The domestic production of refined vegetable oil this year is projected at about 774,000 tonnes, up 7.8 percent from last year, the Ministry of Industry and Trade has said.

The ministry also forecast 2015's output at around 850,000 tonnes, 9.8 percent higher from this year's projected output.

However, it pointed out that local vegetable oil producers will continue to face hardship due to their heavy dependence on raw material imports.

The industry imports up to 90 percent of its raw material requirements, and their prices often tend to be volatile.

Local producers have also faced intensifying competition from vegetable oil imports, the ministry added.

During 2011-13, refined vegetable oil production in the country rose 8.3 per cent annually, which is a lower pace compared with previous years, as a result of increasing competition from vegetable oil imports from Malaysia, Singapore, Indonesia and Thailand, which enjoy zero import tax.

This forces the Ministry of Industry and Trade to decide in September last year to impose a 5 percent import tax on refined soybean oil and palm oil, noting that the surge in imports is harming the domestic industry. The tariff is expected to gradually ease to 2 percent by 2017.

The ministry introduced the tax after an eight-month investigation, which showed that the market share of local vegetable oil producers had declined from 52 percent in 2009 to 27 percent in 2012, even as demand increased from 100 tonnes to 137.94 tonnes during the same period.

The investigation was initiated in December following an application by the National Company for Vegetable Oils, Aromas and Cosmetics of Vietnam and seven other producers.

It is the first time the Government has invoked an ordinance on safeguard measures against imports, which it passed in 2002.-VNA