Authorities are set to launch stricter controls on more than 1,000 fruit traders suspected of acting as nominees for Chinese companies and infringing on local fruit trading in violation of the Foreign Business Act (FBA).
Wiboonlasana Ruamraksa, director-general of the Internal Trade Department, said it will team up with the Business Development Department, Customs Department and the Department of Special Investigation to tighten inspection of fruit traders who deal directly with fruit farmers, handling their own exports rather than going through Thai brokers, and the practices of those traders who re-export fruit that do not meet quality standards for domestic sale.
Ms Wiboonlasana said the department has submitted a list of 1,094 Chinese traders and Thai-Chinese joint venture brokers, mostly in Rayong, Chanthaburi and Trat, to the Business Development Department to inspect their shareholding structure, financial background and trading practices.
"According to Thailand's FBA, wholesale and retail fruit trading in Thailand remains prohibited to foreign operators," she said. "We're ready to take legal action if any traders are found to act on behalf of foreign traders."
The move comes in response to complaints from operators in recent years that Chinese traders have entered Thailand to operate fruit wholesaling businesses. Many Chinese traders talk directly to farmers at Thai orchards, particularly in Chumphon, Chanthaburi, Rayong and Trat provinces.
Authorities are afraid this practice may affect Thai farmers and small local traders in the long run if they expand and dominate the market, although the entry of Chinese traders creates more competition among middlemen or brokers, which can benefit farmers.
Foreign fruit traders are allowed to export from Thailand, but many sell products locally, which is prohibited under the Act.
Ms Wiboonlasana said Chinese traders enjoy a competitive edge over Thai operators because of lower business costs, as most use Thai nominees that do not pay corporate income tax. Even some Chinese individuals have become traders, she said.
Such practices have existed here for many years, mostly via futures contracts because of growing demand from Chinese consumers.
Aat Pisanwanich, director of the University of the Thai Chamber of Commerce's Center for International Trade Studies, said some Chinese traders breached their futures contracts, refusing to buy all the longan from farmers at agreed-upon prices if the quality drops. He proposed the government supervise purchase contracts to ensure fair treatment.