Report No. 5670-TH

Thailand's Manufactured ExportsKey issues and Policy Options(In Two Volumes) Volume l1: Annexes and Statistical Tables

December 1985

Regional Mission in BangkokEast Asia ard Pacific Regional Office andIndustrial Strategy and Policy DivisionIndustry Department

FOR OFFICIAL USE ONLY

Doawnent of the Wou= Bank

This document has a restricted distribution and may be~ used by recipientsonly-in the performance of their official duties. its contents may not otherwisebe- discosed withot World Bankauthorization.

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CURRENCY EQUIVALENTS

The value of the baht is determined on the basis of a basket ofcurrencies and changes daily. During 1985, the value has ranged from 26- to27.6 baht to the US$1.00

ABBREVIATIONS AND ACRONYMS

ATI Association of Thai IndustriesBOI Board of InvestmentBOT Bank of ThailandBQ Basic QuotaCCs Commercial CounselorsCVD Countervailing DutyDCR Department of Commercial RelationsDFT Departmen.t of Foreign TradeDIL Loans for Purchasing Domestic InputsDLC Domestic Letter of CreditDOL Loans for Purchasing Domestic Finished GoodsEAs Exporters' AssociationsECIs Export Credit Insurance SystemEDC Export Development CommitteeED Export DemandEEC European Economic CommunityERP Effective Rate of ProtectionESC Export Service CenterETCs Export Trading CompaniesFBAs Foreign Buying AgentsFIL Loans for Purchasing Imported InputsFPO - Fiscal PoLicy OfficeGDP - Gross Domestic ProductGNP - Gross National ProductGSP - Generalised System of PreferencesGTCs - General Trading CompaniesIS - Import SubstitutionISIEs- Input-SuDplying Indirect ExportersITCs - International Trading CompaniesMOC - Ministry of CommerceMOF - Ministry of FinanceMOI - Ministry of IndustryNESDB- National Economic and Social Development BoardOECD - Organization for Economic Co-operation and DevelopmentOICA - Office of Input-Coefficient AdministrationOSIEs- Output-Supplying Indirect ExportersPEFG - Preshipment Export Finance Guarantee SystemQR - Quantitative RestrictionsSITC - Standard International Trade ClassificationSMI - Small and Medium IndustrySQ - Supplementary QuotaTACs - Technical Advisory CommitteesVAL - Loans for Generating Value AddedDRC - Domestic Resource Cost

FOR OFCIAL USE ONLY

THAILAND'S MAINUFACTIRED EXPORTS:

KEY ISSUES AND POLICY OPTIONS

VOLUME II

TABLE OF CONTENTS PAGE NO.

ANNEX TO CHAPTER II

ANNEX II Export Value and Growth Rates of MajorManufactured 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 ofFiscal Policy Office ...... .. 41

ANNEX IV-3 Announcement on Conditions, Criteria andMethodolody for Reducing Sales Tax Rates 51

ANNEX IV-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) - FreeImport Administration ..................... 79

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

ANNEX TO CHAPTER V

ANNEX V-1 Role of Trade Information, Export Marketing andPublic Sector Support Services .. 93

ANNEX V-2 Export Development Committee . .101

ANNEX V-3 Organization Chart of Department of CommercialRelations .105

Thi document has a restiaod dribufion and may be used by nripnts only in the perforance of their offiCial duties 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 at1972 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 andManufacturing ... oo- .... ...... 116

TABLE 2.5 The Manufacturing Sector: Value cf Output, ValueAdded, Imports, Exports, Growth Rate, Ratio in1975, 1980 . .... .......... 117

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

TABLE 2.7 Distribution and Growth of Manufactured Exportsby Commodity ... ............. .. 129

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

TABLE 4.2 An Example of Input Coefficients Used forIndividual Drawback/Exemption of Duties byCustoms Department .......... ........ ,...... 131

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

TABLE 4.4 Alternative Estimates on Average Duty (and IndirectTax) Exemption Rate ............................. 133

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TABLE OF CONTENTS

STATISTICAL TABLES (Contd.)

PAGE NO.

TABLE 4.5 Accumulative Value of Export Bills Refinancedby the Bank of Thailand (Head Office) Classifiedby Nature of Product ..... ........................ 134

TABIE 4.6 Accnmlative Value of Export Bills Extended bythe Bank of Thailand (Head Office) Classified byTypes of Documents ...................... ......... 135

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

TABIE 4.8 Exporters Classified by Outstanding Value ofExport Loans Rediscounted by the BOT as at July 31,1984 .. ....................... .................. 137

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

TABLE 4.10 Relative Importance of Various Documents usedin Obtaining Export Loan for Selected AgriculturalProducts ............................ 139

TABIE 4.11 Percentage Structure of Export ReceiptsClassified by Type of Payment Instruments and byType of Goods ..................................... 140

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

TABLE 4.13 Outstanding Value of Export Bills Extended by theBank of Thailand (Head Office) Classified byNature of Documents .................. ... .. 144

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

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

TABLE 4.16 Product List for BOI-Promoted TradingCompanies ......................................... 146

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TABLE OF CONTENTS

STATISTICAL TABLES (Contd.)

PAGE NO.

TABLE 4.17 Export Performance of BOI-Promoted TradingCmpanies ....................... *. 148

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

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

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

FIGURES

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

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

FIGURE 3 Effective Period of Using Preshipment Loan forManufactured Good Exports by a Manufacturer (FinalStage Producer and Direct Exporter) ............... 155

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

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

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

(D-105f)

ANNEX TO CHAPTER II

EXPORT VALUE AND GROWTH RATESOF MANUFACTURED EXPORTS, 1970-83

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I

ANNEX IIPage 1 of 7

EXPORT VALUE AND GROWTH RATESOF MAJOR MANUFACTURED EXPORTS, 1970-83

1. This annex provides a detailed account of the export performance ofmajor manufactured exports, by CCCN category. The attached Table II-1identifies the manufactured exports that achieved high growth rates during theperiod 1970 to 1983. The most notable among them were frozen chicken, frozenshrimp and prawns, canned fish and seafood, canned pineapple, apparel andclothing, footwear, gems and precious metals, integrated circuits, and severalother products of smaller value but very high growth rates. The followingparagraph7 spell out the market destinations and key characteristics of theseexports.1

2. Strictly speaking, CCCN 1-24 are composed of raw materials, while25-99 include semi-manufactured and manufactured products. However, a numberof processed products, e.g. canned fish, seafood, vegetables, pineapple, foodwaste, etc., are also part of CCCN 1-24 and are therefore included in thediscussion. Starting with CCCN 02--meat and offal-the export value of frozenchicken (CCCN 020201) grew at a rate of 37.6% annually in current pricesduring 1977-83, reaching Baht 946.3 million in 1983. The next major item isCCCN 03-fish crustaceans, i.e., frozen shrimp and prawns (CCCN 030348)-whichhad an export value in 1983 of Baht 3,165.4 million. These products wereexported mainly to Japan. Other exports of high growth and volume, apart fromsugar, were canned fish and other canned seafood (CCN 160419 and 160519) inCCCN 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 wereEurope and North America, while Virginia tobacco went mainly to Japan. Theproducts under CCCN 1-24, which are based on domestic raw materials, aremostly labor-intensive in the processing stage and generate high domesticvalue added.

3. For cement and mosaic cubes (CCCN 25), average growth was 13.51% ayear for the seven-year period, while capacity utilizat:on was at 81%. At the6-digit level, gypsum crude (CCCN 252001) had a high -. .wth rate of 54.1% forthe seven-year period. This product could show a furtAer growth in the nextfew years. In terms of destinations, it is notable that cement went chieflyto ASEAN (Indonesia and Malaysia) and other Asian countries (mainly TaiwanProvince, China). Since the industry has been utilizing its capacity at closeto the limit, it is unlikely that exports of CCCN 25 can be boosted withoutadded capacity.

4. The growth of processed natural rubber (CCCN 40) was about 8.7Z peryear 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. NarongchaiArkrasanee, and his associates and draws on their report entitled:"Promotion of Manufactured Exports: Destination and Barriers toImporting Countries," Industrial Management Consultant, Bangkok, 1984.

- 2 - ANNEX IIPage 2 of 7

year. Natural rubber went largely to the Japanese market, whereas aircrafttires were exported mainly to countries in Asia (Malaysia, Singapore and HongKong) and rubber bands to the US and EC (mainly the UK). Although initiallyrubber bands went just to the EC, by 1981 they had penetrated the US marketquite successfully. The US and the EC markets will continue to be the chiefoutlets 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 orWest Germany, France and Denmark). At the 6-digit level, there were twogroups of products of interest--leather containers and leather handbags. Theformer had 33.9% growth; their markets were Asia (Singapore, Saudi Arabia andHong Kong) and the EC (the UK). As to leather handbags, their growth was53.3Z, while the dominant market was the EC (West Germany), the UK and theNetherlands). Industry sources are quite confident that the EC markets willcontinue being receptive to Thai leather products. However, the availabilityof fine grain leather is a production problem. At present, Thai exportsconduct their business by subcontracting through designers' houses withoutThai brands. The next steps should be: (a) to introduce, nurture and selectThai brands for gradual projection abroad and (b) ensure the availability ofthe needed raw material.

6. CCCN 44 includes all types of wood products, ranging fromhandicrafts to wooden toys. At the 2-digit level, CCCN 44 shows a negativerate of growth, a reflection of the shortage of wood in Thailand. While bothwooden articles (cheeseboards, knife handles and so on) and .oys are emergingas small export items and have good outlets in the US, they will not enjoygrowth in the EC and Asian countries, including Japan for very long. Althoughthere is reasonable demand for this class for products, the availability ofwood is a constraint.

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

8. Thailand exported both semi-finished cotton yarn and finishedproducts. At the broad 2-digit level, the growth rate was 7.1%. However, atthe 6-digit level, cotton waste yarns grew at 31.6% (the outlets were otherAsian countries such as Hong Kong, Taiwan Province, Cl-ina and Malaysia and theEC). Other important items at this level were cotton fabrics and sheetfabrics, both of which had lower growth rates; however, cotton fabrics hadoutlets in Hong Kong, Singavore and the EC (i.e. West Germany, theNetherlands, Denmark and Italy). The fabric was used for shirts by apparelindustries in 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 ofthe Atlantic. The growth of these two fab-ics categories can be maintained atprevious rates. Nonetheless, better value added could be gained if Thai firmsthemseives produced quality shirts and quality bed sheets for export.

9. There were several items in the CCCN 60 that showed high growthpotential. Cotton crocheted shirts (CCCN 600411) expanded at 40.0% a year inthe 1977-83 period, with particularly high growth in 1978 and 1982. The mainmarkets 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) had58.4% growth over the seven years, with the high growth continuing in the1980s. 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 a74.6% growth, with 1980 a spectacular year. The demand for wool sweaters camefrom the US and the EC (i.e., West Germany, the UK, Italy and Denmark) andSwitzerland. Sweaters made of man-made fiber (CCCN 600503) also showed goodgrowth based on demand from the US and the EC (predominately West Germany).Nevertheless, the capacity of the industry is already limited-the utilizationrate 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, whichis imported from Australia, is rising. That will cut down on the competitiveedge for woolen products. Therefore, productivity increases and liberalaccess to imported wool are the k.-..y issues relating to promotion of thisproduct.

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

11. Generally speaking, Thai apparel and clothing accessories foun"their way into Asia, the US, the EC, Singapore, Kuwait, Saudi Arabia, UnitedArab Emertes (UAE) and Hong Kong. At least eight countries within the ECabsorbed the bulk of the exports of this category with West Germany aloneabsorbing close to 30% of the EC demand in any given year. At present, thecapacity utilization of the garment industry is high--at 91%; thus sustainingthe high growth rates will require added capacity. In addition, demands fromsome Gulf state countries may not increase much. Other outlets should besought. For example, the non-quota items in the EC should be explored. Thaifirms have tended to concentrate on quota items because of higher profits, andcorrespondingly, have ignored "non-sensitive" items. Firms that concentrateon quota items are neither actively seeking nor transferring "non-quota" itemsthat they have identified to other firms. However, many small firms couldfill the orders that large firms reject. Therefore, the Ministry of Commerceshould review the quota allocation system.

ANNEX IIPage 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 (CCCN6402_1). This group of products, grew at 102.5% a year, with demand comingchiefly from Middle Eastern (ME) countries and from the US and EC in smallerproportions. Slippers, growing at 75.9Z, had outlets in Asia, the US, and theMiddle East (Bahrain, Kuwait, UAE and Saudi Arabia). In 1983, Saudi Arabiaalone bought Baht 194 million worth of slippers. Sports shoes (CCCN 640210came onto the export scene only in 1981 but have grown at a 249.6Z a yearsince then. The markets eere geared toward the US and the EC (predominatelythe UK). Rubber footwear (CCCN 640231) was another item, expanding as wellover 100% during the period. Here the demand was from Asia in all cases, withstrong demand again coming from Saudi Arabia, Kuwait, UAE, Jordan andBahrain. The rise in the volume of exports to Saudi Arabia was also quiteimpressive, with a rate of at least 30% per year over the last four years. Onthe production front, capacity utilization was only about 60% in part becauseof the difficulty again in obtaining high quality leather. Still, there ismore room to expand the marketing effort to utilize the apparent excesscapacity. Given that Thai leather shoes are not designed so as to competewith products from Italy, Spain and Portugal, the Gulf states will remain themost important customers in the near future.

13. Feather articles (CCCN 67) had a 33.22% growth rate over the pastseven years. Two items deserve special mention: bird down (CCCN 670910) andartificial flowers (CCCN 670201). Bird down was exported to Hong Kong andSingapore, where producers used it to produce down jackets which are exportedto the US and the EC. Artificial flowers, growing at 31.8% a year, weremarketed successfully in 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 valueexports. As such ceramic products are reviewed as a broad group. The demandfor ceramic products came from ASEAN countries and EC. The EC absorbed about45-50% of total exports in any given year between 1977-83. West Germany andthe Netherlands were the major among the EC buyers of Thai ceramic products,whereas Hong Kong purchases a substantial portion of the exports of otherAsian countries. Ceramic products exporters have focused on the FC marikets,however, and recent events indicate that they might face stiffer quotarestrictions. A switch in marketing toward the US and Canada, which have sofar been smaller customers, would maintain a good growth rate. Capacityutilization is running about 70%; kiln capacity can be expanded if the priceof 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 710expanded at 33.0% in the 1977-83 period. Three categories important toThailand were (1) diamonds (CCCN 710231), (2) rubies (CCCN 710235 and (3)sapphires (CCCN 710236). All three were high value exports, however, theexport of diamonds has not reflected this true value to the economy because oftheir import content. The growth rate of diamond exports was 112.3Z, butthese diamonds were mainly small ones (less than 1 karat) brought in andpolished before shipment overseas. Hence the domestic value added was quitesmall. In the case of rubies and sapphires, the value added to the economy

ANNE IIPage 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. Thedemand for rubies came from Asia and Middle East (43%), the US (24X) and theEC (12.5%). Importing countries in Asia were chiefly Hong Kong, Singapore,Labanon, Israel, South Korea and Kuwait. In 1983, Hong Kong alone importedbaht 393 million. Importing countries in the EC were West Germany, the UK,Italy, France and Belgium. Within Europe, Switzerland prrchased more thanB 400 million worth in every year where rubies are used in the Swiss watchindustry for mechanical analog watches. Exports of sapphires grew 31.0Z. Themarket was diversified-mainly including Asia, the US and the EC. Hong Kongand Singapore were the main importing countries in Asia, while in the ECFrance, Italy, the UK, Belgium and West Germany were important. Outside theEC, Switzerland bought B 439.9 million worth of sapphires in 1983. It is notpossible to estimate the capacity utilization of the sapphire industry.However in 1984, production appears to have been constrained by the limit oncredit expansion of 18%.

16. The electrical industry (CCCI 85) was almost completely dominated bythe integrated circuit (I/C) industry. About 93% of the export value hereintegrated boards, which came to B 5,819 million in 1933. Exports grew at31.5Z. The circuit boards and chips were imported into Thailand bysubsidiaries of multinational companies such a National Semiconductors Corp.and then assembled by Thai workers. The demand for the I/C depended on thedemand for the finished products of the parent companies (chiefly in theUS). However, it should be noted that the value added to the I/C industry tothe Thai economy is low.

17. In the last seven years, Thailand has exported a few hundred millionBaht 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 watchcases, parts of watch cases, watch dials and parts of watches and clocks.Metal watch cases (CCCN 910909) grew 33.9Z, with the demand coming fromSwitzerland, Hong Kong, Singapore and the UAE. Exports of parts of watchcases (CCCN 910919) increased at 9.9Z, with major markets being Hong Kong, theUK 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 withlargest im-porter for Asia. Part- of clock and watches (CCCN 911109) expandedat 73.5%, with markets in Hong Kong. the UK and Australia. There is nocapacity utilization index for the industry, but the indications are thatexport growth can be maintained at high levels.

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

ANNEX II- 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 33.70201 pool fresh, chiflled firoze 0.1 157.5 %6.3 37.6

03 Fish, cincars mlbsQ 331.8 2,524.7 6,862.1 16.7030348 sliz arid aws - 1,171.5 3,165.4 15.8

05 Pmou± of az-I odgin 57.3 2ff8 607.5 18.8050701 Featr and dams 0.5 7.5 224.4 85.8050709 Sdn aid pmrtsa blrds 0.6 106.9 141.4 2D.02

16 PreprtLu aE meat fish 0.1 512.0 4,323.0 41.8160419 l fish 0.1 146.9 2,114.9 58.3160519 Other smzo sefood - 257.4 1,640.2 35.7

17 Sinr atd fecti{ny 140.1 8,03.5 6,950.1 89170101 Ra supr cetr1fugaL 55.1 5,026.9 5,371.0 11.4170111 Uhite reEi sar 0.1 123.5 840.4 102.7170300 MaIss 4.,1 745.2 609.5 2.6

19 Preppatrltc of cereal flour 5.8 115.6 361-7 23.5190303 R oeD non3 venuIcllIs 5.2 50.1 150.8 23.4

20 PEep. of vegetable fruit plait 68.6 998.4 2,722.4 18.6200601 Plnnple in r 55,3 898.0 1,817.5 14.2200712 Pineapple juice In emrs - 19.4 96.0 25.6

23 Vbste fro food 125.7 753.5 1,853.1 14.9230109 Flour and mal. of mlluscs - 36.8 575.0 53.8

24 Tobww 202.1 924.5 1,821.6 15.2240101 Virginia toba=ro 196.8 765.7 1,276.0 10.6

25 ment nasc cibes/tiles 332.9 646.6 939.6 13.525201 Gypsum crude 82 14.8 159.8 54.12752321 Ibrtlanid oenet 83.3 185.2 144.4 43.8

40 Rubber atd synthetins 10,060.3 6,282.3 12,404.7 8.7401421 Rubber -_ 52.8 119.7 27.8401130 Aircd.t tires - 13.1 249.2 43.3

42 Arteiles ofleatr 797.7 249.3 836.7 17.7420209 Lntear containers - 20.7 123.6 33.9

-7- ANNEX IIPage 7 of 7

(coi'd)

E Vale G h RateOQI Diption 1970- 197 9837W

50 Silk ad silk wste 34.5 30.3 163.7 38.5500901 Silk fabrir - 30.0 163.2 39.7

55 Cotta 33.8 1,17&5 1,686.3 7.1550100 Catton nt aied 2.0 2.4 69.0 90.355M03 Comzitse imicmbel 6.8 30.9 179.9 31.6

60 1, crodet g3odf - 19 1,906.3 45.5600411 SElrts croadet cat - 21.7 216.7 40.06O0412 len-me fiber shirts - 12.1 325.5 58.4600503 Wboo gseatem - 6.6 110.4 74.6

61 Appre and clotbixg aeories 18.2 1,576.5 7,223.6 30.3610133 Fiber Jadcet - 100.3 559.9 36.06101436102D2610203 Flber ants - 50.6 A72.6 56.3610223 Fiber dresses 2.2 17.9 317.5 50.9610242 Flber blouses - 143.0 521.6 20.2610279 Otber fiber ciar - 102.1 1,360.9 56.6

64 Footwar 0.2 24.9 1,740.7 102.5640101 Sippers ad otber bDuse fooar - 13.6 501.3 75.964210 Sprt soies- - 406.3 249.6640231 Rubber fotoear - 5.6 671.5 121.7

67 Fes:er articles 1.6 103.6 487.0 32.2670201 ArtificLal flws 0.3 103.1 480.7 31.8

69 ec pmoducts 1.3 139.6 443.7 18.3690603 Galz wal tiles 94.4 287.3 14.0

71 Gems and previou netals 155.1 1,299.3 8,227.8 33.0710235 RubLes cut, not set - 463.5 2,762.3 34.0710236 Sbires cut, ot set - 458.9 2,465.2 31.0

85 Eleitrical mdiixy 8.3 1,307.6 6,937.6 33.2851911 Iontg,tei circuits - 1,144.9 5,819.5 31.5851920 CImrait bre r parts - 2.8 482.0 201.3

90 Qpi caie mwarus - 64.5 571.8 41.1901705 Medic1. srs mits 0.7 9.5 95.6

91 Cladc, we - 67.5 253.5 95.6910909 tal ach ses - 50.4 94.7 33.9910919 Parts cf watch csea - 4.1 167.1 9.9

97 Top and sports euLpnt 4.1 35.5 162.5 30.7970201 ILbls - 6.9 34.3 38.7970O1 Other rk1rg wdels _ 11.8 82.8 40.5

(D-105f)

- :-1 -

ANNE TO CHAPTER IV

ANNEX IV-1

BACKGROUND IIFRIAON RELATED TO CHAPTER IV

- /O --

H;~~ z 'Ooe;}~ {-1 It /3 9rs A<

ANNEX IV-1Page 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 Basein Korea 1977-81 . . . . . . . . . . . . . . . . . . 26

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

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

Table 11. Percentage Structure of Import Payments Based on L/CClassified 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

,y yr/ Lyt- f f r ,

I~~~ 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 9of dMfSmO -MCl. 28C/3fM) To p t locb piva=. Tqpwto1m Is mc _ml I L

2 mad on qrIm ID No. 9 lb _ fr Imptom Is tc Iy aUmtLad ~f L pm MC Y 54 (6/4/253

-CEMMOf Sm cc atammm a y of 20 UIt-of v= but UCMM

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

iimM by Gm - IffDoe tya 2z BJ; 256Z.

3 1 C. s t s I falli ID Vb. 9 T p d sdc Inky. Tc-tCim Is McC DM-SW aLlmw'drdda ~1-- lb. 48.0l (b). MC NC. 55 C27/8W13) . dm., iddi ct pmad zungatd ac . t W d by MC N7. 63 a .da yll ad-am eztiftSd

Cuer vit ormi (trIMM1) by rsmifm s) fall1-011 lb. 480 of 60-2)0

(b) P2pf faUz ld Iladf1: lb. 48.01 (b) adNo. 48.Ot (b) 1wee (*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

Minol ' i - : tr fM Ry D ft 9 To prwA= doesi mpret:eb i Mawoy no asC Lq7.i

witl 1 or,s R.-. 29-z0 (c!. MC: N 60 (2U//21) tC&ra

_= bu ad 81 >alf m 9 To pnesi T^wamsd is saie for ial

w(id~%- No. 73.10. MC N 6 (2D/5/2514) POCO6tb i tqr&x coy

bDit-tiUad md nap- mm. ao m awdd byRCLrctda 11_-1--wr 1e saU& eof Sw;tm5., M..1--ldlc h folhf:

i . riea Sea stirmIt d n ma I-As tl lOJle by %bvidw-

Z m L* PE- Zo ~-!.L

o In :1a15d of Mtu1e tlIz lb. 710 J l

lt mw- thm1 adw w myMd -by meNCr

-14 - AnrX3-1Page 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

Rymi Dsu acd adci de a1zdl ad O

6 Mmt. &W 4 cc fwc ]I lb9 -b PMuc mnsti Pui6- Tqiaccs to1. B afld Incomtmg sam dE GD-3g MC lb. 61 0I9I539) tun apltca ins ,t td tJpn

D ad c db

7 swim ck *-s c mod- wt Uo l. 9 lbpo~ ~idcmgf Imub Do qiMom Is we A2smd In,nM"-%Ad= dL o Awj m E 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 MC gI1Y*Uaud MC Wb. 83 (ZVGn=) aummL1. .

(1) M-iL Cm 53-2.or

(2) AL& 0Cm 53-22. °ml lW

C1) E15-M aQ W-1

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

54-1. c

(6) EtE mCb 54-2, (7, ) Eiaan 544.(8) hj cum 5-4- cc

.~~~0 IlB Ons 4(6) 21-L Cms %-2sa55 a-2m ccm "

(a) ASI Cm -Sw. or(9) C 5

3. 8n t4.(1' _ - _ _ ___ _

5-&2, =

(3) AUS aSS552. cc

(4) MM-MMCI

C6) AM1 e" S62, or0) am-d LM W S3 ac(1N) AM Cbm 56-3r(9) MMfM *3

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

10 _mmw RCf-% : 9 N*i 8 (25M/29/2) T2 p O4 capn T_ .ol 1 Is aMme foc ebo<r. Oara for RC Mb 2 17 (WV2SY55) foradost *pm ; r_I by lod cET !r

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 Ebpwort Q xiu ties)

_~pi wm = _cbjm ef adtda ad mlb. - ~~~~~~~~00Ifev~rpm t xzsripat 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 Urn t .p.du k.&

-h c -m p ditmal.

2 Su a 5 UD Va. 9 lb p_m 4dc Tn>-nm is Mm t 806 Ln em, MC Nb. 25C3f2M ad tm ipcia ed aP-m mg Uo d sult

zulhli r WdUdMo dAi. Ibl *ft ad r_- &COak pitw..

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

in Cur peads1m -mmK

4 S 9 .r ce KI dw U .dlb ID lb. 9 l aI pm1p mrn. Mwottm Is 8mmmW yt mllcmdMC Mm. 23(3MIMI=A

5 Sine WUJgLcus I IbD 9 ab zCo ini rnmirnd m. m _rnoca In 0 I a.1UaLMC lb. 28(C293/2M05

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

7 ute t WAC L mlate ED l. 8 lb captect Ic atd 1. Mt -aU".id IQc asILr ap NC lb. 67 (141l/2Ls5) pxuia-Im. p-Impla

d O1 b. aMl ryp MD H- N 9 lb potc de Cc h-aacry rattm Is ct allowdl IxGE Ju or b NC g. 66( 24/1251LS) Wlmpl-

j bA. e. szcum IDb 18 (22//Y2S5) lb proct dc I1kacZy rpacxrta Is t gunllyrd IUrnU u d Epoce 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 t g%bech f MMWl dh Z EC No. 2 (16/I2V26) C (tl3Ii) Incty tcU dra lata apecfla.ar mTIOCd usd XIDt.dsTLT_m :£E 1,lao cr-me dowaumm faill'i'thntarlI' 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 blykC -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

USAGE PER 1000 UNTS OF CERAMIC DIP 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. FUNCTrCSAL TEST 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

USAGE PER 1000 UNITS OF CERMC DIP I.C.

1. FRAME CUT 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. FUNCTIONAL TEST 4 % rrD uss

IMEFORE USAGE PER 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 0 o.96 _ 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(ANCF ROUTINE 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 Ln T

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 CM GLAS 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 0 0.98 - 0.051 O./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= GROUP FOUN 10% OF RAIIS NOT N YUZX.Y .ADE

1IBM USAGE wLL BE (1000 + 15) * 0.9 , 0.9 _ 83 TESf/1000 UNITS

NIIAR SUE?

2L WAFER YAVE 230 GO0D DICE AND IMW 8 N!LLR FR WAFER

-IAUX 10A1O X Me EL ALU C-DIP PRWUCT

1000 UN1T IL USE GOD DICE 1279 PC

MIIR SHEET USAGE VXLL U

1279 + 230 x 8 - 45 PCS.

2n -

AIIHEIV-1Page 9 of 27

* -TARTF a

DRAWBAK APPI CATION MRM

UDE THE CUSTOS ACT (NO.9) B.E. 21 SECTO .19 ES

Name of appi3cant *- s .. o*oseese.oseee*eueReee

Acting an Behalf of ( PazjFin=) a 8009600090OW040

COnmrcial locati:o rvTrl ....................

""" Of ManUfact ry lo.ai ..... 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-lPage 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

c0 tai - .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 2- 1.60 1J49is 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-1Page 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-d fIbr dsincontiauu 6_1.1 1.13.

S7 Otbhe vqg. textle materIal a 5.03 0.92

s fbtCacp lace 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 tiLer text£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 - P3RI1X3 IW! WOJ1CT 19759-4

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) ilnercl and Metal I 6 2 7 6 8 7 6 t0 1 54(3) Cheical - - - I 2 2 1 2 2 3 13(4) Nechanroal ard Electrical I I 4 3 11 1 3 6 6 8 4615) Other Products I 14 16 IS 19 20 17 31 24 167(6) Service I - 1 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. Amomt of 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 Generated bi 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

*, I4inber of. Export prolects that have 242

Started Operation

I. Nmb r of b!Wrt Projects under 163Construction

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 of 27

Table 6: TAX REVENUE BY TIE GOVEREHENT, FY82

PercentageType 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-1Page 16 of 27

Table 7: BUSINESS TAX COLLECTED IN FY82(by major activities)

PercentageMajor 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: SHARE OF VALUE ADDED TAX RASE WITH ZERO TAX RATE (EXPORT ACdVIxTIES)IN TOTAL VALUE ADDED TAX EASE IN KOREAN 1977-81

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

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

(b) Value added taxbase for whichzero tax rate Xis applied due to 49,900 54,474 68,194 72,705 86,810 108,587 142,974 167,837 193,461 lforiegn exchangeearning activities(mdillion Won)

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

Source: Korea Development Institute (1983), p. 162.

Jim

N

-29- AN= IV-1

Page 18 of 27TABLE 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- ~~Page 19 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 or c 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 v Seing 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:henae pJa, 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 pparts usable only with mahunes.

Local m cturer: Tools for carpenters, blackwmths

and building contractrw.

-32- ANNE)X IV-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 3 35

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 PAY14NIS E SIJEDSY IN CP PAI D SM I MDU N M1 O7 m

1979 19_0

TyAM a OZf CVA S o D/A I odvC ml Awnca Ohrs!/ Totl Tye of I vC 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 2.6212. Inrgu aid 7bccm 47.97 18.15 33.88 - 1 1.10 62.43 11.20 26.37 -1D 11,403. O1d. lhtarial, Izm1bla binpt PFla 88.38 11.62 - - 100 2.23 86,18 13.82 - - 100 1.654. Irearia1s, Uia, Litrcats M 28.33 71.67 - - 100 20.73 32.39 67.61 - - 100 28.72

Rlated lbtertls5. MIMIml w %vtabla OLI md ISt 96.38 13.62 100 0.18 60.51 39.49 - - 10O 0.636. Ouceals 61.64 38.36 - - 100 14.57 66.38 33,62 - - 100 13.907. wnufatureo G, CIihile d Wfly 91.22 8.78 - - 100 26.69 90.99 9.01 - - 100 21.93

by lXterWas8. nbddnry ad Trwuport Iqmnt 72.11 27,89 - - 100 27.25 71.22 28.78 - - 100 25.899. 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 0.07cm&i.u N.J,S.

I oypd f 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

W

O gN

OEM sunuW Ofl N PAfs aAWM BY WN O FAUTM INM IN iW OF MU

'1961 190

TyAWdo dA Z a dA X oweC SW Awm Otrr. i ta 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 O- IO .02 8L96 17.02 - - m 0.863. i%do Itrt1at., bT ba >pt PAU 80.61 19.39 - - ID 1.61 78.71 (73.58) 21.29 - - 100 1.554. Ibztla^, PtMl, Iatta ad60.74 59.26 - - 100 26,82 51.42 (22,10) 48,58 _ 1- 29.06

11s1 16&41.5. 1mmi ai \ kptah1 a la d ita 70.50 29.50 - - 100 0.49 71.55 2.4S - - lCD 0.226. ho¢ca1 65.52 34.48 - - 10 13.45 65.40 (37.24) 34.60 - - 100 14*.07. 1 1dactud Oa ok. I1ad Wddeny 89.12 10.88 - - 200 23.13 85.83 (58.91) 14.M7 - - lCD 22.51

by libteulaI. Ihdy1*q ml 1WPOTt waIm 75.19 24.81 - - 100 26.70 66.l (u0.40) 33.69 - - t MM.129. 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 durve of t Ide.

Source: Bank of Thailand

1r 1III!

,. ° N

rr)2fN s1 l C DVW= PFAUS OASSIFI2) iy rnY. (V FAUW DPW WNI AM I TrI CF G

1963 1979,- IM hMrqp

iv nf CQJu IrA 2oJ d/A ofi/C ml1 Advawu rtwu Total Tyr of tic am hhA" ntIhetn Total Typ o

D/P P 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 3.762. Nwn%" all Trh m 76/n5 23.94 . .O661. Onle l"ter1al, 1r1ibla Paept YunAs 75A5 (SI.16) 2.15 - - 00 1.544. '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 Putertals5. Arltil aidt Vetethe oils ma Fats 49.69 50.11 - - l) 0.236. Chdals 63.13 (36.93) V6.67 -- 1D 14.667. bmnifartured 0dsa Cluiaf le adlefly 32.J7 (53.M9) 17.13 - - im 22.17 7. 86.01 11.99 - - 100 23.9

by tteri aleA. 4rhirwry aid Trmupxt Fqdpm 60.77 (93.70) 39.21 - - 100 26.90 3. 69.12 3).88 - - WIN 26.579. acel1itis mE%fctunrl kAtlclm 60.0 N3.1 - - 1m 0.4 9. 65.2 14.RO - - lOIN 3.A7In. HNsrulLwvwuA TrnruwsttIm all r3.26 16.74 - - ln 0.07

Oiluxiitlei N.E.S.I of TryAuof Firt Pywt 62.72 17.28 - - O lOIN kq 65.23 4.6A2 0.15 - INo WIm

Satrewe B* of rlt lead.

Oitqjj

Ln

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

Tabla II

PtKrMZ 1== O DOW PASW S M CN C CLASSMM BY R2MIT PUtITW

MAT

bwrt VC_ljht 30 3zyx 60 Dhrp 90 Dy 120 Dr, 180 Iqy 240 Dip 360 Wy 360 Wys 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

w

o

.~~~~~~~~~

- 37 -

Am~ 'v- IPage 26 of 27

FIGIIRE 1

A Flow-Chart of Generl Customs Procedure Import

Cs.. Foruzaify Dw iu Customs Foymlty Divoo

Entr sppliation Check completeness of

amepted 3 documents, tems entered

ebzge rat check entry -

D~~~~~~~~~~~~~~~opt at ionsD

DUy AU'6act EvideS. Caub Divison

Assign duty assesso

Check rates and value 4 Payment of duties

- Assss duties Fial stamp of appxvd

4, ~~~~~~~~~befome goods wre insected

cutomu Prevention =Ai

Spp DlvsionRecord importersname and decide

if its personnel n o

are required to pin D

the iscn

WarebouseChief inspector of the Customs Dept. requests

PAT warehouse superintendent of prepare

goods for inspection;Customs Exmier inspects the goods, endorses

custms clearnce order;Warehou Supeintendet the payment

of sorage fes before releasing the goods.

4,Fnal Checking PostsCustoms clearace

order shown beforleaving port area

-38-

ANN IV-1

Page 27 of 27

FIGE 2

A Flow Chart of General CRo n. ProcAmedn

Entry app bion

i E~~~~~~~~~~b, tm Fo.ii .._!.

. . ~~~~~~~Clere exsport is

loaded an ip under

COtom Fwguat Diwso

Check compktn1essof docnnents

Cbeck lues and -i E specon DbW=of duty lsPctdOf of xpOrt

Cbek entry cakulaons Release

Order export inspeon

_____________ ,__ Castoms PreveDooo andSuppremian Dlslkon1 Decide whethe its

If dutiable If duty-free perosamel is required to

l join the inspection

Cdsb *hkm Duzty-freePq duty number issued

Final smp FiDn1 stampof approval of approval

-359-

ANNEX IV-2

TECHNICAL NOTE ON FIXED DRAWBACK SCHEDULES OFFISCAL 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

Am s = imported input (sector is - output coefficient for

sector j

Ad = domestic input (sector i) - output coefficient forij

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-2Page 3 of 7

Drawback rate j

- - (3) (4)

where

P.j= World market price (f.o.b.) of product J (converted in the3

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

A L. (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- ANNEX IV-2Page 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)

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

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

and

d d ,~P*0( + NPR.) (1 -S. 7dA.. 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)i ij 1]w3 1 1 1 1 3.3 1] 1 i I 1

V/ Excluding indirect tax effect

_ 45 _ ANNEX ,V-2Lage 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

i Am (te + Si) f1" [i+ 1 i 1 + a c FeS f[ i5Ri ;i ij i ijI te + S 1 ) L i sC9*

Note in (9) that: LCi) 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) underestimates the correct full rate based on (8).

It is suggested to compute the following in order to evaluate the

acscrepencies between the current rates and the corresponsding correct

rates:

Revision factor for imported input i for sector j

= f :: E t + s i + t5i X I9t +5

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- ANNEX IV-2Page 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 becumnes very efficient based on

accurate standard input-output coefficients:

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

domestically produced inputs;

(c) Indirect exporters ti.e. producers who generate export value added

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

ANNEX IV-3

ANNOUNCEMENT ON CONDITIONS, CRITERIA AND METHODOLOGY FORREDUCING SALES TAX RATES

I

?IV) A'%I io

q_-

\1

- 51 - ANNEX IV-3Page 1 of 9

Announcement by the Dir CIPrarn Ithe 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 theProducer Sells to Industrialists

Based on the-powers vested in Article 8 [thvi-translation inknown] ofthe Law Code enacted pursuant to provisions in the Revenue Code concerning thereductions in rates of and exemptions for sales taxes CNo 54) 1974, as amendedby 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 author-ized by the Minister of Finance, hereby specifies the charaEtiistics and tpeii-of goods; conditions, criteria, and methodology for reducing sales tax rates forgoods which producers in the Kingdom sell to industrialists who buy them for usein 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, andmethodology for reducing sales taxes for goods which producers sell to indus-trialists, dated 4 August 1980, is hereby revoked.

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

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

a 2. receive sales tax rate reductions which 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 percentwhich is a reduction pursuant to this announcement.

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

Paragraph 3. Those industrialists who are corporations or juristic personpartnerships who intend to request sales tax rate reductions for the goodspursuant to Paragraph 2 which are purchased from other producers for use inproduction of their own goods, must perform the following:

(1) Submit a request as an industrialist to the RD or to the ProvincialRevenue Office [PRO] in accordance with the form stipulated by the DG RD by

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

(B) Making lists of the various goods which must be purchased in orderto be used in the production of goods pursuant tc (A) and the quantities usedin the production of those goods per unit.

- 52 - ANNEX IV-3Page 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 registra-tion, permission to operate an industrial enterprise, a letter of guarantee fromthe registrar of limited partnership corporation, other relevant documents, anda sample signature of the persons authorized to sign as guarantor on the seller'sinvoice.

(2) Submit a request for permission to purchase goods pursuant toParagraph 3 (1) (J) from other producers to the DG RD or to the PRO as specifiedby the DG RD prior-to purchasing those goods each and every time, by listing theitems to be purchased and their quantities and by purchasing the necessaryquantities to be used in the production of their own goods within a period oftime 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 monthnor more than 2 mo-2ths in advance prior to the expiration date of the authoriza-tion to produce the goods pursuant to the first phrase.

The request for authorization to purchase goods pursuant to the firstphrase 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 authorizationform in accordance with (2) third phrase to the industrialist in triplicate. Theindustrialist shall turn over two copies of this to the other producers who areselling those goods and the other copy shall be retained as documentation.

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

Paragraph 4. The producer of the goods who is a corporation or juristicperson partnership and who sells the goods produced to an industrialist pursuantto Paragraph 3 must do the following:

(1) Prepare a 4-copy invoice with identical content, stating the numberof the request for authorization to purchase of the industrialist. Two copies ofthe invoice for those goods shall be turned over to the industrialist, one copyshall 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 orlocality in duplicate with identical content:

(A) Stating the amount of income earned from the sales of the goodsto industrialists differentiating this from other income received.

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

Paragraph 5. The industrialist, pursuant to the announcement of the DG RDwhich was revoked pursuant to Paragraph 1, shall be the industrialist pursuantto this announcement.

- 53 - ~I-53 ~~~~~~ANNEX IV-3

Page 3 of 9

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

Paragraph 7. In the event that the industrialist pursuant to Paragraph 3does not fulfill the-conditions, criteria, and methodology for the reductionof 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 1983Wit Tantayakun(Wit Tantayakun)

DG, RD

54 ANNEX Iv-3

(Seal, RD] Page 4 of 9Ph.Kh. 1 KhForm Requesting to be an Industrialist Industrialist No . ........ ......(pursuant to announcement of DG RD No24) (Office Use)

Name of Businessman ............. ....... Name of Business Establishient .Business Registration No .. Tax payer ID No.Location of Business ........... Soi .. Road.Ward/subdistrict .............. zone/district .. Province.Branch/Factory located at..;................................ 0...............................

Having the intention-to become an industrialist pursuant 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 productionper 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 partnershipof corporation registration No of shtets..3. copy of authorization by Ministry ofIndustry to conduct business No of sheets.4. other documents No of sheets.

I hereby guarantee that the above-mentioned items are trueand correct in every respect

Signature .................. industrialist(. )

date submitted ......... /../

official opinion Order Registration Receipt No.day month year received.........(signature).....................

recieving official

- 55 - ANNEX IV-3Page 5 of 9

Information to be Aware of and Adhered to

1. Those responsible for submitting requests to be industrialistsinclude producers whose corpora-ions or juristic person partnerships.whichdesire to request a reduction in the sales tax tax rate pursuant to goodstype 1, Type I (A) and type 2 (J) of the sales tax rate list which are pur-chased 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 isto 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 copiesof the request with both forms filled out correctly.

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

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

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

Guidance for Filling out the Forms

Blank (1) State the types of business, or the type of goods to be producedpursuant to Blank (2) concerning that which is within the regulations and whichmust pay a sales tax pursuant to the type in the list of sales tax rates. If thereare 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 ofthe finished product goods in this item?

Blank (4) State the names of the goods used as compouaznt parts in produc-tion only for that for which a request to purchase utilizing a reduced sales taxrate is made. If there are many types, many sizes, many prices, please differen-tiate by item.

Blank (5) This means how many uaits of the goods in Blank (4) are neededto produce one umit.

- 56 - ANNEX IV-3Page 6.of 9

[Seal, RD]Ph.Kh. 1 K./l

Form for Requesting Permission to Purchase Goods for Use in One'sOwn Production

Request No.

Date

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

To: DG RDPRO Province

I Name of BusinessBusiness Registration No , having received authorization to be anindustrialist, Permit No , with the location of the business atNo Soi , Road, Ward/subdistrict_Zone/district Province

I request authorization to purchase goods or component parts to be usedin the production of my own goods, with the purchase to be made fromBusiness Registration NO , with the location of the business at NoSoi Road, ward/subdistrict zone/districtProvince . with the following listed goods or component parts:

goods or component number of to be used to Amount of goods Remarksparts to be bought units to produce or component

be bought parts not yetused in prod-uction

This is submitted for your consideration and authorization

signed industrialist

C _

official opinion Order: Registration receipt No_ approved day month year receiveddisapproved (signed)___

signature _ receiving official_I I_

- 57 - ANNEX IV-3Page 7 of 9

Information to be Aware of and Adhered to

1. Those persons with the right to submit a request for authorization toreduce sales tax rates for the purchases of goods or component parts to be usedin their own production must be an industrialist registered as an industrialistwith 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 shallbe 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 statedas 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 werepurchased for use in production pursuant to the details stated on the front ofthe form. This authorization order shall not be transferred to an individualwho is not the,person named in the request.

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

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

8. If the form is not sufficient to list a particular item, a continuationsheet shall be utilized.

- 58 - ANNEX IV-3Page 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'sOwn Goods

To: DG RDPRO Province

I, ,Name of Business__ __ __ _Business Registration No , having received authorization to bean industrialist, authorization No , do hereby submit a List ofgoods or component parts and a report on the production of my own goods forthe month of , year as follows:

No. Goods or Quantity Quantity Quantity Quantity ProductionComponent Remainiug purchased used in remaining Report RemarksParts Brought this month production on last List of/ Qty

Forxard this month day of goods /prod-From Previous month producedlucedMonths this

month

(If space is insufficient, use a continuation sheet)

Submitted for your information, with attachments(signed) industrialist

/ f

- 59 - ANNEX IV-3Page 9 of 9

No

Subject: Submission of sample signatures of those empowered to s_gn receipts andinvoices

To: DG, RDPRO Province

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

Name of 1st personsignature

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) SYSTEMAND STREAMLINING OF EXPORT FINANCING

~~~~~~~I

141

6>

- 63 -

ANNEX IV-4Page 1 of 14

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

Introduction

1. In designing efficient administrative arrangements for a preship-ment export financing system, an imaginative approach is needed. The keyto such an approach is to utilize well-established international tradefinancing mechanisms by modifying and integrating them with the govern-mert's export financing system to achieve the goals of automaticity, equaltreatment, prevention of abuse, and administrative convenience. Theimportant elements in modernization are: (i) disaggregating export loansinto four categories; (ii) introducing automatic export loan disbursangmechanisms (tied to negotiations of drafts drawn under import or domesticL/Cs) and automatic export loan pay-off mechanisms (tied to negotiations onbills for exports); (iii) creatin; quasi-physical collateral by usingcommodities financed by the export loans; (iv) introducing a domestic L/Csystem; (v) developing a plan to combine export loans based on actualexport orders with loans based on expected export orders; and (vi) adminis-tering the rediscounting mechanism with speed and administrativeconvenience.

Disaggregating Export Loans

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

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

(2) Export loans for purchasing domestically producedintermediate inputs (DIL).

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

(4) Export loans for purchasing domestically produced fiaishedgoods (DOL).

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

4. The basis of these export loans is an actual export order (backedby an L/C, D/A, D/P, etc.) or an expected export order extrapolated fromthe past record of the company's exports or local supply. But the sum ofthe export production loans (VAL + DIL + FIL) cannot exceed the value of

- 64 -ANNEX IV-4Page 2 of 14

the associated export order. Likewis^, a loan given to purchase domesticoutputs (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 con-straints, extensive backward linkages between export and local industries,conservative banking practices, and widespread abuse or misuse of theexport financing system. Such disaggregation makes it possible to separateimport financing (FIL) and domestic input financing (DIL) from pure produc-tion financing (VAL), to separate domestic currency loans (DIL, VAL, andDOL) from foreign currency loans (FIL), and to separate inventory or salesfinancing (DOL) from production financing (VAL, DIL, and FIL).

6. Foreign Currency Loan Scheme: In a developing economy in whichthe domestic financial market is segmented, the foreign exchange rate doesnot always reflect the true opportunity cost. Since external borrowingplays a large role in financing development projects, one way to assureefficient management of foreign exchange is to denominate all loans thatare tied to the use of foreign exchange reserves in a foreign currency andcharge an international interest rate. Export loans for purchasingimported inputs (FIL) must be included in this category. If the foreignexchange holdings of a country are substantial, it will be sufficient toestablish the correct priorities in meeting the needs for importfinancing-that is, nothing should receive higher prfority than importingthe inputs needed to earn additional foreign exchange reasonably quickly(within 60-90 days). But if foreign exchange holdings are scarce, externalassistance can be obtained to create a foreign exchange revolving funddevoted to financing imported inputs for activities that generate exportvalue added. The revolving fund should be large enough to avoid rationingof credit for import financing for export production, since rationing wouldcontradict the basic principle of automaticity. If foreign exchangeconstraints exist, excess demand may make credit rationing inevitable foruses of foreign currency other than short-term preshipment working capitalfinancing and public-supported investment financing. Given the uniquenature of short-term preshipment working capital loans (which financeexport production on the basis of confirmed export orders), the rationingof such loans would mean a reduction in the foreign exchange earningsexpected from canfirmed export orders. No government operating underforeign exchange shortages can afford such a reduction.

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

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

- 65 -

ANNEX IV-4Page 3 of 14

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

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

10. It should also be emphasized that disaggregation does not neces-sarily create additional administrative burdens. Such disaggregationoccurs in the international trade-related activities of commercial banks inevery economy. Commercial banks open import L/Cs for exporters as part oftheir normal business. In turn, back-to-back L/Cs are the basis for domes-tic L/C systems. Indonesia's commercial banks, for example, have beenusing a domestic L/C system for inter-island trade.

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

12. Foreign exchange constraints have not been a factor in Singaporebecause of its status as a leading international financial center.Furthermore, Singapore's exports have not depended as much as Korea's onbackward linkages to local industries. Consequently, the need to disaggre-gate export loans has been much less than in the case of Korea. Moderniza-tion of Singapore's export financing system has therefore focused onincreasing the speed of the rediscourting mechanism.

- 66 -

ANNEX IV-4Page 4 of 14

13. The export financing systems of Malysia, Indonesia, and thePLilippines have been based on aggregate export loan schemes. Increasingforeign exchange scarcities and the critical importance of backwardlinkages for export development, however, call for serious consideration ofdisaggregation o,- export loans. Indonesia set the stage for surh mDderni-zation when it adopted a new export policy in 1982, and Bank Indonesia hasbeen working on detailed implementatior of a modernization scheme. ThePhilippines is also planning to implement a modernized export financingscheme.

Domestic Letter of Credit System

14. The single most important innovation in export incentive adminis-tration is the domestic letter of credit. The domestic L/C is essential toassuring automatic availability of short-term export loans and free tradestatus to all firms that generate export value added but do not exportdirectly, i.e., indirect exporters. There are two types of indirectexporters: (i) input-supplying indirect exporters--which supply interme-diate inputs to final stage (or next stage) export manufacturers-andCii) output-supplying indirect exporters--which supply finished exportproducts to trading companies that export diLectly (or sell to othertrading companies). Indirect exporters most commonly are manufacturers,but they can also be pure traders. Input-supplying indirect exporters,shown in the upper part of Figure 1, are critical for achieving backwardlinkages from exports; output-supplying indirect exporters, shown in thelower part of Figure 1, are critical for developing trading companies thatspecialize in overseas marketing.

15. In many developing countries attempts to encourage finalexporters to pass the benefits of export incentives through to indirectexporters have not been successful, because the systems constructed haveapparently not dealt adequately with the different needs of indirect anddirect exporters in a well-coordinated manner. The successful East Asiancountries, on the other hand, have granted equal export incentives toindirect exporters themselves, not through intermediaries. The domesticL/C system has been the most effective administrative tool for this directgranting 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 creditworthiness of theimporter (and the availability of export incentives tied to an exportorder). When an exporter has an irrevocable L/C in his favor, theexistence of the L/C enables his bank to open a second, similar creditaccount on behalf of the exporter, with the input-supplying indirectexporter or output-supplying indirect exporter as the beneficiary. Thus,the indirect exporter gains access to all export incentives based on thereceipt of the domestic L/C, just as the final exporter gains such accessbased on the receipt of an export L/C (or other evidence of an exportorder).

- 67 -

ANNEX IV-4Page 5 of 14

17. If the suoplier of inputs for export production is a foreignmanufacturer, as shown in the upper part of Figure 2, the second credit isan import L/C; if the supplier is a domestic input-supplying ind1rectexporter, 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 colla-teral and applies for an import or domestic Ll4C. Generally, the bank open-ing the second credit establishes exactly the same documentary requirementsas those under the primary credit. Note in the upper part of Figure 2 thata domestic L/C is parallel to an import L/C. There is no differencebetween them except for the fact that the beneficiary of the former is inthe country, while the beneficiary of the latter is overseas. A domesticL/C is no different from an export L/C in that the beneficiary in eithercase is an exporter (an indirect exporter for the former, a direct exporterfor the latter). Both provide a basis for opening another domestic or animport L/C.

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

19. Let us suppose that the domestic textile weaver is a small-scaleproducer (located on a back street in a suburb of a big city) equipped with20 looms. This weaver sells his textile fabric to a garment exporterthrough a first-stage domestic L/C and purchases yarns either through asecond-stage domestic L/C or an import L/C. This weaver is purchasing theintermediate inputs and selling output under a free trade regime andreceives the same treatment as large-scale firms when he applies for exportloans. Through a domestic L/C system this small-scale weaver becomes animportant actor in international trade, because a domestic LIC systemextends free trade to domestic trade involving small-scale enterprises.The backward linkages from garment export to domestic production of textilefabrics, and from domestic production of fabrics to the domestic productionof yarns, are achieved through first and second-stage domestic L/Cs.Because the backward linkages are achieved under a free trade regime, thesedomestic industries should be in accordance with the principle of inter-national comparative advantage, as will be discussed below.

20. If the garment manufacturer (i.e., output-supplying indirectexporters) in the lower part of Figure 2 cannot receive the same exportincentives as the final exporter (i.e., the trading company) that purchasesthe export commodities for export, then trading companies cannot be devel-oped effectively, since the garment manufacturer would try to exportdirectly rather than sell to the trading company. Furthermore, if thegarment manufacturer is a small producer, the export potential would simplybe lost, since such small firms cannot afford to have an export marketingchannel. Therefore, the domestic L/C system is critical in developingtrading companies by providing equal export incentives to output-supplyingindirect exporters.

- 68 -

ANNEX IV-4Page 6 of 14

21. The domestic L/C system is the most effective instrument formeeting the two basic requirements in structuring administrative arrange-ments that provide critical incentives for indirect exporters. Theserequirements are: (i) that a means exist for independently and automatic-ally verifying that the supply of intermediate inputs or completed exportcommodities provided by tne indirect exporter were in fact purchased by anddelivered to the final exporter and (ii) that both the indirect exporterand the final exporter are strongly encouraged to use available instrumentsin order to gain access to export incentives. Because the domestic L/C ishandled by commercial banks, it also offers the advantage of delegatingmuch of the authority for export incentive administration to the commercialbanks, which generally offer greater administrative efficiency than govern-ment can provide.

22. A domestic L/C is a document created by a bank that declares tothe indirect exporter that the bank will pay, on behalf of the finalexporter, a draft drawn on it when the indirect exporter submits, togetherwith the draft, a receipt that commodities have been delivered to the finalexporter. Therefore, the domestic L/C is the most reliable and automaticinstrument for verifying the transaction between the final exporter and theindirect exporter. The mutual encouragement to use available instrumentsis provided under the domestic LIC because the final exporter gains accessto export loans for purchasing domestic inputs (DIL) or finished exportcommodities (DCL) based on the domestic L/C he issues, while the indirectexporter must be the beneficiary of the domestic L/C in order to gainapproval for his production loans (DIL, FIL, and VAL). For this mechanismto operate, it is essential that the export financing system be modernizedalong the lines indicated above.

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

(a) Equal treatment of other payments methods. In other words,purchasers of domestically produced intermediate inputs forexport production or finished export commodities must be able toask a commercial bank to open a domestic L/C based on a D/P orD/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 ofdomestically produced intermediate inputs for export productionor finished export commodities must be able to ask a commercialbank to open a domestic L/C on the basis of an expected exportorder (a specific formula representing the average exportperformance of the company in the past is shown in Table 13 ofAnnex I).

- 69 -

ANNEX IV-4Page 7 of 14

Figure 1

DOMESTIC L/C: BACK-TO-BACK CREDIT

Input-Supplying Indirect Exporter

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

(Textile Fabric)

Exporter(Garment Import L/C

manufacturer) Foreign Spinner(yarn)

Import Foreign WeaverL/C (Textile Fabric)

Export L/C

Foreign Buyer

Export L/C Domestic L/CDomestic Weaver

| Domestic LI C I(2nd stage) (Textile Fabric)Domestic LIC(lst Stage) l

Exporter Garment(Trading Company) Manufacturer

Output-Supplying Indirect Exporter

- 70 -

ANNEX IV-4Page 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 drafton the opening bank; (c) once an export loan is granted on the basis of adomestic L/C, only the lending bank may purchase the draft drawn under thedomestic L/C; (d) a bank negotiating a domestic L/C collects proceeds fromthe bank opening the domestic L/C througih a domestic L/C clearinghouse.

Impact of Domestic L/C System

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

26. A domestic L/C system has been extensively and successfully usedby Korea. The most notable achievements of the system have been moreefficient backward linkages, development of trading companies, and thesuccessful development of small-scale export industries. These arediscussed below.

27. Backward Linkages: By extending free trade status and automaticavailability of short-term export loans to every production process contri-buting to the generation of export value added, the domestic L/C system ofKorea has brought about backward linkages that accord with the true compa-rative advantage of each production process. According to Table 14 ofAnnex I, about 67 percent of the total value of domestic L/Cs issued inKorea during 1976-78 was for the purchase of domestically produced interme-diate inputs, 31 percent was for the purchase of domestically producedfinished products, and 2 percent was for the payment of subcontract fees.Note that for every dollar of manufactured exports, about 50 cents' worthof domestically produced intermediate inputs were purchased. In thetextile industries the use of domestically produced intermediate inputs inexports was even more extensive. About 60 cents' worth of intermediateinputs were purchased from other domestic producers for every dollar oftextile exports. These figures indicate the depth of the backward linkagesassociated with exports.

28. Development of Trading Companies: Without the domestic L/Csystem, Korea could not develop its trading companies as effectively as itdid. According to Table 14 of Annex I, for every dollar of export about24 cents worth of finished export products were purchased by tradingcompanies from other manufacturers.

- 71 -

ANNEX IV-4Page 9 of 14

29. Development of Small-Medium Scale Export Industries: Accordingto a 1979 survey of small and medium-scale manufacturing firms in Korea,the total value of direct and Indirect exports by the firms amounted to41.8 percent of the aggregate exports of Korea's manufacturing indus-tries. What major policy factor accounted for this impressive contributionby the smaller firms to export-led growth? The answer is clear. Byguaranteeing small and medium-scale industries absolute equality in obtain-ing export incentives, the domestic L/C system brought many potentialexport producers into export production activities. As far as I know, noother developing country so successfully avoids discrimination againstsmall and medium-scale enterprises engaged in export activities. TheKorean experience suggests that the best policy toward such enterprises isneither the excessive subsidizing that comes from the 'small is beautiful'notion nor the discrimination of the counter-reaction that small isinferior.-

(D-105g)

_ 72 _ ANNEX IV-4Page 10 of 14

AN EXAMPLE OF TYPICAL PROCEDURES FORA MODERNIZED SYSTEK OF EXPORT INCENTIVE AUKINISTRATION

F0R TRADING COMPANY AND INDIRECT EPORERS

Figure 2 pro-ides an overviev of typical procedures for tradingcompany 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-supplyingindirect exporters and exports directly to the overseas buyer.

2. Output-Supplying Indirect Exporter:

Manufactures finished export coiodities (garments) based ondomestically produced intermediate inputs (domestic textiles) andimported materials (foreign-made textiles). and sells them to thetradlng company rather than exports directly.

3. Input-Supplying Indirect Exporter:

Manufactures intermediate inputs (textiles) based on importedmaterials (foreign-made yarns), and sells them to che output-supplying indirect exporter (garment manufacturer).

A. Procedures for Export Financing

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

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

(2) The foreign buyer arranges an L/C (master export L/C) with hUsbank.

(3) The trading company receives the master export L/C (forgarments).

(4) The trading company orders domestically produced finished exportcommodities (garments) to an output-sur:,iying indirect exporter(garment manufacturer) and the latter agrees to fill orders.

_ 73 - AANNEX IV-4Page 11 of 14

(5) The trading company arranges a domestlc L/C with his bank for thepurchase of garmets.

(6) The output-aupplying Indirect exporter receives the domestic L/C.

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

(8) The output-supplying indirect exporter arranges a domestic L/Cwith 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-madetextiles for his garment manufacturing. So he ordersforeign-made textiles, and a foreign supplier (Supplier A) agreesto fill orders.

(11) The output-supplying indirect exporter arranges an L/C (importL/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 forgenerating value added (VAL).

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

(15) The input-supplying Indirect exporter arranges an L/C (importL/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 forgenerating value added (VAL).

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

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

(20) The bank of supplier B forwards the dre-ft drawn under the importL/C to the bank of the input-supplying indirect exporter forreimbursement.

ANNEX IV-4Page 12 of 14

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

(22) The input-supplying indirect exportee delivers the domesticallyummufactured textiles to the output-snpplyinz indirect exporter.

(23) The input-supplying indirect exporter presents the draft drawnunder the domestic L/C to Mis bank and liquidates the exportloans [VAL obtained in (17) and FIL obtained in (21)].

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

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

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

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

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

(29) The bank of the output-supplying indirect exporter honors thedraft drawn under the import L/C with an export loan forpurchasing intermediate inputs (FIL) granted to the indirectexporter.

(30) The output-supplying indirect exporter delivers the finishedexport commodities (domestically manufactured garments) to thetrading company.

(31) The output-supplying indirect exporter presents the draft drawnunder the domestic LIC to his bank and liquidates the exportloans [VAL obtained in (13), DIL obtained in (25), and FILobtained in (29)].

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

(33) The bank of the trading company honors the draft drawn under thedomestic L/C with an export loan for purchasing finished exportcommodities (DOL) granted to the trading company.

_ 75 - ANNEX IV-4Page 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 masterexport L/C to bis bank and liquidates the export loan DOLobtained In (33)1.

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

(37) The foreign buyer's bank preseuts the draft drawn under themaster 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-direct tax, because he supplies his product to the output-supplying indirectexporter [in (22)], based on the domestic L/C issued by the latter [in(9)1.

The output-supplying indirect exporter is emempted from the in-direct tax, because he supplies his product to 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, thetrading 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 temporaryImport because the imports are based on the import L/C [in (16)1 that hasbeen issued on the basis of the domestic L/C received [in (9)].

Likewise, when the input-supplying indirect exporter (garmentmanufacturer) imports foreign-sade textiles [in (26)1, he is granted theduty-free temporary import 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 ofExport Incentive Administration forTrading Companies and Indirect Exporters

( Ta ngCop Output-Supplying , J ( | Input-Supplying I

36Tradinig CompaysBanyknic Exporter'sBn Indirter't Exprte

x _ 7 ~~~~~~~~~(Garment Manufacturer) (Txie evr

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

S v0 _.Av,

z~~~ L, L L L L_ ___rrI

Output-Supp g I -Foreign Supplier (B)

lForeing Buyer IForelgn Supplier (A) of of Inputs (Poreign-_I| 1nputs (Foreign-Made Textile.) Made Yarn)

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

NOTE: Export L/C : Import L|C

~ : Domestic L/C : Export Loan

AN1UEX IV-5

TECHNICAL NOTE ON DUTY AND INDIRECT TAX-FREEIPORT ADMINISTRATION

\.

7 VI

( I

- 79 - ANNEX rv-5Page 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 dutiesand indirecttaxes (to be Imported Import price Duty and (1)exempted or . input i - output j of input i indirectrefunded) per coefficient tax rateunit of exportcommodity j

where

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

Duty Ind L _ _ _inlrete tax 1 + duty rate i I + indirect tax -1

- 80 -ANNEX IV-5Page 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/individual drawback system:

Value of dutiesand indirecttaxes (to beexempted cr Right hand side Approved (or (2)refunded) asso- _ of equation (1) . completed) exportciated vith quantity japproved exportquantity ofcommodity j

and

Allowed duty-free import ofinput i required Imported Import Approvedto produce - input i - output j . price of . export (3)approved export coefficient input i quan:ity jquantity ofcommodity j

- 81 - ANNEX IV-5Page 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 Expectedstock 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 yiuput 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 drawbackNew value for imported| value for domestic

Schedule inputs as fraction + inputs as fraction (5)A of export value in of export value in_ _ ~~~Sector J L Section J

1 _ Fixed drawbackNew . value for domestic

Schedule _ inputs as fraction (6)

B of export value inL _ L Sector J

where

-82-

ANNEX IV-5

Page 4 of 6

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

importedinputs inSector I

andI

Fixed drawback Domestic money ijAverage effectivevalue for domestic value domestic indirect tax rateinputs as fraction input - output for domestic inputs (8)of export value in ratio in-Sector ISector 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 Itvalue 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 -1good 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 disaggregated physical input-output coefficient approach

partly represented by equation (9).

- 83 - ANNEX IV-5Page 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 + indirectinputs as,.-raction _ domestic protection tax rate forof 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 out-

puts 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 irn the less than free trade

status at the level of aggregation adapted in equation (8).

03FARM9l Of TW2 A?rA2ES ro ESMD%ThC FD( MAO SnMI

MY AO DODtECr TAX IMS

(b) Prices te) PeulttLrg =y value iW-ouitpst td) DAy (a) =u1tIz drrA&ck rate Ct) Tree traI status forEqur (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 World mrket value World mdtet vAlue la.1l Dru rate Apegate Fe PMbw41 epcillc ot j of hrAmos of IipL enricat lrpt I - o; Put j IrVxt I - ouput J duty ard (old rate) drsA4oc rate trie trdeIrfiuttpWt coicrne mlat Itam L enl Sector J prlee ca,fflaee ratio irdinrct baud e (9) (old rate) status stAtuScoalficlant Is campoe of her ta rate dn C9)apptxKch drul of outpt j

myrfa_ A _ or V A V V o-A V

ValournLJ C7) It In rt posslble to IrLut I - oltp* J Pn;t-tAd Dtic tua t value DmiaUc milat value Effective /gpte Aarstoe . ls or mro Le1 th&MlII -Out-PA ldestify spic ratio Ls mry value dbutLc lrpt I - ouWt J 1ept I - autpit I duty ard dreAnck rnte drMrnck rate thr frue free traetabld iept j - specfic ratio rather thn Uiet ratio ratio inilract Cnv rnte) (ncw rate) trade status atatus

tpproach ut rcetffllent qtthty ratio prmv tor ate baei an t7) bsedl a (7)withLn Scetor I ardScotor J

Ram:iis Spre c 1rqzt I - speclfic utput j corafft- (muLeLc Cc) - (a) . (u) Ce) -Lc (d)Clete are tJe wrnrta* of tih &Ityfree price)l [_ leffective ratel * I or Ilavrt abirdstratla (wuFrld i prot:tlcz )

rDrket rate for Jpat (11e ratel -price) xII + mul- l ai rate)ral pro-tectlan nrMl protectfn

mte_amItl eoc Iic t _J

' , II|U'F

- g z-

ANNEX IV-6

PROPOSED TASK FORCE FOR INPUT COEFFICIENTS

Draft Terms of Reference

I "Ie

.-I

- 87 -

ANNEX IV-6Page 1 of 3

PROPOSED TASK FORCE FOR INPUT-COEFFICIENTS

DRAFT TERNS OF REFERENCE

1. Background

The principle of assuring equal footing' with foreign competi-tors for export industr -s has been accepted by the Government as one ofthe high priority policies for export development in the 24-point packageof January 1985. The first step for assuring equal footing with foreigncompetitors is to provide "free trade status' for all exporters (includingindirect exporters) by improving duty (and indirect tax)-free importadministration. Strengthening the input-coefficienc administration is,tberefore, the most important task for improving the duty-free imp-rtadministration.

This draft terms of reference spells out the purpose, composi-tion, 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 inlight of the need to protect immediately the access of Thai manufacturedgoods exporters to duty (and indirect tax)-free imports for their exportproduction from the increasing threats of countervailing actions (inparticular the CVD Suspension Agreement on textile exports with U.S.) byshowing that duty and indirect tax exemptions or drawbacks are not inexcess of those levied on items that are "physically incorporated" into themanufactured export products.

2. Purpose of ICTF

The purpose of ICTF is to Lnitiate the work to strengthen theinput-coefficient administration with the objective of producing initialversions of the input-coefficient books for the priority manufacturedexport industries and carrying out the preparatory work to ultimatelyestablish 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 shouldbe chaired jointly by the Secretary General of NESDB and the PermanentSecretary of the Ministry of Finance and that NESDB and MOF should serve asa joint secretariat of ICT?. ICTF should be assisted by an advisorycommittee composed of selected export manufacturers associations. In viewof the highly technical nature of its task, the technical core team of ICTFshould be the heads of the following offices/divisions in the Government(already involved in estimating and administering the input-coefficients.

- 88 -

ANNEX IV-6Page 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, theLaboratory Division of the Customs Department should provide a major inputfor the technical core team in terms of technical manpower support and datasupply. Active participation of the technical staff of the other twoorganizations would also be needed to speed up the work.

4. Major Tasks of ICTF

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

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

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

(3) In collaboration with the advisory committee, develop anefficient mechanism to collect additional data and screen thecollected data.

(4) Produce a draft version of the input-coefficient book for textileexports based on about 300 standard input-coefficient alreadyestimated by the Laboratory Division of tne Customs Department,the data recently collected by FPO from textile exporters, andadditional data in order to provide urgent inputs for the reviseddrawback schedules of _PO (which are needed to meet the require-ments of the CVD Suspension Agreement with US).

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

(6) Produce a final version of the input-coefficient book for textileexports for implementation by the Customs Department, FPO andBOI.

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

(8) Prepare rules and procedures for the input-coefficientadministration based on the experience of other successfuldeveloping countries.

- 89 -

ANNEX IV-6Page 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 toreport the progress of the work to the full committee and the chairman ofthe ICTF.

77

'O/I, 0

A4.

ANNEX TO CHAPTER V

ROLE OF T-RADE INFORMATION IN EXPORT MARKETINGAND PUBLIC SECTOR SUPPORT SERVICES

'IN

Cp l

(.eQ

- 93 A-NEX V-iPage 1 bf 6

ROLE OF TRADE INFORMATION IN EXPORT MARKETING ANDPUBLIC SECTOR SUPPORT SERVICES

1. Exporters of manufactured goods in developing countries aregenerally newcomers to foreign trade and require the support of a variety ofservices to enable them to penetrate the external markets and acquire theexpertise that trading demands. To a great extent, the support is a temporaryrequirement and resembles a transfer of technoLogy that, when completed,enables the firm to pursue its activities largely unaided. Moreover, it isgenerally the small and Medium industry (SHIs) exporters that can use theservices, which vary according to the exporting community's needs. InThailand, as in other countries, small exporters generally require trade andMarket information, transport and shipping guidance, a Marketing advice, apromotion program, and a design and product development service. Most of thisassistance is not usually available from the private sector and thus isgenerally 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 ofMarketing advisory services in acquiring and disseminating essentialian1ormation and (d) the role of general Marketing promotion programs (tradefairs, trade missions) exhibitions, etc. The specific needs of SMIs have beenalso highlighted because they have to cope with intense competition in anever-changing international Market environment. The pivotal role of theDepartment of Commercial Relations (DCR), which is now engaged in theseservices, is a focus throughout the discussion.

3. The involvement of the public sector amounts to an investment in anessential commercial infrastructure. In developed economies, the investmentis made mostly by private enterprise over a lengthy period and adjustedregularly to the changing requirements of foreign trade. Given its serioustrade imbalance, ThaiLand, however, cannot afford a protracted process.Instead, it needs an apparatus to translate trading opportunities intorealizable export programs rather quickly, i.e., to identify potential buyersand suppliers, locate products of the kind and quality needed and promote themin the various markets. As such, the public sector should establish themechanisms needed to initiate the process, while encouraging the privatesector to build up the institutions that will complement public mechanisms andprogressively take over many of their functions. This approach implies aserious policy and resource commitment from the Government, and presupposes arealization of the importance of foreign trade to development, anunderstanding of what is needed to penetrate foreign markets and an acceptanceof the costs in terms of time, effort and money.

4. Export Marketing has assumed critical importance at this stage ofThailand's development. Therefore, in examining the services provided by theDCR, an attempt was made to identify those areas where services were not fullyadequate or that could profitably be improved in the near future.

- 94 - ANNEX V.1Page 2 of 6

The Importance of General Trade Information

5. Trade information is critical for export trading. It has severaldimensions, 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 bothimporting countries and Thailand. While acknowLedging the value of the tradeinformation provided by the DCR, some exporters have found it necessary toconfirm it with another source to see whether it was accurate and up-to-date. The number of firms interviewed was small, however, and this problemmay not be widespread in many sectors and product Lines. Still, given itsimportance, the DCM should give the compilation and distribution of up-to-dateand accurate information a high priority. Out-of-date trade information cancreate serious problems, such as Customs' rejecting merchandise at the pointof import, thereby obliging the exporcer to destroy it on the spot, sell itelsewhere at whatever price it will fetch, or transport it home at his ownexpense. The costs of misinformation in export trading are very high. TheDCR 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 tohave detailed information on every country's import regulations, or even tomaintain an inventory of every regulation affecting imports in Thailand's mainmarkets. For the majority of small- and medium-size direct exporters, onlycertain basic information need be available and kept up-to-date, for example,tariffs, quotas, import licenses, import documentation and labellingreguLations for main products. At the same 14me, the DCR should either havethe data at hand or have quick access to it._

The Nature of Effective Market Information

7. Market information presents a difficult problem unless approachedsensibly. As the information an exporter generally requires depends on hisneeds, the essential question is "what minimum information will enable acompany to make a decision or complete his transaction, given the stage of itsproposed action in the Market?"

8. Assessing realizable export prospects involves a series ofconsecutive steps, with a decision made at each one whether to proceed to thenext. At any stage an exporter may only need limited although specificinformation. Just the price alone of a competing article in the importingcountry 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 andcost-effective to promote both general and export trading companies andto develop an environment and incentives framework that would link themto the SMIs. However, that will be a long-term process, and not allexporters 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 -

ANNEX V-iPage 3 of 6

depth and detailed report on the Market could take so much time thatconditions 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 indecision-making. Only regular contact with the exporters to get currentknowledge of their Production, Marketing and financial capabilities will yieldthis insight. Other information may be required at the level of an industrysector or subsector, for example, how best can the men's outerwear sectorestablish itself in a specified Market. The answer involves an extensiveexamination of the market, including its growth and structure; trends andrequirements; specific activities and steps needed to establish a foothold;and cost in money and time, etc. Such an extensive exercise should not beundertaken, however, without (a) adequate information on the supply, e.g., thenumber of menswear producers, the volame and quality of output, prices andcosts, design and product development capabilities and transport facilities,and (b) a quick preliminary survey of the Market. Both of these are theproper responsibility of an export service organization.

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

11. These exercises are expensive, with the cost varying according tothe 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 UKwould cost at least L 10,000 and $30,000 in the US. Therefore, such exercisescannot be undertaken across-the-board in many sectors and a precondition mustbe a firm commitment from firms in the industry. These analyses should bepart of a selected strategy for penetrating the potenj3al market, and theinterested firm should be aware of the cost involved.-

12. The market information provided by trade service organizations isless than effective if it does not meet the minimum needs of a firm or themore detailed requirements of an industry sector. If it does not enable theexporter to move to the next stage in his market deliberations and is notsufficient to establish an effective market development program for theindustry 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 highlydesirable.

- 96 -ANNEX V-IPage 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 ingeneral information, in excessive material, or in the accumulation of stocksof data that do not directly support the current export effort. In short, acarefully designed, activity-based information gathering and disseminationsystem 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 exportmarketing advisory service to help them determine their export capabilitiesand to advise them on the preparation and implementation of practicalMarketing programs aimed at achieving specified volumes of exports inparticular markets. In many instances, this service is provided by foreignbuying agents, but public sector organizations can aLso play an importantsupplementary role.

15. The quality of a public advisory service depends on the Marketingadviser, who is the link between the exporter and the support serviceorganizations of the country. The adviser selects from the organization'sservices those relevant to the exporter's needs and informs the organizationof the exporters' requirement, so that the services can be adjusted tochanging needs. The adviser is also the link between the exporter and traderepresentatives overseas. Again, he defines the exporter's information needsso that the trade representative can provide the specific data required, andhe interprets the market information from the representative in terms of itssignificance 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 doubtfulvalue, and their impact on the economy's export drive will not besignificant. Again, export promotion programs are effective if they arelinked to the requirements of the exporting community; are flexible inoperation, and are delivered speedily and efficiently. Flexibility is alsoimportant, as the needs of exporters are not constant, but vary according tomarket and domestic conditions. Therefore, staff must keep in close touchwith exporters and markets so that they can adapt the services to newcircumstances and design programs to meet real needs. Such a service islacking 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 facilityto improve product quality, to extend the range of products and to alterproduct design and presentation to suit the requirements of the export,as distinct from the domestic, market. It was not possible to determinethe real demand for such a facility in these and other subsectors or theextent to which these requirements were being met by existinginstitutions and facilities. However, given the number of requests andperceived needs, the desirability of such a facility should at least beinvestigated.

- 97 - AMX V-1Page 5 of 6

the export drive. The central roLe of the services is described in Chapter Vof 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. Theyrequire special attention to enable them to develop into exporters. If theyare below a certain size, the cost of exporting is beyond their resources, andunless cooperative or marketing intermediaries can be arranged, they areconfined to the domestic market. If their size indicates an exportcapability, they will require support in many areas to exploit that capabilityprofitably, for example, in product design, development and presentation;pricing and costing; export financing; market planning and the mechanics ofexporting. These firms require much time and attention.

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

19. It will thus be necessary to provide adequate incentives for tradingcompanies, buying agents, etc. to get them to forge these linkages, with SMIexporters. The DCR has a particular role to play here. While it willinvolve a significant initial investment of time and effort per firm, thesubsequent investment diminishes progressively as the firm's capabilitiesgrow. In the interests of the economy, it is desirable that the DCR undertakethis particular responsibility.

Assessment of Export Production and Marketing Capabilities

20. In order to assess the adequacy and compatibility of services, animportant first task of the export marketing service will be an ongoingappraisal of the production and export potential--namely, a periodicassessment or audit of existing and new exporter capabilities. Such anassessment will enable policy-makers and relevant public and private sectoragencies to initiate and adjust the export marketing services, provideessential information on products being manufactured and exported,distinguishing locally controlled or indigenous firms from joint ventures andforeign-owned enterprises; and make possible the calculation of the proportionof exports attributable to indigenous and to foreign firms, and the extent ofdomestic value added, employment, investment, etc., by sector and subsectorsof manufacturing. Using the basic data provided by the audit, andcomplementing the work of the UN Center for Transnational Corporations/ESCAP,further investigation could identify the main export marketing channels usedby the manufacturing subsector and their changing roles. The audit would alsoestablish with reasonable precision the characteristics of Thailand's exportcommunity or export base, and would show the market segments into whichexporters sold their products. This information will provide a firmfoundation on which to determine the services that the various industry

- 98 -ANNEX V -IPage 6 of 6

segments most needed in both industrial promotion and export markets.Moreover, it will avoid the waste that arises when services are acceptedsimply because they are provided and ensure they relate to felt needs. Bydirecting services to real needs, the DCR can enhAnce the competitive abilityof Thailand's manufacturers in their export markets.

21. Another important advantage of an assessment is to facilitate thesetting of realistic targets. Top-down target-setting using macro-indiceswithout much regard to the realities of the exporting community's capabilityis at best unrealistic, at worst harmful. A more useful exercise may be acumulative approach to an analysis of manufacturing sectors and sub-sectorsthat reveal strengths and weaknesses within each manufacturing group overtime. Aimed with that clearer understanding of the export potential of Thaienterprises and industry, the public and private sector institutions will bein a position to forge a partnership first to establish and then to achieverealistic export targets.

ANNE V-2

EXPORT DEVELOPMENT COMMITTEE (EDC)

'VP'' -)/c s7, A-,, , 0? - .P g

0 (:? o

ANNEX V-2Page 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

DEPARTMfENT OF COMMERCIAL RELATIONS (DCR)

A)/- 6e,f -- D =, -9

- / o/

ORGANIZATION CHART

DEPARTMENT OF COMMERCIAL RELATIONS

I - -. L--- -I OFFICE OF THE TRADE INFOR14ATION TRADE PROMOTION TRADE DEVELnPMENT TECHNICAL DIVISION EXPORT TRAININGSECRETARY DIVISION 1 DIVISION DIVISION(EXPORT SERVICE CNE

___ ____________________________CENTRE)

Personnel & Trade Report General Affairs Trade Information Technical Training & SeminarRecord Section Section Section - Service Section S Section Sectio;"

Finance Editorial Domestic Trade Advisory Service Planning & Personnel Development 1Section Section Pronotion Section Section Coordination Section Section ]

Trade Publication International Trade Product Adaptation Analysis & Training MaterialSection - Promotion Section | Section Evaluation Section D Development Section

Product & Raw Trade Center Training RecordMaterial Survey - Coordination - SectionSection Section __|_.-_ |

Design & Decoration Overseas Trade Technical CoordinationSection Center In Trade Promotion | '

I ~~~~~~~~~~~~~01

/0 6-

+s~~~~)-C S"A A'2 /Y/d

STATISTICAL ANNEX TABLES

- Pe </.- ;; -j 6,/ S p

-_- 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 1982732. Mining & Quarrying 2759 14493 13373 14807 16480 201653. Manufacturing 21814 134515 158272 164659 176200 1892684. Construction 8261 39865 42008 43040 47129 512315. Electricity & Water Supply 1625 6284 10743 14454 16319 172506. Transportation & Communication 8588 45261 57281 63133 73708 825137. Wholesale & Retail Trade 25903 128731 150293 159849 165812 1849678. Banking, Insurance & Real Estate 5626 41891 52025 61021 71722 80514t. Ownership of Dwelling 2934 7378 8411 9912 11210 12413

-43'8Public Administration & Defence 6146 28263 30645 37349 42551 4714311. Services 13911 64443 75229 89170 98680 10801512. GROSS DOMESTIC PRODUCT 136060 684930 786166 846136 924254 991752

Source: NESDB

Cross Domestic Product at 1972 Prices

1970 1980 1981 1982 1983 1984

1. Agriculture 48332 72784 77701 78502 81449 842972. Mining & Quarrying 2555 4780 4623 4431 4414 51663. Manufacturing 23320 60597 64490 67317 72252 769444. Construction 8705 16576 15500 15097 15927 166505. Electricity & Water Supply 1638 5560 6330 6755 7348 B1416. Transportation & Communication 9195 18811 20209 21715 23290 249457. Wholesale & Retail Trade 26524 48227 51103 52789 55076 579748. Banking, Insurance & Real Estate 5806 17419 19197 21396 24238 268569. Ownership of Dwelling 3000 4502 4723 4936 5178 538510. Public Administration & Defence 6476 12423 13192 13833 14498 1530111. Services 14541 31173 34202 37261 39276 4190412. GROSS DOMESTIC PRODUCT 150092 292852 311270 324032 342946 363563

Source: NESDB

labit 1.L Balance of Payments, 1992 - I995

Millions of US dollir

P199 Eostions

1992 19 ........1 . .....................9............I9s2 1985 ,,,, ,,,,,, ,,,, ~~........................---.. ...............

°1 02 3 g *' 02 - S 04 Tot"................................................................................ .................. ................. ........................................................................... . ...... .... .... ......,+~*+,.-...... ..

trade balance -1511 -3919 -161 -645 -691 -699 -2989 tOQ -5 -0 -679 627 -2310 -23. 7Exports, f.o.b. 6935 6309 1330 l954 leil5 121 1320 3950 1945 1911 2096 1918 9096I1po0rs, L.i.i. -940b -10187 -2597 299 2502 -2510 -10300 -2463 -2511 -2659 -2123 -103536 -11433

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

Transfers Inetl 193 271 45 43 37 4& III 41 Al 40 47 It7 170Current account 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,. 1600Private Sector . 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 and other short tern 523 433 410 68b 11 253 1360 17 191 605 21? 635 575Poftrtoli investsMt and 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 7 IIState enterprises 596 449 115 160 63 95 493 73 6s 15 168 499 495Central governeents /I 3S0 261 -29 13S 3? 11 21u, 25 51 luS 50 231 226

Errors and omissions 12 -Sil 559 -122 165 -35 53 5 0 0 0

Allocation of SDs 0 0 0 0 0 0 0 0 0 u 0 0 OOverall ulnae 130 -919 20 519 -171 195 331 -72 41 1.2 III 222 222

tonetary movesents -130 919 -20 -519 111 -195 -331COINtcial bants Inell -320 692 269 -542 199

Li4bilities lincresse #I -250 630 139 -119 -1?Asets lincrese -l -70 52 129 -423 216

Nonetary authorities 190 131 -269 55 292Use of Fund Credit -4 175 9 -2H -39onetmary gotd (increase -I -119 lt5 0 0 0

Holdings of SRs (lncrease -1 36 9 5 -11 20)Foreign nchange lincrease -) 159 -41 -302 -lo 300Contra-entry to gold evaluation 119 -165 0 0 0Central institutions liabilities 0 0 0 0 0

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

/1 Including Irust Fund repaysmnts of USI4 sillion in 1993, US$13 million in ItSI, US$22 million IlI 1985 and US$26 millionIn 19i12 Including counterpart to valuation chingis in Ioreign eichange reserves amounting to losses of US114 million in 982, UWi29 ef*In 1993 anod US$3i illon in 1984

Soaurce 9Ban of thailand

- 131 -

Table 1.3. Non-Factor Services -1982 - 85(In millions of U.S. dollar)

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

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

Freight and insurance 220 259 289 318 350Other transportation 143 157 196 21b 238Travel 1,038 1,089 1,208 1,359 1,504Investment income 245 227 229 272 298governent, n.i.e. 100 113 97 102 112Others 831 1,074 1.112 1,171 1,241

Of which: workersremittances froa abroad o18 946 B83 930 985

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

Freight and insurance (1521 (125) (147) 163) (181)Other transportation (99) (133) 12151 (140) (155)Travel (269) (343) (3301 (347) (3B5)Investment income (t.332) (1260i (1.481 ) (1.645) (1,793)Of wbich: interestpayments 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 169Other transportation 44 i 71 76 B3Travel 770 74b 878 1 01. 1115Investment income 11.087) (1,033) (1i2541 11,373) (1,485)Governnent. n.i.e. 32 49 33 30 32Others 555 909 815 83B 071

Saurce: Bank of Thailand

- 112 -Table 1 4: Normnonetary Capital

lUit: EUSS million

1982 1983 Projection

19864 1985 1986

Private Sector (net) 75- 7sG i.765 969Lona-term capital (fver one year)

Inftfloi 916 1m331 1.833 1.691 1 .2Direct investment 258 446 4'91 409 407Eqp!ity (169) (315) (316) (259) (267)Loans (89) (131) (175) (150) (140)

Other Loans 475 694 1,070 1,090 1,010TrLde Credits 144 161 165 160 165Others 39 30 107 32 10

Ottflo' 672 866 9L olDirect investment 70 103 110 98 105

M*1ity (21) (19) (20) (-) (-)Loans (49) (84) (90) (98) (105)

Other Loans 346 416 511 558 597Trade Credits 116 128 136 128 151Others - 25 109 - -

s' Net 8 6s 2iz 907Direct 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 413Trade Credits 28 33 29 32 14Others 39 5 -2 32 10

Short-term CapitalInflow 4,488 4,023 jA.905 L. 2 54

TAan 1,537 980 2,155 1,860 1,700Trade Credits 2,674 2,668 2,391 2,221 2,272Others - 277 375 359 277 282

Outflow 4.121 3-896 4,107 4302 4.104Loans 1,299 1,070 1,689 2,065 1,796Trade Credits 2,705 2,683 2,356 2,187 2,258Others 117 143 62 50 50

Net 67 127 5615Loans 238 -90 466 -205 -96Trade Credits -31 -15 35 34 14Others I 160 232 297 227 232

PbUic Sector (net) 91 710 6JQ 7711-Lor-term capital (net) 1.00 799 I 8550 711

Centra. and loa al governmeentet) 130 261 210 231 i_TIflov - I 508 519 504 509 500Outflew 178 258 2941 278 274

State enterprises (net) 73 S . 619 AnInLlov 857 768 989 962. 880Outflow 184 230 460 343 395

Short-term capital (net) .-87 _-89 -46 ..-1.Central and local zoverrment(net) .

Inflo£Outflow

State enterprises (net) -87 -84 -46 -120Inflou 226 200 200 80 B7Outflou 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 in1984., 'JS5 22 million in 1985 and US$ 26 milLion in 1986.

Source: &lnk of T aiLand

table 2.1: MRIICIPAL 91ERtHA469 E11 EIIORTS... .......... ................. ..................... ... .................... ............................. ........................................................ ..................

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

1. RkceV4lue Imillion of babil 2,511 2,909 4,431 3,594 9,179 5,052 91,03 13,303 10,424 15,592 19,109 2t,3il 22,511 2,, 1$1 25,932Volume lItkoulnos of to 1si 1,044 1,51t 21112 949 1,029 951 1,913 2,944 1,601 2,791 2,i00 3,032 3,184 3,41a 4,416Unit value bI(ht per tool 2,344 1,946 2,101 4,235 9,500 4,152 4,159 4,543 46,47 5,515 6,960 6,491 5,949 5,199 S,439

2. RobberValue laillion 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 11,181 33,004Volume ltbomnfs of lonsl 214 306 i9 3931 3J3 332 313 402 442 321 155 412 544 5;5 532Unit value lbaht per ton) 6,099 4,186 5,641 13,130 13,111 30,438 14,184 15,331 13,140 21,109 27,135 22,962 11.419 21,2:t 2139,9

3, Kalue /aValue (millt3c of bahil 3,949 2,29t 2,085 2,9t9 6,01 5 .105 5,411 3,345 4,275 5,44 1,7299 1,49 8,330 9,486 10,141

Volume lIthouands 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 3,343Unit value Ihlah 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 ("tillValue leillion 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 5,280Voluae thtouuando of 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 1135Unit valve lbah poer tono 12,732 1,138 17,190 89,162 149,083 134,942 14,6450 212,243 249,147 295,514 334,118 302,28 3112,301 297,055 261,101

5. lapioa productiValue (billion of bahi) 13223 1,240 1,541 2,531 3,936 4,591 1,529 1,120 lu'i92 9,89 144,97 1 3,44 19,15 131,387 12,600Value. 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 4,510Unit value Ibaht 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

. enIf and JuteVelee leallion of thbil 719 S35 1,017 3,034 i4l 643 519 417 449 391 354 71 36 28 490Yolue Ithounanhs of Lonse 253 212 255 264 241 I56 338 el 91 79 SO 20 0 7 I1Unit value 4b04t 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

Valuv lelillon 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 5,222Volute Ithouands of tonol ) e56 1 409 215 444 595 1,124 1,455 1.040 1,190 452 1,119 2,206 1,537 1,242Unit value lbaht 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 4Value leillien of bAil 224 247 340 804 402 691 3,141 1 1,11 1,500 2,3172 1,961 2,336 2.144 3,644 2,799Volume Itbouavnds of tonsl 4.4 3.4 4.1 14.9 10.3 J 335 15.2 33.1 15.4 39.t 17.9 Is8. 20.1 20.2 19.lUnit value ibaht per toni 34,964 44,1a2 50,39 54,050 588,126 65,S 00 I 9,534 95,414 91,542 127,349 109,461 113,I S3 31),251 151,022 144,010T. TellValve leitliosn of thal 334 li3 205 422 402 443 749 544 254 llie 0 4 0 0 6Volume Ithoulnds of co l 29 0 40 52 33 43 12 39 is 6 0 5 0 0 365Unit value lbaht per tv el 5,424 4,64 I ,ti 3 8 I ,l 4 11,434 10,344 30,350 14,000 13,933 19,467 0 9,200 0 0 335714

10. lobacco LeavsValue Inillion of bahtl 191 236 284 309 445 594 699 924 1,14. 1,2431 1731 13739 2,344 1,191 13,3tVoluo Ithououndo of tonol II 13 Is 36 15 11 22 29 35 34 39 4 319 3J 34Unit value lbaht per tono 39,246 11,934 33,489 139,11 SO3434 32,359 31,135 33,022 33,352 34,505 33,103 41,871 44,545 50,s3 45,490

Value of prlncipal eipo.t 30,949 11,812 14,119 19,458 33,914 30,144 40,294 43,465 49,314 61,t 51 11,053 94,462 6,'333 12,403 11,101Other geports 3,923 5,383 1,113 13,149 33,925 14,161 20,503 253542 34,993 44,526 43,344 46,339 13,595 74,l69 94,129Total erchandlue egports 14,772 17,215 22,491 32,224 49,199 43,001 40,191 11,198 OI3O,S 101,119 133,191 13,001 159,129 144,412 115,231djustetal for DIP lb -502 583 -143 -914 .791 -42 -800 73J5 -914 1300 1153 2944 -2523 -1394 *117

Ihrchandise exporti g,0.4. 14,210 14,t92 213750 31,252 49,002 44,363 60,34 10,44S 52,251 304,819 132,041 330,38l 151,23 145,014 113,520

Ia Inclu4ing elte groat ind etal14 Inclusl t lties soch as Emploaitic shipents personal effetts, teporary enports, etc.Source: lank of thailand

ijble 2.21 OIKR MERCHANDISE IIPORTSiillion of lahtil

........................................... ............................................................................. ,,,,,,,............. ,, ,,........ , , .... b........

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

Aqritultural Products 1,114 1,429 1,691 2,419 2,914 z b24 3,699 4,644 5,429 Ie8 4,936 9,181 10,489 9,848 10,491tegleHs and bloc salpt leans 255 255 211 374 454 414 146 1,059 1,161 1,375 1,441 1,H93 1,1 5 1,557 1,71

SolVem 14 17 23 14 47 133 48 9s Sl 68 29 23 It 9 9Strqhlem 103 151 ISO 241 424 482 J74 299 372 495 61 901 926 19qO 809lapek litr 134 141 149 119 195 1"9 211 244 231 264 255 2i5 is? 250 220Castor seeds 93 12? 91 712 215 103 251 51 281 705 0 0 Q I 056dla asn Stich let 34 60 101 191 281 95 92 54 51 U6 Ito S! 181 210 414Hides d skins 52 47 102 98 1C 34 54 53 16 1"3 1i 115 102 105 195Cattle 13 91 115 1S3 120 III 141 Z15 251 209 99 21 25 43 33Other alriciltlral 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

Fllfry Products 143 249 42 111 180 1,007 1,34 1,925 2?06 3,64i2 3,584 4,496 4,812 5,061 5.885tuttic fish, Iresh I 3Jl 96 141 213 340 505 432 46o 1,022 1,471 1,01 1,336 1,780 1,47 1,693Cottle fish, ialted in irine I I 68 16 83 102 130 209 318 362 318 416 401 6t0 8oOther fis%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

Forstry Products 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 2,308Fleorile 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 220Iron smes tocetlratts 8 I 0 0 0 0 0 0 0 0 0 0 0 0 0 *

Olter elseral products 127 157 135 214 543 394 456 185 S5o 1,526 3J112 2 01? 1,511 l1lIq 1,120

Ibaulactrilng Products 108 1,430 2,193 i,070 8,311 8,051 12,161 14,510 20,155 29,173 /40,040 45,111 50,213 55,020 70,913Pineapple, canned 55 44 51 75 280 346 405 893 1,201 1,244 1.432 2,039 I1,9 1,011 2,84iarments 18 41 251 440 1t5 98y 1,559 1,493 7,461 3,511 4,314 1,03a ,006 9,U11 12,2949olastes 4 45 36 91 312 500 419 491 745 507 52i 364 iq6 i5I 4O9 8i3Cesent 83 90 218 $14 450 504 3)9 211 33 33 52 99 2'9 198 16Petreleve products 3 132 48 319 303 230 101 I 2 13 10 9 13 15 31Spinsing 5 21 112 159 144 11 445 131 890 141 1,133 1,276 1,203 1,141 1.500silk, IcIrns 34 30 29 39 34 2t 29 3o 38 41 15 139 15i 144 1f21Urills 23 62 271 1,021 131 803 2,042 2,110 3,311 4,317 3,14 4,b254 4,194 4,331 5,171Jute yarn I Jute fabrics, tiine

terdae rope, cable ol jute 14 l3 III l8 415 314 430 311 49N 756 140 44 150 115 101GuRny bait 61 116 110 31J 3J0 283 11 11 IZ5 024 111 420 542 395 1,278Iron t stell products . 41 46 li1 114 335 145 211 235 426 676 1,421 "9 oil 319 1,315IHosehold utsi Is of ool to 33 72 135 16 205 238 I24 3J0 356 371 411 401 450 502PruhK us stortn anO JeIerV 137 232 383 641 1U 761 91 1,210 2,059 2,754 3,713 5,012 5,249 1,242 1,33JOther aufatturvrii pfoducts 215 340 691 1,645 2,133 2,304 4,534 5,111 3,329 13,353 21,344 21,9i6 25,111 28,201 34,431

TeeprrNy etpots 364 625 916 919 101 858 951 1,38J 1,363 2,511 3,411 2,444 1I1,1 1,102 110RIEopwrts 522 598 115 1,010 1,1 1 935 608 101 113 1,342 2,191 4,033 5,69 2,150 3,162Ilopieatic S96ip fts 63 82 97 145 135 27 23 11 22 19 71 57 27 42 56teroonal NvIoehold Eflftos 37 53 55 66 if IJ 14 72 62 1J II 9Y 233 133 JIOOthers 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 14,16l 20,503 25,542 34,101 44,123 61,344 48,319 S3,59 14,0U U4,129....................................................................................................................................................................

S9ucte lank of Ibill^nd

Table 2.3: COMPARATIVE STRUCTURE OF MANUFPCTURING SECTOR

Colom- Indo- Ivory Malay- Philip- Tuni- Thai

Brazil bia Egypt nesia Coast Korea sia Mexico pines sia land

Growth Rate (%)

1960-70 5.4 5.1 4.3 3.9 8.0 8.6 6.5 7.6 5.1 4, 1/ 8.4

1970-82 7.62/ 5.4 8.4 7.7 5.7 8.6 7.7 6.4 6.0 7.0 7.1

Manufacturing

1960-70 - 5.7 4.8 3.3 11.6 17.6 - 10.1 6.7 7.81/ 11.4

1970-82 7.&i.1 5.2 9.3 13.4 5.4 14.5 10.6 6.8 6.6 11.6 9.9

Share (%)

Manufacturin Sharein GDP (%)

1960 26 17 20 a 7 14 9 19 20 83/ 13

1982 27 1 21 27 13 12 28 18 21 24 13 19

1/ Figures are for 1961-70, not 1960-702/ 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 EDE AND 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 15.21979.80 17.6 26.4 13.2 45.5 7.9 -14.3 35.0 65.0 -1.2 6.1 35.1 16.8 17.91980-81 -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 10,81979-80 32.1 -12.2 -9.0 -6.4 7.5 17,9 31.3 134.8 33.9 37.3 49.2 32.0 42.71980-81 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)ITbtal 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 16.01979 7.5 16.1 10.8 31.7 27.5 24.8 54.5 7.2 12.5 15.7 31,0 29.1 19.11980 8.5 13.3 13.3 31.4 38.4 30.1 58.4 9.2 13.4 16.8 24.6 30.2 19.41981 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 17.81979 9.7 13.5 22.5 14.7 27.3 33.5 38.6 9.7 24.6 22.5 45.8 46.6 26.01980 10.5 15.2 21.2 15.5 37.7 38.3 44.9 11.7 23.3 21.8 54.0 48.4 27.51981 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 681979 44 73 66 67 71 55 67 83 53 65 55 61 631980 41 70 59 65 72 43 67 83 46 59 53 57 581981 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 21979 39 22 20 3 8 89 18 29 23 35 12 34 251980 39 20 11 2 8 90 19 39 24 37 19 36 291981 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

IIDJWSTA3AL CSIJJaSrCAT4 VxLur Or OUTPUtv_ VALUC O - tDom?3 _ rPrT1,v.OU7?VT 4Lb1915 1960 1ItT: aS90 1977 9S70 1775 Yi o 1770 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' 31.42 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

3 TOSACCO 603.7 1e4,217.0 3,76.0 6,767. 700.1 1,096.7 71.77 1,135.3 7.1 7.9

4 TCETILCS 33,769.1 6.491.7 11.31.6 16,701.7 1,14, III !JjX J.XI.fJ.jt1.f 6.1 13.73 LcATWCR 31,06.4 4,976.1 133.0 1,624,4 39. '11, 9 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 IHOUSTPJAL CKWrJCAU 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

10 PtriItpePs S ,CToLczu PPoo=S 16,639.1 30,467.7 4,149. 19007.0 2.6 11,900.7 351 .1 69.6 15 0.1

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 60,413 PLASTIC PFOPUCTS 2,41$.6 3,312 J1,3l1.$ 23,244 4 99.5 609.7 I3I1L 0 . I).& S.6 11.513 CXMAJUC S 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 30.9 137.9 7 32 4.41 5 QIVR WI40KETALLIC PTOTcs 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 9.317 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 61.0is 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.CAL IN.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 312X21 TM1I5P0RT Cgflpl'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 0,333 oQTi mrI rAC`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 Commoaity Group

WMpor& Valuo (Mil. US Dollars) Growth Rate (%)SITC 5 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

SITC 6 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 : Staciatical Yearbook for Asia and The Pacific 1975,1982.

United Nation.

f

Table2.6: (Continued)

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

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 : Textile yarnp Pabrics ETC

Source : Yearbook of International Trade Statistics 1972-73, 1978, Vol.I 1982.

United Nation.

Table 2.6:(Continued)

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

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 Manufactures Nes.

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

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

-~~~~~~~~~~~~~~~~~~~~~~~I

Table2.6: (Continued)

Export Value (N14. US. Dollars) Growtth Rate (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 : Machinery and Transport Equlpment

Source : StatistLcal Yearbook for Asia and The Paciflc 1975,1982.

United Nationbs

'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 Pacific 1975, 1982.

United Nation.

f

Table 2.7:Distribution and Growth of Manufactured Exports by CbmxUity

Percentage Growth1/Value (Million Baht) 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 9.3Garments 18 4,894 8,873 2.2 12.2 16.1 75.2 21.9Molasses 45 364 609 5.6 0.9 1.1 23 s3 18.7Cement 83 52 198 10.3 0.1 0.4 -4,6 56.2Petroleum products 36 70 15 4.5 0.2 0.0 6.9 -40.2Spinning 5 1,133 1,147 0.6 2.8 2.1 72.0 0.4Silk, fabrics 34 75 164 4.2 0.2 0.3 8.2 29.8Textiles 23 3,616 4,331 2.8 9.0 7.9 65.8 6.2Jute yearn & jute fabrics, twinecordage 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 -20.9Iron & steel producLs 41 1,421 819 5.1 3.5 1.5 42.6 -16.8Household utensils of wool 18 378 450 2.2 0.9 0.8 35.6 6.0Precious stones & jewelry 137 3,773 7,242 17.0 9.4 13.2 39.3 24.3Other manufacturing products 234 21,364 28,201 28.9 53.3 51,2 57.1 9.7

1 / End point compound growth 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 (restricteddue to health andother 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 EXAMPLE OF INPUT COEFFICIENTS USED FOR INDIVIDUALDRAWBACK/EXEMPTION OF DUTIES BY CUST'DdS DEPARTMENT

Product: TImmcation Flower Made From Cloth and Plastic

Input Coefficients

Quantity of inputInput Specification Input Code per 100 kg of Wasrage

product Rate

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

1.1 OOZ polyesterTaffeta

1.2 1OOZ PolyesterPongee

1.3 100% RayonSatin

1.4 Rayon Suede

2. Plastic 390001/03 48.60 kg 8Z

2.1 Low densityPolyethylene

2.2 High densityPolyethylene

3. Steel Wire 730001/03 20.00 kg

Source: Customs Department.

Table 4 .3

AN JWZ OF INPUY S'flX AI BO(JM1 ifO ISDD OF WIY EXD1EIO()N

Product: Integrated Circuts; (a) tbnthly Export VoluTo of the Co. - 6,000,000 Mnite(CER DIP Type)

(b) (c) (d) (e) (f)1mdn allowable Duty-Free Worts

input. Stock Balanoe Actually Usad for Rsninirg BalanceInput Co,-efficients a/ for Duty-Free loport b/ Actual Exports (mpleted Allowd for Duty-(PC Fneoed per 1,0CU - (a) x (b) x 6 Duty Free - (b) x Export Volume Free nrlort

Iziported Inputs units of output) 1,000 Imports 1,000 0 (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. 41,544,000H

Aluzlrdium Wire 224 Fr. 8,064,000

Lid 1,085 PCS. 39,060,000

Msrkem Ink 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 Annax B for the detailld input-coefficients based an whichthe 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

ALTERNATIVE ESTIMATES ON AVERAGE DUTY (AND INDIRECr TAX) EXEMPTION RATE

Average money Average duty Average duty and indirect taxVersion 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 61Company 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/

a1 Industrial Management Co. estimates based on 172 Sector input-outputtable. 0.32 is the average nominal protectioa rate (1983), rather thanduty rate and 0.05 is the average indirect tax rate. Average moneyvalue input-output ratio is in domestic prices.

MALI 4 .5

WAMIA1II M E V UL W 0T mIlLS KIIWC BY 31 mm42 w7 TlUinAs -(fAD oFFicE)

ima aI Ic I S1914 ti11 1974 I111 Il71 1ill 1913 M91 593 52im 1914 591 1914 MY? 19731 1979 1919 9 1911 W 191

3. IylesilsiaI $03,613.1 3,33 4,15.1 1,9518. 6,196?1 11,111.4 113641.1 14,M15. 31,930.7 11,41.9 33.1 132 1. 1.1 .34.1 I 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 5,416.9 2534. 2379.9 3.3 7. 112.6 21.3 I.s 26.6 14.3 26.6 19.1 21.9KIII. 3~~~~~,313.6 3,119.9 941.3 414.3 961.3 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 3.31n-f.F4 317.1 191.1 3.11 519.6 114.3 5,444.5103,16.9 3,15.131,716.6 1,M341. 3.6 2.9 1.7 3.1 3.4 3.9 4.5 .1. 4.1 1.4lucas 119.1 34.1 132.9 343. 1,136.1 634.4 413.1 444.5 161 424A 6 2 .1 6.3 1.6 5.4 1.1 2 .1 2,1 6, 6.3 0.6Intl 511.9 111.1 311.1 911.1 136.9 161.4 59.6. 1.4 19. 171.9 I . 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 5,1291.9 1,139.1 4.5 3.3 3.2 3.4 3.3 5.6 3.3 3.2 2.9 3.6

3. 5ee1s,risI 4,323.3 731.3 5 2,411,0,6 13,196,3 21,941.4 3366.33,316 3.3 21,9. 31,497.4 41,1311. 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 2,361.716,134.1 4,696.4 1,3213 1,515.1. 3,1111.9 9,937.4 1,416. 1,1323 2513 37.1 9. 31. 1. 33.6 I 36.4 1.3 31 9.25II 6.5liSpIKc Preicnts 1,39.3 51.6 3S, 0144.4 4,293.6 1,414.9 6,1132.3 56,644.3 9,3116.4 55,351. 14,441.6 21. 1.1 21.3 11.1 3.9 32.1 17.3 31. 27,3 23,5 30.3molIlls 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 3.3Called 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 9.9TehApCe Leaves 333.3 316$ .1 43.3 49.3 136.12,3113.4 1163 I..1 1,36. 1262.1 1,446.6 3.7 3.3 3.6 3.6 3.5 3.3 3.5 1.4 3.9 3.1WWIIte 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 6.9Prfeuell 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?% 11.3 91. 61.1 1 1.1 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 6.4fl~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 6.3Il lItat predicts 79.3 63. 62. 3 2.3 366.6d 516.6 5,66u. 1.6 6. 15. 6 136.3I 2.6 3.6 6.4 6.3 6.9 2.1 3.1 2.2 6.6 6.3SlOws 323.9 I61. 336.9I M31. 466.5 2,22.3 3,54N.3I 3,593. 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 4,5121.6 4,309.6 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 w 4 1.7 ,47.6 134.6 149.31 . 3. 3. 2 . . 5.1 5.6 Il3 I.6 3.2 2.3 6.142Nisliam.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 7,7321.1 26,136.3 16,363.4 19,144A1.43,41.1 1619.1. 41,#312,112,736.4 43,623.1 13,214.1 346.6 266. 266.6 366. 266.3 166. 266.3 266. 166.6 266.0. .. ................ ....

SOURCES lank of Thailand

TABLE 4.6

mAATIE AK W ENt DILLS URl IT TMm AN IF TIrILAS (READ omcE)ECIazi,9f9. I, 7r" .9 OKIHqIII

_ .. _ ... _ _ .,_._ ........ ......... ... .. . ................ _ . .. .__.......... _._ ..... _

IHlllllu if lahil 1 iii.aoowcts~~~~~~~~~~~~NIIU| @@ tt ,,,,. ............. ._____.._........-...- ----------------- . . . . . . . . _ _ _ . . . . . . . . . . . . . . . . . ....... _... ......... .......... __

9974 9972 9916 9917 9916 il19 9101 list 9l 1 99112 1 9174 91 91 9l 191l 1919 1910 1911 91 99021

1. Prte,blpest F18aela4 g 7,11 9,942 1,942 11,614 13,1 2I,7J1 41,461 49,644 II,"? 1,113 I n la 97 97 TV 97 94 n4 I

.1 Le t.t .o Crlle 2,419 . 1,4 9,14 0,90 9,1 94, 19,919 90,296 36,12 r,90li M I 44 Si 51 41 49 41 Is S 41 4151.3 Cs.u st o totaen se* O t 96l19,64 1,094 28,6 11 5534 1,910 92,906 19,162 19,641 1,213 1 1 6 It to 0 t 1 9 11 3 1U19. hIeAi. e l Recipt 1,621 3 1,94 4,142 0,461 7,941 93,920 96,M 5,69161 5,362 2,119 4 14 n n 1 14 is to 1 I s

3. Possti- lgai Fleaselag 414 5 @91 49 26 1,697 3,444 3,6 149,109 03,119 I 6 4 2 2 I 0 6 9 I

1.9 pill 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, 114,44 09,144 31,611 U,.4 43,6* 22,116 43,414 1,N4 1I I6 l60 too I60 M4 96t 6o 960 Its l60_.____.........____....._

BOURCZI bank of Thailand

LA

- 136 -

Table 4 7

ESTIMATED AVERAGE LOAN PERIODS FOR SELECTED PRODUCTS(HEAD OFFICE) IN 1983

Percentage Outstanding Estimatedshare of out- balance (monthly Accumulated average loan

standing average) al value periodbalance x (Million baht) (Million baht) (months)

Rice- 21 3,608 12,780 3.4Maize 6 1,031 5,057 2.4Tapioca prod. 21 3,608 14,401 3.0Sugar 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 ofThailand. In converting the national data to Head Office figure, thenational data-Head Office ratio of the total accumulated value (1983)was used.

- 137* -

Table 4.8

EXPORTERS CLASSIFIED BY OIUTSTAN,DING VALUE OF EXPORT LOANSREDISCOUNTED BY THE BOT AS AT 31st JULY 1984

PercentageTotal out- Average of total

Outstanding of export No. of standing outstanding outstandingloan (millions baht) exporters (mil.- baht) (mil. baht) exp. loans

Less than 5 482 825.3 1.7 4.25-50 292 4,752.0 16.3 24.2

51-100 58 4,114.3 70.9 21.0101-500 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 SURVEY ON ACCESS TO TEE EXPORT LOAN

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 DOCUHENTS USED IN OBTAININGEXPORT LOAN FOR SELECTED AGRICULTURAL PEtODUCTS

Pre-Shipment Post-shipment

Contracts WherehouseL/C or Orders Receipts B/E *Total

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

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

-~~~

' 4,14

nsMD snem cr mom M aA m vi TM w t^vEw, uaws AM By Tmt ee a

1979

TMP at,AG A Ito D/A xof310 NW AMno *Mhrs!/ lbcal rn 7 d 310 eM AdMrc Othii TeAl TY" of

DIP - mt, ootDP pvOm-~~~~~/ .wme ,/

1. Pod 70.77X 27.09X 0.88Z I.26 1 45.572 78.35 18.87X 0.062 2.72 1= 45.1w2. 1wrs p T d 82.86 10.20 5.15 2.79 105 ,14 78.64 2.U48 7.10 1.78 100 0.993. aH lateuia1-, mdtbla t*pt Fish 29a.87 60.70 0.79 a.64 IOD 14,77 28,86 54.60 1.05 is.49 10 15.384. 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 btariaIA5. Anlil ud VpttAl OUS m hts 50.01 17.69 32.30 I0 0.06 94.82 5.02 - 0.16 I05 0.176. Ocinmls 59.36 33.44. 0,07 1.13 10o 0.60 0.8D 43.21 - 5.99 1OD 0.177* Hlu tfactund owx, 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 IAteda1a8. HI m4hny AM Trauport Fulpmt 72M04 15.64 0.03 12.29 I3 0.69 80.01 I5.57 O.IS 4.27 103 1.039. a*ueonaow Huufactured ArtLclei 83.99 13.42 0.02 2.57 I00 6.15 80.69 14.87 0.10 4.34 100 6.1810. laulin trc a w 0.05 - 19,83 80.12 100 5.80 0.12 0.04 33.84 69.0D 100 6.77

0muvd1lwl NE.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 open Oplnts, dedrrrd paywna, couipmit osles xd otfem.

I-

.TABLE 4.11 (continued)

PFUM= Msn O WM Mi Ms aAMyPm BY rTm O Pr^Msr DwUOTA Ye rit ii OM

_ ~~~~~~~~~~~~~~~1981 1982

Trpeof O2ai P/A Za /A ZEO1 Adam Odea bca of i 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 56.1U2. kwrv ard lbbn 76.15 2D.86 9,66 2.33 100 1.02 85.56 14.19 - 0.25 100 1.683. lWudi Itterlali, 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 10.054. 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 tecrWS. Mbdl ad Vet&bIa Lib ad hau 71.80 28.20 - - 100 0.18 95.73 3.91 - 0.36 100 0.306. a cala 47.02 50.73 - 2.25 100 0.68 51.65 (92.83) 43.40 0.33 4.57 100 0.787. 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 Hzttl8. WyhLnerny ad eampxtt 4upnit 83.03 14.33 - 2.64 100 1.23 74.75 (95.54) 17.22 - 8.03 100 0.889, IUmll ao Nhoifet Afrtics 82.99 12,V8 0,02 4.11 100 7.48 83.14 13,72 - 3.14 I0N 8.3110. 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

mwauas1e N.E.S.S of Ty ce bpot Fayt 66.35 17.81 1.10 14.74 MA 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 wO NE3 D Am e AI Tax (1 OM

Opef .m* /A ZIf D/A d1/ i I~rir~ A1~/C amC aid MtW Awnm Odin Ta1 lye OtWC~~~~~~~~~ Ud afesH of WtC Rd@b

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 50.832. qwas o adthm e.n 11.71 - 0.07 100 1.143. Q% 1lggdab, wa11 & 1pt 27.67 59.53 0.10 12.70 100 9.354. Nmg.a1a kln, 1&L,=* wi 61.1 12.15 - - 10 0.03

S. MadI ad Vuam eala ad hn 7606 23.90 - 0.02 I00 0.16Chmdes .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 0.979. jtlna nAm lhuifactad kt>lu 78.70 17. - 1.42 100 10.27

10. nU .1 1 TIEact.m ad 0.02 - 32.94 67.0 100 8.33 9. 81.90 14.55 0.03 3.36 100 7.87Cmtiaa LL..

ZXd Typucf 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 OF Wm Ws 3A5 ai of OA511c Vt Cm? MM

M"" _ C OarS4k 30 a" 60 Dy 90 h" 120 a" 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

OUTSTANDING VALUE OF EXPORT BILLS EXTENDEDBY THE BANK OF 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 28Contract or Purchaseorder 4,165 5,402 7,087 33 37 41

Warebouse Receipt 1,331 989 1,119 11 7 . 7

Postshipment Financing 1,253 4,428 4,192 10 30 24Bill 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 GARMENT EXPORT MANUFACTURERS(SURVEYED DU2RING 1982-83)

Number of Percentage ofSize/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 EXPORT MANUFACTURERS PRODUCINGCANNED SEA FOOD IN 1982

Number of Workers Number of Export Manufacturers

i - 100 13101 - 200 2201 - 300 3301 - 400 2401 - 500 l501 - 600 _601 - 700 3701 - 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!

PRODUCT LISTS FOR BOI-PROMOTED TRADING COMPANIES al

Items of Goods CCCN

(List No. 1)

1. Cows 010211 0102212. Buffaloes 010212 - 0102223. Fish, Fresh, chilled or frozen 030127 - 1694. Cuttlefish, squids and octopus,

fresh, chilled or frozen 030341 - 445. Octopus fresh chilled or frozen 0303446. Tapioca froducts 070601, 070602, 070605,

(including tapioca flour) 110602, 2303057. Maize 10058. Rice 10069a Grain sorghum 100702

10. Cereal products 110101, 110103, 110104,1903, 1905, 1907, 1908

11. Cotton seeds 12013312. Castor seeds 1201413. Sugar14. Molasses 17030015. Fish meal 23010116. Portland cement 252321.17. Fluorite ore 253106, 253107, 25310918. Tungsten ore 260118, 26011919. Rubber smoked sheets grade 400120. Other bovine cattle hides 41022221. Kenaf 570402 - 05

22. Unwrought tin 80010223. Mineral ores 2500 -2532,2600 -2604

2700 - 271724. Goods which are subject to

quantity control or exportrestriction 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 theannouncement of the quantity control or export restriction.

- 147 -

Table 4.16 (ocntiuied)

PRODUCT LISTS FOR BOI-PROMOTED TRADING COMPANIES a/

Items of Goods CCCN

(List No. 2)

1. Fresh frozen chicken 0202012. Dried cuttlefish, squids and octopus 030321 - 43. Feathers and down 05074. Cut natural orchids 0603025. Beans 0705, 120121, 1201236. Teel seed or sesame 1201237. Fish preserved in airtignt containers 1604198. Marine crustaceans and molluses prepared

or preserved in airtight containers 1605199. Canned pineapple 20060110. Tobacco leaf 240101 - 0211. Veneer 44100012. Parquet flooring 441307, 44230113. Wooden utensils of wood 44240014. Synthetic fibres (continuous) 5101-.- 0315. Synthetic fabrics 5104, 560716. Cotton yarn 5505, 550617. Cotton fabrics 5507 - 0918. Kapok fibre raw or processed not spun 570409-19. Jute products 5706, 5710, 590412

62080120. Ready made garments 60 - 61 - 6221. Precious and semi-precious stones 7101, 710222. Electrical circuitry 851923. 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 <- ^-- :

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- 149 -

Table 4 18

EXPORT COMMODITY COMPOSITION AND ANNUAL EXPORT GROWTH RATES OF BOI-PROMOTEDTRADING 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 composi-tion (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 thecountry (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

SOURCE OF INPUTS AND EXPORT CHANNEIS OF SHALL AND MEDIU4 SCALEEXPORT MANUFACTURERS, 1981

Source of lnputs Export ChannelsExport

Manufacturing ThroughSectors 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 andChemical products 20.0 80.0 50.0 25.0 25.0

Rubber products 75.0 25.0 .100.0 - -

Non-metallicMineral 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: Narongchai Akrasanee (December 1982), p. 97.

- 151 -

TABLE 5.1EXPORT MARKET DESTINATIONS

Millions of Baht (I share)

POUSCIT 1981 1982 1983MARK'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 AClrcuits(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 1983MARKET 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) SwitzerlandGems (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 1983MARKET 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) FranceSeafood ( 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 MARKET525 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) FranceC 4.7) Switzerland ( 3.7) Switzerland (-3.3) SwitzerlandC 4.1) U K (4.4) U K ( 2.8) U RC 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.IDIVUJAL L _TEFi OF MIES

(Cbat ae diffemet fxom noinl. Cstcm procedUre)

(a) For A -b) After I -ort-)(c) Norm Ons -> (d) AfterProceure Epr

(F$g.Z.1 anl!g,2.2

Annex B)'b3spection ofImport Docaent

1 SubmitSuiait Duty DrwbAckApplicatio > Sub-Division ee

or Drba _____port

(Table 2.3 ICC1.of or

Annex B)

ECurantee sem]

* Sumit ILaboratory for li5pectionImput Coefficient -> Diisio(Formula)

C) :for individual drawback

| 1: for e tion

_____

- 154 -

Figure 2

PROCEDURS FOR DUTY-FRE iMOS BASED ONINPUT STOCK ACCOUNTING 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 tobe exported; Subcommittee authorizes Co. to

- > use the method.(S1) average monthly export

!olumes;

(ili) sauples of inputs andotputs.l l

(b) Icport Procedure

B.O.I. checks whether B.O.I. sends a letterCo. requests the requested Import to Customs Dept. re-permission to volume is within the questing the releaseimport allowed input stock of approved duty-

_> based on its account--> free import volumeing book. and subtracts Import

(See Table 2) volume from allowedinput stock level

(See Table 2)

(c) Stock Replacement

B.0.1. adds the inputWhenever Company volume used to pro- Company repeatscompletes exports, duce exported pro- the proceduresend export docu- _> ducts to previously I> in (b)ments to B.O.I. allowed input stock

level.(See Table 2)

.

YX OD z U S F W M ^ P a. *S j5I~~~~~~~~~~~~~~~~~~% __!EEMCYIV PMMI OFWD ~01 US=PM W PMR MWAVkM 91M WM

1BY A HW==IW (VnAL FMA FFM- AW ]DM=C ~

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

1. *X*L.BEwort Order(I/C or 0/A)

2. IPeaiMqxrt Las 80 t period8ac (or 70%) otf -- I/C (or D/A) ___,

3. Ornr foreigninlput (71) w,ed foruaa 60 der: dfw

I qm$ qorct WC O by other ex- perod dporters excluded u

4. Order dcmtic for eaport

111prt (DI) O (Oen dam. VC)

5. Wotiace .'

I Hdt R t 60 C

for with * This could be reduced to 60 days,

wcPOrt loan if the restriction (the original '

version was announced early 1984) use loan for °6. Mbke p? yft that exporters must purchase inputs

t DIwlth or outputs within 60 days.after

ex=t loan: receiving the export loan is strictly 60 dE s

otptiate implemented. But due to a lack of

Domatic 1/C) the efficient automatic administra- f

tive mechanisms, it appears difficult Ube lxn or m7. 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. dfor VA widthwpottloen

an la for VA iuratm8. O,wplete shivprnt:

eqort TiC ietn:recrive petsliqulate erp. loan.

Figure 4

ERW v PRIO1 OP tfl E OF IRE NRr A rU wM= GOO Ex (M H=A? f COO MBY A '1RADDM O cXWA

12425 A/ 2/1 3/1 4/1 516tl 6/30

e--1. I"ce.

Export Order(/C or D/A) 0O

2. PeceiveExport tmu 180 dyst loan period8(Q (or 70m) ofI/C (or D/A) - .m a a --- = = -

3. Order prdmay 150 dayu: loa anuld be 3O dMaexport caommdities saved for effediv

or dowtically ue other peiod o

mmumfactured exqorters exchlWed wf lm

finbhe3d export for eo ?t

caomidities(DD)sI (Oendanetic W.C) O

4. W nt * See note for Figure 3.for DO Ltexport loans 30 ds

(Negotiatedcmaatic C) .O

am om for DO

5. Oinlete ahipunt:export 1JC rtgotiltisreceive paytnttliquidateexport lom

EmTT1V PmoCDo us' rW PmRESII1 1Jom mmSE cN, wASEm mBY A 'RDN rtAN

12/25 J/I 21 3/1 4/1 5/1 fl1 6/30

1. order prizmygoods or dcatlcallyImifacturedfinilhed exportcmuodities (DO) 0

2. DO Is deliveredbut psynmnt notnude yet(bought cn credit)

3. Receive export 180 days: loan period Un

loan: 50 of_warehouse receipt

4. 5 ,mnthl' credit 150 days: l' azld be effectivetemn expilres: saved for perido of

use by other . iagt lowmke paynwt exportera el.uded for eqortfor DO withexport loans 30 dap

5. lcive emmort iol for 0order (1/C or D/A)for DO: liquidateexort Joan basedon wremuae receipt

6. Apply eqort loanbased on WC(or D/A)

PiQure 6

EXPLOITING FULLY COUNTRY'S EXPORT POTENTfALS

Calalytic Role of Large kcale Final Stage Export IBackward Unkages to Manufacturers (Dlrect Exporters) .---- L> io*r4 liz to Ixtern l

Small and Medium Scale Producers I and Trading Companies | hdeea

I I Final atage export! I General IInput-supplytig Iutut-supplying m manufacturer andr Export Trading I Tradlng I Yorelgn g Overnea

ndlrect exporter Indirect exporter direct exporter -Copany Conany "re sale *tWork

I I I I I

X i ~~~~~~~ 8 >tf W~~~.....