Thailand to limit payment terms of major retailers with SMEs — Bangkok Post
Thailand’s Trade Competition Commission (TCCT) is tightening oversight of the retail sector and introducing limits on payment terms between major trading companies and small and medium-sized enterprises. The new rules, published in the Royal Gazette in October, will take effect in November, Bangkok Post reports.
The regulator seeks to promote fair trade and strengthen the competitiveness of small and medium-sized businesses. The rules apply to major wholesalers and retailers with annual revenue exceeding 500 million baht, including hypermarkets, supermarkets, specialty and department stores, convenience store chains, and cash-and-carry operators.
Payment terms for small businesses
For agricultural products and primary processed agricultural goods with an uncomplicated production process, the trade credit period must not exceed 30 days unless the parties agree on a shorter period. For SMEs in the commercial sector, manufacturing, and services, the maximum period will be 45 days.
The period will begin after goods are delivered in the agreed quantity and category, provided they meet quality standards and are accompanied by proper documentation. For goods transferred for sale, the period will begin after the full sale of the agreed quantity of goods or part of it. Violators may face fines of up to 10% of annual revenue for the year of the violation or up to 1 million baht if the violation occurred in the first year of operations.
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Review of the market and chain practices
The TCCT is also preparing a field study of retail trade in the provinces of Phetchaburi and Lampang. In early November, the commission plans to hold focus groups there involving traditional and modern retailers as well as consumers; similar meetings are planned in Bangkok. Data collection is expected to be completed by the end of November.
The regulator is responding to concerns about concentration in the multi-trillion-baht modern retail market, where a small number of major players dominate. Among the issues being examined by the TCCT are situations in which a company, after selling a franchise, opens its own store near a franchisee’s outlet, potentially reducing the franchisee’s revenue. Retailers explained such openings by high local demand that existing stores cannot meet.
The commission is also reviewing complaints from SME associations regarding goods sold through modern retail chains on consignment terms and possible unilateral changes to product placement on shelves. The TCCT stressed that it has not established any violations at this stage and is collecting data to determine whether a separate code of business practice is needed.
