CEO TALK Detail

How Thai SMEs can survive customs in cross-border shipping

How Thai SMEs can survive customs in cross-border shipping
อัพเดทล่าสุด : 11/05/2018 - 07:36:50

Any product that traverses Thailand’s borders must undergo a multitude of customs checks and balances, documentation and payments. The specifics of these processes vary widely, particularly when shipping products throughout Asia, and can quickly generate significant costs for Thai SMEs unfamiliar with their intricacies.What happens to SMEs that do not understand these procedures? Non-compliance inevitably leads to shipment delays and hefty fines, increasing operational costs and ultimately hurting the customer experience. Thai SMEs whose core businesses center on the daily import and export of their products are advised to fully understand not just these customs in their own country, but also their shipping destinations as well.

 ● Customs clearance procedures and regulations vary country to country, and SMEs need to know them to prevent delays and penalties. 

 ● SMEs will need to be aware of the different categories of customs clearance to avoid unnecessary hindrances when shipping.

 ● Strategic partnerships with global logistic carriers will boost the confidence of SMEs when they navigate customs, allowing them to focus more important business strategies and growth.

To stay abreast of cross-border customs, Thai SMEs can take a leaf from the following best practices and apply them in their businesses.

1) Get the classification for your shipment right

  The biggest issue many Thai SMEs face when conducting cross-border deliveries is a lack of familiarity with the customs classification of their product. Overcoming this hurdle requires a clear understanding on the nuances of the Harmonized Commodity Description and Coding Systems (HS Code). The HS Code is a globally-used classification system that standardizes the classification of certain goods and the amount of payable duties and taxes.While HS Codes are standardized up to the first six digits, countries can include additional distinctions in the code to account for local tariffs on certain materials. Non-compliance can result in businesses underpaying their duties and taxes, resulting in heavy penalties when discovered. Familiarity with the facets of the HS Code System underpins effective clearance through customs, and businesses should use tools now available online in order to stay compliant.

2) Determine the correct customs value of your product

  Once the correct HS Code for your shipment has been identified, SMEs need to perform a customs valuation to determine the duties and tariffs that will be levied on their goods. The type of tariff, whether specific or ad valorem[1], is determined by the classification of their product and the destination country.The customs valuation of shipments is not the same as its total stated value on invoices, as local licensing fees and other factors will also come to play. There are a number of methods to perform a proper customs valuation, but SMEs should always check with a customs and logistics expert, as incorrect valuation of goods will also incur heavy fines and result in goods being held back from final delivery.

3) State the proper country of origin for your goods

  The possibility of goods transiting across multiple countries before arriving at their destination necessitates that SMEs clearly state the shipment’s country of origin in their customs documentation. This information is required for SMEs to take advantage of available trade agreements and preferential treatment for certain goods, which may reduce or even do away with duty rates[2].Likewise, information on the shipment’s country of origin may be required by certain customs officials to cross-check against quotas[3], labelling or as a precaution against the dumping of products in domestic markets. SMEs uncertain about how to obtain the origin criteria of their products or are unsure about their paperwork should immediately seek for expert advice.

4) Fully understand the requirements of your shipping destination

  A host of other local factors may also contribute to delays in processing and clearing shipment through customs. For example, licensing or permit requirements are different from country to country, and SMEs can keep tabs on each of their destinations through the help of global customs and logistics experts.Providing specifics of shipment contents instead of general descriptions will also help decrease ambiguity during customs inspections and valuation. For instance, instead of labelling shipments as “computer electronics”, SMEs should specify whether their shipment contain computer chips or computer hardware, which would make it easier for customs officials to cross-check against documentation, such as the HS Code. Certain products such as edibles and plants are categorized as “red line”, high-risk items that will be subjected to physical inspection[4]. Proper labelling will provide transparency and accelerate the inspections and clearance process.

The world of cross-border trading may seem like a potential minefield, but only for SMEs that fail to take the necessary precautions to navigate it properly. Strategic partnerships with logistics partners that are familiar with the complexities of regional customs often reap dividends for Thai SMEs, as they have on hand expert partners to validate decisions and provide vital information at every step of the journey.

More importantly, when Thai SMEs are confident that their shipment will pass customs clearances without a hitch, they can then fully focus on growth and expansion of their business in other areas of opportunity.

 

______________________________________________________

[1] International Trade Theory and Policy, Steven M Suranovic

[2] Rules of Origin (ROO), Customs Care Center, Thai Customs Department,

[3] Rules of Origin: Preferential and Non-Preferential, Integration Point

[4] Thailand: The Guide to Thailand’s Import and Export Procedures, AEC Strategy Center, University of the Thai Chamber of Commerce



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