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Vietnam-made construction glass threatened by cheap imports
A survey conducted in HCM City showed that China-sourced glass, though assessed the import tax of 40 percent, is still flooding the market thanks to its cheap price.
China-made products the cheapest
Representative of a company specialising in importing and distributing construction glass in HCM City said that glass products have recently been imported from China, Thailand and Indonesia; however, imports from China prove to be arriving in the largest quantity.
Moreover, China-sourced glass has the lowest sale price in the domestic market, lower than the sale prices of domestic products and also ASEAN products.
For example, China-sourced 5 mm glass is retailing at 90-120,000 dong per square metre, 10,000 dong per square metre lower than in 2008.
Meanwhile, the same products made domestically have the sale prices at 160-180,000 dong per square metre, while Thailand-made products 190,000 dong and Indonesian products 200,000 dong per square metre.
The owner of a glass shop in Tan Binh district in HCM City said that the low price of Chinese products has helped the products dominate the HCM City market. Retail shops also prefer selling China-made glass because they can earn profit of 6,000-7,000 dong per square metre more than on other products.
Domestic factories stop production
According to Tran Quoc Thai, Chairman of the Vietnam Glass Association, who is also Deputy General Director of Viglacera, imports began flocking into Vietnam in 2008, but the imports have increased sharply since the beginning of the second quarter of 2009.
Thai said that Vietnam Glass Industries under Japan’s Nippon Sheet Glass Group, one of the eight member companies of the association, has completely halted production. Meanwhile, both Dap Cau Glass Factory under Viglacera and Kien An Glass Factory in Hai Phong have shut down one production line.
Members of the association collected figures for two months to submit to the Competition Administration Department to appeal for an investigation of glass imports and safeguard measures to be applied to protect domestic production.
Thai said that the reasons imports are cheaper than domestic products are that floating glass production requires high investment capital, a long period of investment and the continuous operation of furnaces.
Therefore, glass producers all apply similar marketing policies. If supply outstrips domestic demand, they have to export products and maintain maximum capacity in order to lower production costs. As a result, a dual price policy always exists: the price for domestic consumption and price for export. While the price for domestic sale is always stable, the export price fluctuates all the time and is lower than the domestic price.
Moreover, Thai said, trade fraud, mostly occurring in the north (importers make wrong declarations about the volume of imports, taxable price and types of products to enjoy lower tax rates), has led to the sharp increase of glass imports recently.
What will be the outcome?
The plaintiffs have proposed the Ministry of Industry and Trade release a decision on imposing the fixed tax of $0.6 per square metre on imports (with no discrimination of origin) for four years.
While waiting for the official decision from the ministry, the enterprises have proposed the following temporary safeguard measures: import tax rate on floating glass imports of 40 percent for 200 days. This means that besides the import tax rate of 5 percent for ASEAN-sourced products and 40 percent for non-ASEAN products, imports would also have to bear an additional 40 percent tax when entering Vietnam.
Though the competition, safeguard and anti-dumping ordinance was enacted in 2002, this is the first time Vietnamese producers have “entreated” the ordinance for help.
According to the Competition Administration Department, in principle, the Ministry of Industry and Trade will make a decision on whether to apply safeguard measures within six months of releasing a decision to begin an investigation.
Safeguard measures can be applied when imports are shown to have increased so sharply that they threaten domestic production.
The Ministry of Industry and Trade has the right to apply temporary safeguard measures before an official decision is made, if it believes that imports are causing domestic producers losses. The temporary safeguard measures cannot be valid for more than 200 days.
VietNamNet, TT
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