Viet Nam Cashew Association (Vinacas) has sent an official dispatch to the Ministry of Industry and Trade to propose a tax on cashew kernels imported from Africa to protect domestic cashew processing.

According to Vinacas, Viet Nam needs to negotiate soon and sign bilateral trade agreements with African countries. That will have import and export tax exemptions for each other's goods, including raw cashew nuts exported from Africa to Viet Nam.

In case no bilateral trade agreements have been reached, Viet Nam should impose a 25 per cent import tax on cashew kernels like India, Vinacas said.

India imposes an import tax of 25 per cent on Viet Nam's products exported to this market to protect its domestic cashew industry. Meanwhile, Viet Nam has no similar measures for protecting domestic production.

Currently, cashew-growing African countries are developing cashew processing industries, gradually reducing raw cashew nut exports by imposing high export taxes.

In addition, they offer many preferential and supportive policies to attract investment in cashew processing factories, including export tax exemption for cashew kernels.

Many enterprises have taken those advantages to build preliminary processing plants in African countries to produce cashew kernels for export enjoying tax exemption.

Now, importers of cashew kernels to Viet Nam are mainly FDI enterprises.

Meanwhile, Vietnamese enterprises must invest VND100-500 billion in a completed processing plant from raw cashew nuts to kernels. They must import raw cashew nuts at high prices because Africa imposes an export tax on raw cashews and exempts export taxes on cashew kernels. That makes Vietnamese firms lose their competitive advantage.

If FDI enterprises import cashew kernels from Africa, domestic plants' processing lines run only 20 per cent of all stages from processing raw cashews to finished products, thereby wasting investment in the line and workers.

Meanwhile, both raw cashew nuts and kernels imported to Viet Nam for processing export products are exempt from tax, according to Vinacas.

Vinacas Deputy Chairman Bach Khanh Nhut said Viet Nam's cashew industry has had an annual export value of about US$3.5-3.8 billion, so it has become a leading cashew producer and exporter in the world for many years. However, the difficulty in importing raw cashew nuts for processing has affected the production and export of this product.

With this situation, Viet Nam's large processing enterprises have to reduce their capacity to focus on a few of stages of the cashew processing line to maintain operation.

Therefore, it will be increasingly difficult to consume Vietnamese raw cashew nuts. On the other hand, the capacity reduction in Viet Nam's processing factories leads to narrowed areas in which cashew trees are grown, affecting hundreds of thousands of cashew growers.

According to Vinacas, in the first two months of 2023, Viet Nam imported about 10,160 tonnes of cashew kernels, equivalent to nearly 44,000 tonnes of raw cashew nuts.

In 2022, the nation imported 78,583 tonnes of cashew kernels, equivalent to nearly 350,000 tonnes of raw cashew nuts – larger than the total output of raw cashews produced by Viet Nam in one year. — VNS