith the form stipulated by the DG RD by

(A) Stating the type and names of goods for which they will be the producer and the per unit production capacity

(B) Making lists of the various goods which must be purchased in order to be used in the production of goods pursuant tc (A) and the quantities used in the production of those goods per unit. - 52 - ANNEX IV-3 Page 2 of 9

The request pursuant to the first phrase shall be prepared in two copies, of identical content, and shall be accompanied by a photocopied sales registration, permission to operate an industrial enterprise, a letter of guarantee from the registrar of limited partnership corporation, other relevant documents, and a sample signature of the persons authorized to sign as guarantor on the seller's invoice.

(2) Submit a request for permission to purchase goods pursuant to Paragraph 3 (1) (J) from other producers to the DG RD or to the PRO as specified by the DG RD prior-to purchasing those goods each and every time, by listing the items to be purchased and their quantities and by purchasing the necessary quantities to be used in the production of their own goods within a period of time not to exceed 3 months except when ordered by the DG RD to do otherwise.

When it is necessary to purchase those goods on subsequent occasions, a request for authorization to purchase shall be submitted not less than 1 month nor more than 2 mo-2ths in advance prior to the expiration date of the authorization to produce the goods pursuant to the first phrase.

The request for authorization to purchase goods pursuant to the first phrase shall be prepared in four identical copies.

(3) In the event that authorization to purchase goods on each occas- ion is granted, the DG RD or the PRO will return the purchase request authorization form in accordance with (2) third phrase to the industrialist in triplicate. The industrialist shall turn over two copies of this to the other producers who are selling those goods and the other copy shall be retained as documentation.

(4) Lists of goods purchased and produced shall be submitted to the DG RD or to the PRO as directed by the DG RD by the 15th of every month. This shall be done by listing by name and quantity the goods for which permission has been granted for purchase for use in production and stockpiling along with a copy of the seller's invoice signed by the individual in (l) second phrase as guarantor.

Paragraph 4. The producer of the goods who is a corporation or juristic person partnershipand who sells the goods produced to an industrialistpursuant to Paragraph 3 must do the following:

(1) Prepare a 4-copy invoice with identical content, stating the number of the request for authorization to purchase of the industrialist. Two copies of the invoice for those goods shall be turned over to the industrialist,one copy shall be retained and one copy shall be attached to the form listing the goods (Form Ph.Kh 40).

(2) Submit a form showing the list of goods to the local district or locality in duplicatewith identical content:

(A) Stating the amount of income earned from the sales of the goods to industrialistsdifferentiating this from other income received.

(C) Attaching the request for permission to purchase goods given by the industrialist,I copy, along with the form showing the list of goods.

Paragraph 5. The industrialist,pursuant to the announcementof the DG RD which was revoked pursuant to Paragraph 1, shall be the industrialistpursuant to this announcement. - 53 - 53 ~I- ~~~~~~ANNEXIV-3 Page 3 of 9

Paragraph 6. In the event that the DG RD or PRO, depending on the situation, had previously authorized an industrialist to purchase goods, then with this having been revoked pursuant to Paragraph 1 by the announcement of the DG RD, (the permission] shall still be effective for that particular authorization until the purchase ar' 3dles of those goods has been concluded..

Paragraph 7. In the event that the industrialist pursuant to Paragraph 3 does not fulfill the-conditions, criteria, and methodology for the reduction of the sales tax rate pursuant to this announcement, the DG RD or the PRO, depending on the situation, may order the revocation of that industrialist's [authorization].

Paragraph 8. This announcement will become effective on the date signed.

Announced on 12 December 1983 Wit Tantayakun (Wit Tantayakun) DG, RD 54 ANNEX Iv-3 (Seal, RD] Page 4 of 9 Ph.Kh. 1 Kh Form Requesting to be an Industrialist IndustrialistNo ...... (pursuant to announcement of DG RD No24) (Office Use)

Name of Businessman...... Name...... of Business Establishient . Business RegistrationNo .. Tax payer ID No. Location of Business...... Soi.. Road. Ward/subdistrict...... zone/district.. Province. Branch/Factorylocated at..;......

...... 0...... Having the intention-tobecome an industrialistpursuant to DG RD Announcement

Type of Goods Name of product Production List of component parts Quantity used (1) produced Capacity in production per unit of (2) Cunits) (only for which a production per month reduction in sales tax (5) (3) rate is requested) (4)

Documents to be attached with request _

1. photocopy of business registration No of sheets. 2. photocopy of guarantee of partnership of corporation registration No of shtets.. 3. copy of authorization by Ministry of Industry to conduct business No of sheets. 4. other documents No of sheets. I hereby guarantee that the above-mentioned items are true and correct in every respect Signature ...... industrialist (. ) date submitted ...... /../ official opinion Order Registration Receipt No. day month year received...... (signature)...... recieving official - 55- ANNEX IV-3 Page 5 of 9

Information to be Aware of and Adhered to

1. Those responsible for submitting requests to be industrialists include producers whose corpora-ions or juristic person partnerships.which desire to request a reduction in the sales tax tax rate pursuant to goods type 1, Type I (A) and type 2 (J) of the sales tax rate list which are purchased from producers for use in the production of one's own goods.

2. In submitting a request for the registration of an industrialist, if the business location is in the Bangkok Metropolitan Area, the request is to be submitted to officials of the import and export-business tax [division], Central Operations Division, RD. If the business is located in other provinces, the request is to be submitted to the PRO of that province by submitting 2 copies of the request with both forms filled out correctly.

3. An industrialist with branch offices and/or numerous factories is to differentiate the request according to the individual branch and/or factory.

4. The person signing the request must be the person authorized to do so pursuant to the authority stated in the corporation's regulations or pursuant to the registration of the partnership or individual designated by an individual with the above-mentioned authority.

5. If any item in the form cannot fit into the space provided, a continuation sheet shall be utilized.

Guidance for Filling out the Forms

Blank (1) State the types of business, or the type of goods to be produced pursuant to Blank (2) concerning that which is within the regulations and which must pay a sales tax pursuant to the type in the list of sales tax rates. If there are details as to type, then give the information as to type.

Blank (2) This means the goods which the industrialist produces.

Blank (3) In one month, how many units does the industrialist produce of the finished product goods in this item?

Blank (4) State the names of the goods used as compouaznt parts in production only for that for which a request to purchase utilizing a reduced sales tax rate is made. If there are many types, many sizes, many prices, please differentiate by item.

Blank (5) This means how many uaits of the goods in Blank (4) are needed to produce one umit. - 56 - ANNEX IV-3 Page 6.of 9 [Seal, RD] Ph.Kh. 1 K./l Form for Requesting Permission to Purchase Goods for Use in One's Own Production Request No.

Date

Subject: Request for Permission to Purchase Goods for One's Own Production

To: DG RD PRO Province

I Name of Business Business Registration No , having received authorization to be an industrialist, Permit No , with the location of the business at No Soi , Road, Ward/subdistrict_ Zone/district Province

I request authorization to purchase goods or component parts to be used in the production of my own goods, with the purchase to be made from Business Registration NO , with the location of the business at No Soi Road, ward/subdistrict zone/district Province . with the following listed goods or component parts: goods or component number of to be used to Amount of goods Remarks parts to be bought units to produce or component be bought parts not yet used in production

This is submitted for your consideration and authorization

signed industrialist C _ official opinion Order: Registration receipt No _ approved day month year received disapproved (signed)___ signature _ receiving official

_I I_ - 57 - ANNEX IV-3 Page 7 of 9

Information to be Aware of and Adhered to

1. Those persons with the right to submit a request for authorization to reduce sales tax rates for the purchases of goods or component parts to be used in their own production must be an industrialist registered as an industrialist with the RD.

2. Four copies of the request shall be submitted with identical content. When approved by Revenue officials , three copies shall be returned.

3. Of the three copies of the request which are returned, two copies shall be given to the seller and the other copy shall be retained as documentary evidence.

4. The goods or component parts to be purchased shall be clearly stated as to quantity and the use in production to which the goods are to be put.

5. It shall be clearly stated as to from whom the component parts were purchased for use in production pursuant to the details stated on the front of the form. This authorization order shall not be transferred to an individual who is not the,person named in the request.

6. The signatory on the request must be one who is empowered pursuant to the provisions stated in the corporation's regulations or pursuant to the limited partnership's registration, or an individual who has been designated with such powers from an individual so empowered as stated above.

7. The producer of the goods which are sold to an industrialist who is requesting a reduction in the sales tax shall note clearly on the form showing the list of goods (Form PhKh 4) informing [parties concerned] as to the amount of income earned from the sales of these goods along with attaching an invoice and one copy of this request. This is to be documentary evidence for the reduction of the sales tax rate.

8. If the form is not sufficient to list a particular item, a continuation sheet shall be utilized. - 58 - ANNEX IV-3 Page 8 of 9

[Seal, RD] PhKh 1 K.12

Day Mbnth year_

Subject: Submission of List of Goods or Component Parts and Production of One's Own Goods To: DG RD PRO Province I, ,Name of Business______Business Registration No , having received authorization to be an industrialist, authorization No , do hereby submit a List of goods or component parts and a report on the production of my own goods for the month of , year as follows:

No. Goods or Quantity Quantity Quantity Quantity Production Component Remainiug purchased used in remaining Report Remarks Parts Brought this month production on last Listof/ Qty Forxard this month day of goods /prod- From Previous month producedluced Months this month

(If space is insufficient, use a continuation sheet)

Submitted for your information, with attachments (signed) industrialist / f - 59 - ANNEX IV-3 Page 9 of 9

Subject: Submission of sample signatures of those empowered to s_gn receipts and invoices

To: DG, RD PRO Province

Pursuant to the Corporation/juristic person partnership's having submitted a request for registration as an industrialist to the Revenue Department and pursuant to Industrialist Registration No'' -- I hereby request to submit sample signatures of those empowered to sign invoices in the name of the corporation/juristic person partnership, numberinmg,_ yeople, as follows:

Name of 1st person signature Name of 2nd person__ signature______Name of 3rd person__ signature__

With highest regard, signature industrialist ( J AIA

I St K 'k ANNEX IV-4

A NOTE ON THE DOMESTIC LETTER OF CREDIT (L/C) SYSTEM AND STREAMLINING OF EXPORT FINANCING 141

~~~~~~~I 6> - 63 -

ANNEX IV-4 Page 1 of 14

A NOTE ON THE DOMESTICLETTER OF CREDIT (L/C) SYSTEM AND STREAMLININGOF EXPORT FINANCING

Introduction

1. In designing efficient administrative arrangements for a preshipment export financing system, an imaginative approach is needed. The key to such an approach is to utilize well-established international trade financing mechanisms by modifying and integrating them with the govern- mert's export financing system to achieve the goals of automaticity, equal treatment, preventionof abuse,and administrative convenience. The important elements in modernization are: (i) disaggregating export loans into four categories; (ii) introducing automatic export loan disbursang mechanisms (tied to negotiations of drafts drawn under import or domestic L/Cs) and automatic export loan pay-off mechanisms (tied to negotiations on bills for exports); (iii) creatin; quasi-physical collateral by using commoditiesfinanced by the export loans; (iv) introducing a domestic L/C system; (v) developing a plan to combine export loans based on actual export orders with loans based on expected export orders; and (vi) adminis- tering the rediscounting mechanism with speed and administrative convenience.

Disaggregating Export Loans

2. Preshipment financing is needed to cover all production costs (i.e., the costs of imported and domestically produced intermediate inputs and payments of wages, interest rates, and rents) or, in the case of pure traders,to cover the purchase costs of domestically produced finished goods to be exported. The initial step in modernizing an export financing system is to classify erport loans into the following four categories:

(1) Export loans for generating value added (VAL).

(2) Export loans for purchasing domestically produced intermediate inputs (DIL).

(3) Export loans for purchasing imported intermediate inputs (FML).

(4) Export loans for purchasing domestically produced fiaished goods (DOL).

3. VAL, DIL, and FIL are employed in production financing, while DOL is employed for sales (or inventory) financing.

4. The basis of these export loans is an actual export order (backed by an L/C, D/A, D/P, etc.) or an expected export order extrapolated from the past record of the company's exports or local supply. But the sum of the export production loans (VAL + DIL + FIL) cannot exceed the value of - 64 - ANNEXIV-4 Page 2 of 14

the associated export order. Likewis^, a loan given to purchase domestic outputs (DOL) cannot exceed the value of the associated export order.

5. There is a particularly strong need to disaggregate a productior' loan into its component parts in economies with foreign exchange constraints, extensive backward linkages between export and local industries, conservative banking practices, and widespread abuse or misuse of the export financing system. Such disaggregation makes it possible to separate import financing (FIL) and domestic input financing (DIL) from pure production financing (VAL), to separate domestic currency loans (DIL, VAL, and DOL) from foreign currency loans (FIL), and to separate inventory or sales financing (DOL) from production financing (VAL, DIL, and FIL).

6. Foreign Currency Loan Scheme: In a developing economy in which the domestic financial market is segmented, the foreign exchange rate does not always reflect the true opportunity cost. Since external borrowing plays a large role in financing development projects, one way to assure efficient management of foreign exchange is to denominate all loans that are tied to the use of foreign exchange reserves in a foreign currency and charge an international interest rate. Export loans for purchasing imported inputs (FIL) must be included in this category. If the foreign exchange holdings of a country are substantial, it will be sufficient to establish the correct priorities in meeting the needs for import financing-that is, nothing should receive higher prfority than importing the inputs needed to earn additional foreign exchange reasonably quickly (within 60-90 days). But if foreign exchange holdings are scarce, external assistance can be obtained to create a foreign exchange revolving fund devoted to financing imported inputs for activities that generate export value added. The revolving fund should be large enough to avoid rationing of credit for import financing for export production, since rationing would contradict the basic principle of automaticity. If foreign exchange constraints exist, excess demand may make credit rationing inevitable for uses of foreign currency other than short-term preshipment working capital financing and public-supported investment financing. Given the unique nature of short-term preshipment working capital loans (which finance export production on the basis of confirmed export orders), the rationing of such loans would mean a reduction in the foreign exchange earnings expected from canfirmed export orders. No government operating under foreign exchange shortages can afford such a reduction.

7. Using Domestic L/Cs: The separation of domestic input financing from financing for foreign-made inputs makes it possible to implement a domestic L/C system,which is critical in granting export loans to indirect exporters (see below). Such separation also makes it possible to manage scarce foreign exchange so that the need to finance imports for export production can be met without constraint.

8. Creating Quasi-Physical Collateral: The separation of import and domestic input financing from value added financing makes it possible to create quasi-physical collateral, with inputs or outputs financed by export - 65 -

ANNEX IV-4 Page 3 of 14

loans (FIL and DIL, or DOL) through the automatic loan disbursementmecha- nisms. Such quasi-physical collateral, created by export financing itself, would reduce the concerns of commercial bankers about possible defaults by exporters. This is ac. omplished because the actual payment of FIL, DIL, or DOL is not made to the purchaser, but instead takes the form of the handling bank's making payment directly to the supplier, thus clearing a bill on behalf of the purchaser. The commercial bank confirms that the purchaser is in possession of the deliverable merchandise at that time FIL, DIL, or DOL is granted.

9. Preventing Abuse: The automatic loan disbursement mechanism prevents misuse or abuse of the system by eliminating the waste that would stem from granting a loan before an actual need for it arises. Disaggrega- tion of export loans amounts to classifying them by type of expense and granting these loans at the time payment is made. While the export loan for value added (VAL) is granted only after the purchase of intermediate inputs has been confirmed, the three other types of loans (DIL, FIL, and DOL) are granted when a draft drawn under a domestic or import L/C is presented for payment or acceptance. At this point, physical collateral 's being created from domestic inputs, finished export goods, or imported inputs.

10. It should also be emphasized that disaggregationdoes not neces- sarily create additional administrativeburdens. Such disaggregation occurs in the international trade-related activities of commercial banks in every economy. Commercial banks open import L/Cs for exporters as part of their normal business. In turn, back-to-back L/Cs are the basis for domestic L/C systems. Indonesia's commercial banks, for example, have been using a domestic L/C system for inter-island trade.

1'. Korea's outward-looking development strategy has relied on two key factors: foreign capital in the form of commercial loans, and endogenous entrepreneurial and labor resources. By meeting foreign exchange constraints and pursuing efforts to maximize backward linkages to local industries, an export financing system based on disaggregated export loan schemes has made an enormous contribution to Korea's export development. Without such a well-designed and well-managed export financing system, Korea could not have achieved its export miracle. During the period 1975-79, 35 to 48 percent of Korea's short-term export loans to manufacturing industries were for generating value-added (VAL), 34 to 39 percent were for purchasing domestically produced intermediate inputs (DIL), and 19 to 28 percent were for purchasing foreign-producedinterme- diate inputs (FIL).

12. Foreign exchange constraints have not been a factor in Singapore because of its status as a leading international financial center. Furthermore, Singapore's exports have not depended as much as Korea's on backward linkages to local industries. Consequently, the need to disaggregate export loans has been much less than in the case of Korea. Moderniza- tion of Singapore's export financing system has therefore focused on increasing the speed of the rediscourting mechanism. - 66 - ANNEXIV-4 Page 4 of 14

13. The export financing systems of Malysia, Indonesia, and the PLilippines have been based on aggregate export loan schemes. Increasing foreign exchange scarcities and the critical importance of backward linkages for export development, however, call for serious consideration of disaggregation o,-export loans. Indonesia set the stage for surh mDderni- zation when it adopted a new export policy in 1982, and Bank Indonesia has been working on detailed implementatior of a modernization scheme. The Philippines is also planning to implement a modernized export financing scheme.

Domestic Letter of Credit System

14. The single most important innovation in export incentive administration is the domestic letter of credit. The domestic L/C is essential to assuring automatic availability of short-term export loans and free trade status to all firms that generate export value added but do not export directly, i.e., indirect exporters. There are two types of indirect exporters: (i) input-supplying indirect exporters--which supply intermediate inputs to final stage (or next stage) export manufacturers-and Cii) output-supplying indirect exporters--which supply finished export products to trading companies that export diLectly (or sell to other trading companies). Indirect exporters most commonly are manufacturers, but they can also be pure traders. Input-supplyingindirect exporters, shown in the upper part of Figure 1, are critical for achieving backward linkages from exports; output-supplyingindirect exporters, shown in the lower part of Figure 1, are critical for developing trading companies that specialize in overseas marketing.

15. In many developing countries attempts to encourage final exporters to pass the benefits of export incentives through to indirect exporters have not been successful, because the systems constructed have apparently not dealt adequately with the different needs of indirect and direct exporters in a well-coordinated manner. The successful East Asian countries, on the other hand, have granted equal export incentives to indirect exporters themselves, not through intermediaries. The domestic L/C system has been the most effective administrative tool for this direct granting of export incentives.

Basic Principle of Domestic LIC

16. The principle of a domestic L/C system is the creation of -back- to-back credit," a vehicle through which the beneficiary of an export L/C (or other export order) can take advantage of the creditworthinessof the importer (and the availability of export incentives tied to an export order). When an exporter has an irrevocable L/C in his favor, the existence of the L/C enables his bank to open a second, similar credit account on behalf of the exporter, with the input-supplyingindirect exporter or output-supplying indirect exporter as the beneficiary. Thus, the indirect exporter gains access to all export incentives based on the receipt of the domestic L/C, just as the final exporter gains such access based on the receipt of an export L/C (or other evidence of an export order). - 67 - ANNEX IV-4 Page 5 of 14

17. If the suoplier of inputs for export production is a foreign manufacturer, as shown in the upper part of Figure 2, the second credit is an import L/C; if the supplier is a domestic input-supplying ind1rect exporter, the second credit is a domestic L/C. The exporter, in fact, assigns the primary credit-the master export L/C-to the bank as collateral and applies for an import or domestic Ll4C. Generally, the bank opening the second credit establishes exactly the same documentary requirements as those under the primary credit. Note in the upper part of Figure 2 that a domestic L/C is parallel to an import L/C. There is no difference between them except for the fact that the beneficiary of the former is in the country, while the beneficiary of the latter is overseas. A domestic L/C is no different from an export L/C in that the beneficiary in either case is an exporter (an indirect exporter for the former, a direct exporter for the latter). Both provide a basis for opening another domestic or an import L/C.

18. As one can see from the upper part of Figure 2, under a free trade regime a garment exporter should be neutral in deciding whether to purchase fabrics from a domestic weaver (by opening a first-stage domestic L/C) or a foreign weaver (by opening an import L/C). Equally, a domestic textile weaver should be neutral in deciding whether to purchase yarns from a domestic spinner (by opening a second-stagedomestic L/C) or from a foreign spinner (by opening an import L/C).

19. Let us suppose that the domestic textile weaver is a small-scale producer (located on a back street in a suburb of a big city) equipped with 20 looms. This weaver sells his textile fabric to a garment exporter through a first-stage domestic L/C and purchases yarns either through a second-stage domestic L/C or an import L/C. This weaver is purchasing the intermediate inputs and selling output under a free trade regime and receives the same treatment as large-scale firms when he applies for export loans. Through a domestic L/C system this small-scale weaver becomes an important actor in international trade, because a domestic LIC system extends free trade to domestic trade involving small-scale enterprises. The backward linkages from garment export to domestic production of textile fabrics, and from domestic production of fabrics to the domestic production of yarns, are achieved through first and second-stage domestic L/Cs. Because the backward linkages are achieved under a free trade regime, these domestic industries should be in accordance with the principle of international comparative advantage, as will be discussed below.

20. If the garment manufacturer (i.e., output-supplyingindirect exporters) in the lower part of Figure 2 cannot receive the same export incentives as the final exporter (i.e., the trading company) that purchases the export commodities for export, then trading companies cannot be developed effectively, since the garment manufacturer would try to export directly rather than sell to the trading company. Furthermore, if the garment manufacturer is a small producer, the export potential would simply be lost, since such small firms cannot afford to have an export marketing channel. Therefore, the domestic L/C system is critical in developing trading companies by providing equal export incentives to output-supplying indirect exporters. - 68 - ANNEXIV-4 Page 6 of 14

21. The domestic L/C system is the most effective instrument for meeting the two basic requirements in structuring administrative arrangements that provide critical incentives for indirect exporters. These requirements are: (i) that a means exist for independently and automatic- ally verifying that the supply of intermediate inputs or completed export commodities provided by tne indirect exporter were in fact purchased by and delivered to the final exporter and (ii) that both the indirect exporter and the final exporter are strongly encouraged to use available instruments in order to gain access to export incentives. Because the domestic L/C is handled by commercial banks, it also offers the advantage of delegating much of the authority for export incentive administration to the commercial banks, which generally offer greater administrative efficiency than government can provide.

22. A domestic L/C is a document created by a bank that declares to the indirect exporter that the bank will pay, on behalf of the final exporter, a draft drawn on it when the indirect exporter submits, together with the draft, a receipt that commodities have been delivered to the final exporter. Therefore, the domestic L/C is the most reliable and automatic instrument for verifying the transaction between the final exporter and the indirect exporter. The mutual encouragement to use available instruments is provided under the domestic LIC because the final exporter gains access to export loans for purchasing domestic inputs (DIL) or finished export commodities (DCL) based on the domestic L/C he issues, while the indirect exporter must be the beneficiary of the domestic L/C in order to gain approval for his production loans (DIL, FIL, and VAL). For this mechanism to operate, it is essential that the export financing system be modernized along the lines indicated above.

23. The following additional elements are designed to treat a domestic L/C just like an export L/C:

(a) Equal treatment of other payments methods. In other words, purchasers of domestically produced intermediate inputs for export production or finished export commodities must be able to ask a commercial bank to open a domestic L/C based on a D/P or D/A draft, a previous domestic L/C, or other foreign-exchange- earning contracts, as well as an export L/C.

(b) Equal treatment of expected and actual orders. A purchaser of domestically produced intermediate inputs for export production or finished export commodities must be able to ask a commercial bank to open a domestic L/C on the basis of an expected export order (a specific formula representing the average export performance of the company in the past is shown in Table 13 of Annex I). - 69 - ANNEX IV-4 Page 7 of 14

Figure 1

DOMESTIC L/C: BACK-TO-BACK CREDIT

Input-Supplying Indirect Exporter

Domestic L/C Domestic L/C Domestic Spinner (lst Stage) Domestic Weaver (2nd stage) (yarn) (Textile Fabric)

Exporter (Garment Import L/C manufacturer) Foreign Spinner (yarn)

Import Foreign Weaver L/C (Textile Fabric)

Export L/C

Foreign Buyer

Export L/C Domestic L/C Domestic Weaver | Domestic LI C I(2ndstage) (Textile Fabric) Domestic LIC (lst Stage) l

Exporter Garment (Trading Company) Manufacturer

Output-Supplying Indirect Exporter - 70 - ANNEXIV-4 Page 8 of 14

24. There are several administrative requirements for domestic L/Cs: (a) domestic L/Cs are irrevocable, opened in accordance with internation- ally adopted practices (see International Chamber of Commerce 1974); (b) the beneficiary of a domestic L/C is authorized to draw a sight draft on the opening bank; (c) once an export loan is granted on the basis of a domestic L/C, only the lending bank may purchase the draft drawn under the domestic L/C; (d) a bank negotiating a domestic L/C collects proceeds from the bank opening the domestic L/C througiha domestic L/C clearinghouse.

Impact of Domestic L/C System

25. The domestic L/C system is critical for several reasons: it breaks the barrier that restricts free trade status and access to export financing to a free trade zone or a final exporter; it makes domestic trade the equivalent of free international trade as long as the domestic trade is tied to exports; and it helps to achieve efficient industrial development through (i) the accomplishment of more efficient backward linkages because of export expansion, (ii) development of trading companies specializing in overseas marketing, and (iii) the development of small and medium-scale industries by bringing them into export production activities.

26. A domestic L/C system has been extensively and successfullyused by Korea. The most notable achievements of the system have been more efficient backward linkages, development of trading companies, and the successful development of small-scale export industries. These are discussed below.

27. Backward Linkages: By extending free trade status and automatic availability of short-term export loans to every production process contri- buting to the generation of export value added, the domestic L/C system of Korea has brought about backward linkages that accord with the true comparative advantage of each production process. According to Table 14 of Annex I, about 67 percent of the total value of domestic L/Cs issued in Korea during 1976-78 was for the purchase of domestically produced intermediate inputs, 31 percent was for the purchase of domestically produced finished products, and 2 percent was for the payment of subcontract fees. Note that for every dollar of manufactured exports, about 50 cents' worth of domestically produced intermediate inputs were purchased. In the textile industries the use of domestically produced intermediate inputs in exports was even more extensive. About 60 cents' worth of intermediate inputs were purchased from other domestic producers for every dollar of textile exports. These figures indicate the depth of the backward linkages associated with exports.

28. Development of Trading Companies: Without the domestic L/C system, Korea could not develop its trading companies as effectively as it did. According to Table 14 of Annex I, for every dollar of export about 24 cents worth of finished export products were purchased by trading companies from other manufacturers. - 71 - ANNEXIV-4 Page 9 of 14

29. Development of Small-Medium Scale Export Industries: According to a 1979 survey of small and medium-scale manufacturing firms in Korea, the total value of direct and Indirect exports by the firms amounted to 41.8 percent of the aggregate exports of Korea's manufacturing industries. What major policy factor accounted for this impressive contribution by the smaller firms to export-led growth? The answer is clear. By guaranteeing small and medium-scale industries absolute equality in obtaining export incentives, the domestic L/C system brought many potential export producers into export production activities. As far as I know, no other developing country so successfully avoids discriminationagainst small and medium-scale enterprises engaged in export activities. The Korean experience suggests that the best policy toward such enterprises is neither the excessive subsidizing that comes from the 'small is beautiful' notion nor the discrimination of the counter-reaction that small is inferior.-

(D-105g) _ 72 _ ANNEXIV-4 Page 10 of 14

AN EXAMPLEOF TYPICALPROCEDURES FOR A MODERNIZEDSYSTEK OF EXPORTINCENTIVE AUKINISTRATION F0R TRADING COMPANYAND INDIRECT EPORERS

Figure 2 pro-ides an overviev of typical procedures for trading company and indirect exporters under a mDdernized export incentive adminis- tratLon. In the flow chart, there are three exporters:

1. Trading Company: Purchases export commodities (garments) from the output-supplying indirect exporters and exports directly to the overseas buyer.

2. Output-Supplying Indirect Exporter:

Manufactures finished export coiodities (garments) based on domestically produced intermediate inputs (domestic textiles) and imported materials (foreign-made textiles). and sells them to the tradlng company rather than exports directly.

3. Input-Supplying Indirect Exporter: Manufactures intermediate inputs (textiles) based on imported materials (foreign-made yarns), and sells them to che output- supplying indirectexporter (garment manufacturer).

A. Procedures for Export Financing

The following are explanations of the steps in the flow chart of Figure 2.

(I) A foreign buyer orders goods, and a trading company agrees to fill orders.

(2) The foreign buyer arrangesan L/C (masterexport L/C) with hUs bank.

(3) The trading companyreceives the master exportL/C (for garments). (4) The trading companyorders domestically produced finished export commodities(garments) to an output-sur:,iyingindirect exporter (garmentmanufacturer) and the latter agrees to fill orders. _73 - AANNEXIV-4 Page 11 of 14

(5) The trading company arranges a domestlc L/C with his bank for the purchase of garmets. (6) The output-aupplying Indirect exporter receives the domestic L/C.

(7) The output-s4plying indirect exporter orders domestically produced intermediate Inputs (domestic textiles) to an input- supplyivg indirect exporter (textile weaver) and the latter agrees to fill orders.

(8) The output-supplying indirect exporter arranges a domestic L/C with his bank for the purchase of domestic textiles.

(9) The input-supplying indirect exporter receives the domestic L/C.

(10) The output-supplying indirect exporter also needs foreign-made textiles for his garment manufacturing. So he orders foreign-made textiles, and a foreign supplier (Supplier A) agrees to fill orders.

(11) The output-supplying indirect exporter arranges an L/C (import L/C) with his bank for the purchase of foreign-made textiles.

(12) The foreign supplier A receives the import L/C.

(13) The output-supplying indirect exporter obtains an export loan for generating value added (VAL).

(14) The input-supplying indirect exporter orders foreign-made yarns 'for his production, and a foreign supplier (Supplier B) agrees to fiJl orders.

(15) The input-supplying Indirect exporter arranges an L/C (import L/C) with his bank for the purchase of foreign-made yarns.

(16) The foreign supplier B receives the import L/C.

(17) The input-supplying indirect exporter obtains an export loan for generating value added (VAL).

(18) The foreign supplier B ships the foreign-made yarns to the input-supplying indizect exporter.

(19) The foreign supplier B presents the draft drawn under the import L/C of the input-supplying indirect exporter to his bank for payment or acceptance.

(20) The bank of supplier B forwards the dre-ft drawn under the import L/C to the bank of the input-supplying indirect exporter for reimbursement. ANNEXIV-4 Page 12 of 14

(21) The bank of the Input-supplying indirect exPorter honors the draft drawn under the import LIC with an export loan for purchasing foreign-made Intermediate inputs (FIL) granted to the indirect exporter.

(22) The input-supplying indirect exportee delivers the domestically ummufactured textiles to the output-snpplyinz indirect exporter. (23) The input-supplying indirect exporter presents the draft drawn under the domestic L/C to Mis bank and liquidatesthe export loans [VAL obtained in (17) and FIL obtained in (21)].

(24) The bank of the input-supplying indirect exporter forwards the draft drawn under the domestic L/C to the bank of the output-supplying indirect exporter for reimbursement.

(25) The bank of the output-supplying indirect exporter honors the draft drawn under the domestic L/C with an export loan for purchasing domestically produced intermediate inputs (DIL) granted to the indirect exporter.

(26) The foreign supplier A ships the foreign-uade textiles to the output-supplying Indirect exporter.

(27) The foreign supplier B presents the draft drawn under the import L/C to his bank for payment or acceptance.

(28) The bank of the foreign supplier B forwards the draft drawn under the import L/C to the bank of the output-supplying indirect exporter for reimbursement.

(29) The bank of the output-supplying indirect exporter honors the draft drawn under the importL/C with an export loan for purchasing intermediate inputs (FIL) granted to the indirect exporter.

(30) The output-supplying indirect exporter delivers the finished export commodities (domestically manufactured garments) to the trading company.

(31) The output-supplying indirect exporter presents the draft drawn under the domestic LIC to his bank and liquidates the export loans [VAL obtainedin (13), DIL obtainedin (25), and FIL obtainedin (29)].

(32) The bank of the output-supplying indirect exporter forwards the draft drawn under the domestic L/C to the bank of the trading company for reimbursement.

(33) The bank of the trading company honors the draft drawn under the domestic L/C with an export loan for purchasingfinished export commodities (DOL) granted to the trading company. _ 75 - ANNEXIV-4 Page 13 of 14

(34) The trading company sbips the finished export commodltles (garuents) to the foreign buyer.

(35) The trading coupany prements the draft drawn under the master export L/C to bis bank and liquidates the export loan DOL obtained In (33)1.

(36) The trading company's bank forwards the draft drawn under the master export L/C to the foreign buyer's bank for reiabursement.

(37) The foreign buyer's bank preseuts the draft drawn under the master L/C to the foreign buyer for reiuburseaaent. B. Procedures for Value Added Tax Exeuption

The input-supplying indirect exporter is exempted from the in- directtax, because he supplies his product to the output-supplying indirect exporter [in (22)], based on the domestic L/C issued by the latter [in (9)1. The output-supplyingindirect exporter is emempted from the in- directtax, becausehe supplieshis productto the trading company [in (3)], based on the domestic L/C issued by the latter [in (6)].

Since both the input-supplying indirect exporter and the output- supplying indirect exporter are exempted from the indirect tax, the trading company is indirect tax-free.

C. Procedures for Duty Exemption (Drawback)

When the input-supplying indirect exporter (textile weaver) imports foreign-made yarns [in (18)1, he is granted the duty-free temporary Import because the imports are based on the import L/C [in (16)1 that has been issued on the basis of the domestic L/C received [in (9)].

Likewise, when the input-supplying indirect exporter (garment manufacturer) imports foreign-sade textiles [in (26)1, he is granted the duty-free temporaryimport because the imports are based on the import L/C [in (12)1 that has been Issued on the basis of the domestic L/C received [in (6)]. Figure 2: Flow Chart of a Modernized System of Export Incentive Administration for Trading Companies and Indirect Exporters

36Tradinig CompaysBanyknic Exporter'sBn Indirter'tExprte

I~~~ 2 D A-O (Txl Wever 6 p

( Ta ngCopOutput-Supplying ,J ( | Input-SupplyingI _.Av,S v0 (Txie evr xz~~~ _ 7 ~~~~~~~~~(GarmentManufacturer)L, L L L L_ ___rrI

Output-Supp g I Supplier-Foreign (B) lForeing Buyer IForelgnSupplier (A) of of Inputs (Poreign- _I|1nputs (Foreign-MadeTextile.) Made Yarn)

B' Bank Foreign Buyer'.B Bank - l;F Ig pli

NOTE: Export L/C : ImportL|C

~ : Domestic L/C : Export Loan AN1UEXIV-5

TECHNICAL NOTE ON DUTY AND INDIRECT TAX-FREE IPORT ADMINISTRATION \.

7 VI

( I - 79 - ANNEXrv-5 Page 1 of 6

Technical Note on Duty (and Indirect Tax) -. Free Import Administration

Basic Framework

The value of duty and indirect taxes to be exempted or to be refunded for one unit of export commodity equals the sum of the input- output coefficients times the import prices of inputs times the duty and indirect tax rates:

Value of duties and indirect taxes (to be Imported Import price Duty and (1) exempted or . input i - output j of input iindirect refunded) per coefficient tax rate unit of export commodity j where

LImportprice of [c.i.f. import 1 FExchange rate 1 input prce L and

Duty IndL _ _ _ inlrete tax 1 + duty rate i I + indirect tax -1 - 80 - ANNEX IV-5 Page 2 of 6

Note in Equation (1) that the most critical information for the duty-free import administration is the information on imported input i - output j coefficient, i.e., the physical quantity (or weight) of specific imported input item i needed to produce one unit of specific export commodity j-

Prior Exemption/Individual Drawback System of Custom Department

Based on equation (1), one can summarize the basic framework for the prior exemption/individualdrawback system:

Value of duties and indirect taxes (to be exempted cr Right hand side Approved (or (2) refunded) asso- _ of equation (1) . completed) export ciated vith quantity j approved export quantity of commodity j and

Allowed duty- free import of input i required Imported Import Approved to produce - input i - output j . price of . export (3) approved export coefficient input i quan:ity j quantity of commodity j - 81 - ANNEX IV-5 Page 3 of 6

Most exporters utilize the prior exemption scheme by putting bank guarantees in lieu of the payment of duties and indirect taxes. The bank guarantee must cover the duty and indirect tax liabilities stemming from temporary imports based on equaticn (2), where indirect tax rate

- + standard profit rate].[1.1 x business tax rate d

where 0.1 x business tax liability - local tax liability. (Ministry of Finance 1982, p. 57)

Duty-Exemption System for BOI-promoted Firms

The basic framework of the duty exemption system for BOI-promoted fimrs can be summarized by:

maximum input Expected stock balance Imported Import export allowed for input i - output j . price of . volume of (4) duty free coefficient input i commodity j import of during y iuput jmonths

Fixed Draicback System of FPO

The basic framework used to estimate the new Schedule A -and Schedule

B of the Fixed Drawback System of FPO is:

_Fixed drawback Fixed drawback New value for imported| value for domestic Schedule inputs as fraction + inputs as fraction (5) A of export value in of export value in _ _ ~~~SectorJ L Section J

1_ Fixed drawback New . value for domestic Schedule _ inputs as fraction (6) B of export value in L _ L Sector J

where -82- ANNEX IV-5 Page 4 of 6

Fixed drawback Domestic money rAverage Average value for imported value imported effective effective inputs as fraction _ input - output . duty rate + indirect (7) of export value in ratio in tax rate Sector J Sector I for imported inputs in Sector I and I

Fixed drawback Domestic money ijAverage effective value for domestic value domestic indirect tax rate inputs as fraction input - output for domestic inputs (8) of export value in ratio in-Sector I Sector J

In order to compare the fixed drawback value for imported inputs as fraction of export value defined in equation (7) with the similar measure based on equation (1), let us di-'de the right hand side of (1) with the world market price of export commodity j:

Fixed drawback World market It value for imported money value r- inputs as fraction .imported 1 + duty I + indirect (9) of value of export inputi - outputj . rate i 1 tax rate i -1 good coefficient L L i

A technical note-on the Fixed Drawback Schedules in Annex IV-2 compares the aggregate money value input-output table approach being used by the FPO to estimate the new fixed drawback schedules partly represented by equation

(7), with the disaggregatedphysical input-output coefficient approach partly represented by equation (9). - 83 - ANNEX IV-5 Page 5 of 6

The domestic input portion of Schedule A and the full portion of

Schedule B are designed to achieve such compensation for the use of doaes tic

inputs by exporters. Equation (8) is the basic framework used to estimate

the new Schedule B. The comparable version based on the disaggregated

physical input-output coefficient approach ia:

ied drawback World market __ value for domestic money value 11 nominal I + indirect inputs as,.-raction _ domestic protection tax rate for of value of export inputi- . rate for . domestic -1 (10) goods 3 / output domestic input . - L ~coefficient i nput1

Equation CLO) for domestic inputs is similar to equation (9) for imported

inputs. The excess costs over world market values of domestic inputs are

measured by the nominal protecticn rates and indirect tax rates, whereas

the excess costs over world market values of imported inputs are reflected in the duty and indirect tax rates.

Comparing equation (10) with equation (8), we can make the similar infer- ences oa those made when we compare equation (9) with equation (7). Due to the use of only Indirect tax rate (which are much lover than the sum of nominal protection rate and indirect tax rate) and domestic prices of input and output (rather than world market prices), and the protection structure that gives generally higher rates of nominal protection for outputs than inputs, the resulting drawback rates based on equation (8) would be lower than the rates (based on equation (10)) that guarantee free trade status in purchasing domestic inputs, resultiA irnthe less than free trade status at the level of aggregation adapted in equation (8). 03FARM9l Of TW2A?rA2ES ro ESMD%ThCFD( MAO SnMI

MY AO DODtECrTAX IMS

(b) Prices te) PeulttLrg =y value iW-ouitpst td) DAy (a) =u1tIz drrA&ck rate Ct)Tree traI status for Equr (a) Hriyslcal Lrput-ut adfllert of caexf(iIt md eqrter A+nach t[_ _ It __ . rtilrect (l) at lj%t lewl I 44) at {qet 1w I ard (1) at LtLt lwl I (Rt) at 1rp leml I tax (L) at oAp (U) at cutput (l) at oAt (tl) it eUtPAc rd oAt level j ml t lavel J "Put mN utput levcl j output level J rate lovel j 1a1 J l11 Ivel J

Q4tIty- (9) SpJLfrc lnpt I - Sector I L CMraa $hrld Worldmrket value Worldmdtet vAlue la.1l Dru rate Apegate Fe PM bw41 epcillc ot j of hrAmosof IipL enricat lrpt I - o; Put j IrVxt I - ouput J duty ard (old rate) drsA4ocrate trie trde IrfiuttpWt coicrne mlat Itam L enl SectorJ prlee ca,fflaee ratio irdinrct baud e (9) (old rate) status stAtuS coalficlant Is campoeof her ta rate dn C9) apptxKch drul of outpt j

myrfa_ _A V or A V V o-A V

ValournLJ C7) It In rt posslbleto IrLut I - oltp* J Pn;t-tAd Dtic tua t value DmiaUc milat value Effective /gpte Aarstoe . ls or mro Le1 th&M lII -Out-PA ldestifyspic ratio Ls mry value dbutLc lrpt I - ouWt J 1ept I - autpit I dutyard dreAnckrnte drMrnckrate thr frue free trae tabld iept j - specfic ratio ratherthn Uiet ratio ratio inilract Cnv rnte) (ncwrate) tradestatus atatus tpproach ut rcetffllent qtthty ratio prmv tor ate baei an t7) bsedl a (7) withLn Scetor I ard Scotor J

Ram:iis Spre c 1rqzt I - speclfic utputj corafft- (muLeLc Cc)- (a) . (u) Ce)-Lc (d) Clete are tJe wrnrta* of tih &Ityfree price)l [_leffective ratel * I or I lavrt abirdstratla (wuFrld i prot:tlcz ) rDrket rate for Jpat(11e ratel - price) x II + mul- l ai rate) ral pro- tectlan nrMlprotectfn mte_amItl eoc Iic t _J ' , II|

U'F - g z-

ANNEXIV-6

PROPOSEDTASK FORCE FOR INPUT COEFFICIENTS

Draft Terms of Reference I "Ie

.-I - 87 - ANNEX IV-6 Page 1 of 3

PROPOSEDTASK FORCEFOR INPUT-COEFFICIENTS

DRAFTTERNS OF REFERENCE

1. Background The principle of assuring equal footing' with foreign competitors for export industr -s has been accepted by the Government as one of the high prioritypolicies for exportdevelopment in the 24-pointpackage of January 1985. The first step for assuringequal footingwith foreign competitors is to provide "free trade status' for all exporters (including indirect exporters) by improving duty (and indirect tax)-free import administration. Strengthening the input-coefficienc administration is, tberefore, the most important task for improving the duty-free imp-rt administration.

This draft terms of reference spells out the purpose, composition, major tasks, and management of a proposed Task Force for Input- Coefficient (ICTF) that is to initiate work to strengthen the input- coefficient administration. Formation of ICTF has become very urgent in light of the need to protect immediately the access of Thai manufactured goods exporters to duty (and indirect tax)-free imports for their export production from the increasing threats of countervailing actions (in particular the CVDSuspension Agreement on textile exports with U.S.) by showing that duty and indirect tax exemptions or drawbacks are not in excess of those levied on items that are "physically incorporated" into the manufactured export products.

2. Purpose of ICTF

The purpose of ICTF is to Lnitiate the work to strengthen the input-coefficient administration with the objective of producing initial versions of the input-coefficient books for the priority manufactured export industries and carrying out the preparatory work to ultimately establish an Office of Input-Coefficient Administration (OICA).

3. Composition of ICTF

ICTF should be composed of representatives from NESDB, FPO, Customs Department, BOI, MOC, MOI and BOT. It is proposed that ICTF should be chaired jointly by the Secretary General of NESDBand the Permanent Secretary of the Ministry of Finance and that NESDBand MOFshould serve as a joint secretariat of ICT?. ICTF should be assisted by an advisory committee composed of selected export manufacturers associations. In view of the highly technical nature of its task, the technical core team of ICTF should be the heads of the following offices/divisions in the Government (alreadyinvolved in estimatingand administeringthe input-coefficients. - 88 -

ANNEXIV-6 Page 2 of 3

(a) Duty Drawback Section of FPC' (b) Laboratory Division of Customs Department (c) Duty Exemption Section of BOI

In view of the accumulated experience and data resources, the Laboratory Division of the Customs Department should provide a major input for the technical core team in terms of technical manpower support and data supply. Active participation of the technical staff of the other two organizations would also be needed to speed up the work.

4. Major Tasks of ICTF

The following major tasks are listed in terms of priorities and should be carried out in sequence:

(1) Assemble all input-coefficient data previously estimated by or kept in FPO, Customs Department, BOI, and industry associations.

(2) Develop a scheme to classify assembled data by export industries and product groups and .o tabulate in a systematic manner, finally storing in a computer.

(3) In collaboration with the advisory committee, develop an efficient mechanism to collect additional data and screen the collected data.

(4) Produce a draft version of the input-coefficient book for textile exports based on about 300 standard input-coefficient already estimated by the Laboratory Division of tne Customs Department, the data recently collected by FPO from textile exporters, and additional data in order to provide urgent inputs for the revised drawback schedules of _PO (which are needed to meet the requirements of the CVD Suspension Agreement with US).

(5) Send a team overseas to study the experience of a few successful developing countries in the input-coefficient administration.

(6) Produce a final version of the input-coefficient book for textile exports for implementation by the Customs Department, FPO and BOI.

(7) Produce input-coefficient book for other priority items (i.e., items that are likely to be targets of potential countervailing actions such as steel pipe, canned tuna, and footwear.

(8) Prepare rules and procedures for the input-coefficient administration based on the experience of other successful developing countries. - 89 -

ANNEXIV-6 Page 3 of 3

(9) Make recommendations on the establishment of OICA.

5. Management of ICTF

The core technical team will meet twice a month in order to report the progress of the work to the full committee and the chairman of the ICTF. 77

'O/I, 0

A4. ANNEXTO CHAPTERV

ROLE OF T-RADEINFORMATION IN EXPORT MARKETING AND PUBLIC SECTOR SUPPORT SERVICES 'IN

Cp l

(.eQ - 93 A-NEX V-i Page 1 bf 6

ROLE OF TRADE INFORMATIONIN EXPORT MARKETINGAND PUBLIC SECTOR SUPPORT SERVICES

1. Exporters of manufactured goods in developing countries are generally newcomers to foreign trade and require the support of a variety of services to enable them to penetrate the external markets and acquire the expertise that trading demands. To a great extent, the support is a temporary requirement and resembles a transfer of technoLogy that, when completed, enables the firm to pursue its activities largely unaided. Moreover, it is generally the small and Medium industry (SHIs) exporters that can use the services, which vary according to the exporting community's needs. In Thailand, as in other countries, small exporters generally require trade and Market information, transport and shipping guidance, a Marketing advice, a promotion program, and a design and product development service. Most of this assistance is not usually available from the private sector and thus is generally provided by a public sector agency.

2. Given the central role of trade information in export Marketing, this annex highlights: (a) the importance of general trade information, (b) the nature of effective Market information, (c) the nature and significance of Marketing advisory services in acquiring and disseminating essential ian1ormationand (d) the role of general Marketing promotion programs (trade fairs, trade missions) exhibitions, etc. The specific needs of SMIs have been also highlighted because they have to cope with intense competition in an ever-changing international Market environment. The pivotal role of the Department of Commercial Relations (DCR), which is now engaged in these services, is a focus throughout the discussion.

3. The involvement of the public sector amounts to an investment in an essential commercial infrastructure. In developed economies, the investment is made mostly by private enterprise over a lengthy period and adjusted regularly to the changing requirements of foreign trade. Given its serious trade imbalance, ThaiLand, however, cannot afford a protracted process. Instead, it needs an apparatus to translate trading opportunities into realizable export programs rather quickly, i.e., to identify potential buyers and suppliers, locate products of the kind and quality needed and promote them in the various markets. As such, the public sector should establish the mechanisms needed to initiate the process, while encouraging the private sector to build up the institutions that will complement public mechanisms and progressively take over many of their functions. This approach implies a serious policy and resource commitment from the Government, and presupposes a realization of the importance of foreign trade to development, an understanding of what is needed to penetrate foreign markets and an acceptance of the costs in terms of time, effort and money.

4. Export Marketing has assumed critical importance at this stage of Thailand's development. Therefore, in examining the services provided by the DCR, an attempt was made to identify those areas where services were not fully adequate or that could profitably be improved in the near future. - 94 - ANNEXV.1 Page 2 of 6

The Importance of General Trade Information

5. Trade information is critical for export trading. It has several dimensions, such as information on tariffs, export and import taxes, quotas, export and import licenses, customs documentation, food and drug regulations, labelling and packaging requirements and health and safety standards in both importing countries and Thailand. While acknowLedging the value of the trade information provided by the DCR, some exporters have found it necessary to confirm it with another source to see whether it was accurate and up-to- date. The number of firms interviewedwas small, however, and this problem may not be widespread in many sectors and product Lines. Still, given its importance, the DCM should give the compilation and distribution of up-to-date and accurate information a high priority. Out-of-date trade information can create serious problems, such as Customs' rejecting merchandise at the point of import, thereby obliging the exporcer to destroy it on the spot, sell it elsewhere at whatever price it will fetch, or transport it home at his own expense. The costs of misinformation in export trading are very high. The DCR should also make clear that it is the immediate source of reliable, up-to- date trade information, particularly on Thailand's main markets.

6. On the other hand, it is neither cost-effective nor necessary to have detailed information on every country's import regulations, or even to maintain an inventory of every regulation affecting imports in Thailand's main markets. For the majority of small- and medium-size direct exporters, only certain basic information need be available and kept up-to-date, for example, tariffs, quotas, import licenses, import documentation and labelling reguLations for main products. At the same 14me, the DCR should either have the data at hand or have quick access to it._

The Nature of Effective Market Information

7. Market informationpresents a difficult problem unless approached sensibly. As the information an exporter generally requires depends on his needs, the essential question is "what minimum information will enable a company to make a decision or complete his transaction, given the stage of its proposed action in the Market?"

8. Assessing realizable export prospects involves a series of consecutive steps, with a decision made at each one whether to proceed to the next. At any stage an exporter may only need limited although specific information. Just the price alone of a competing article in the importing country may, for example, show that the market is unattractive. A more in-

1/ As discussed in Chapter IV of the report, it would be economical and cost-effectiveto promote both general and export trading companies and to develop an environment and incentives framework that would link them to the SMIs. However, that will be a long-term process, and not all exporters may like to depend too much on trading companies only. Consequently the need to cater to the requirements of the numerous smaLl- and medium-size exports will remain strong in the foreseeable future. - 95 - ANNEXV-i Page 3 of 6 depth and detailed report on the Market could take so much time that conditions would have changed significantly by the time of completion.

9. To provide exporters with an effective information service, Marketing experts wilL have to know what information will meet the exporters' current minimum requirements !nd enable them to move to the next stage in decision-making. Only regular contact with the exporters to get current knowledge of their Production, Marketing and financial capabilities will yield this insight. Other information may be required at the level of an industry sector or subsector, for example, how best can the men's outerwear sector establish itself in a specified Market. The answer involves an extensive examinationof the market, including its growth and structure; trends and requirements; specific activities and steps needed to establish a foothold; and cost in money and time, etc. Such an extensive exercise should not be undertaken, however, without (a) adequate information on the supply, e.g., the number of menswear producers, the volame and quality of output, prices and costs, design and product development capabilities and transport facilities, and (b) a quick preliminary survey of the Market. Both of these are the proper responsibilityof an export service organization.

10. If a more detailed appraisaL appears worthwhile, and if domestic producers are wilLing to share the costs of establishing a foothold in the market, a decision to undertake the analysis is justifiable. The work should then be designed in detail, with costs and a distinction made between the parts to be undertaken by the export service organization and those that must be bought from specialist Marketing agencies. The results should be discussed with the sector concerned and a program of market development prepared and approved. Initially, the public sector will have to finance these program but gradually users should mobilize their own resources.

11. These exercises are expensive, with the cost varying according to the product category and the market, and to a large extent on the consultants' fees. In the consumer goods sector, a reasonably thorough survey in the UK would cost at least L 10,000 and $30,000 in the US. Therefore, such exercises cannot be undertaken across-the-board in many sectors and a precondition must be a firm commitment from firms in the industry. These analyses should be part of a selected strategy for penetrating the potenj3al market, and the interested firm should be aware of the cost involved.-

12. The market information provided by trade service organizations is less than effective if it does not meet the minimum needs of a firm or the more detailed requirements of an industry sector. If it does not enable the exporter to move to the next stage in his market deliberations and is not sufficient to establish an effective market development program for the industry sector, the information is ineffective.

13. To make the best use of limited resources, the DCR should strive to

2/ This requirement is another reason exporters associations are highly desirable. - 96 - ANNEX V-I Page 4 of 6 market its market information as specific as possible to the immediate, minimum requirements of the exporters. It can thus avoid over-investment in general information, in excessive material, or in the accumulation of stocks of data that do not directly support the current export effort. In short, a carefully designed, activity-based information gathering and dissemination system for high priority exports is needed.

The Nature and Significance of Marketing Advisory Services3/

14. The majority of the SMIs require the support of a practical export marketing advisory service to help them determine their export capabilities and to advise them on the preparation and implementationof practical Marketing programs aimed at achieving specified volumes of exports in particular markets. In many instances, this service is provided by foreign buying agents, but public sector organizations can aLso play an important supplementary role.

15. The quality of a public advisory service depends on the Marketing adviser, who is the link between the exporter and the support service organizations of the country. The adviser selects from the organization's services those relevant to the exporter's needs and informs the organization of the exporters' requirement, so that the services can be adjusted to changing needs. The adviser is also the link between the exporter and trade representatives overseas. Again, he defines the exporter's information needs so that the trade representativecan provide the specific data required, and he interprets the market information from the representative in terms of its significance to the exporter and industry segment with which he deals.

16. The Marketing advisory service is important for export trading. Unless it is effective, the other services of the organization are of doubtful value, and their impact on the economy's export drive will not be significant. Again, export promotion programs are effective if they are linked to the requirements of the exporting community; are flexible in operation, and are delivered speedily and efficiently. Flexibility is also important, as the needs of exporters are not constant, but vary according to market and domestic conditions. Therefore, staff must keep in close touch with exporters and markets so that they can adapt the services to new circumstances and design programs to meet real needs. Such a service is lacking in the Thai system, and its development will make a real difference to

3/ In a number of cases (for example, jewelry, furniture and toys), producers expressed a need for a design and product development facility to improve product quality, to extend the range of products and to alter product design and presentation to suit the requirements of the export, as distinct from the domestic, market. It was not possible to determine the real demand for such a facility in these and other subsectors or the extent to which these requirements were being met by existing institutionsand facilities. However, given the number of requests and perceived needs, the desirability of such a facility should at least be investigated. - 97 - AMX V-1 Page 5 of 6 the export drive. The central roLe of the services is described in Chapter V of the main report.

Special Needs of Small and Medium Enterprises

17. Small- and mediumrsized enterprises are generally indigenous, produce consumer products and cater to the local or domestic market. They require special attention to enable them to develop into exporters. If they are below a certain size, the cost of exporting is beyond their resources, and unless cooperative or marketing intermediaries can be arranged, they are confined to the domestic market. If their size indicates an export capability, they will require support in many areas to exploit that capability profitably, for example, in product design, development and presentation; pricing and costing; export financing; market planning and the mechanics of exporting. These firms require much time and attention.

18. Trading companies, buying houses and similar institutions can help these firms by taking over the marketing function, developing the product for a specific market, etc. As far as the team could assess, this interaction has happened only marginally in Thailand's manufacturing sectors. While the promoted trading companies might have performed this function, apparently they have not done so (see Chapter IV).

19. It will thus be necessary to provide adequate incentives for trading companies, buying agents, etc. to get them to forge these linkages, with SMI exporters. The DCR has a particular role to play here. While it will involve a significant initial investment of time and effort per firm, the subsequent investment diminishes progressively as the firm's capabilities grow. In the interests of the economy, it is desirable that the DCR undertake this particular responsibility.

Assessment of Export Production and Marketing Capabilities

20. In order to assess the adequacy and compatibility of services, an important first task of the export marketing service will be an ongoing appraisal of the production and export potential--namely,a periodic assessment or audit of existing and new exporter capabilities. Such an assessment will enable policy-makers and relevant public and private sector agencies to initiate and adjust the export marketing services, provide essential information on products being manufactured and exported, distinguishing locally controlled or indigenous firms from joint ventures and foreign-owned enterprises; and make possible the calculation of the proportion of exports attributable to indigenous and to foreign firms, and the extent of domestic value added, employment, investment, etc., by sector and subsectors of manufacturing. Using the basic data provided by the audit, and complementing the work of the UN Center for Transnational Corporations/ESCAP, further investigation could identify the main export marketing channels used by the manufacturing subsector and their changing roles. The audit would also establish with reasonable precision the characteristics of Thailand's export community or export base, and would show the market segments into which exporters sold their products. This information will provide a firm foundation on which to determine the services that the various industry - 98 - ANNEX V -I Page 6 of 6 segments most needed in both industrial promotion and export markets. Moreover, it will avoid the waste that arises when services are accepted simply because they are provided and ensure they relate to felt needs. By directing services to real needs, the DCR can enhAnce the competitive ability of Thailand's manufacturers in their export markets.

21. Another important advantage of an assessment is to facilitate the setting of realistic targets. Top-down target-settingusing macro-indices without much regard to the realities of the exporting community's capability is at best unrealistic, at worst harmful. A more useful exercise may be a cumulative approach to an analysis of manufacturing sectors and sub-sectors that reveal strengths and weaknesses within each manufacturing group over time. Aimed with that clearer understanding of the export potential of Thai enterprises and industry, the public and private sector institutions will be in a position to forge a partnership first to establish and then to achieve realistic export targets. ANNE V-2

EXPORT DEVELOPMENTCOMMITTEE (EDC) g 'VP'' ,, , 0?- .P -)/c s7, A-

0 (:?o ANNEX V-2 Page 1 of 1 - 101 -

EXPORT DEVELOPMENT COMMITTEE (EDC)

1. Mirister of Commerce Chairman 2. Deputy Minister of Commerce (I) Vice Chairman 3. Deputy Minister of Commerce (II) Vice Chairman 4. Permanent Secretary of Commerce Ministry member 5. Permanent Secretary of Finance Ministry Member 6. Permanent Secretary of Agri-cultural and

Cooperative Ministry Member 7. Permanent Secretary of Industry Ministry Member 8. Permanent Secretary of Foreign Affairs Ministry Member 9. Permanent Secretary of Public Healch Ministry Member 10. Permanent Secretary of Communication Ministry Member 11. Secretary-General to the office of the National Economic and Social Development Board Member 12. Secretary-General to the office of the Board of Investment Member 13. Governor of the Bank of Thailand Member 14. Economic Advisor to the Prime Minister (Dr. Virapong Ramangkul) Member 15. President of the Board of Trade Member 16. Chairman of Thai Industries' Association Member 17. President of Thai Bankers' Association Member I8. Director-General of Commercial Relations Member and Department Secretary 19. Deputy Director-General of Commercial Member and Relations Department Asst. Secretary 20. Director-General of Business Economics Assistant Department Secretary 21. Commercial Counsellor Asst. Secretary 22. Deputy Director-General of Foreign Assistant Trade Department Secretary -/o p--;)~

Hi4;S /e-7- bA - ., -(o3-

ANN V-3

ORGANIZATIONAL CHART

DEPARTMfENTOF COMMERCIAL RELATIONS (DCR) A)/- 6e,f --=,D -9

- / o/ ORGANIZATIONCHART

DEPARTMENTOF COMMERCIALRELATIONS I - -. -I L--- OFFICEOF THE TRADEINFOR14ATION TRADEPROMOTION TRADEDEVELnPMENT TECHNICALDIVISION EXPORTTRAINING SECRETARY DIVISION DIVISION DIVISION 1 (EXPORTSERVICE CNE ______CENTRE)

Personnel & TradeReport GeneralAffairs TradeInformation Technical Training& Seminar RecordSection Section Section - ServiceSection SSection Sectio;"

Finance Editorial DomesticTrade AdvisoryService Planning& PersonnelDevelopment 1 Section Section PronotionSection Section CoordinationSection Section ]

TradePublication InternationalTrade ProductAdaptation Analysis& TrainingMaterial Section - PromotionSection | Section EvaluationSection DDevelopment Section

Product& Raw TradeCenter TrainingRecord MaterialSurvey - Coordination - Section

Section Section __|_.-_ |

Design& Decoration OverseasTrade TechnicalCoordination Section Center In TradePromotion | ' I ~~~~~~~~~~~~~01 /0 6-

+s~~~~)-CS"A A'2 /Y/d STATISTICAL ANNEX TABLES - Pe

-_- C?/I - 109 -

Table 1.1 Gross Domestic Product at Current Market Prices

1970 1980 1981 1982 1983 1984

1. Agriculture 38493 173806 187886 188742 204443 198273 2. Mining & Quarrying 2759 14493 13373 14807 16480 20165 3. Manufacturing 21814 134515 158272 164659 176200 189268 4. Construction 8261 39865 42008 43040 47129 51231 5. Electricity& Water Supply 1625 6284 10743 14454 16319 17250 6. Transportation& Communication 8588 45261 57281 63133 73708 82513 7. Wholesale& RetailTrade 25903 128731 150293 159849 165812 184967 8. Banking, Insurance& Real Estate 5626 41891 52025 61021 71722 80514 t. Ownershipof Dwelling 2934 7378 8411 9912 11210 12413 -43'8PublicAdministration & Defence 6146 28263 30645 37349 42551 47143 11. Services 13911 64443 75229 89170 98680 108015 12. GROSS DOMESTICPRODUCT 136060 684930 786166 846136 924254 991752

Source: NESDB

CrossDomestic Product at 1972 Prices

1970 1980 1981 1982 1983 1984

1. Agriculture 48332 72784 77701 78502 81449 84297 2. Mining & Quarrying 2555 4780 4623 4431 4414 5166 3. Manufacturing 23320 60597 64490 67317 72252 76944 4. Construction 8705 16576 15500 15097 15927 16650 5. Electricity& Water Supply 1638 5560 6330 6755 7348 B141 6. Transportation& Communication 9195 18811 20209 21715 23290 24945 7. Wholesale& RetailTrade 26524 48227 51103 52789 55076 57974 8. Banking,Insurance & Real Estate 5806 17419 19197 21396 24238 26856 9. Ownershipof Dwelling 3000 4502 4723 4936 5178 5385 10. PublicAdministration & Defence 6476 12423 13192 13833 14498 15301 11. Services 14541 31173 34202 37261 39276 41904 12. GROSS DOMESTICPRODUCT 150092 292852 311270 324032 342946 363563

Source: NESDB labit 1.L Balanceof Payments,1992 - I995

Millions ofUS dollir

P199 Eostions

1992 191 9...... I9s2 1985 ,,,, ,,,,,, ,,,, ~~...... ---...... °1 02 3 g *' - 02 S 04 Tot" ...... ,+~*+,.-...... tradebalance -1511 -3919 -161 -645 -691 -699 -2989 tOQ -5 -0-679 627 -2310 -23.7 Exports,f.o.b. 6935 6309 1330 l954 leil5 121 1320 3950 1945 1911 2096 1918 9096 I1po0rs, L.i.i. -940b-10187 -2597 299 2502 -2510 -10300 -2463 -2511 -2659 -2123 -103536-11433

ServicesInet) 392 729 243 136 105 201 685 !92 III 115 197 Il9 19S Receipts 2571 2919 91S 159 152 901 3131 951 847 946 S99 1439 3741 Payments -2195 2190 -570 -623 -64) -606 -2441 b5 -o/3 -671 -691 .2700 -2954

TransfersInetl 193 271 45 43 37 4& III 41 Al 40 47 It7 170 Currentaccount balance -1006 -2913 -419 -660 -545 *442 -2132 -2714 -351 -46; -393 -141/1-1318 kononetary capital aovesents ineti WI6/ 1496 6b1 1098 109 630 2458 i02 392 5i5 514 169,. 1600 PrivateSector . 151 l9o 475 605 14 411 1165 104 27, 495 296 963 699 Direct investsent 199 349 52 115 33 201 401 63 /8 79 77 2i6 3u/ Loans,credits andother short tern 523 433 410 68b 11 253 1360 17 191 605 21? 635 575 Poftrtoli investsMtand otlirs 59 5 13 A -30 I1 2 24 3 2 3 32 10

Public sector 916 110 116 291 95 159 I93 99 114 1)ve 21.9 ISV 7II Stateenterprises 596 449 115 160 63 95 493 73 6s 15 168 499 495 Centralgoverneents /I 3S0 261 -29 13S 3? 11 21u, 25 51 luS 50 231 226

Errors andomissions 12 -Sil 559 -122 165 -35 53 5 0 0 0

Allocationof SDs 0 0 0 0 0 0 0 0 0 u 0 0 O Overall ulnae 130 -919 20 519 -171 195 331 -72 41 1.2 III 222 222

tonetarymovesents -130 919 -20 -519 111 -195 -331 COINtcialbants Inell -320 692 269 -542 199 Li4bilities lincresse #I -250 630 139 -119 -1? Asets lincrese -l -70 52 129 -423 216

Nonetaryauthorities 190 131 -269 55 292 Useof FundCredit -4 175 9 -2H -39 onetmarygotd (increase-I -119 lt5 0 0 0 Holdingsof SRs (lncrease -1 36 9 5 -11 20) Foreignnchange lincrease -) 159 -41 -302 -lo 300 Contra-entryto gold evaluation 119 -165 0 0 0 Centralinstitutions liabilities 0 0 0 0 0

...... *,......

/1 IncludingIrust Fundrepaysmnts of USI4 sillion in 1993,US$13 million in ItSI, US$22million IlI 1985 and US$26 millionIn 19i 12 Includingcounterpart to valuationchingis inIoreign eichangereserves amounting to losses of US114 million in 982,UWi29 ef*In 1993anod US$3i illon in1984 Soaurce9Ban of thailand - 131 -

Table 1.3. Non-FactorServices -1982 - 85 (Inmillions of U.S. dollar)

1982 1993 1984 1995 1996 (Estimates) (Projections) (Projections)

Receipts 2,57T 2,919 3,131 3,438 3,743

Freight andinsurance 220 259 289 318 350 Other transportation 143 157 196 21b 238 Travel 1,038 1,089 1,208 1,359 1,504 Investmentincome 245 227 229 272 298 governent, n.i.e. 100 113 97 102 112 Others 831 1,074 1.112 1,171 1,241 Of which: workers remittances froa abroad o18 946 B83 930 985

Payments (2,195) (2,190) (2,446) (2,700) (2,954)

Freight andinsurance (1521 (125) (147) 163) (181) Other transportation (99) (133) 12151 (140) (155) Travel (269) (343) (3301 (347) (3B5) Investmentincome (t.332)(1260i (1.481) (1.645) (1,793) Of wbich: interest payments 1,086 1,025 1,109 1,270 1,4b7 Government,n.i.e. (68) MI) 164) (72) (80) Others (276) (265) (2971 (333) (370) Net services 382 729 685 738 789

Freight and insurance 68 134 142 155 169 Other transportation 44 i 71 76 B3 Travel 770 74b 878 1 01. 1115 Investment income 11.087)(1,033) (1i2541 11,373) (1,485) Governnent. n.i.e. 32 49 33 30 32 Others 555 909 815 83B 071

Saurce: Bankof Thailand - 112 - Table 1 4: Normnonetary Capital lUit: EUSSmillion

1982 1983 Projection 19864 1985 1986 Private Sector (net) 75- 7sG i.765 969 Lona-term capital (fver one year) Inftfloi 916 1m331 1.833 1.691 1 .2 Direct investment 258 446 4'91 409 407 Eqp!ity (169) (315) (316) (259) (267) Loans (89) (131) (175) (150) (140) Other Loans 475 694 1,070 1,090 1,010 TrLde Credits 144 161 165 160 165 Others 39 30 107 32 10 Ottflo' 672 866 9L ol Direct investment 70 103 110 98 105 M*1ity (21) (19) (20) (-) (-) Loans (49) (84) (90) (98) (105) Other Loans 346 416 511 558 597 Trade Credits 116 128 136 128 151 Others - 25 109 - - s' Net 8 6s 2iz 907 Direct investment 188 343 381 311 302 I rity (148) (296" (296) (259) (267) Loans (40) (7) (85) (52) (35) Other Loans 129 Z78 559 532 413 Trade Credits 28 33 29 32 14 Others 39 5 -2 32 10 Short-term Capital Inflow 4,488 4,023 jA.905 2 L. 54 TAan 1,537 980 2,155 1,860 1,700 Trade Credits 2,674 2,668 2,391 2,221 2,272 Others - 277 375 359 277 282 Outflow 4.121 3-896 4,107 4302 4.104 Loans 1,299 1,070 1,689 2,065 1,796 Trade Credits 2,705 2,683 2,356 2,187 2,258 Others 117 143 62 50 50 Net 67 127 5615 Loans 238 -90 466 -205 -96 Trade Credits -31 -15 35 34 14 Others I 160 232 297 227 232 PbUic Sector (net) 91 710 6JQ 7711 -Lor-term capital (net) I 1.00 799 8550 711 Centra. and loaal governmeentet) 130 261 210 231 i_ TIflov - I 508 519 504 509 500 Outflew 178 258 2941 278 274 State enterprises (net) 73. S 619 An InLlov 857 768 989 962. 880 Outflow 184 230 460 343 395 Short-term capital (net) .-87 _-89 -461. ..- Central and local zoverrment(net) . Inflo£ Outflow State enterprises (net) -87 -84 -46 -120 Inflou 226 200 200 80 B7 Outflou 313 289 246 200 87 All Sectors (net) 1.667 2.40 1.690 .

1] Including Trust Pund repayments of US.'4 million in 1983, USS 13 miLlion in 1984., 'JS522 million in 1985 and US$ 26 milLion in 1986. Source: &lnk of T aiLand table2.1: MRIICIPAL91ERtHA469 E11EIIORTS

......

3910 1971 1912 1913 1914 1915 1914 1971 9157 1179 1900 list 1961 1191 1164p

1. Rkce V4lueImillion ofbabil 2,511 2,909 4,431 3,594 9,179 5,052 91,03 13,30310,424 15,59219,109 2t,3il 22,511 2,,1$1 25,932 VolumelItkoulnos of to 1si1,044 1,51t 21112 949 1,029 951 1,913 2,944 1,601 2,791 2,i00 3,032 3,184 3,41a 4,416 Unit value bI(htper tool 2,344 1,946 2,101 4,235 9,500 4,152 4,159 4,543 46,475,515 6,960 6,491 5,949 5,199 S,439 2. Robber Valuelaillion of batil 2,232 1,905 1,142 4,573 5,033 3,414 53,91 t,163 9,030 12,351 12,351 10,011 9,490 11,18133,004 Volumeltbomnfs of lonsl 214 306 i9 3931 3J3 332 313 402 442 321 155 412 544 5;5 532 Unit valuelbaht per ton) 6,099 4,186 5,641 13,13013,111 30,43814,184 15,331 13,140 21,109 27,135 22,96211.419 21,2:t 2139,9 3, Kalue/a Value(millt3c of bahil 3,949 2,29t 2,085 2,9t9 6,01 5 .105 5,411 3,345 4,275 5,44 1,72991,49 8,330 9,486 10,141 VolumelIthouands of tons) 11448 13,73 13,44 1,386 2,302 2,105 2,419 13542 1,912 2,04 2.203 27,51 2,833 2,439 3,343 Unit valueIhlah per ton) 11360 13220 1,131 , 142 2,641 2,711 2,341 2,139 2,111 2,802 3,314 3,243 2,943 3,192 3,221 4, Tin("till Valueleillion ol babtl 1,618 3,569 1,664 2,03 3,096 2,241 2,913 4,542 1,229 9,252 11,341 9,091 7,113 5,265 5,280 Voluae thtouuandoof lensl 22.2 21.9 21.9 22.7 201. 14.1 20.0 2134 26.9 31.3 33.9 30.1 2419 11.1 1135 Unit valvelbah poer tono 12,732 1,13817,190 89,162149,083 134,942 14,6450 212,243 249,147 295,514 334,118 302,28 3112,301 297,055 261,101 5. lapioa producti Value(billion ofbahi) 13223 1,240 1,541 2,531 3,936 4,591 1,529 1,120 lu'i92 9,89 144,971 3,44 19,15 131,38712,600 Value.4thousonds of tonl 1,327 1,123 1,331 1,934 2,396 2,383 3,121 3.J34 6,299 3,941 ,211 4,264 1,515 5,191 4,510 Unit valueIbaht per ton) 922 13104 1,160 1,361 13,01 1,921 2,023 1,952 1,132 2,497 2,933 2,425 2,52 2,963 2,521 . enIfand Jute Veleeleallion ofthbil 719 S35 1,017 3,034 i4l 643 519 417 449 391 354 71 36 28 490 YolueIthounanhs of Lonse 253 212 255 264 241 I56 338 el 91 79 SO 20 0 7 I1 Unit value4b04t per tonI 2,190 3,442 4,241 3,991 3,421 4,090 4,195 5,148 4,931 4,949 5,047 3,691 4,141 4,260 7,114

Valuvlelillon of bahi: 94 f92 1,264 1,141 3,157 5,694 6,542 7,445 3,910 4,791 2,975 9,512 12,932 4,338 5,222 Volute Ithouandsof tonol ) e56 1 409 215 444 595 1,124 1,455 1.040 1,190 452 1,119 2,206 1,537 1,242 Unit valuelbaht per tool 1,t11 2,3O8 3,102 4,213 9,462 9.566 ,081 4,500 3,i11 4,032 6,596 9,551 5,862 4,124 4,205 9J. Sriep 4 Valueleillien of bAil 224 247 340 804 402 691 3,1411 1,11 1,500 2,3172 1,961 2,336 2.144 3,644 2,799 VolumeItbouavnds of tonsl 4.4 3.4 4.1 14.9 10.3J 335 15.2 33.1 15.4 39.t 17.9 Is8. 20.1 20.2 19.l Unit valueibaht per toni 34,96444,1a2 50,39 54,050588,126 65,S I 00 9,534 95,41491,542 127,349109,461 113,I S3 31),251151,022 144,010 T.Tell Valveleitliosn ofthal 334 li3 205 422 402 443 749 544 254 llie 0 4 0 0 6 VolumeIthoulnds of co l 29 0 40 52 33 43 12 39 is 6 0 5 0 0 365 Unit valuelbaht per tv el 5,424 4,64I ,tiI 3 8,l 4 11,43410,344 30,35014,000 13,93319,467 0 9,200 0 0 335714 10. lobaccoLeavs ValueInillion of bahtl 191 236 284 309 445 594 699 924 1,14. 1,2431 1731 13739 2,344 1,191 13,3t Voluo Ithououndoof tonol II 13 Is 36 15 11 22 29 35 34 39 4 319 3J 34 Unitvalue lbaht per tono 39,24611,934 33,489 139,11SO3434 32,359 31,135 33,022 33,352 34,50533,103 41,871 44,54550,s3 45,490

Valueof prlncipaleipo.t 30,94911,812 14,119 19,458 33,914 30,144 40,29443,465 49,314 61,t 51 11,05394,462 6,'33312,403 11,101 Othergeports 3,923 5,383 1,113 13,14933,925 14,161 20,503 253542 34,99344,526 43,344 46,339 13,595 74,l69 94,129 Totalerchandlue egports 14,772 17,215 22,491 32,22449,199 43,001 40,191 11,198 OI3O,S 101,119133,191 13,001 159,129 144,412 115,231 djustetal for DIPlb -502 583 -143 -914 .791 -42 -800 73J5 -914 1300 1153 2944 -2523 -1394*117 Ihrchandiseexporti g,0.4. 14,210 14,t92 213750 31,252 49,002 44,363 60,34 10,44S 52,251 304,819132,041 330,38l 151,23 145,014113,520

Ia Inclu4ingelte groatind etal 14 Incluslltiest soch as Emploaiticshipents personaleffetts, teporary enports,etc. Source:lank of thailand ijble2.21 OIKRMERCHANDISE IIPORTS iillion oflahtil ...... ,,,,,,,...... ,, ,,...... , , .... b......

1970 1911 19712 191J 1974 1915 1916 1971 1978 1919 1990 1811 1912 llt3 19140

...... , L ......

AqritulturalProducts 1,114 1,429 1,691 2,419 2,914 z b24 3,699 4,644 5,429 Ie8 4,936 9,18110,489 9,84810,491 tegleHsand bloc salpt leans 255 255 211 374 454 414 146 1,059 1,161 1,375 1,441 1,H93 1,15 1,557 1,71 SolVem 14 17 23 14 47 133 48 9s Sl 68 29 23 It 9 9 Strqhlem 103 151 ISO 241 424 482 J74 299 372 495 61 901 926 19qO 809 lapeklitr 134 141 149 119 195 1"9 211 244 231 264 255 2i5 is? 250 220 Castorseeds 93 12? 91 712 215 103 251 51 281 705 0 0 Q I 0 56dlaasn Stich let 34 60 101 191 281 95 92 54 51 U6 Ito S! 181 210 414 Hidesd skins 52 47 102 98 1C 34 54 53 16 1"3 1i 115 102 105 195 Cattle 13 91 115 1S3 120 III 141 Z15 251 209 99 21 25 43 33 Otheralriciltlral products 352 537 684 "0 1,160 1,033 1,515 2,119 3,143 3,843 4,251 5,991 7,119 5,123 4,11

FllfryProducts 143 249 42 111 180 1,007 1,34 1,9252?06 3,64i23,584 4,496 4,812 5,061 5.885 tuttic fish,Iresh I 3Jl 96 141 213 340 505 432 46o 1,022 1,471 1,01 1,336 1,780 1,47 1,693 Cottlefish, ialtedin irine I I 68 16 83 102 130 209 318 362 318 416 401 6t0 8o Otherfis%ry prodtis 105 153 220 449 365 400 402 1,052 1,466 1,129 1,907 2,612 2,417 2,194 3,192 ForstryProducts 63 104 135 331 249 2l 3159 218 100 52 70 91 103 109 iantal Products 440 798 619 158 1,219 914 1,253 1,892 1,801 2,391 4,013 2,123 2,051 1,540 2,308 Fleorile 222 311 222 224 279 204 245 229 206 252 314 332 320 219 lie IIStqZten83 329 322 240 467 376 532 798 1,020 420 1,41 319 200 132 220 Ironsmes tocetlratts 8 I 0 0 0 0 0 0 0 0 0 0 0 0 0 * Olterelseral products 127 157 135 214 543 394 456 185 S5o 1,526 3J112 2 01? 1,511 l1lIq 1,120 IbaulactrilngProducts 108 1,430 2,193 i,0708,311 8,05112,161 14,510 20,155 29,173/40,040 45,11150,213 55,020 70,913 Pineapple,canned 55 44 51 75 280 346 405 893 1,201 1,244 1.432 2,039 I1,9 1,011 2,84i arments 18 41 251 440 1t5 98y 1,559 1,493 7,461 3,511 4,314 1,03a ,006 9,U1112,294 9olastes 4 45 36 91 312 500 419 491 745 507 52i 364 iq6 i5I 4O9 8i3 Cesent 83 90 218 $14 450 504 3)9 211 33 33 52 99 2'9 198 16 Petreleveproducts 3 132 48 319 303 230 101 I 2 13 10 9 13 15 31 Spinsing 5 21 112 159 144 11 445 131 890 141 1,133 1,276 1,203 1,141 1.500 silk,IcIrns 34 30 29 39 34 2t 29 3o 38 41 15 139 15i 144 1f2 1Urills 23 62 271 1,021 131 803 2,042 2,110 3,311 4,317 3,14 4,b2544,194 4,331 5,171 Juteyarn I Jutefabrics, tiine terdae rope,cable ol jute 14 l3 III l8 415 314 430 311 49N 756 140 44 150 115 101 GuRnybait 61 116 110 31J 3J0 283 11 11 IZ5 024 111 420 542 395 1,278 Iront stellproducts . 41 46 li1 114 335 145 211 235 426 676 1,421 "9 oil 319 1,315 IHoseholdutsi ofIs ool to 33 72 135 16 205 238 I24 3J0 356 371 411 401 450 502 PruhKus stortn anOJeIerV 137 232 383 641 1U 761 91 1,210 2,059 2,754 3,713 5,012 5,249 1,242 1,33J Otheraufatturvrii pfoducts 215 340 691 1,645 2,133 2,304 4,534 5,111 3,32913,353 21,344 21,9i6 25,111 28,201 34,431

TeeprrNyetpots 364 625 916 919 101 858 951 1,38J 1,363 2,511 3,411 2,444 1I1,1 1,102 110 RIEopwrts 522 598 115 1,010 1,11 935 608 101 113 1,342 2,191 4,033 5,69 2,150 3,162 IlopieaticS96ip fts 63 82 97 145 135 27 23 11 22 19 71 57 27 42 56 teroonalNvIoehold Eflftos 37 53 55 66 if IJ 14 72 62 1J II 9Y 233 133 JIO Others 212 is 41 41 1 33 12 11 3O ItO 215 24 64 U .38

Total 3,123 5,363 1,113 12,1t 15,925 14,16l20,503 25,542 34,10144,123 61,344 48,319 S3,59 14,0U U4,129 ...... S9ucte lank of Ibill^nd Table 2.3: COMPARATIVESTRUCTURE OF MANUFPCTURINGSECTOR

Colom- Indo- Ivory Malay- Philip- Tuni- Thai Brazil bia Egypt nesia Coast Korea sia Mexico pines sia land

Growth Rate (%)

7.6 5.1 4, 1/ 8.4 1960-70 5.4 5.1 4.3 3.9 8.0 8.6 6.5 6.4 6.0 7.0 7.1 1970-82 7.62/ 5.4 8.4 7.7 5.7 8.6 7.7

Manufacturing 10.1 6.7 7.81/ 11.4 1960-70 - 5.7 4.8 3.3 11.6 17.6 - 10.6 6.8 6.6 11.6 9.9 1970-82 7.&i.1 5.2 9.3 13.4 5.4 14.5 Share (%)

Manufacturin Share in GDP (%) 19 20 83/ 13 1960 26 17 20 a 7 14 9 21 24 13 19 1982 27 1 21 27 13 12 28 18

1/ Figures are for 1961-70, not 1960-70 2/ Figures are for 1970-81, not 1970-82 3/ Figures are for 1961, not 1960 TI/ Figures are for 1980, not 1982 Source: World Development Report, 1984. Tuble 2.4 C(PARATIVE DATA, FUREICN 1 EDEAND MANUFAC7WIN

ColoaT- Indo- Ivory Malay- Philip- Sri Tuni- Thai- Brazil bia wypt neaia Coast Korea aia Mexico Morocco pines Lanka sia lard

la~h (% p,.s) Manufactured Inportsp 1960-79 13.5 10.4 11.3 14.7 16.4 23.8 14.8 12.8 11.7 12.0 7.5 14.7 15.2 1979.80 17.6 26.4 13.2 45.5 7.9 -14.3 35.0 65.0 -1.2 6.1 35.1 16.8 17.9 1980-81 -15.7 15.3 75.7 31.9 -28.6 17.2 20.2 - -7.2 1.1 -11.1 11.0 8.7 Manufactured Exrorts 1960-79 30,5 28.2 9.3 - 14.2 51.5 19.2 19.1 15.5 24.5 - 22.9 10,8 1979-80 32.1 -12.2 -9.0 -6.4 7.5 17,9 31.3 134.8 33.9 37.3 49.2 32.0 42.7 1980-81 21.0 13.8 -22.7 103.2 19.9 21.1 -1.6 - 8.8 10.5 23.9 -0.0 -1.0 Share (X)I Tbtal OgoortaJGDP (X)ha 1960 5.3 9.7 14.6 9.7 27.) 0.8 51.8 6.4 17.4 9.0 25.7 15.1 16.0 1979 7.5 16.1 10.8 31.7 27.5 24.8 54.5 7.2 12.5 15.7 31,0 29.1 19.1 1980 8.5 13.3 13.3 31.4 38.4 30.1 58.4 9.2 13.4 16.8 24.6 30.2 19.4 1981 11.0 9.7 14.0 26.2 29.8 32,3 52.0 8.4 15.2 14.7 25.1 31.1 18.8 Total Iffyorta/GDP {X) 1960 6.1 12.8 17.1 6,6 23.2 8.8 39.7 9.9 20.2 10.2 27.6 24.0 17.8 1979 9.7 13.5 22.5 14.7 27.3 33.5 38.6 9.7 24.6 22.5 45.8 46.6 26.0 1980 10.5 15.2 21.2 15.5 37.7 38.3 44.9 11.7 23.3 21.8 54.0 48.4 27.5 1981 11.4 15.7 38,2 15.6 28.1 39.7 53.0 10.1 29.5 20.4 43,8 55.3 27.2 Manufactured IffprtJ/ Total Inport 1960 54 74 50 62 74 58 42 84 58 70 49 67 68 1979 44 73 66 67 71 55 67 83 53 65 55 61 63 1980 41 70 59 65 72 43 67 83 46 59 53 57 58 1981 36 70 57 70 56 43 65 - 41 58 53 57 58 Hanufactured Exports/

1960 3 2 12 0 1 14 6 12 8 4 0 10 2 1979 39 22 20 3 8 89 18 29 23 35 12 34 25 1980 39 20 11 2 8 90 19 39 24 37 19 36 29 1981 41 28 8 4 10 90 20 - 28 45 21 33 27

Source: WDR 1981, 82, 83, 84 ad lnr6national Financial Statitics, Yearbook 1983. Tubi 2.5

1h? riW Actvtrln9 Sletori Valwus t output, valw Added, Irports. crpor%, Gr%vth pJtI. Pljl@in 1975, I90

IIDJWSTA3ALCSIJJaSrCAT4 VxLur Or OUTPUtv_ VALUC O - tDom?3 _ rPrT1,v.OU7?VT 4Lb 1915 1960 1ItT: aS90 1977 9S70 1775 Yi 1770o 17 M

I .000 67.309.1 153,397.0 23,037.4 37,134.1 l457,6 *6,30.S 19,076.3 49,7l5.1 I1t' 31.4 2 gtAg 6,235.6 26,191.1 * 5.631.1 10,866.3 30,0 937.9 6.5 96.0 0.1 0,4b 7.9 3 TOSACCO 603.7 1e4,217.0 3,76.0 6,767. 700.1 1,096.7 71.77 1,135.3 7.1 4 TCETILCS 33,769.1 6.491.7 11.31.6 16,701.7 1,14, !JjX J.XI.fJ.jt1.f III6.1 13.7 3 LcATWCR 31,06.4 4,976.1 133.0 1,624,4 39.9 '11, 1 M S.$ 11.1 * 00 * w6OO tMopm 6,611.0 2),034.9 3,307.7 10,691,3 117.4 1,044.3 1,4-13,3 3, 017C 17, 7 PAP90 & PAPtA PF40=S 6,323,7 33,313.0 3,0.6 9,147.1 1,405.2 3,741.9 61.4 401,6 .31 1.7 I BAStC IHOUSTPJALCKWrJCAU I3.S1 $ 014.4 2,226.3 2,691.3 5 ,430,6 1S,376,9 *.3 434.0 123 *.7 9 CK4ZlCAL?PVTous 3,530.9 7,81.17 ,64,5 7,6l4.0 16713 546,0 1,5 3.0 0.1 10 PtriItpePs S ,CToLczuPPoo=S 16,639.1 30,467.7 4,149. 19007.0 2.6 11,900.7 351.1 69.6 15 1 fUlfj S R5S5Cf PP^ODCKS 6,011.6 16,171.9 3,369.6 5,116.3 221, 10.0 30546,2 13,236.1 16.9 60,4 13 PLASTICPFOPUCTS 2,41$.6 3,312 J1,3l1.$ 23,2444 99.5 609.7 I3I1L0 . I).& S.6 11.5 13 CXMAJUCS EAWuMIH WARC 4,0,0 1,903,6 331.7 1,003,1 160.3 137.5 1164 311.9 4.4 16.4 14 CLSS 6 CLASS FPAOTS Lt ! .4. - IflI.A 642,4 993.1 31t10 473.1 30.9 137.97 32 4.4 15 QIVR WI40KETALLICPTOTcs 3,640,i 123547.7 1,404.7 4,163,3 391.0 3,040.3 593.7 142,4 15.4 IA 16 1MM * srcclC 6,497.6 11,10.9 3,103.0 3,37.3 4,16.1 1°,115,7 104.6 1,035.7 1.6 9.3 17 WO.rIcPJu MZALS , 4,1$3.1 11,101.9 936.6 3,993.3 1,34S.9 4,176.7 ,3974.4 15,933.1 57.4 61.0 is rATIC .nTA1s. 4,213.0 1,276,3 1,469.1 3,000.5 3,445.2 4,516.0 325'7 1,301.5 ..61 14.5 It KACHOIRWW 4,*43,9 )j 34 1,631.3 4,357,0 11:430.3.19,55116 6. 663,1 1.7 5.1 32 CUCTP.CALIN.O ICgtV S * UP. 4,31S.6 20,733.0 1,401.6 6,131,5 3 443.3 130,40,1 444.3 6,176,9' 10,9 312X 21 TM1I5P0RTCgflpl'fs 33,763.3 44.906,7 4,366.6 14,206,7 6,763.6 13,631.u 14.6 145.1 0.1 0,3 33 oQTi mrIrAC`rTcoD P0tZOtTS ,106.7. 9,623.7 3,001.6 4,625.3 1,245,3 3,511.7 1,041.3 4,6203. 190 49,1 tOTALe 340,766.3 163,043.6 79,0912 176,734.4 46,705.0 134,997.9 323,1653 112,71.0 13, 20.0 Table 2.6: Manufactured Exports of Thailarl and Some Other Countries - Solected CommoaityGroup

WMpor&Valuo (Mil. US Dollars) Growth Rate (%) SITC5 1970 197S 1980 1982 1970-75 1975-80 1980-82

'rhailand 1.6 12.8 45.7 54.0 51.6 29 8.7 Philippines S.; 21.2 88.6 95.4 32 33 3.7 Malaysia 19.6 61.7 174.7 103.4 26 23 7.9 Indonesia 5.4 24.3 83.8 61.S 35 28 -14 Korea 11.4 74.8 780.2 731.1 45 60 - 3.5

SITC 5 : Chemicals Source : Statistical Yearbook for Asia and The Pacific 1975, 1982, United Nation.

e~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. Table2 .6:(Continued)

Hxport Value (Mil US. Dollars) Growth Rate (a

SITC6 1970 197S 1980 1982 1970-75 1975-80 1980-82

Thailand 10S.1 338.9 1,439.2 1,145.5 26 33 -11 Philippines 68.9 238.4 532.2 334.9 28 17.4 -21 Malaysia 388.7 691.5 1,796.7' 1,275.6 12.2 21 -16 Indonesia 11.0 92.0 . 614.7 817.2 52.93 46 1S.3 Korea 220.9 1,484.6 6,241.9 6,722.0 46 33 3.7

SITC 6 : Manufactured Goods,Classified Chiefly by Material

Source : StaciaticalYearbook for Asiaand The Pacific1975,1982. United Nation.

f Table2.6: (Continued)

Export Valuos (thousand US. dollars) GrowthRate (%)

SITC 6.5 1970 1975 1980 1982 1970-75 197S-80 1980-P.

Thailand 8,704 81,067 329,g9O8 346,911 56 32 2.5

Philippines 5,434 22,503 74,694 n,a, 33 27 n.,a

Malaysia 6,546 33,902 180,038 n,a, 39 40 n.a.

Indonesia - - 45,836 43,530 n.f. n,a, -2,5

Korea 84,943 648,922 2,210,097 n,a, 54 27 n,a,

SITC 6.5 : Textileyarnp PabricsETC

Source : Yearbookof InternationalTrade Statistics1972-73, 1978, Vol.I 1982. United Nation. Table2.6:(Continued)

ExportValue (thousandUS. dollars) GrowthRate (%)

SITC 6.9 .1970 1975 1980 1982 1970-75 1975-80 1980-82

Thaila.~nd 1,480 11,017 54,277 47,336 49 37 - 6.5

Philippines - 1,773 18,484 n,a, - 60 n.a,

Malaysia 5,107 14,672 42,855 n,a, 23 24 n,a.

Indonesia -

Korea 12,167 124,058 773,667 n.a, 60 44 n,a.

SITC 6.9 : Metal ManufacturesNes.

S~~~~~~~~~~~~~~

V'I,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -~~~~~~~~~~~~~~~~~~~~~~~I

Table2.6:(Continued)

ExportValue (N14.US. Dollars) GrowtthRate (M)

SITC 7 1970 1975 1980 1982 1970-75 1975-80 1980-82

rhailand 0.7 30,3 372.0 3S7.3 112.5 65 - 2

Philippines 0.8 12.2 127.1 167.9 72,5 60 1S

Malaysia 31.4 263.3 1,722.8 2,161.1 53 45 12

Indonesia 3.6 32,1 109 179.6 54.9 28 28

Korea 61.5 702,1 3,461 5,881.3 62.7 38 30

SITC 7 : Machineryand TransportEqulpment

Source : StatistLcalYearbook for Asia and The Paciflc1975,1982. UnitedNationbs

'f Table 2.6: (Continued)

8xport Value (thousand US. dollars) Growth Rate (%)

SITC 7.7 1970 1975 1980 1982 1970-7S 1975-80 1980-82

Thailand - 24,060 325.332 323,809 - 68 - 0.5

Phillippines - 2,260 55,921 n:a. - 89 n,a,

Malaysia 7,236 126,556 1,180,438 n,a, 77 56 n.a.

Indonesia - 12,948 94,620 11(,939 - 49 11.2

Korea 43,874 441,629 923,560 n.a. 58 15.9 n.a.

SITC 7, 7: Electronic machinery Nos. Etc.

r6 Table 2 .6: (Continued) Export Value (thousand US. dollars) Growth Rate (%)

SITC 7.9 1970 1975 1980 1982 1970-75 1975-80 1980-82

Thailand - - 8,438 43,844 - - 127.9

Philippines - 2,80S 93,185 n,a, - 101.5 n.a.

Malaysia 11,275 27,620 90,924 n.a. 19.6 27 n.a.

Indonesia ------

Korea 9,207 183,669 790,598 n,a, 81.9 34 n.a. 0

SITC 7.9: Transport Equipments Table 2 .6:(Continued)

Export Value (Mul. US. Dollars) Growth Rate (%)

SITC 8 1970 1975 1980 1982 1970-75 1975-80 1980-82

Thailand 2.8 83.5 413.4 577.5 97,2 37 18.1

Philippines 9.2 100.7 609.6 611.6 60 43 0.1

Malaysia 22.1 243.2 404.8 424,0 61 10.7 2.3

Indonesia . . 20.9 120.2 141.1 n.a. 42 8.3

Korea 352.5 1,882.6 5,282.6 6,640.9 40 23 12.1 IJ

SITC 8 : Miscellaneous Manufactured Articles

Source : Statistical Yearbook for Asia and The Pacific 1975,1982. United Nation. Table 2.6 (Cont inued)

Export Value (thousand US. dollars) Growth Rate (%)

SITC 8.4 1970 1975 1980 1982 1970-75 1975-80 1980-82

Thailand 993 53,S54 266,641 370,735 124.8 38 17.9

Philippines - 33,055 279,317 n,a, - 53 n,a,

Malaysia 8,674 42,181 149,724 n,a, 37 29 fa.

Indonesia * * - 98,274 116,938 - - 9

Korea 213,566 1,148,223 2,949,404 n,a. 40 60 n,a,

SITC 8.4: Clothing

! Table 2 .6 (Continued)

Export Value (thousand US. Dollars) Growth Rate t%)

SITC 851 1970 1975 1980 1982 1970-75 1975-80 1980-82

Thailand 17,a381 57,760 - - 82

Philippines - 3,005 67,077 n.a, 86 n.a.

Malaysia 3,431 14,702 40,773 n.a. 34 22 n,ea

Indonesia - - . - --

Korea 17,268 191,213 874,S37 n.a. 62 3S n.a,

SITC 851 : Footware Table 2.6 (Continued) Export Value (Mi!.US, Dollars) Growth Rate (%)

SITC 9 1970 1975 1980 1982 1970-75 1975-80 1980-82

Thailand 22.6 51.9 184.4 88.8 18.1 28 -30

Philippines 0.5 133.4 902,5 1,31..6 205 46 20

Malaysia 14.0 35.8 70.6 66.1 21 14.6 - 3.5

Indonesia 2.7 2.6 32.5 59,2 - 2 65.7 35

Korea 0.4 11.1 85 71.7 94 S0.3 9

SITC 9 : Co.moditi8s and Transactions not Classified according to kind,

Source : Statistical Yearbook for Asia and Tho Pacific1975, 1982. United Nation.

f Table 2.7:Distributionand Growthof ManufacturedExports by CbmxUity

Percentage Growth1/ Value (MillionBaht) Distribution Rate (NT 1970 1980 1983 1970 1980 1983 1970-80 1980-83

Total 808 40,090 55,020 100.0 100.0 100.0 47.8 11.1 ,1 Pineapple,canned 55 1,432 1,871 6.8 3.6 3.4 38.5 9.3 Garments 18 4,894 8,873 2.2 12.2 16.1 75.2 21.9 Molasses 45 364 609 5.6 0.9 1.1 23 s3 18.7 Cement 83 52 198 10.3 0.1 0.4 -4,6 56.2 Petroleumproducts 36 70 15 4.5 0.2 0.0 6.9 -40.2 Spinning 5 1,133 1,147 0.6 2.8 2.1 72.0 0.4 Silk, fabrics 34 75 164 4.2 0.2 0.3 8.2 29.8 Textiles 23 3,616 4,331 2.8 9.0 7.9 65.8 6.2 Jute yearn & jute fabrics,twine cordage rope, cable of jute 16 740 715 2.0 1.9 1.3 46.7 -1.1 Gunny bags 63 778 385 7.8 2.0 0.7 28.6 -20.9 Iron & steel producLs 41 1,421 819 5.1 3.5 1.5 42.6 -16.8 Householdutensils of wool 18 378 450 2.2 0.9 0.8 35.6 6.0 Preciousstones & jewelry 137 3,773 7,242 17.0 9.4 13.2 39.3 24.3 Other manufacturingproducts 234 21,364 28,201 28.9 53.3 51,2 57.1 9.7

1 / End point compoundgrowth rates. Source: Bank of Thailand - 130 -

Table 4.1

PRODUCT UNDER IMPORT LICENSING

Product Category Final User Number of Items

A. Manufactured Goods Manufacturing industries (as inputs) 10 items

B. Manufactured Goods Consumers 11 items

C. Primary Goods Consumers 16 items

D. Raw Materials Manufacturing industries 3 items

E. Others (restricted due to health and other reasons) 23 items

Total 63 items

Note: As of August, 1984.

Source: Exnort and Import Control Division, Department of Commerce. See Table 1 of Annex IV-1. - 131 -

Table 4.2

AN EXAMPLEOF INPUT COEFFICIENTS USED FOR INDIVIDUAL DRAWBACK/EXEMPTIONOF DUTIES BY CUST'DdSDEPARTMENT

Product: TImmcation Flower Made From Cloth and Plastic

Input Coefficients

Quantity of input Input Specification Input Code per 100 kg of Wasrage product Rate

1. Fabric 510001/0! 42.CO)kg 20%

1.1 OOZ polyester Taffeta

1.2 1OOZ Polyester Pongee

1.3 100% Rayon Satin

1.4 Rayon Suede

2. Plastic 390001/03 48.60 kg 8Z

2.1 Low density Polyethylene

2.2 High density Polyethylene

3. Steel Wire 730001/03 20.00 kg

Source: Customs Department. Table 4 .3

ANJWZ OFINPUY S'flX AIBO(JM1 ifO ISDDOF WIY EXD1EIO()N

Product: Integrated Circuts; (a) tbnthly Export VoluToof the Co. - 6,000,000 Mnite (CERDIP Type)

(b) (c) (d) (e) (f) 1mdn allowable Duty-Free Worts input. Stock Balanoe Actually Usad for Rsninirg Balance Input Co,-efficients a/ for Duty-Free loport b/ Actual Exports (mpleted Allowd for Duty- (PCFneoed per 1,0CU - (a) x (b) x 6 Duty Free - (b) x Export Volume Free nrlort Iziported Inputs units of output) 1,000 Imports 1,0000 (c) - (d) + (e) c/

Dice 1,279 PCS. 46,044,000

FranM 1,177 PCS. 42,372,000

Base 1,213 PQS. 43,668,000

Gold Preform 1,154 PCS. 41,544,000 H AluzlrdiumWire 224 Fr. 8,064,000

Lid 1,085 PCS. 39,060,000

MsrkemInk 0,051 OZ. 1,836

Plastic Ralls 83 SErS. 2,988,000

Plugs 166 PCs. 5,976,000

Mylar Sheet 45 P(s. 1,620,000

a/ Thse inputcoefficients are aggregate coefficients. See Table 2.2 of AnnaxB for the detailld input-coefficients based an which the aggregate coefficients wre estinmted. b/ Inputs required to produce 6 wrt91' exports of the apany are allowed. c/ (c) - (d) + (e) with the .omoraint that (f) < (c). - 133 -

Table 4 -4

ALTERNATIVEESTIMATES ON AVERAGEDUTY (AND INDIRECr TAX) EXEMPTIONRATE

Average money Average duty Average duty and indirect tax Version value input- x and indirect . exemption and drawback rate output ratio]tax rate ] L

(1} 0.10 [Column (h) of Table 61

(2) 0.56 0.19 0.11 (Industrial [Column (f) Management of Table 61 Company a/)

(3) 0.56 0.28 0.16 [BOI firms only; Column (f) of Table 61

(4) 0.56 [1+0.321[1 + 0.051 - ] 0.21

(Industrial Mgt. Co.)a/

a 1 Industrial Management Co. estimates based on 172 Sector input-output table. 0.32 is the average nominal protectioa rate (1983), rather than duty rate and 0.05 is the average indirect tax rate. Average money value input-outputratio is in domestic prices. MALI4 .5

WAMIA1IIMV E ULW 0T mIlLSKIIWC 31BY mm42w7 TlUinAs -(fAD oFFicE)

imaaI Ic I S 1914 ti11 1974 I111 Il71 1ill 1913 M91 593 52im 1914 591 1914 MY? 19731 1979 1919 9 1911 W 191

3. IylesilsiaI $03,613.13,33 4,15.1 1,9518. 6,196?111,111.4 113641.1 14,M15. 31,930.7 11,41.9 33.1 132 1.1.1 I 34.1 . 31.1 14..E 3.3 19.4 31.4

664.6 M1.4 3,66. 13,16.1 1,999.3 1,611.51 ,341.1 5,416.92534. 2379.9 3.3 7. 112.6 21.3 I.s 26.6 14.3 26.6 19.1 21.9 KIII. 3~~~~~,313.63,119.9 941.3 414.3 961.3 3,034.1 1.161,1 2,219. 3,34.6 1,61.3 21.6 22.3 1.3 3.3 3.3 I's 4.3 4.6 1.4 7.5 Bettor 214.6 IN., 31.3 w 13.12,41.3 3,116.9 8,511.3 3,563.4 2,554.3 2,171.3 . .6 2.3 3.6 3.9 13. 4.7 4.3 3.9 3.3 3.3 1n-f.F4 317.1 191.1 3.11 519.6 114.3 5,444.5103,16.93,15.131,716.6 1,M341. 3.6 2.9 1.7 3.1 3.4 3.9 4.5 .1. 4.1 1.4 lucas 119.1 34.1 132.9 343. 1,136.1 634.4 413.1 444.5 161 424A6 2 .1 6.3 1.6 5.4 1.1 2 .1 2,1 6, 6.3 0.6 Intl 511.9 111.1 311.1 911.1 136.9 161.4 59.6. 1.4 19. 171.9I . 1.1 1. I's 6.3 6.4 3.3 3.2 .6 6,3 @4bs 313.3 832.1. 151.6 446.3 463.2 M461.91223.4 2,326.2 5,1291.91,139.1 4.5 3.3 3.2 3.4 3.3 5.6 3.3 3.2 2.9 3.6

3. 5ee1s,risI 4,323.3 731.35 2,411,0,613,196,3 21,941.4 3366.33,316 3.321,9. 31,497.441,1311. 14.2 16.3 71.4 81.3 61.4 59.3 62.1 it. 4 11.3 17.3 …-...... -. .---...... …...... 5.lae 2,533.3 2,361.716,134.14,696.4 1,3213 1,515.1.3,1111.9 9,937.4 1,416. 1,1323 2513 37.1 9. 31. 1. 33.6I 36.4 1.3 31 9.25II 6.5 liSpIKcPreicnts 1,39.3 51.6 0144.43S, 4,293.6 1,414.9 6,1132.356,644.3 9,3116.4 55,351. 14,441.6 21. 1.121.3 11.13.9 32.1 17.3 31. 27,3 23,5 30.3 molIlls aei Tealile PrEel 9.4 66.1 5,9.12.32,11.4 2,697.3 3,666,2 3,427.6 4,919.4 1,176.6 6,314.1 5.9 6.4 6.1 4.9 1.3 7.2 3.6 9.3 9.6 3.3 Called I rtita, hild 134.6 333.9 414.9 3S11. 261.1 55,767.2 3,331,7 4,661.9 1,443.3 1,611.3 3.4 3,3 136 4.1 4.1 4.3 6.6 7.1 3,7 9.9 TehApCeLeaves 333.3 316$ .143.3 49.3 136.12,3113.4 1163 I..1 1,36. 1262.11,446.6 3.7 3.3 3.6 3.6 3.5 3.3 3.5 1.4 3.9 3.1 WWIIte 3WE. 111.4 463.3 233.9 44.9 241.4 327.9 414. 13314 433.1 4.4 2.6 1.4 2.6 3.3 l 6.9 3. .3 6.1 6.9 Prfeuell Was$ 7.7 39.11 H6.3 42.7 7.3 327.6 691.3 914.6 2,661.9 2,447S .1 3 .1 6. .3 3,3 6.3 6, 2.6 5.3 2.7 3.2 ito all hsif Indoiel 3?% 11.391. 61.1 11.1 1.1. 46.1. 604.4 6163. 149.1 164.1 1.1 3.3 6.4 3.1 6.1 1.1 5.4 5.5 0.9 6.4 fl~uetia I tiqlpiea 22.3 16.9 3.7 14.9 36.3 13.4 373.9 41. 1 44606 344.6 6.3 6.3 .6I 0.3 6.5 6.3 6. ..1 6.3Ill Itat predicts 79.3 63. 62. 3 2.3 366.6d 516.6 5,66u. 1.66. 15.6 136.3I 2.6 3.6 6.4 6.3 6.9 2.1 3.1 2.2 6.6 6.3 SlOws 323.9 I61. 336.9I M31. 466.5 2,22.3 3,54N.3I3,593. 3,613.4 3,0t3.4 3. .4 ' 5 1.1 . 3.3 5.0 1.9 1.4 $1. 4.1 s.Mmti 139.1 1691.3 323.1 19.3 03.9 1,30.1 3,142.6 3,642.8 4,5121.64,309.6 7.3 M. 3.6 3.2 3.9 6.2 6.7 6.3 1.3 6.7 … -...... S2wIstl 194.6 347.3 273.1 33.3 176.6 49.1.7 4w 1.7,47.6 134.6 149.31 . 3.. .2 5.1 5.6 Il3 I.6 3.2 2.3 6.1 42Nisliam.me. 234.3 366.6 161.4 367.9 141.9 2,741.6 3,1215.13,46.6 2,710. 4,392.1 3.6 2.6 2.6 1.4 3.3 4.1 .13 4.6 6.6 6.6

TOTAL 7,7321.126,136.3 16,363.4 19,144A1.43,41.1 1619.1. 41,#312,112,736.443,623.1 13,214.1 346.6 266. 266.6 366. 266.3 166. 266.3 266. 166.6 266.0 ......

SOURCES lank of Thailand TABLE4.6

mAATIE AK W ENt DILLSURl ITTMm AN IF TIrILAS(READ omcE) ECIazi,9f9.I, 7r" .9 OKIHqIII

_ .. _ ... _ ... _ .,_._ ...... _ . .. .__...... _._..... _ .aoowcts~~~~~~~~~~~~NIIU IHlllllu if lahil 1 iii | @@ tt ,,,,...... _____.._...... -...------...... _ _ _ ...... _...... __ 9974 9972 9916 9917il19 9916 9101 list 9l1 991121 9174 91 91 9l 191l 1919 1910 1911 91 99021

1. Prte,blpestF18aela4 g 7,11 9,942 1,942 11,614 13,1 2I,7J1 41,46149,644 II,"? 1,113I n la 97 97 TV 97 94 n4 I .1 Le t.t .o 2,419 Crlle . 1,4 9,14 0,90 9,1 19,91994, 90,296 36,12 r,90li M I 44 Si 51 41 49 41 Is S 41 415 1.3 Cs.ust se* o totaen O t 96l19,64 1,094 28,611 5534 1,910 92,90619,162 19,641 1,213 1 1 6 It to 0 t 1 1139 1U 19. hIeAi. e Reciptl 1,6213 1,94 4,142 0,461 7,941 93,92096,M 5,691615,362 2,119 144 n n 1 14 is to 1 I s 3.Possti- lgai Fleaselag 414 5 @91 49 26 1,697 3,444 3,6 149,10903,119 I 6 4 2 2 I 0 6 9 I 1.9pill It mILeIh 614 US Ul 4 Sit 1,617 ,444 1,674 9,0111 93,12 I 6 4 I I I a 6 1 16 to 3. Itud 7,61 1, 114,4409,144 31,611 U,.4 43,6* 22,11643,414 1,N41I I6 l60 too I60 M4 96t 6o 960 l60 _.____...... ____....._ Its

BOURCZI bank of Thailand LA - 136 -

Table 4 7

ESTIMATEDAVERAGE LOAN PERIODS FOR SELECTEDPRODUCTS (HEAD OFFICE) IN 1983

Percentage Outstanding Estimated share of out- balance (monthly Accumulated average loan standing average) al value period balance x (Million baht) (Million baht) (months)

Rice- 21 3,608 12,780 3.4 Maize 6 1,031 5,057 2.4 Tapioca prod. 21 3,608 14,401 3.0 Sugar 9 1,546 5,721 3.5

Others 43 7,387 20,780 2.7

Total 100 17,179 71,325 2.9 a/ Estimated based on the percentage share data provided by the Bank of Thailand. In converting the national data to Head Office figure, the national data-Head Office ratio of the total accumulated value (1983) was used. - 137* -

Table 4.8

EXPORTERS CLASSIFIED BY OIUTSTAN,DINGVALUE OF EXPORT LOANS REDISCOUNTED BY THE BOT AS AT 31st JULY 1984

Percentage Total out- Average of total Outstanding of export No. of standing outstanding outstanding loan (millions baht) exporters (mil.- baht) (mil. baht) exp. loans

Less than 5 482 825.3 1.7 4.2 5-50 292 4,752.0 16.3 24.2 51-100 58 4,114.3 70.9 21.0 101-500 28 6,321.0 225.8 32.2 Over 500 3 3,620.2 1,206.7 18.4

TOTAL 863 19,632.8 20.4 100.0

Source: Bank of Thailand. - 138 -

Table 4-9

RESULTS OF BOT SURVEYON ACCESS TO TEE EXPORTLOAN

Size of Exporter

Type of Exporter Small Medium. Large Total

Total 100.OZ 100.OZ 100.OZ 100.OZ (a) User 12.8Z 71.3% 86.5Z 66.7Z (b) Non-user 87.2 28.7 16.5 - 33.3

TOTAL 100.0 100.0 100.0 100.0 (b.1) Do not know of the facilities 48.8 29.0 28.6 42.5 (b.2) Know of but do not use 51.2 71.0 71.4 57.5

TOTAL 100.0 100.0 100.0 100.0 (b.2.1) Due to lack of

understanding (31.0) (27.3) - -(27.5) (b.2.2) Been refused of credit (14.3) (18.2) (40.0) (17.4) (b.2.3).Do not vant to use (45.2) (45.4) - (42.0) (b.2.4) Other reason (9.5) (9.1) (60.0) (13.1)

Source: Industrial Management Co. (May, 1984), p.39. - 139 -

Table 4 10

RELATIVE IHPORTANCE(Z) OF VARIOUS DOCUHENTSUSED IN OBTAINING EXPORT LOAN FOR SELECTEDAGRICULTURAL PEtODUCTS

Pre-Shipment Post-shipment

Contracts Wherehouse L/C or Orders Receipts B/E *Total

Rice 18: 172 172 48Z 1002 Maize 30: 35Z. 10C 15 1002 Tapioca Products 15% 75Z 3% 7% 1002 Sugar 10oo - - - 1002

Total (1983) 28 - 41% 7% 24% 100X

-~~~ ' 4,14 nsMD snem cr mom M aA m vi TM w t^vEw,uaws AMBy Tmt ee a

1979 TMPat,AG A Ito D/A xof 310 NW AMno *Mhrs!/ lbcal rn7 d 310 eM AdMrc Othii TeAl TY" of ootDP pvOm -~~~~~/ .wme DIP - mt, ,/ 1. Pod 70.77X 27.09X 0.88Z I.26 1 45.572 78.35 18.87X 0.062 2.72 1= 45.1w 2. 1wrsp T d 82.86 10.20 5.15 2.79 105 ,14 78.64 2.U48 7.10 1.78 100 0.99 3. aH lateuia1-, mdtblat*pt Fish 29a.87 60.70 0.79 a.64 IOD 14,77 28,86 54.60 1.05 is.49 10 15.38 4. Htari&U, Fila, Lbrijwlean 9.64 8.81 1.41 80.14 IX) 0,04 3.50 0.52 - 95.98 105 0,28 Blatad1 btariaIA 5. Anlil udVpttAl OUSm hts 50.01 17.69 32.30 I0 0.06 94.82 5.02 - 0.16 I05 0.17 6. Ocinmls 59.36 33.44. 0,07 1.13 10o 0.60 0.8D 43.21 - 5.99 1OD 0.17 7* Hlu tfactundowx, CIali defly 42.67 14.88 0.07 42.38 100 25.18 34.88 17.37 0.18 47.57 I0 23.41 by IAteda1a 8. HI m4hnyAM Trauport Fulpmt 72M04 15.64 0.03 12.29 I3 0.69 80.01 I5.57 O.IS 4.27 103 1.03 9. a*ueonaowHuufactured ArtLclei 83.99 13.42 0.02 2.57 I00 6.15 80.69 14.87 0.10 4.34 100 6.18 10. laulin a trc w 0.05 - 19,83 80.12 100 5.80 0.12 0.04 33.84 69.0D 100 6.77 0muvd1lwlNE.8. X of 1fe od bIort Paymit 54.39 26,33 1.74 17.54 10E 30X2 55.06 22.48 2.40 20.06 1 100S

/ acd openOplnts, dedrrrd paywna, couipmit osles xd otfem.

I- .TABLE4.11 (continued)

PFUM= Msn O WM Mi MsaAMyPm BYrTm O Pr^MsrDwUOTA Yerit ii OM

_ ~~~~~~~~~~~~~~~1981 1982 TrpeofO2ai P/A Za /A ZEO 1 Adam Odea bca ofi IC ad ' mm" CUim Td W of pip rWW Wo.k P/P i.q.t WOX

1.s r 87.95S l0,2o -Z 1.762 iCz 54,44 85.9U (96.91) ff 32.521 -Z I.mn 10 56.1U 2. kwrv ard lbbn 76.15 2D.86 9,66 2.33 100 1.02 85.56 14.19 - 0.25 100 1.68 3. lWudiItterlali, ln hbl 3mpt RmI 26.51 64.15 0.76 8.58 ID 11.01 28.69 (96.49) 59.67 0.30 11.03 too 10.05 4. bttria1, Bts, Ijjbdcats ad 2.78 0.50 0.45 96.27 100 0.42 69.04 (79.05) 14.65 13.15 3.16 100 0.02 Pated l tecrW S. Mbdl ad Vet&bIa Lib ad hau 71.80 28.20 - - 100 0.18 95.73 3.91 - 0.36 100 0.30 6.a cala 47.02 50.73 - 2.25 100 0.68 51.65 (92.83) 43.40 0.33 4.57 100 0.78 7. Ihiufazd Cook, alfli.d Oddly 39.65 18.82 0.06 41.75 I 18.03 48.50 (86.71) 19.69 0.06 31.73 100 16.35 by Hzttl 8. WyhLnernyad eampxtt 4upnit 83.03 14.33 - 2.64 100 1.23 74.75 (95.54) 17.22 - 8.03 100 0.88 9, IUmll ao Nhoifet Afrtics 82.99 12,V8 0,02 4.11 100 7.48 83.14 13,72 - 3.14 I0N 8.31 10. Hiamll-uo Tlauaw ard 0.15 0.01 17.83 82,01 100 5,53 0.14 0.01 30.67 69.31 100 5.62 mwauas1eN.E.S. S of Ty cebpot Fayt 66.35 17.81 1.10 14.74MA 10 1 68,64 18.12 1.77 11.47 IIX 10E

/FtM tn PaMWdM rupi-a sham of SI& V11. F

TABLZS 4.11 (continued)

aIB sMM=, OFr s3 mAMM , TMI wONE3 D AmAIe Tax (1 OM

Opef.m* /A ZIf D/A d 1/I~rir~ WC~~~~~~~~~i amCUdA1~/C afesH of WtC Rd@baid AwnmMtW Odin Ta1 lye Ot DI 0t0uV w/ av

to RIid 83.6jUZ 13.01 - 2 I.n lox 53.0X 1. 81.32 16.76 0419 1.76 ion 50.83 2. qwas adthmo e.n 11.71 - 0.07 100 1.14 3. Q% 1lggdab, wa11 & 1pt 27.67 59.53 0.10 12.70 100 9.35 4. Nmg.a1a kln, 1&L,=* wi 61.1 12.15 - - 10 0.03

S. MadI ad Vuameala ad hn 7606 23.90 - 0.02 I00 0.16 Chmdes .36M 37.47 - s5.59 lO 0.79 1:. r ox*, amuma alkfly 51.13 2.43 - 25.44 100 15.85 7, 43,41 18.64 0. 37.67 100 19.76

8. Idwy ad Twuct fldp t 61.83 23.44 - 14.73 I00 1.01 8. 74.33 16.54 0.0 9,10 10 0.97 9. jtlna nAmlhuifactad kt>lu 78.70 17. - 1.42 100 10.27 10. nU .11 TIEact.m ad 0.02 - 32.94 67.0 100 8.33 9. 81.90 14.55 0.03 3.36 100 7.87 Cmtiaa LL.. ZXdTypucf bpct hnl 65.40 19.79 2.75 12.06 iD Ira Avg 61.97 70.91 2.00 15.17 1a00

Slarm Um&cif halgid.

, .~~~~~~~~~~~

. t

j,bI 4.12

lIz sTN OFWm Ws 3A5 ai of OA511c Vt Cm? MM

M"" C _ Oar S4k 30a" 60Dy 90 h" 120a" lOh yw 20 hs 3tO 1 360 1y tIpeS if ThtaI

1979 Z 97.10 0.31 1.0 0.60 0.54 0.01 0.01 0.01 - 100.00

19 z 96.6 0.28 0.56 1.X2 0.36 0.86 - IO0..-

1961 S 96.95 0.27 0.50 00 0.48 0.97 - - - - lo0o0.

19821 95.J1 0036, 0.67 0.96 0.78 1.46 - 0.34 0.12 - 100000

198 X 91.78 1.21 0.96 1.59 0.85 3.06 0.01 0.25 - 0.22 IO.0D .Average Z 95.54 swreal etk 1*S - 144 -

Table 4.13

OUTSTANDINGVALUE OF EXPORT BILLS EXTENDED BY THE BANKOF THAILAND (HEAD OFFICE) (Classified by Nature of Documents)

(Millions of Baht) (Z)

PRODUCTS______1981 1982 1983 1981 1982 1983

Preshipment Financing 11,414 10,197 12,923 90 70 76

Letter of Credit 5,918 3,806 4,717 47 26 28 Contract or Purchase order 4,165 5,402 7,087 33 37 41 Warebouse Receipt 1,331 989 1,119 11 7 . 7

PostshipmentFinancing 1,253 4,428 4,192 10 30 24 Bill of Exchange 1,253 4,428 4,192 10 30 24

Total 12,667 14,625 17,115 100 100 100 - 145 -

Table 4.14

SIZE DISTRIBUTION OF GARMENTEXPORT MANUFACTURERS (SURVEYEDDU2RING 1982-83)

Number of Percentage of Size/Categories Plants Employment

Small-scale Industry (less than 100 workers) 35 36.5

Medium Industry (small: 101-250 workers) 26 27.1

Medium Industry (large: 251-500 workers) 24 25.0

Large-scale Industry (more than 500 workers) 11 11.4

TOTAL 96 100.0

Source: Export Service Center, Thai Garments, 1984, p. 5.

Table 4.15

SIZE DISTRIBUTION OF EXPORTMANUFACTURERS PRODUCING CANNEDSEA FOOD IN 1982

Number of Workers Number of Export Manufacturers

i - 100 13 101 - 200 2 201 - 300 3 301 - 400 2 401 - 500 l 501 - 600 _ 601 - 700 3 701 - 800 1 1,7L1 - 1,800 1

TOTAL 26

Source: Export Service Center, Report on Canned Sea Food Products, 1984, p. 7. - 146 -

Table 4-16!

PRODUCTLISTS FOR BOI-PROMOTEDTRADING COMPANIES al

Items of Goods CCCN

(List No. 1)

1. Cows 010211 010221 2. Buffaloes 010212 - 010222 3. Fish, Fresh, chilled or frozen 030127 - 169 4. Cuttlefish, squids and octopus, fresh, chilled or frozen 030341 - 44 5. Octopus fresh chilled or frozen 030344 6. Tapioca froducts 070601, 070602, 070605, (including tapioca flour) 110602, 230305 7. Maize 1005 8. Rice 1006 9a Grain sorghum 100702 10. Cereal products 110101, 110103, 110104, 1903, 1905, 1907, 1908 11. Cotton seeds 120133 12. Castor seeds 12014 13. Sugar 14. Molasses 170300 15. Fish meal 230101 16. Portland cement 252321. 17. Fluorite ore 253106, 253107, 253109 18. Tungsten ore 260118, 260119 19. Rubber smoked sheets grade 4001 20. Other bovine cattle hides 410222 21. Kenaf 570402 - 05 22. Unwrought tin 800102 23. Mineral ores 2500 -2532,2600 -2604 2700 - 2717 24. Goods which are subject to quantity control or export restriction by law.b/

a/ Appended to the announcement of the Board of Investment No. Sor. 16/1980. b/ Goods would be under the list No. 2 if At is suspended according to the announcementof the quantity control or export restriction. - 147 -

Table 4.16 (ocntiuied)

PRODUCTLISTS FOR BOI-PROMOTEDTRADING COMPANIESa/

Items of Goods CCCN

(List No. 2)

1. Fresh frozen chicken 020201 2. Dried cuttlefish, squids and octopus 030321 - 4 3. Feathers and down 0507 4. Cut natural orchids 060302 5. Beans 0705, 120121, 120123 6. Teel seed or sesame 120123 7. Fish preserved in airtignt containers 160419 8. Marine crustaceans and molluses prepared or preserved in airtight containers 160519 9. Canned pineapple 200601 10. Tobacco leaf 240101 - 02 11. Veneer 441000 12. Parquet flooring 441307, 442301 13. Wooden utensils of wood 442400 14. Synthetic fibres (continuous) 5101-.- 03 15. Synthetic fabrics 5104, 5607 16. Cotton yarn 5505, 5506 17. Cotton fabrics 5507 - 09 18. Kapok fibre raw or processed not spun 570409- 19. Jute products 5706, 5710, 590412 620801 20. Ready made garments 60 - 61 - 62 21. Precious and semi-precious stones 7101, 7102 22. Electrical circuitry 8519 23. Furniture and parts thereof 94

(List No. 3)

All goods other than those under List No. 1 and List No. 2

Source: Board of Investment. e j - w -w a <- ^-- :

n Z * -: ,, _ ~~-_ ,, - -, - ia - a ~ *f~f S. ~-a e

o; - - _.- _ _ 2

| _ _- - _2

1Y, _~ I_ I

_ t - - ! t

-~ ~ ~ ~~~_ * !-

; _ I _~~~ . _,

. ~~ ~ ~ ~ a : . :

_ . a - _ @ s

_ . -- _ - ^ a

_ . - _ a - . _ -_ -- : :

? ~ ~ ~ ~ -- a - . _ ._

- a _ _ _ _ , ,

_ _ _ _ _ -_ - . a

:1 * -a - - - a .C_

a a a _ a - ,I -;______~~~ ~ _;_ ~~ - ~ - ~-- ~~ s ~ i2 _

_g _-2--, - ; t~~~2

- 'a C a a i

_ = _ - - - - i

_ . - _ _a-*a

______a'a

a, a- - aSaa.- - S '. - a e e e- - : :

_ j -_ - _

j _ __ ---- i t

_ _ a- _ .a - a - . : - s - a ,san

_~~ ~ -a. 2.

______t- t ati

.n- _ - -s : !,

- 9#T - - 149 -

Table 4 18

EXPORT COMMODITYCOMPOSITION AND ANNUAL EXPORT GROWTH RATES OF BOI-PROMOTED TRADING COMPANIES AND THEIR EXPORT SHARE IN NATIONAL EXPORTS

1979 1980 1981 1982 1983 a. Total number of BOI- oromoted trading companies 2 4 6 8 9 b. Export commodity composition (Z)

(i) List No. 1 3.3 15.5 23.3 39.4 52.5 (ii) List No. 2 73.8 54.8 50.5 35.9 27.5 (iii) List No. 3 22.9 27.7 26.2 24.7 20.0 (iv) Total 100.0 100.0 100.0 100.0 100.0 c. Annual Growth Rate (Z)

(i) List No. 1 880 164 118 87 (ii) List No. 2 56 62 -8 8 (iii) List No. 3 173 Z-55 22 14 (iv) Total 110 76 29 40 d. Total exports of BOI- promoted trading companies (million baht) 1,138.3 2,390.4 4,200.6 5,428.7 7,624.3 e. Total exports of the country (million haht) 108,179 133,197 153,001 159,728 146,472 f. (d i e) X. 100) (Z) 1.05 1.79 2.75 3.40 5.21

Source: Table 4.17. -- 150 -

Tabl]. 4-19

SOURCEOF INPUTS ANDEXPORT CHANNEISOF SHALL ANDMEDIU4 SCALE EXPORT MANUFACTURERS, 1981

Source of lnputs Export Channels Export Manufacturing Through Sectors Domestic Imported By them- trading Sell to inputs inputs selves companies agents

Foods 85.0% 15.0Z 57.0% 33.0% 10.0Z

Beverages ; 60.0 40.0 100.0 - -

Textiles 100.0 - 100.0 - -

Leather products 50.0 50.0 66.7 - 33.3

'Wood products 100.0 - 100.0 - -

Furniture 77.5 22.5 100.0 - -

Paper products a/ a/ 33.3 33.3 33.3

Chemicals and Chemical products 20.0 80.0 50.0 25.0 25.0

Rubber products 75.0 25.0 .100.0 - -

Non-metallic Mineral products 90.0 10.0 50.0 - 50.0

Metal products 80.0 20.0 100.0 - -

Machinery 60.0 40.0 66.7 16.7 16.7

Electrical products 35.0 65.0 100.0 - -

Transport equipment 85.0 15.0 66.7 33.3 -

Miscellaneous 50.0 50.0 62.5 25.0 12.5

TOTAL 80.0 20.0 67.9 17.9 14.3

a/ Data is not available.

Source: NarongchaiAkrasanee (December 1982), p. 97. - 151 -

TABLE 5.1 EXPORT MARKET DESTINATIONS Millions of Baht (I share)

POUSCIT 1981 1982 1983 MARK'IT MARKET MARKET 6193 5930 58219 (42.0) Singapore (38.7) Singapore (51.3) singapore Integrated (37.0) U S A (40.7) U S A (36.3) U S A Clrcuits(l) ( 9.0) Malaysia ( 4.3) Malaysia ( 0.5) Malaysia ( 7.6) gong Kong ( 9.3) Hong Kong { 4.5) Hong Kong, ( 4.4) Otaer ( 7.0) Other ( 7.4) other

P DUCT 1981 1982 1983 - MARKET MARKET HARKET 12,570 14,005 14,351 (20.0) U S A (19.0) U S A (26.6) U S A (29.8) E B C Ci) (30.4) E E C (25.0) B B C Txtiles(l) (16.0) Regional (ii) (16.7) Regional (13.2) Regional (10.0) giddle East (iii) ( 9.2) Middle East ( 9.7) Middle East (25.0) other (24.7) Other (25.5) Other

PRoDUCT 1981 1982 1983 MARKET MARKET MARKET 4,486 4,671 -6,214 (20.3) Japan (25.2) Japan (24.4) Japan Precious (19.5) Switzerland (17.6) Switzerland (16.2) Switzerland Gems (19.0) U S A (14.4) U S A (20.8) U S A (15.5) Hong Kong (17.1) Hong Kong (14.4) Hong Kong (25.7) other (25.7) Other (24%) Other

PUODUCT(2) 1981 1982 1983 MARKET MARKET MARKET 6,886 7,904 N/A (35.7) E E C (32.1) E E C garments (26.7) U S A (27.2) U S A (19.8) Middle East (19.8) Middle East (17.8) other (20.9) Other

ftDUCT(2) 1981 1982 1983 (Jan-Sept:) MARKET MARKET MARKET 2;141 3,185 2,819 (28.2) U S A (32.6) U S A (46.2) U S A Canned (16.4) France (16.7) France (11.2) France Seafood ( 8;3) Australia ( 7.0' Australia ( 4.8) Australia ( 7.0) Germany FR t 6.4) Germany FR ( 7.0) Germany FR ( 5.6) U.x. ( 5.2) U.K. ( 4.6) U.K. (35.5) Other (32.1) Other (26.2) Other - 152 -

Table 5.1 (continued)

PRODUCT(2) 1981 1982 1983 (Jan-Oct)

MARKET MARKET MARKET 525 588 839 (17.6) U S A (22.4) U S A (28.4) U S A (19.4) Japan (15.0) Japan (20.1) Japan (17.') Germany PR (14.0) Germany PR (12.8) Germany PR Jewelry (14;0) Prance (16.2) Prance (12.6) France C 4.7) Switzerland ( 3.7) Switzerland (-3.3) Switzerland C 4.1) U K (4.4) U K ( 2.8) U R C 4.8) Australia ( 4.5) Australia ( 2.4) Australia (17.5) Other (19.8) Other (17.6) Other

Ci) Denmark, France, Germany (Federal Republic) Italy, Netherlands, United Kingdom. (ii) Hong Kong, Japan, Singapore. (iii) Saudi Arabia, United Arab Emirates. (1) Bank of Thailand (2) Department of Commercial Relations - 153 -

P~IXJRES E.IDIVUJALL _TEFi OF MIES

(Cbat ae diffemet fxom noinl. Cstcm procedUre)

(a) For A -b) After I -ort-)(c) Norm Ons -> (d) After Proceure Epr (F$g.Z.1 anl !g,2.2 Annex B) 'b3spection of Import Docaent 1 Submit Suiait Duty DrwbAck Applicatio > Sub-Division ee or Drba _____ port (Table 2.3 ICC1. of or Annex B) ECuranteesem]

* Sumit ILaboratory for li5pection Imput Coefficient -> Diisio (Formula)

C) :for individual drawback

| 1: for e tion _____ - 154 -

Figure 2

PROCEDURSFOR DUTY-FRE iMOS BASEDON INPUT STOCKACCOUNTING BOOK MEIIOD

(a) Request for Aproval

Co. Submits to B.O.I: B.O.I.exami*e a request for (I) estimtes on input-output using the Input stock aceount- coefficients for inputs to Ing book method and the B.O.I. be laported and outputs to be exported; Subcommittee authorizes Co. to - > use the method. (S1) average monthly export !olumes; (ili) sauples of inputs and otputs.l l

(b) Icport Procedure

B.O.I. checks whether B.O.I. sends a letter Co. requests the requested Import to Customs Dept. re- permission to volume is within the questing the release import allowed input stock of approved duty- _> based on its account--> free import volume ing book. and subtracts Import (See Table 2) volume from allowed input stock level (See Table 2)

B.0.1. adds the input Whenever Company volume used to pro- Company repeats completes exports, duce exported pro- the procedure send export docu- _> ducts to previously inI> (b) ments to B.O.I. allowed input stock level. (See Table 2)

. I~~~~~~~~~~~~~~~~~~%__! YXOD z USFW M^Pa. *S j5 EEMCYIVPMMI OFWD ~01US=PM W PMRMWAVkM 91M WM 1BYA HW==IW (VnALFMA FFM- AW ]DM=C~

}2/25 1/1 2/1 3/1 4/1 5/1 6/1 613D

1. *X*L.B Ewort Order (I/Cor 0/A) 2. IPeai Mqxrt Las 80 t period 8ac (or 70%)otf -- I/C (or D/A) ___,

3. Ornr foreign inlput (71) w,ed foruaa 60 der: dfw I qm$ qorctWC O by other ex- perod d porters excluded u 4. Order dcmtic for eaport 111prt(DI) O (Oen dam.VC)

5. Wotiace .' C 60 I Hdt R t days, for with * This could be reduced to 60 wcPOrtloan if the restriction(the original' version was announced early 1984) useloan for ° 6.Mbke p? yft that exportersmust purchase inputs t DIwlth or outputs within 60 days.after ex=t loan: receivingthe export loan is strictly 60 dE s otptiate implemented. But due to a lack of Domatic1/C) the efficient automatic administra- f tive mechanisms, it appears difficult Ube lxn or m 7. PI raticn) to implement this rule. Even if the (VA riu?atlo) 60 days rule is adhered to, that period 60 is an idle period. d for VAwidth wpottloen an la forVA iuratm 8.O,wplete shivprnt: eqort TiCietn: recrivepets liqulateerp. loan. Figure 4

ERW v PRIO1 OPtfl OFE IRE ANRr rU wM= GOOEx (M H=A? f COOM BYA '1RADDMOcXWA

12425 A/ 2/1 3/1 4/1 516tl 6/30 e-- 1. I"ce. Export Order (/C or D/A) 0O

2. Peceive Export tmu 180 dyst loan period 8(Q (or 70m)of I/C (or D/A) - .m a a --- = - = 3. Order prdmay 150 dayu: loa anuld be 3OdMa export caommdities saved for effediv or dowtically ue other peiod o mmumfactured exqorters exchlWed wf lm finbhe3d export for eo?t caomidities (DD)sI (Oen danetic W.C) O

4. W nt * See note for Figure 3. for DO Lt export loans 30 ds (Negotiate dcmaatic C) .O am om for DO 5. Oinlete ahipunt: export 1JC rtgotiltis receive paytntt liquidate export lom EmTT1V PmoCDo us' rWPmRESII1 1JommmSE cN, wASEm m BYA 'RDN rtAN

12/25 J/I 21 3/1 4/1 5/1 fl1 6/30

1. order prizmy goods or dcatlcally Imifactured finilhed export cmuodities (DO) 0

2. DOIs delivered but psynmntnot nude yet (bought cn credit) 3. Receiveexport 180days: loan period Un loan: 50 of_ warehousereceipt 4. 5 ,mnthl' credit 150days: l' azld be effective temnexpilres: saved for perido of use by other . iagt low mke paynwt exporterael.uded for eqort for DOwith export loans 30 dap 5. lcive emmort iol for 0 order (1/C or D/A) for DO: liquidate exort Joan based on wremuae receipt 6. Applyeqort loan basedon WC (or D/A) PiQure 6

EXPLOITINGFULLY COUNTRY'S EXPORT POTENTfALS

Calalytic Role of Large kcale Final Stage Export I L>lizio*r4 to Ixtern l Backward Unkages to Manufacturers (Dlrect Exporters) .---- | hdeea Small and MediumScale Producers I and Trading Companies I Final atage export! I General I I Yorelgn g Overnea Input-supplytig Iutut-supplying mmanufacturer andr Export Trading I Tradlng I ndlrect exporter Indirect exporter direct exporter Conany-Copany "re sale *tWork X i ~~~~~~~ 8 >tf W~~~.....

I I I I I