Proposal made to govt on increasing foreign tourist spending

Corporate December 15, 2015 01:00

By The Nation

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The Thai Retailers Association has presented to the government a proposal to increase foreign-tourist spending as a way to boost incomes in many industries and to help the country compete with its neighbours.

"It is important to increase the number of foreign visitors arriving in Thailand. But it is even more important and of greater benefit to more Thais across many more sectors if we can get foreign visitors to want to spend more in Thailand than they are currently spending," Chatrchai Tuongratanaphan, executive director of the association, said yesterday.

This would also strengthen Thailand’s chances of becoming the shopping hub of the impending Asean Economic Community.

The tourism proposal includes convenient value-added-tax (VAT) waivers and more downtown duty-free shops.

Currently only tourism is playing a major role in driving the economy. The export and agricultural sectors as well as domestic consumption have stayed flat.

The proposal aims to strengthen Thailand’s appeal to tourists as a shopping destination so that they leave more money behind in this country.

The proposal includes either a VAT refund for foreign tourists immediately at the point of sale, at stores, or a "zero per cent" VAT on sales made to foreign tourists on condition of a minimum purchase amount.

The government should also promote more downtown duty-free shops, which are popular with foreign tourists and encourage spending. All the government needs to do is to support the creation of pick-up counters at international airports that are operated by neutral corporate entities and offered on equal terms to all retailers.

Both of the measures have already been adopted in some countries in Asia. Japan announced a policy to triple the number of tax-free stores to 20,000 by 2020 and to free foreign visitors of these taxes.

"Japan is well known for its strict fiscal discipline and it is still adopting these measures. They are nothing new or extraordinary. Thailand can and should do the same," Chatrchai said.

"As for the duty-free-store measure, China has put a lot of focus on it and has built the world’s largest duty-free mall, in Hainan, to attract Chinese and foreign shoppers.

"These types of developments may also have some adverse effect on Thailand’s attractiveness as a shopping destination for international tourists," he said.

"In 2014, Thailand generated Bt1.2 trillion from international visitors. We believe that if the government adopts both of our proposed measures, spending by foreign tourists will double in three years’ time."

Rawittha Pongnuchit, a tax-law expert and former deputy director-general of the Revenue Depart-ment, said both measures were certainly doable and would ultimately contribute to an increase in national income.

They would help boost Thais’ incomes and the government’s revenues from all types of direct and indirect taxation. These measures would not only increase retail spending but also have an immediate positive effect on many industries that benefit from tourism and its trickle-down effects, including hotels, spas, restaurants, and land and air transport, she said.

"While the value-added-tax measure will have to wait for the Finance Ministry’s feasibility analysis, the measure to increase downtown duty-free shops is a real, doable alternative for foreign shoppers.

"The key is for the government to support the establishment of pick-up counters at all international airports that are neutral corporate entities which all downtown duty-free shops can use on equal terms.

"This way, overall revenues to the country will immediately increase," she added.