The steel industry has been hit hard by dirt-cheap imports from China, which takes advantage of Viet Nam's loose import regulations to dominate the market. — Photo satthep.vn

by Compiled by Le Hung Vong

While the Ministry of Finance has not decided on a date for issuing sovereign bonds worth US$3 billion on the international market to refinance the country's debts, the same amount of foreign currency is allowed to be spent every year to allow Vietnamese to study abroad.

According to figures released by the Education and Training Working Group at the 2015 Viet Nam Business Forum (VBF) in Ha Noi last week, some 110,000 students study overseas, each paying $30,000-40,000 annually for tuition, meaning $3 billion a year.

VBF said Viet Nam can save most of this amount if it offers incentives to attract foreign education partners.

Under the Law of Investment and commitments under WTO, foreign investors are allowed to fully own educational institutions in the country.

However, under Article 24 of Decree No 73 promulgated in 2012, Vietnamese can make up no more than 10 per cent of students at foreign-owned primary schools and 20 per cent at high schools.

But demand for going to international schools is increasing.

"The limits on Vietnamese students allowed to attend international schools, at 10-20 per cent, are extremely unreasonable," the group's report said.

With the limits now in place, foreign investment cannot be channeled into primary and high schools in Viet Nam's smaller cities since few foreigners live and work in other cities apart from HCM City and Ha Noi.

If the government does not permit Vietnamese students to attend international schools in Viet Nam they would head overseas, Brian O'Reilly of the group told the forum. In response to fears that a large number of Vietnamese students attending international schools would lead to a loss of Viet Nam's cultural identity, the group said, "This seems to be a conservative opinion."

O'Reilly said Vietnamese students at international schools have to study Vietnamese history, geography and literature, salute the national flag and sing the national anthem, and take part in all traditional festivals such as Tet (the Lunar New Year festival), the Mid-Autumn Festival and National Day.

If students who are not allowed to join international schools go abroad, how can they then maintain Viet Nam's cultural identity, the group asked.

It recommended certain changes to Decree No 73, such as licensing-related issues, transitional provisions, conditions for approving educational activities, facilities and equipment, the extension of the operation term of educational institutions and the minimum qualifications of instructors.

Viet Nam's economy is growing and bringing many benefits to its citizens, it said. With the TPP and the AEC, Viet Nam has a major opportunity to grow its economy and become an even more prosperous nation. To achieve this requires a highly competent workforce with the knowledge and skills to drive economic growth, the group said.

A recent report from the International Labour Organisation reveals that in 2013 Vietnamese's labour productivity was among the lowest in the region. It was a 15th of Singapore's, a 11th of Japan's, and a 10th of South Korea's.

Banks wary of farming loans

While theoretically agricultural firms should be able to borrow from banks without collateral, few of them manage to get loans, heard a recent seminar on support policies for technology use in the agricultural sector in HCM City.

The seminar was held by the Ministry of Agriculture and Rural Development to hear from businesses about their problems in getting credit to come up with suitable support measures. According to the Institute for Policy and Strategy of Agriculture and Rural Development (IPSARD), policies to help the agro-aquatic-forestry sector adopt technology stipulate tax and land rent reductions and waivers and interest subsidies, and allow businesses to obtain loans equivalent to 80 per cent of cost without collateral.

However a recent IPSARD survey of 200 enterprises found that most still find it difficult to get loans, with only 21 per cent of respondents saying they could get a loan easily while the rest found it impossible or very difficult.

Only 3 per cent could obtain financial support for buying machinery, 0.5 per cent to buy technology from abroad and 1 per cent for infrastructure development.

Some businesses lamented that they were unable to get loans worth 80 per cent of the project investment — as mandated by circulars and decisions — if they did not have collateral. Even where they had collateral, the amount of money they could borrow was much lower than the value of their asset, Le Van Cuong, director of the Lam Dong-based Da Lat Gap Co, said.

A company could only get VND3 billion if it mortgaged agricultural lands worth over VND80 billion, he said. He added that this has spelled trouble for firms in expanding operation and carrying out new projects.

Cheap Chinese imports

The steel industry has been hit hard by dirt-cheap imports from China, which takes advantage of Viet Nam's loose import regulations to dominate the market.

The manager of a steel-structure company at Ha Noi's Quang Minh Industrial Park said the price of Chinese black steel foil (mainly used for construction works and facilities) the company imported from China has dropped by 40 per cent to VND7.3 million per tonne in the past few months.

Cheap prices are the main reason behind the rising imports of the black steel foil, he said.

He said his company also imported Chinese zinc-coated steel, whose prices have fallen from VND12.5 million per tonne earlier this year to VND7.5 million now. Imports have risen by 50 per cent this year.

Imports of steel sheets, in which local producers are considered strong, have also been large. According to the Viet Nam Steel Association (VSA), they rose from 750,000 tonnes last year to 1 million tonnes in just the past nine months.

The upshot is that in the past ten months imports of various types of steel from China amounted to 7.71 million tonnes, a 62 per cent rise year-on-year.

Imports of steel alloys in the form of rolls, rods and even ingots have risen 10-fold even as their prices dropped by 100 per cent to 200 per cent from last year.

The sharpest fall was reported in the prices of alloy ingots from $1,800 per tonne to $413. The general director of a steel company in the south told Tuoi Tre (Youth) newspaper that Chinese manufacturers add chrome or boron to steel ingots used in construction to enjoy the zero tax rate on alloys. Pure steel ingots attract import tariffs of 5-10 per cent.

Yet, these alloys are used for construction after being imported, he said.

Most of the imported steel rolls and rods are supplied to construction works across the country at VND10 million per tonne, over VND1 million lower than the prices of local products.

Nguyen Van Sua, the deputy chairman of VSA, said alloys containing less than 0.3 per cent chrome can be used like normal steel.

The association cited customs figures showing that import of ingots containing chrome rose from 3,000 tonnes in August to 62,000 tonnes in September, saying the imports would keep rising if no action is taken.

As of mid-September 1.1 million tonnes of ingots had been imported, three times the volume in the year ago period, 75 per cent of them from China.

Last month VSA accused China of trade fraud in exporting steel ingots to Viet Nam.

In a letter to the ministries of industry and trade, finance, and science and technology, the association said cheap steel ingots several China exporters cheated to enjoy tax breaks.

"This is not the first time that cheap steel ingots from China have flooded the domestic market," it said.

Local producers, unable to compete, are running at just 60 per cent of their 11 million tonne capacity.

VSA called for tightening oversight of imports of steel ingots containing chrome. If the ingots are used to produce construction steel, a tax of 9 per cent must be imposed, it said. The use of trade defence instruments should be considered to prevent fraud and unhealthy competition, Sua said. —VNS