VietNamNet Bridge - The Ministry of Planning and Invetsment (MPI) has proposed slashing the export tariff to save cement manufacturers facing million tons of cement in stock.

Cement manufacturers have been struggling to export cement to ease the domestic oversupply. However, with the changes in tax policies, the clinker export cost has increased to $4.5 per ton and the cement export cost $7.5 per ton, which has made Vietnam’s cement uncompetitive with Chinese, Thai, Indonesian and Japanese products.

Therefore, MPI has proposed to ease the export tariff and allow cement manufacturers to deduct input VAT to help ease difficulties for manufacturers. 

Cement manufacturers have been struggling to export cement to ease the domestic oversupply. However, with the changes in tax policies, the clinker export cost has increased to $4.5 per ton and the cement export cost $7.5 per ton, which has made Vietnam’s cement uncompetitive with Chinese, Thai, Indonesian and Japanese products.

The production capacity in Vietnam has exceeded domestic demand. A report of the Vietnam Cement Association showed that the total capacity of the industry has reached 86 million tons, while the total consumption would not be higher than 60 million tons this year.

The current oversupply is the result of the hot development for years. New cement plants were set up in every province despite warnings from environmentalists. 

Each cement plant takes away hundreds of thousands of tons of limestone and other minerals from nature. Thoi Bao Kinh Te Saigon commented that when every new cement plant appears, one mountain may disappear within 10-20 years.

Dinh Trong Thinh from the Finance Academy said that exporting cement is a good way to clear the big stocks because cement doesn’t keep long. 

Vietnam now runs many cement plants using outdated Chinese technology, which causes pollution and requires high production cost. In Thailand, the cement production cost is 70 percent of the production cost in Vietnam.

Emphasizing that MPI’s proposal to ease export tariff is just a temporary solution, Thinh commented that it is unreasonable for manufacturers to ask for preferences in a market economy.

“The state budget is tight and its revenue will suffer if the tax is cut,” he warned.

Some economists have expressed their strong opposition to MPI’s proposal, saying that in a market economy, producers must not expect protection from the state. 

An economist commented that if Vietnam slashes the tariff to save cement, then it is showing that it is trying to spend its money to save outdated Chinese blast finance technology,

Prior to that, MPI asked EVN and other power generators to prioritize to buy coal from Vinacomin at the market price. 

Vinacomin, shouting for help as EVN refused to buy its coal, warned that if it cannot sell coal to EVN, thousands of Vinacomin’s workers will become redundant. The same warming may ultimately be given by Vincem and other cement manufacturers.

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Thanh Lich