Sunday, January 30, 2011

Thailand - Dual Pricing Taken to the Extreme

A common complain (from foreigners) in Thailand is that is the policy of charging foreigners more is unfair and even racist. I understand that there are reasons why dual pricing can make sense.

One often heard argument is that foreigners don’t pay income taxes in Thailand so they should therefore pay more (ten times as much as a Thai) to enter national parks or museums, i.e., Thai nationals contribute to running national parks via income taxes. But this is actually an afterthought and not the original reason for introducing dual pricing.


The spirit of the National Parks Act of 1961 assumed that natural and cultural attractions, including sacred and historic sites, nationwide are part of the national heritage, belonging to all Thais equally. So, provisions were designed to ensure fair and equal opportunity for each and every individual Thai to have access to national treasures, and the natural and cultural heritage inherited from their forefathers.

This put a limit on how much entrance fees for Thais could increase, so over time, foreigners were left holding the bag whenever there was a need to plug a hole in the budget for national parks.

Another argument centers on simple microeconomics, i.e. the price of goods and services should be differentiated depending on the marginal utility and price sensitivity of various customer segments. In other words, foreigners are (in general) richer than Thai and can therefore better afford to pay more. This makes sense in a competitive (private sector) industry, but probably not when discussing pricing of public goods.

Good examples of taking dual pricing to the extreme can be found in Chiang Mai Zoo. It is incomprehensible to me why foreigners visiting a zoo must not only pay more in entrance fee and to visit the aquarium, but foreigners also have to pay more to use bus and tram services to get around the zoo. Do foreigners weigh more and thus cause more wear and tear on the equipment?


Another annoying aspect of this overpricing is the attempts to hide it by writing the Thai prices in Thai which few foreigners can read. Hence, they don’t know they’re being cheated and they don’t complain. It’s a bit too clever for my liking.




More importantly, the dual pricing in the private sector is actually illegal.


The legal framework on pricing - for tourism attractions that are wholly-owned, funded, and run by private sector operators - stipulate unequivocally that there can only be one price charged for entrance and that this price but be prominently displayed at the entrance.


This rule is obviously frequently blatantly ignored. If you notice this rule is broken by private sector operators, feel free to complain about unethical pricing practices to the Ministry of Tourism and Sports' Office of Tourism Development on co_service@tourism.go.th


Good luck.