Tax code bogs down Vietnam's cement exporters

Local cement producers worry that their exported products could struggle to compete with foreign firms in term of price, a concern voiced at an online forum held in Hanoi on February 22.
Tax code bogs down Vietnam's cement exporters ảnh 1Inside a La Hien Cement Joint Stock Company factory (Photo: vietnamnet.vn)
 
 Hanoi  (VNA) - Local cementproducers worry that their exported products could struggle to compete withforeign firms in term of price, a concern voiced at an online forum held in Hanoion February 22.

Tran Viet Thang, General Director of the Vietnam Cement Industry Corporation(VICEM), said the increasing input material and fluctuating foreign exchangerate have brought difficulties for cement exporters.
“Vietnamesecement has been under pressure both in terms of price and supply in comparisonwith China, Thailand, Indonesia and Japan in the region,” Thang said, addingthat these factors could directly affect domestic cement production.
He said theGovernment’s Decree No 100/2016/NÐ-CP stipulates that exported cement productsare not eligible to enjoy input value-added tax (VAT). In addition, the productis imposed five per cent export tax.

The taxes have made the export cost increase by 4.5 USD per tonne of clinkerand 7.5 USD per tonne of cement based on average Free-on-board (FOB) prices of 30USD and 50 USD, respectively.

Nguyen Quang Cung, Chairman of the Vietnam Cement Association, said the cementexport amount last year was reduced by 5.9 percent from the previous year.
Notably,since the middle of 2016, the cement export prices were reduced around 10 USD pertonne from the end of 2015.
“Many cement producers could face risks of halting their production orbankruptcy if the Government does not create timely solutions to unknot thesedifficulties,” Cung said.

He added that members of the Southeast AsianCement Association in a meeting in October voiced that the tax policies couldreduce Vietnam’s cement competitiveness in the international market.

Lawyer Le Dinh Vinh, Director of Vietthink Law Firm, said VATand export tax have been indirect taxes imposed on the consumers.

“If we impose a high export tax, purchasing power will be reduced,” Vinh said.

The Government has enhanced collection of direct taxes and reduced indirecttaxes, a move that has been suitable with the world’s trend and the country’sreality.

Increasing export tax has been considered against the Government’s guidelines.

Vietnam set an annual export target of 20-35 percent of the country’s totalcement and clinker capacity by the year of 2030.

Vietnam’s cement output is expected to reach 120-130 million tonnes a year by2020, while local consumption was estimated at 93 million tonnes, making apossible redundancy of around 25 to 35 million tonnes.

By the end of last year, the cement industry’s total designed capacity reached88 million tonnes a year.

However, some cement projects which are expected to become operational in 2018would bring the country’s total designed capacity to 108 million tonnes a year.

In 2016, cement and clinker exports were over 14.73 million tonnes or 561million USD, reducing 7.1 percent and 16 percent in terms of quantity and value,respectively from the previous year. The Philippines and Bangladeshhave been Vietnam’s two largest cement importers. — VNA
VNA

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