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Vietnam Steel Association petitions against tax policy changes on steel products

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Vietnam Steel Association petitions against tax policy changes on steel products

Highlights

Writes letter to finance ministry July 19

Appeals against cutting antidumping on steel imports

The Vietnam Steel Association, or VSA, wrote to the country's finance ministry July 19, petitioning against the implementation of an export tax on steel billet products with HS codes 7206 and 7207, and a drop in import tax on finished steel products with HS codes 7213, 7214, 7216 and 7210.

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In the letter, VSA asked that government policies stay consistent to protect the domestic manufacturing industry, given that adjustments to import and export taxes could roll back and threaten domestic manufacturers.

VSA attributed the current high steel prices to geopolitical tensions, high raw material costs, transport issues and the lack of shipping containers, as factors contributing to higher cost for steel production, and not due to import or export tax policies.

The association said that if the new export tax for billet were to be introduced, it would add to financial pressure on the country's steel manufacturers who are already facing muted local steel demand due to the worsening pandemic situation in the country.

"The steel association is asking the government to not go ahead with the export tax on billet. This is resounded by many in the industry because we produce more steel than what our local markets can consume," a Vietnam-based steelmaker said. "This tax would make Vietnamese billets less competitive in the overseas market, and eventually become a burden to us to bear."

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Appeals against drop in antidumping duties

The VSA also appealed against a drop in antidumping duties against steel product imports, as the move would give less protection for its steel industry.

Local steelmakers also voiced concerns regarding the reduction, saying it would increase competition from the import markets.

"Easing the barriers for imports would mean more competition for local steelmakers," a Vietnam-based trader said. "The import duties were put in place since 2016, and then extended again, for a reason. Previously in 2015, we had too many imports coming in, and it almost destroyed the local steelmaking industry."

In return, the VSA has proposed to help control steel prices in Vietnam through timely investigation and update of price fluctuations. VSA also said that the country's steel industry is able to satisfy domestic demand, alongside having enough volumes for export.

It added that keeping the exportability of Vietnamese steel also aids in positive growth for the local market, as it would boost current steel production, improve the industry's efficiency, provide employment opportunities, and bring in additional foreign currency to enhance the country's GDP growth.

S&P Global Platts had reported July 14 that rising steel prices in Vietnam had led the country's finance ministry to propose cutting taxes on construction steel imports and also introduce a 5% tax on billet exports. Import tax on angle, mold and shaped steel products was proposed to be cut to 10% from 15%, and tax on flat-rolled non-alloy steels cut to 15% from 20%-25%. The proposals aimed to halt the rise in steel prices, which was also attributed to higher imported raw material costs.