The Free Zone Scheme encourages Thailand-based operations by removing certain disincentives associated with manufacturing inThailand. The duty on a product manufactured abroad and imported into Thailand is assessed on the finished product rather than on its individual parts, materials, or components. The Thailand-based manufacturer finds itself at a disadvantage compared with its foreign competitor when it must pay a higher rate on parts, materials, or components imported for use in a manufacturing process. The Free Zone Scheme corrects this imbalance by treating products made in the Zone, for the purpose of tariff assessment, as if it were manufactured abroad. At the same time, this country benefits because a zone manufacturer uses Thai labor, services, and inputs.
A Free Zone is an area designated by the Director-General of Customs under Section 97 ter of the Customs Act B.E. 2469 amended by Section 8 of the Customs Act (No.18) B.E. 2543 for industrial or commercial operation or any other activities beneficial to economy of the country.
A Free Zone may be composed of many subzones operating either industrial/commercial Free Zones or any other operations involving in economic growth and development; or a combination of any type of Free Zone.