The cement industry is faced with high stockpiles while exports are not easy (Source: VNA) In a recent report submitted to the government, the ministry saidthat the export tax rate of five percent on cement was too high, whichundermined competitiveness of Vietnamese cement in the global market.
Besides, cement is not eligible for input value added tax (VAT)deduction.
The ministry estimated that no deduction on input VAT coupled withfive percent export tax rate pushed up prices of cement and clinker by 7.5 USDand 4.5 USD per tonne, respectively.
This made Vietnamese cement unviable and unable to compete withproducts from China, Thailand, Indonesia and Japan, according to the Ministryof Planning and Investment.
The ministry proposed to the Ministry of Finance that it considerVAT deduction and export tax cut to remove difficulties for local cementproducers.
According to the Ministry of Construction, in the local market,supply exceeded demand by around 20 percent, putting local producers into a lotof difficulties.
Local producers were faced with fierce competition on both qualityand prices not only in the export markets but also in the domestic market, especiallyfrom China which reportedly encountered overcapacity of hundreds of millions oftonnes.
The Vietnam Cement Association estimated that the total productioncapacity of the cement industry of Vietnam now reached 86 million tonnes whilethe local demand was at 60 million tonnes in 2017 and the industry must seekways to export the rest.
Previously, the association said that exports were not easy due tohigher prices of Vietnamese cement pushed up by taxes.
By 2020, the cement industry might encounter a surplus of 36million tonnes to 47 million tonnes, said Nguyen Quang Cung, the association’spresident.
Dinh Trong Thinh from the Academy of Finance said that exportingcement was just a temporary solution, however. Vietnam aimed to reduce exportsof natural resources while the local cement industry was still using oldtechnologies with high production cost, he said.
"Exporting cement is a difficult problem. Only producers withmodern technologies can export and compete,” Thinh said.
According to Le Van Toi, Director of the Building MaterialDepartment under the Construction Ministry, no more cement production lineswould be put into operation from 2018 and cement companies must haveappropriate production and sales plans to avoid creating more pressure on thelocal market.
Statistics of the General Department of Customs showed that Vietnamexported 9.5 million tonnes of cement and clinker, worth 330 million USD in thefirst half of this year.
Major import markets of Vietnamese cement are Bangladesh (35.2 percent)and the Philippines (33.8 percent).
Vietnam’s cement and clinker export hit a record high of nearly 20million tonnes with revenue of 1 billion USD in 2014 but has been on a downwardtrend since then. Vietnam exported 16.2 million tonnes in 2015 and 14.7 milliontonnes in 2016.
Export prices were at around 29-30 USD per tonne for clinker and 45-50USD per tonne for cement, down by 25 percent over 2014.-VNA
VNA
