AN EVALUATION OF ASEAN HARMONIZED COSMETIC REGULATORY SCHEME IMPLEMENTATION IN THAILAND

Abstract

The ASEAN Harmonization was aimed to stabilize politics, and improve economic, social, and cultural aspects of the region. In the healthcare sector, cosmetics was the first to be harmonized and committed to implement the ASEAN Harmonized Cosmetics Regulatory Scheme (AHCRS) in January 2008, with full implementation expected in January 2011. This study was conducted to determine whether Thailand has complied with ASEAN Cosmetic Directive (ACD) in 2013 after 6 years of implementation, and to evaluate the competitiveness of Thai cosmetic industry after the ASEAN harmonization before entering the ASEAN Economic Community (AEC) in 2015. The Thai cosmetics Act B.E. 2535 and ACD were compared in 2008, and in 2013. Content analysis and in-depth interview were performed. The study revealed that Thailand has highly complied with ACD in all regulated areas; (i) definition and scope of cosmetics products (ii) ingredients’ listing (iii) labeling (iv) product claims and (v) good manufacturing practice. To officially implement ACD, the Thai regulator has to transpose the directive into local laws. During the legal process, one might notice discrepancy between these two laws. Although the country regulator intended to fully harmonize, some minor issues, such as the ingredients’ listing and labeling, cannot be implemented all at once. In summary, it can be concluded that the main objectives of AHCRS have been achieved. Harmonization in Thailand happened in an ASEAN way. The study was also conducted to evaluate the competitiveness of the Thai cosmetic industry. The import and export data from the International Trade Center (ITC) were gathered for the analysis. The Reveal Competitiveness Advantage (RCA) and Market Share (MS) of 6 leading countries in ASEAN; Singapore, Thailand, Indonesia, Malaysia, Philippines, and Vietnam were evaluated for 5 cosmetic categories of harmonized codes 3303-3307 in 7 years during 2007-2013. The study found that Thailand had absolute competitiveness in hair preparations (HS 3305) and oral care preparations (HS 3306) with reveal competitiveness more than 1 and market share more than 50% intra ASEAN market. However, Thailand had less competitiveness (RCA less than 1) in skin care and make up preparations (HS 3304) which is the biggest market, perfumes (HS 3303), and pre-, after shave, and deodorant preparations (HS 3307). The HS 3304 and HS 3305 were selected for in-depth study because of the huge contribution to the country’s cosmetic industry. The Diamond Model and SWOT analysis were applied used for the in-depth study. It was found that the key players for the cosmetic business of Thailand were multi-national companies. The key factors which mainly impacted the country competitiveness were conditions and government factors. The strengths are Thai cosmetic products were trusted by neighboring countries. Thailand has opportunities from herbal and natural sources of cosmetic ingredients and the well-known related and supporting business i.e. services and medical businesses. In order to maintain the absolute competitiveness of HS 3305 and to improve the competitiveness of HS 3304, the good coordination between government and industry should be considered. A huge effort and support from all relevant parties are required.