VietNamNet Bridge - The proposal by the Vietnam Coal and Mineral Industries Group (Vinacomin), the biggest coal miner in the country, to reduce the natural resources tax has faced strong opposition.

Vinacomin’s deputy general director Nguyen Van Bien complained at a Ministry of Industry and Trade’s conference in July that domestically made coal is less competitive than imports, because the natural resource tax Vietnam imposes is higher than that in Indonesia and Australia.

Meanwhile, under a National Assembly’s Standing Committee, the tax will be increasing further from July 1, 2016. The tax rate will be 12 percent for open cast mining and 10 percent for underground mining. 

With the new tax rates, it is estimated that Vinacomin will have to pay VND1.2 trillion a year in royalties.

The proposal by the Vietnam Coal and Mineral Industries Group (Vinacomin), the biggest coal miner in the country, to reduce the natural resources tax has faced strong opposition.

Therefore, Vinacomin has proposed to cut the natural resource tax as a measure to prevent foreign products from entering Vietnam which would affect domestic production.

Nguyen Xuan Khien, former Director of Institute of Geosciences and Minerals, said he personally does not think the proposal should be accepted because it is unreasonable. 

Not only Vinacomin, but many other enterprises, especially state-owned enterprises, have complained about difficulties and reported losses. 

“The state’s protection to SOEs will spoil businesses,” he warned. 

“If enterprises meet difficulties, they have to settle the problems themselves instead of asking for tax reductions. Meanwhile, the coal production cost is not high,” he said.

Khien said he does not believe difficulties exist for Vinacomin and commented that Vinacomin needs to re-organize its production and renovate technology, rather than ask for the state’s help.

“The country cannot get high benefits from natural resources, but the benefits fall into the hands of some groups of people. The paradox must not exist any longer,” he said.

Meanwhile, an analyst said that Vinacomin’s proposal was unreasonable if noting that Vietnam does not encourage coal exports.

The coal industry development strategy by 2020 shows that the coal demand in Vietnam will be increasing rapidly.

In 2015, Vietnam needed 56.2 million tons, while the figure is 112.3 million in 2020 and 145.5 million tons in 2025. 

Anticipating the high coal demand for domestic thermopower plants, the government has drawn up a plan to gradually reduce coal exports, planning to import coal in some years.

The analyst cited an official report as saying that Vietnam has begun importing coal from Indonesia, mostly anthracite. 

The domestic output can satisfy 30 percent of the demand, while domestic sources would be running out by 2025 if the current exploitation rate is maintained.

Khien also warned that while Vietnam exports coal in large quantities, mostly to China, it may have to import coal in large quantities, and possibly from China, in the future.

Dan Viet