Cycling in Thailand: An Economic Saving at a High Price

Economy June 22, 2015 01:00

By Associate Professor Adis Isran

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Cycling has become more and more popular, with clubs and chapters found in nearly all provinces throughout the country.

These cycling enthusiasts organise themselves into groups and go on weekend trips to various destinations. Their spending on accommodations, food and beverages also helps distribute income to the rural economy.

The more serious cyclists probably spend more time in training, trying to smoothen their cadence or increase endurance. Nonetheless, the more socialising cyclists spend more time perfecting their costumes, equipment and social media uploads.

No matter which type of cyclist you are, these activities help raise income for the economy.

Now, cycling shops and hangouts can easily be found in many cities. Distributors, shops, custom bike garages and even cafes for cyclists are making more money than ever.

Still, that is not the end of the economic contribution of cycling. Besides revenue generated directly from the sale of bicycles, clothing and accessories, a large economic contribution comes from improved health, recreational value and, more importantly, social capital.

Cycling generates many health benefits that eventually turn into economic savings and improved social welfare. Improved health reduces both personal and government healthcare expenditures. Improved personal health, in turn, enhances worker productivity, improves the quality of life and prolongs lifespans.

A much greater contribution is cycling’s social value. Through meetings, organised trips and cyber networks, thousands of cyclists meet new people who become friends. This exchange of hospitality and friendship among cyclists who would never have met otherwise generates the kind of social capital that is badly needed in this country.

Last but not least, cycling will end up becoming a mechanism to help Thailand reduce greenhouse gas emissions. The Bike Carbon-Offset project operated by GSEI (Good Governance for Social Development and the Environment Institute) encourages cyclists to record their mileage and convert it into carbon savings and greenhouse gas reduction. These efforts will eventually transform Thailand into a low-carbon society.

Unfortunately, none of these economic savings came cheap. Cycling in Thailand does come at a very high price.

First, even though Thailand has been a part of the Asean Free Trade Agreement and many import taxes on merchandise have been reduced to near zero, there is still a hidden import tax in Thailand that has proven costly for the economy.

Bicycles are a case in point. Bicycles imported for businesses and shops are subject to a mere 1-per-cent tax, but individuals who want to purchase bicycles abroad and have them shipped to Thailand for personal use will need to pay up to 30 per cent.

This tax barrier aims to prevent individuals from directly buying bikes from overseas and forces them to purchase two-wheelers from the local bicycle shop, as they will be priced 30 per cent cheaper.

This import tax barrier has needlessly generated an economic loss for Thailand – a loss that results from shops having to waste floor space, sale staff and capital in selling bikes when in fact those bikes could be cheaply purchased directly between cyclists and sellers abroad.

This hidden tax raises an important question. Do Thai authorities fully understand the fruits of free trade, because the existing tax barrier seems to suggest that they do not.

Second, despite the economic savings cycling promises to generate for the economy, too many cyclist lives have already been sacrificed in road accidents.

Recently, three cyclists were killed by a drunken driver in Chiang Mai. In 2011, Peter Root and his wife Marry Thompson, who cycled around the world, were killed in a road accident in Thailand.

In February. Francisco from Chile, who cycled for more than 250,000 kilometres around the world with his family, was killed in Thailand when he was hit by a pickup truck. And, this will not be the end of it.

And third, several solutions have been now proposed to help reduce cycling accidents in Thailand – limiting the age of cyclists, limiting places and time of day cyclists can ride and making cyclists obtain driving licences.

Restricting the right to pedal around is, above all, the highest price cyclists will have to pay in this country.

Associate Professor Adis Israngkura of the School of Development Economics at Nida contributed to this article.

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