Viet Nam finds free trade has tax handicap

Wednesday, Aug 21, 2013 17:37

Pineapples for export in southern Tien Giang Province. Agricultural exports are facing challenges due to export tax rates reached in Free Trade Agreements with other countries. — VNA/VNS Photo Dinh Hue

HA NOI (VNS)—Viet Nam's agricultural exports are facing challenges due to export tax rates reached in Free Trade Agreements (FTAs) with other countries.

The assessment was announced by experts at a conference on rural and agriculture policies in the integration process yesterday.

It was based partially on reports on the impacts of tax barriers in FTAs on agriculture made by the Institute of Policy and Strategy for Agriculture and Rural Development (Ipsard) and the Australian National University.

Pham Thi Ngoc Linh, an expert from Ipsard, said the country was suffering from FTAs with other countries, especially in terms of tax rates.

This had led to taxes on agricultural imports witnessing a sharp decrease to 0-10 per cent on products such as beef, dairy products and rice, she said.

Most of the country's agricultural exports to FTA partners are subject to tax rates of 5-15 per cent, and sugar, dairy products, vegetables and meat had to suffer taxes of 30, 23 and 18 per cent, she said.

She forecast that Viet Nam's trade deficit with its four FTA partners including ASEAN, China, South Korea and Japan would reach US$4 billion by 2017.

The total export turnover for forestry-agriculture-aquatic products would increase by US$15-17 billion, she said.

The volume of agricultural exports to ASEAN countries is expected to surge by 18-20 per cent, while the volume of rice exported to China will be up 25-30 per cent, vegetables 15 per cent and dairy materials nearly 50 per cent.

Dang Kim Son, director of Ipsard, said tax reductions for the country's FTA partners had facilitated many foreign companies to do business and export agricultural products to a third country.

Small-scaled production, dated technology and a lack of funding had multiplied the challenges for the country's agricultural production, he said.

Deputy Minister of Agriculture and Rural Development Nguyen Thi Xuan Thu said the ministry had been restructuring the agricultural sector to make it more competitive.

Experts also suggested that protectionism be replaced by development policies of production and value chains.—VNS

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