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BUSINESS SPOTLIGHT

Temporary tax imposed on imported steel corrugated iron

Released at: 16:42, 25/06/2019 BUSINESS SPOTLIGHT

Temporary tax imposed on imported steel corrugated iron

Photo: Hoa Sen Group

MoIT announces tax on products from China and South Korea, to the benefit of local manufacturers such as the Hoa Sen Group.

by Thanh Thanh

A decision from the Ministry of Industry and Trade (MoIT) to temporarily impose taxes on imported steel corrugated iron will be beneficial to the Hoa Sen Group, helping it increase consumption in Vietnam.

MoIT issued Decision No. 1711 / QD-BCT on June 18, applying temporary anti-dumping measures on some color-coated steel products (often called colored corrugated iron) originating from China and South Korea.

The temporary rate applied to 20 of China’s color-coated steel export companies is from 3.45 to 34.27 per cent and to three South Korean enterprises from 4.48 to 19.25 per cent.

According to a report from the Vietnam Steel Association (VSA), due to market pressure, consumption of construction steel products grew at a low rate in May and that of corrugated iron fell dramatically.

Crude steel consumption of VSA members reached 1,390,041 tons in May, an increase of 4 per cent compared to April and 24 per cent year-on-year. In the first five months of 2019, consumption was 6,354,277 tons, up 23 per cent year-on-year.

Considering construction steel products alone, however, May consumption was only 916,519 tons, down a slight 0.7 per cent compared to April but 12.4 per cent year-on-year.

For galvanized steel sheet and color-coated corrugated iron products, consumption in May was just 300,187 tons, down 2.83 per cent compared to April 2019 and 18.6 per cent against the same period of 2018.

While consumption of steel corrugated iron and construction steel has been plummeting, imported steel has been skyrocketing. During the first four months of this year, Vietnam imported about 4.8 million tons of all kinds of finished steel. Imported galvanized steel sheet and color-coated corrugated iron products surged by 24 per cent, in which color-coated corrugated iron increased 55 per cent and galvanized corrugated iron 25 per cent.

The largest number of imported products still come from China, accounting for 39.1 per cent, while South Korea holds 14.44 per cent.

It will be impossible for the steel industry to experience any improvement in consumption, which may even be difficult in the years to come. In order to create appropriate conditions and fairness for domestic manufacturers and imported goods, MoIT issued Decision 1711 to impose temporary anti-dumping duties on imported color-coated steel from China and South Korea.

The Decision took effect on June 25 and the time limit for temporary solutions is 120 days (expiring on October 23), and then MoIT will decide whether or not to officially impose anti-dumping tax on the above items.

MoIT may also impose anti-dumping duties within 90 days before a temporary decision (from March 27 to June 25) in cases where the identified imported goods are dumped; the quantity of the dumped goods imported into Vietnam increased dramatically during the time of the investigation (according to Decision No. 3877 / QD-BCT on October 15, 2017) until a temporary anti-dumping tax is applied; and irreparable damage is being caused to the domestic manufacturing industry.

A production line at one of Hoa Sen Group's factories (Photo source: Hoa Sen Group)

The ministry began the investigation last October, based on the results of appraisal dossiers requiring the application of anti-dumping measures filed by representatives of the domestic manufacturing industry last August.

The survey results show that although safeguard measures in the form of tariff quotas are being applied, the number of imported products in quotas shows signs of dumping in a rather high interval, from 3.45 per cent to 34.27 per cent, which continues to cause significant damage to the domestic color-coated steel industry.

This dumping behavior continues to put considerable pressure on the activity index of the domestic manufacturing industry, which can be seen in criteria such as production output, sales, turnover, profits, market share, and inventory, which were volatile during the investigation period.

In particular, over the last seven months, these indicators have shown a marked declining trend, lots of domestic manufacturing enterprises are suffering losses, many production lines have had to stop operating, and a large number of workers have had to quit their jobs.

According to domestic steel corrugated iron companies, the imposition of anti-dumping duties on colored cold-rolled, colored zinc, and black corrugated iron of the 20 Chinese companies and three South Korean companies will help Vietnamese manufacturers compete fairly in the market and reduce their substantial losses.

At the same time, the government is able to obtain taxes from genuine Vietnamese businesses and prevent tax losses to increase budget revenues. Consumers do not have to waste money on buying poor quality Chinese goods.

In the domestic market, the Hoa Sen Group has a large production output, good product quality, and a network of extensive retail distribution stores, and is known as Vietnam’s No. 1 galvanized steel sheet maker. The MoIT decision will have a positive impact on the Group, helping it increase consumed products in the country.

In the time to come, MoIT will continue to work with related parties, verify data, and organize a public consultation session for all parties to have a chance to express opinions, and will also evaluate the overall impact of the case on related parties, including consumers. The case was expected to end the investigation in April.

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