Local steel firms seek temporary import tax

Saturday, Feb 20, 2016 09:00

Imported steel was transported at Hai Phong Port in the northern Hai Phong City. Some local producers are calling for the use of trade defence instruments to protect the local industry. — VNA/VNS Photo Hoang Hung

HCM CITY (Biz Hub) — Some steel companies want the Ministry of Industry and Trade to put up temporary barriers like higher import tax on steel billet and other products until an ongoing investigation into dumping is completed, while other producers who use imported billets are opposed to it.

The ministry recently began the investigation following a demand from many domestic companies who themselves make billets and are affected by the cheap imports.

Since 2012 imports have more than tripled to 1.5 million tones, hitting domestic producers, whose inventories soared by 70 per cent last year from a year earlier.

Those currently opposing the ad hoc tax hike had also opposed the decision to investigate, saying imports had been much higher in 2008 –10 without sparking a similar probe.

They blamed the troubles of the billet manufacturers on excess capacity – two to three times higher than demand, is their claim – rather than on cheap imports.

The proponents of the investigation and higher tax dismissed these claims.

Nguyen Van Sua, deputy chairman of the Viet Nam Steel Association (VSA), was quoted as saying by Tuoi Tre newspaper: "It is no surprise they are objecting because most of them are processing steel, not manufacturing, and are benefitting from cheap imported billets.

"We should think about long-term domestic production and stability of the industry."

Nguyen Minh Thao, deputy head of the Central Economic Management Research Institute's Business Environment and Competitive Ability Department, warned that in future import taxes would decline due to international integration, and many companies would stop production and switch to trading.

"With this, domestic production will disappear, jobs will also be gone, steel has to be imported and the economy will rely on imports."

According to the VSA, last year Viet Nam imported 1.9 million tonnes of vario kinds of billets for USVND14,235,995 million, with Chinese products accounting for 63 per cent, more than two-thirds up from 2014.

At an average of VND7,151,520 per tonne, Chinese billets were VND2 million (nearly VND2,234,850) cheaper than local products.

"If the [imports] continue, the local steel industry will face bankruptcy," Nguyen Van Ton, deputy general director of major steel producer VinaSteel, said.

Billet producers would take down many supporting industries too with them, he warned.

Ho Nghia Dung, chairman of the VSA, said, "The use of protective measures is in line with international laws and are meant to protect the entire industry not individual companies.

"The VSA has sent a reply to six steel makers who oppose the import tax hike on billets."

The six had earlier communicated their objections to the VSA.

Dung too said that if import taxes are not increased soon, local steel makers would go bust.

Deputy Minister of Industry and Trade Do Thang Hai, said: "Any investigation with respect to trade protection anywhere in the world will lead to conflicts between domestic producers and importers.

"In this case, domestic producers have proved their loss and the Ministry of Industry and Trade has opened an investigation.

"We pledge that the investigation processes and procedures will be transparent." — VNS

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