The Ministry of Finance has postponed its plan of increasing the most-favoured nation (MFN) tariff on imported hot rolled steel coil (HRC) from zero percent to 5 percent after collecting opinions from businesses and experts. (Source: Vietnambiz)Hanoi (VNS/VNA) – The Ministry of Finance has postponed its plan of increasing themost-favoured nation (MFN) tariff on imported hot rolled steel coil (HRC) fromzero percent to 5 percent after collecting opinions from businesses andexperts.
In its latest proposal for revision of Decree No 125/2017/ND-CP on export duty schedule, preferential import duty schedule and list ofcommodities and their flat tax rates, compound tax rates and outside tariffquota rates, the ministry has suggested not increasing the MFN tariff on HRCproducts.
According to the ministry, the previous plan was derived from the concernthat the worsening of US-China trade tensions could lead to a massive influx ofcheap Chinese steel to the Vietnamese market, negatively affecting local steelmanufacturers.
Every year, Vietnam imports more thaneight million tonnes of hot rolled steel coil for domestic production, of whichChinese products account for 40 percent.
The ministry also estimated the increase in MFN tax rate from zero percentto 5 percent would bring an additional 3.15 trillion VND (135.3 million USD) to the State budget. But the actual number could be lower sincebusinesses would seek imports from other countries with preferential tax ratesof zero percent such as the Republic of Korea and ASEAN countries.
In its response to the ministry’s previous plan, the Vietnam Steel Association (VSA) suggested notincreasing the tax as it would not limit Chinese steel import as China is partof the free trade agreement with ASEAN countries. Under this agreement, Chinaenjoys a zero per cent preferential import duty on HRC into Việt Nam.
Meanwhile, the tax hike would limit supply from other markets which do nothave agreements with Vietnam such as Taiwan,Australia and India.
Hot rolled steel coil is a raw material used to produce cold rolled steeland other pre-painted galvanized steel sheets, and the increase in tax wouldmake Vietnamese steel products more expensive, diminishing the competitivenessof local manufacturers.
"If tax is raised by 5 percent, the average price of raw materials inViệt Nam will be 8-9 percent higher than the world price, pushing up the priceof finished products," VSA said in its document.
The Ministry of Industry and Trade has also proposed not to hike the MFNtax rate as the HRC production of domestic manufacturers has not met demand andexport.
VSA’s statistics showed that demand for hot rolled steel in Vietnam is currently about 10-11 million tonnesper year but local production capacity is only 4 million per year,meeting 30-40 percent of the consumption.
The figure is expected to increase to 60-70 percent when the Hoa Phat Dung Quat iron and steel productioncomplex and Formosa Ha Tinh Corp’s additionalmills start operation next year./.
VNA
