Import-export tax policy in general and steel export tax are long-term policies that contribute to promoting the domestic manufacturing industry, including the steel industry.
The view of the Steel Association (VSA) is that the Government should have a consistent policy to protect the domestic manufacturing industry.
The Vietnam Steel Association (VSA) has just sent a response to the Ministry of Finance to comment on the draft Decree amending and supplementing a number of articles of Decree No. 57/2020/ND-CP dated May 25, 2020. Accordingly, VSA and Vietnamese steel manufacturers proposed that the Ministry of Finance not increase export tax on billet products (HS code 7206, 7207) and not reduce MFN import tax on steel products. finished products (HSC codes 7213, 7214, 7215, 7216 and 7210).
According to the Steel Association (VSA), the proposal to adjust export tax and import tax on iron and steel products of the Ministry of Finance, VSA found that it is not suitable with the current situation of the domestic steel industry.
The reason is that since the outbreak began at the end of April until now, many localities across the country have implemented social distancing in accordance with directives 15.16 of the Government. Therefore, the basic construction work from industrial to civil has stopped, the situation of domestic steel consumption has decreased sharply. Specifically, the domestic sales of finished steel products in June decreased by 20% compared to May and increased by only 1% over the same period in 2020, if excluding the growth of hot rolled coil, domestic sales decreased by 28 respectively. % and 22%.
In the first 6 months, the growth of the steel industry (domestic sales of finished steel increased by 18% while exports grew by 66% (if excluding the growth of hot rolled coil) is the inheritance of the industry’s constant efforts. steel in 2020. According to VSA, current steel export is the direction to expand the market to continue to maintain production and business, ensure jobs for factory workers, maintain economic development, bring revenue for businesses and the country in the difficult context due to the complicated development of the epidemic.
In the past 10 years, the trend of protecting the steel industry has increased worldwide, even in developed countries such as the US, EU, Japan..to protect the domestic steel industry. According to VSA, Vietnam’s steel industry is gradually developing synchronously and modernizing to improve the competitiveness of the steel industry. In that context, the adjustment and reduction of import tax on domestic steel products will cause steel to flood in from outside, threatening the production activities of domestic enterprises, which are very difficult.
According to VSA, with the FTAs that Vietnam has signed, is and will be signing with other countries and regions, it has been a challenge for Vietnam’s steel industry, especially with blocks like CPTTP or RCEP which are regions with major manufacturing powers. steel producers such as China, Japan..so the tax adjustment as draft will increase difficulties for domestic steel producers.
Moreover, the import-export tax policy in general and the steel export tax are long-term policies that contribute to promoting the domestic manufacturing industry, including the steel industry, as well as the domestic economic sectors to develop sustainably, rather than develop the domestic industry. not a short-term solution to deal with temporary market ups and downs.
Vietnam’s steel export is one of the industries that attract foreign currency every year for the country (the first 6 months of the year, it earned $4.9 billion, in 2020 it earned $6.1 billion), contributing to reducing the rolling deficit. balance trade, increase export turnover, create jobs for hundreds of thousands of workers nationwide.
Therefore, VSA’s view is that the Government should have a consistent policy to protect the domestic manufacturing industry.
Steel prices start to fall
Before the recent developments in steel prices, VSA has reported to the Government and state management agencies about the reasons for the increase in steel prices due to fluctuations in the world raw material market and not due to the impact of tax policies as well as the impact of tax policies. as trade remedy policies are applied to steel products.
According to VSA data, China currently dominates world ore prices with 70% of global seaborne ore imports. China is stepping up investment to recover from Covid-19 so Chinese manufacturers are actively stockpiling and importing materials for production.
In addition, due to the increased tension between China and Australia, which also contributed to the increase in iron ore prices… In order to serve stable production, domestic steel enterprises must accept to buy high raw material prices to ensure continuous production. supply goods to the market. The selling price of finished products is balanced according to the world market. According to VSA, this is the law of supply and demand. In fact, the world steel price has dropped continuously since the end of May.
In the domestic market, the price of finished steel is decreasing day by day, lower than that of other countries in the region and the world. And future domestic steel prices will still be affected by world market prices. If the application of the new tax policy will increase the existing pressure on domestic steel producers, some steel producers may go bankrupt if the new policy is applied.
Source: VITIC/synthesis
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