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DHL’s Free Zone: The Platform for Market Connectivity

DHL’s Free Zone: The Platform for Market Connectivity
Amolrada Thamrongvoraporn

With its diverse manufacturing and industrial potential, Thailand has become a driving force in Asia’s global economy. This is further complimented by Thailand’s logistics infrastructure that has been developed to meet both domestic and international trade demands.

Another way Thailand is elevating their potential as a regional trade hub is by allowing private logistics service providers an opportunity to register their logistics center or integrated warehouse as a Free Zone area (FZ). These Free Zones provide both domestic and international importers and exporters, a non-taxed logistics operation center, while simultaneously stimulating economic growth and attracting more international investment.

In this issue of LM, we had a chance to speak with Ms. Siriluk Chantorn, Head of Integrated Warehousing Service (IWS), DHL Global Forwarding (Thailand). DHL is an operator of one of the FZ integrated warehouses in Thailand, located near the Lad Krabang area. Ms. Siriluk spoke with us further about the operations and services DHL’s registered FZ integrated warehouse provides, and how the main purpose of the facility is to facilitate international trade between Thailand and the rest of the world.

A Hub of Convenience

Ms. Siriluk Charntorn, Head of Integrated Warehousing Services (IWS) บริษัท DHL Global Forwarding (Thailand) Limited

Ms. Siriluk Charntorn, Head of Integrated Warehousing Services (IWS), DHL Global Forwarding (Thailand) Limited

Ms. Siriluk began by introducing us to three of DHL’s warehouses. The first is located in the Wang Noi district, Ayutthaya province, which is specialized in chemical cargo. The other two are located in the Lad Krabang area just outside of Bangkok, and one of them is registered as a FZ where Ms. Siriluk oversees its cargo, transport, and import permission divisions. She explained how the FZ integrated warehouse serves clients whose cargo are usually goods that fulfill supply chains, “The majority of our FZ clients enjoy the provided tax-related privileges when it comes to storing their cargo, especially during the process of being transported to fulfill a supply chain or to be assembled. This is because our FZ integrated warehouse exempts our clients of Thai import taxes, and is regarded as an international area. This means any cargo entering the FZ area is not yet imported into the Kingdom of Thailand, and are not taxed until they are transported elsewhere”, said Ms. Siriluk. She further explained that a large number of DHL’s FZ clients choose to distribute their cargo as a re-export cargo. “Clients who want to distribute their goods to different markets in Asia usually choose Thailand as their main distribution hub. Our clients are exempted of tax in that case, because of the international ground status of our FZ.

In the case of importing cargo into Thailand, our clients can put their cargo through the customs clearance process and pay import tax according to the actual amount of the imported cargo”, said Ms. Siriluk. Being located amongst a number of major markets in Southeast Asia benefits Thailand in being a convenient route for many international destinations. Thailand’s location allows many markets and trading partners easier connections, making Thailand the perfect distribution center for international trade. In addition, DHL’s FZ integrated warehouse is supported by the Thailand Board of Investment, a governmental organization that facilitates both local and international businesses in the private sector. One great benefit they help to provide is the exemption of tax for up to 2 years on cargo stored in DHL’s FZ integrated warehouse, dependent on the type of cargo. The provide benefits aimed to attract investment to the country from overseas, especially for automotive and high-value technology businesses who prefer to store their cargo or re-export to other countries.

“Bringing cargo in and out of a FZ in Thailand is now much less complicated than it used to be. The system has been digitalized now and there are only a few parts in the process where a hard copy of a document is required to be physically signed. Processing documents through a paperless system has shortened the overall processing time by a very noticeable amount,”

Ms. Siriluk Charntorn, Head of Integrated Warehousing Services (IWS), DHL Global Forwarding (Thailand) Limited

Regulations for Timeliness

Many people are still under the impression that Thailand’s customs clearance procedures into a FZ takes a long time and is complicated with paperwork. However, Ms. Siriluk told us that most of the customs clearance procedures have been implemented into a paperless system. This minimizes the need for hardcopy documents to be signed, and shortens the overall processing time. “Bringing cargo in and out of a FZ in Thailand is now much less complicated than it used to be. The system has been digitalized now and there are only a few parts in the process where a hard copy of a document is required to be physically signed. Processing documents through a paperless system has shortened the overall processing time by a very noticeable amount,” said Ms. Siriluk. The establishment of a FZ in Thailand has not only brought about a digitalized customs clearance procedure, but has also helped to ensure the status of re-exported cargo to international destinations. Mr. Siriluk explained, “We have a way to track the status of re-exported cargo transported to a destination outside of Thailand to help prevent against the illegal import of goods. The regulation stipulates that the transported cargo must exit the country within 24 hours from the time it leaves a FZ. The Thai Customs agency is notified of the transport release time, and they can then check to make sure that the transported cargo’s status is closed off at the border within the allotted time.”

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Location & Service-Ready

Although DHL’s FZ integrated warehouse has yet to implement a value-added service, like re-packaging, the warehouse continues to draw in an increasing number of clients with its convenient location for transportation to nearly all modes of logistics. The FZ integrated warehouse is located within 4 kilometers from Suvarnabhumi International Airport, is near the Lad Krabang Inland Cargo Depot (ICD), and is accessible to the Motor Way, which allows easy access to both Bangkok and industrial zones in other provinces. In addition to the strategic location, DHL’s FZ integrated warehouse clients also have the freedom to seek logistics service providers other than DHL to process their cargo. “FZ integrated warehouse clients are free to work with any 3rd party logistics service providers for cargo transportation. They are not obliged to transport with only DHL, as our FZ is a public ground where all logistics service providers are given equal opportunity and access,” said, Ms. Siriluk.

“FZ integrated warehouse clients are free to work with any 3rd party logistics service providers for cargo transportation. They are not obliged to transport with only DHL, as our FZ is a public ground where all logistics service providers are given equal opportunity and access,”

Ms. Siriluk Charntorn, Head of Integrated Warehousing Services (IWS), DHL Global Forwarding (Thailand) Limited

Open to All

However, DHL’s FZ integrated warehouse is not only aimed towards businesses who are interested in importing goods into Thailand or re-exporting to international destinations, DHL’s service is also aimed at local businesses who wish to export goods to other markets. Within the last two years, Ms. Siriluk told us how DHL’s FZ integrated warehouse has been gaining more and more local clients exporting goods. “For Thai exporters, storing their cargo with us and exporting the cargo accordingly to their demand can greatly help manage their cash flow. This helps save on export taxes and overhead at the destination warehouse, and helps to mitigate risks for their business at the same time.”

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Forwarders
Amolrada Thamrongvoraporn

Amolrada Thamrongvoraporn is a Thai Content Writer for Airfreight Logistics and Logistics Manager, and an avid people-watcher/flâneur. She enjoys discussion about social dynamics, modern philosophy, movies, and cat videos. She's also a big fan of raccoon gifs, ghostly stories, as well as rock music from the 60s through the 80s.

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