Thailand’s new customs law has been welcomed, although other reforms are necessary to help fully modernize the country’s trade regime, sources tell Asia IP.

The act, which becomes effective in mid-November, repeals the Customs Act B.E. 2469 (1926) – a date which reveals how long it has been since Thailand gotten to grips with this.

Among the key reforms are elimination of strict liability presumptions on an accused for claims of customs duty evasions.

Presumed liability for officers, directors, and other authorized persons is also done away with and now requires either “willful intent” or “negligence.”

The previous law “was ambiguous on officer and director liability, especially as the act failed to define [the terms] managing director, managing partner, and person responsible for the operation of a juristic person,” writes Michael Ramirez, a senior consultant at international law firm Tilleke & Gibbins, in a client alert posted on the firm’s website.

Another significant change, Ramirez says, are changes to how criminal fines for claims of duty evasion are to be calculated. Previously, such fines were calculated as four times the combined price of the good plus duty; the new calculation is between 0.5 to 4 times the amount of duty evaded only.

For the first time, he notes, courts can apply discretion in calculating criminal fines.

Also important are new rules on timelines. The law imposes limits on post-clearance audit timelines, creates clear timelines for Board of Appeal review and imposes a clear deadline for return of duty guarantees. Currently, appeals can run for years.

Another significant change is in how whistleblowers are rewarded. There is a decrease in the percentage of fines which can be claimed as rewards for whistleblowers under the Customs Act, and the introduction of a cap on such rewards of B5 million (US$151,000), Ramirez’s note says.

Under the previous act, the director general of the Thai Customs Department had the authority to “reward” customs officials and third-party whistleblowers for reporting or otherwise successfully pursuing instances of customs evasion (smuggling) and customs avoidance (false declarations).

Helpful though a rewards system can be in identifying avoidance and evasion, overly generous rewards can also incentivize or facilitate wrongdoing, or introduce bias during audits and investigations.

“Many of the criminal provisions of the Customs Act of 1926 were not only onerous, but created prosecution incentives, shifted burdens of proof to an accused, and included penalties significantly out of proportion to the alleged wrongdoing. Similarly troubling was the former Act’s lack of clarity in the post-clearance audit and appeal process. The new act deals substantially with many of these issues and offers relief to importers subject to the historically difficult customs environment,” Ramirez said.

“The Customs Act of 2017 represents a significant step forward in introducing improvements in fairness and clarity for those involved in the customs clearance process in Thailand – improvements that will benefit not only business operators and importers, but the Thai government itself,” he added.

Many see the new law as a first of many such required moves rather than their conclusion.

“While the new law is a significant step in the right direction, AMCHAM Thailand urges for further reforms to the Customs Act that would bring it closer to international standards. AMCHAM Thailand firmly believes that Thailand’s Customs Act should fully meet international standards established by the International Convention on the Simplification and Harmonization of Customs Procedures (the Kyoto Convention) and that Thailand should become a signatory of the Kyoto Convention,” Jeffrey Nygaard, president of the American Chamber of Commerce in Thailand said in a statement.

Beyond this lie a number of other issues, some of them surprising and some which touch on sensitive issues.

The surprising section is water. Thailand is trying to build up a large high-tech, or at least higher-tech, manufacturing sector on its eastern seaboard, now called the Eastern Economic Corridor.

Some of these new industries will require water, and lots of it. But it might not be there, as Kirida Bhaopichitr, research director for international research and advisory service at the Thailand Development Research Institute (TDRI), said at a recent meeting.

“Especially in the dry season there are actually water shortages,” Bhaopichitr said. Thailand also “needs to iron out uncertainties about regulations, water and skills,” she added. On regulatory issues, she acknowledges the need for further customs reform and reform in how labour, especially skilled labour, will be regulated.

This is also an infrastructure issue. Thai engineers are mobilizing to block, or at least delay, the building of the China-backed high-speed railway until their own professional concerns are addressed.

On the sensitive side of the ledger are issues of incentives and the use of Section 44 of the government’s emergency powers act, which the current military regime uses to force through key legislation.

With a number of new incentives being channeled into the EEC and the use of Section 44 to create the EEC, the durability of the project is open for debate. “I think it will become an issue,” says Pavida Pananond, an associate professor at Thammasat Business School.