FOB vs CIF vs DDP: Incoterms for Importing Machinery into ASEAN

The two questions that decide the money

For a machine going into a factory in Thailand, Vietnam, Malaysia or Indonesia, whether the contract says FOB, CIF or DDP matters far less than two questions almost nobody negotiates: **whose name goes on the import entry**, and **who unloads the truck**. DDP takes your name off the entry, and with it the import VAT you meant to reclaim. CIF includes insurance — the cheapest sold, excluding exactly the damage machinery suffers. DAP leaves a 50-tonne machine on a trailer at your gate. For most ASEAN machine imports the sane default is **FCA or CIP with your own customs broker**, and a named place precise enough to be a physical spot.

A cost boundary, not a responsibility boundary

The most expensive misreading in ASEAN machinery buying is that "CIF Laem Chabang" means the seller carries the risk until Laem Chabang. It does not. The ICC's own academy describes CIF and CIP as **shipment terms, not delivery terms**: risk passes to the buyer before the main carriage begins. The port named after those letters is where the seller's *costs* stop, not their *risk*. Nor do the rules transfer ownership or set payment terms.

DDP is the only rule that takes your name off the entry

Under DDP the seller clears the goods for import and pays duty and taxes, which makes the seller the importer of record. That is the point of the rule, and in ASEAN it is where the money leaks.

Thailand collects **7% VAT** at import on customs value plus duty, and that VAT is *input tax for the importer*. If the entry is filed by your supplier's nominated agent, it is not in your name and the credit is not yours to take. Vietnam works the same way in principle — the customs declaration supports the input VAT deduction (standard rate 10%, with a temporary reduction on some goods; confirm yours). Bundled into one DDP number, a permanent 7–10% cost looks like a convenience fee.

A second problem: a Chinese supplier with no local entity often *cannot* lawfully be importer of record or register for VAT locally. Hence the "DDP excluding VAT" hybrids, which customs authorities sometimes query or reject.

BOI-promoted projects in Thailand raise a third question. The exemption is granted against a master list filed through the **eMT** system; the machinery must be imported within **30 months** of the promotion certificate and serve the promoted project for **more than five years**. Whether an entry cleared by a supplier's agent can sit under your privilege is a question for BOI and your own broker — ask them before you sign, not the supplier.

**Do this instead:** buy DAP or DPU and appoint your own broker. You keep the entry, the credit, the privilege and the paperwork.

CIF includes insurance. It is the cheapest insurance sold.

Incoterms 2020 changed one of these rules and deliberately left the other alone: **CIP now requires Institute Cargo Clauses (A), all risks; CIF still requires only Clauses (C), minimum cover.** Both are set at 110% of the contract price.

Clauses (C) is named-perils cover: fire and explosion, the vessel sinking, grounding or capsizing, the truck overturning or derailing, general average. It does **not** cover handling damage, theft and pilferage, ordinary water damage or earthquake. A crated machine tool gets handled five or six times between a Chinese factory floor and a plant in Rayong or Bien Hoa. The realistic loss is the excluded one.

And the 110% is of the contract price, not of your landed and installed cost: it does not carry duty, VAT, inland haulage, the crane, or a week of stopped production.

**Do this instead:** specify CIP, which forces Clauses (A) by rule, or buy your own all-risks cover at your true landed and installed value. If you accept CIF, read it as "freight prepaid" and insure the machine yourself.

One letter, one crane: DAP versus DPU

The ICC puts it plainly: under DAP the seller does not unload the goods; under DPU, the seller does. DPU is the only Incoterms 2020 rule obliging the seller to unload at destination.

That sounds like a detail until you look at what you are buying. This [800-ton vertical rubber injection moulding machine](/en/products/ali-store-800-ton-high-precision-vertical-rubber-injection-molding-machine) lists a machine weight of **50,000 kg** and dimensions of **4.3 × 2.8 × 5.0 m**. Five metres tall does not fit a standard container, and fifty tonnes is not a forklift job — it is a booked mobile crane, a permit and a rigging crew, none of them same-day items in Rayong or Binh Duong. Under DAP that is all yours, with the truck already at the gate.

**Do this instead:** name the place down to the bay, not "the factory". If the machine cannot be moved by equipment you already own, buy DPU — or write the crane, the rigging and the standby time into the contract, each with a named party.

Containers: the ICC recommends FCA, not FOB

FOB, CFR and CIF assume goods loaded on board a vessel, but a container is handed to the carrier at the terminal days earlier — leaving a stretch where the box has left the seller's hands and the risk has not reached the buyer's. The ICC recommends **FCA for containers**; Incoterms 2020 added an on-board bill of lading option under FCA for letters of credit.

"Packing" is a contract term, not a courtesy

Packaging is the seller's obligation under every rule, which means the specification is yours to write. This [air-cooled industrial water chiller](/en/products/ali-store-5-tons-industrial-chiller-20kw-75kw-100kw-air-cooled-water-chiller) states **Packing: Wooden Case**, alongside 420 kg and 1,280 × 950 × 1,650 mm — a method, a weight and a box size you can plan a truck around. This [3-ton electric forklift](/en/products/ali-store-3-ton-lower-operating-cost-electric-forklift-for-warehouse-logistics) lists **Packing: Standard Export Packing**: a reassurance, not a specification.

The wooden case matters more than it looks. Wood packaging is regulated under **ISPM 15**: debarked, heat treated to a core temperature of **56 °C for at least 30 minutes** (or fumigated), and marked with the IPPC stamp carrying country code, producer number and treatment code. Where you are the importer, a missing stamp is your delay and your treatment bill at the port. And that forklift's lithium-ion battery ships as **UN3480, Class 9 dangerous goods** — name who books the DG space and who holds the UN 38.3 test report.

Form E, and the preference you already paid for

Most Chinese machinery enters ASEAN under the ACFTA preference on a **Form E** certificate of origin. Where the invoice comes from a third-country company, the third-party invoicing box must be ticked and the invoice number shown — a common, repairable defect, but only if you see the document. Under DDP you never do: the duty sits inside one bundled number, so you cannot tell whether the preference was claimed or quietly kept.

**Do this instead:** require copies of the import entry and the Form E as a condition of final payment, under every Incoterm. Our [supplier audit checklist](/en/news/verify-chinese-equipment-supplier-audit) and [certifications to demand](/en/news/quality-certifications-chinese-equipment) cover the rest of that document set.

A default that survives contact with a real shipment

• **Standard machine, fits a container:** FCA or CIP, your own broker, your own all-risks cover.
• **Oversize or over 10 tonnes:** DPU to a named bay, crane and rigging named in the contract.
• **DDP:** only if the seller can lawfully be importer of record where you are — and only after pricing the VAT credit you give up.

Incoterms allocate cost and risk. They do not allocate competence. The buyer who keeps the entry, the broker and the insurance can still fix things when a 50-tonne crate arrives on the wrong day.

Importing for the first time? Start with our [China sourcing service](/en/china-sourcing), the [Vietnam](/en/news/import-chinese-machinery-vietnam-guide) and [Thailand](/en/news/sourcing-industrial-equipment-china-thailand) import guides, browse [equipment on ASEAN Machine](/en/products), or [tell us what you are importing](/en/contact).