VietNamNet Bridge – The Vietnam Steel Association (VSA) has petitioned management agencies to soon arrive at solutions of monitoring products labeled as alloy steel imported from China as it contains a small portion of boron to escape the tax.

In a document sent to the Prime Minister and the Ministry of Industry and Trade on Monday, VSA stated that alloy steel containing boron at a mere 0.0008% imported from China are enjoying a zero tax rate. Meanwhile, the import tax rates imposed on rolled steel and other steel products such as U-shaped, H-shaped and V-shaped steel are 5%, while steel bars are subject to tax rates of 10-18% depending on categories.

Traders have taken advantage of loopholes of the regulation on alloy steel requirements as well as tax incentive policies to import a huge amount of boron steel products into Vietnam, the association said.

According to statistics of VSA, Vietnam imported 619,000 tons of hot-rolled steel rods and 275,000 tons of hot-rolled steel sheets containing boron last year. Besides, the import of construction steel having boron from China was 427,000 tons last year, up 331% from 2011.

In this year’s first five months, the import volume of rolled steel with boron amounted to 270,000 tons, higher than the total import volume of the kind last year (248,000 tons).

VSA says that some Chinese enterprises add boron to steel products to enjoy tax incentives. Boron is at first mixed in rolled steel but then in many other steel products.

Vietnam has not been able to produce hot-rolled steel rods and sheets, and thus such products have yet to affect the domestic market.

However, regarding construction steel, Vietnam’s production capacity of this kind is two times higher than the demand. Therefore, a large import volume of Chinese steel containing boron has left a negative impact on local steel enterprises, especially when the demand remains dreary like now.

“The import of steel alloy containing boron from China is in fact a trade fraud, causing losses of hundreds of billions of Vietnam dong in tax sums to the State budget,” says VSA in the document.

China’s rolled steel containing boron when imported into Vietnam is nearly VND1 million per ton cheaper than rolled steel produced domestically, affecting Vietnamese rolled steel producers.

Do Duy Thai, general director of Viet Steel Corporation, once told the Daily that while many countries have widely applied self-defense measures, Vietnam’s measures seem to be ineffective, as seen in the increasing influx of China’s rolled steel into Vietnam.

According to Thai, because of a lower price compared to domestically produced steel, rolled steel imported from China currently holds a market share of 10% in rural areas. If solutions are not worked out soon, it is certain that the domestic steel industry will face more difficulties.

Last August, the Ministry of Industry and Trade issued Circular 23/2012/TT-BCT on application of the automatic import license for some steel products in an effort to set up more administrative barriers against imports. However, the licensing duration last only five to seven days, not long enough to discourage importers.

Meanwhile, according to VSA, neighboring countries like Thailand, Malaysia and Indonesia have applied complicated and prolonged non-tariff barriers to discourage steel importers.

For instance, the process of getting import licenses in Thailand consists of 14 stages and lasts 40-50 days, not to mention the time needed to test sample products.

Similarly, importers in Malaysia and Indonesia must undergo 17 stages in 41 days to receive testing certificates before obtaining import licenses.

Source: SGT