The cement industry is faced with high stockpiles while exports are not easy (Source: VNA)
Hanoi (VNA) – The Ministry of Planning and Investment has proposed
export tax cuts on cement while local producers are struggling with high
stockpiles as supply has exceeded demand in the domestic market.
In a recent report submitted to the government, the ministry said
that the export tax rate of five percent on cement was too high, which
undermined competitiveness of Vietnamese cement in the global market.
Besides, cement is not eligible for input value added tax (VAT)
deduction.
The ministry estimated that no deduction on input VAT coupled with
five percent export tax rate pushed up prices of cement and clinker by 7.5 USD
and 4.5 USD per tonne, respectively.
This made Vietnamese cement unviable and unable to compete with
products from China, Thailand, Indonesia and Japan, according to the Ministry
of Planning and Investment.
The ministry proposed to the Ministry of Finance that it consider
VAT deduction and export tax cut to remove difficulties for local cement
producers.
According to the Ministry of Construction, in the local market,
supply exceeded demand by around 20 percent, putting local producers into a lot
of difficulties.
Local producers were faced with fierce competition on both quality
and prices not only in the export markets but also in the domestic market, especially
from China which reportedly encountered overcapacity of hundreds of millions of
tonnes.
The Vietnam Cement Association estimated that the total production
capacity of the cement industry of Vietnam now reached 86 million tonnes while
the local demand was at 60 million tonnes in 2017 and the industry must seek
ways to export the rest.
Previously, the association said that exports were not easy due to
higher prices of Vietnamese cement pushed up by taxes.
By 2020, the cement industry might encounter a surplus of 36
million tonnes to 47 million tonnes, said Nguyen Quang Cung, the association’s
president.
Dinh Trong Thinh from the Academy of Finance said that exporting
cement was just a temporary solution, however. Vietnam aimed to reduce exports
of natural resources while the local cement industry was still using old
technologies with high production cost, he said.
“Exporting cement is a difficult problem. Only producers with
modern technologies can export and compete,” Thinh said.
According to Le Van Toi, Director of the Building Material
Department under the Construction Ministry, no more cement production lines
would be put into operation from 2018 and cement companies must have
appropriate production and sales plans to avoid creating more pressure on the
local market.
Statistics of the General Department of Customs showed that Vietnam
exported 9.5 million tonnes of cement and clinker, worth 330 million USD in the
first half of this year.
Major import markets of Vietnamese cement are Bangladesh (35.2 percent)
and the Philippines (33.8 percent).
Vietnam’s cement and clinker export hit a record high of nearly 20
million tonnes with revenue of 1 billion USD in 2014 but has been on a downward
trend since then. Vietnam exported 16.2 million tonnes in 2015 and 14.7 million
tonnes in 2016.
Export prices were at around 29-30 USD per tonne for clinker and 45-50
USD per tonne for cement, down by 25 percent over 2014.-VNA