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Firms seek lower steel ingot taxes
Steel ingot producers have asked for a reduction in export taxes on steel ingot from the current 20 per cent down to 10 percent.
The producers said they are seriously lacking capital and facing bankruptcy due to the combined problems of lack of demand in the domestic market and the high tax rate which prevents them from exporting. To date, all producers have been forced to reduce production.
According to the Viet Nam Steel Association, steel ingot exports have seen continual reductions for the past few months. In August only 120,000 tonnes were exported, which is half of July's amount.
Due to low demand for steel domestically, steel producers are not buying steel ingot, which is the material needed for steel production. This is, in turn, creating a stockpile of the material in the domestic market.
Dinh Vu Steel Joint Stock Company, which can churn out 200,000 tonnes of ingot steel a year, said that with no outlet for the products. The inventory volume of the company worth nearly VND300 billion (US$18.2 million) has reached 15,000 tonnes a month.
The Hung Yen Mechanical Joint Stock Company also complained that it has 10,000 tonnes of ingot steel in stock every month, worth VND200 billion ($12.1 million).
The situation is even more serious at Van Loi Company, which now has up to 40,000 tonnes of ingot steel in stock every month, worth VND600 to 700 billion ($36-42.5 million).
Despite not being able to offload their products, the companies still have to pay accrued interest and bills for other inputs such as electricity and labourers' salaries.
Do Van Thanh, general director of the Dinh Vu Steel Company, lamented that steel ingot producers would have to shut down workshops and contemplate bankruptcy if no solution can be found.
The Ministry of Finance increased the export tax on steel ingot from 10 per cent to 20 per cent in August, aimed to further limit steel ingot exports in the wake of the large volume of the material exported in the first half of the year. The ministry explained they feared massive exports may lead to a ingot steel shortage in the domestic market.
Due to the high tax rate, domestic steel ingot producers claimed they could not profitably export their product.
Steel ingot producers said they are incurring a double loss, because the world's ingot steel price is also decreasing with the price dropping 25 per cent over the last month.
The Viet Nam Steel Association has, in addition to requesting a 10 per cent reduction in export tax, asked the Government to help producers gain more access to bank loans to continue their production.
It also called for the Government to establish a steel ingot reserve fund under the control of the Ministry of Industry and Trade, in order to help stabilise steel ingot prices in case of world price fluctuations.
VNN
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