Viet Nam on the way to lower import taxes
Ha Noi, Jan. 13 (VNA) -- As the ASEAN Free Trade Area (AFTA) agreement nears, Viet Nam agreed to lower import taxes to beneath 5 percent on 97 percent of goods by 2005.
This means by 2005, Viet Nam will be using a system of tax rates for 10,800 commodities, whereas now there are 6,500 different tax rates in use.
And the Government will wait until July to implement the widespread tax cut on ASEAN imports.
To get there in time, Viet Nam must have in place their part in the CEPT, or Common Effective Preferential Tariff by July. This year's target is to reduce import tariffs on 2,250 commodities, including 750 that had been on the Temporary Exclusion List, explained Tam.
These include heavily-protected industries such as cement, paper, electronics, engineering products and construction material, Deputy Minister of Finance Le Thi Bang Tam noted.
"The country's AFTA integration will bring many advantages to the country but it will also pose significant challenges to domestic enterprises, particularly small-to-medium enterprises (SMES) that have limited competitive ability," Tam said.
Some companies are still clamouring for protection, fearful of the ASEAN goods onslaught, such as motorbike makers and vegetable oil producers.
"Following integration, highly protected local industries like fertiliser, paper and tea will find the going tough against ASEAN imports" warned Tran Phuong Lan, head of the Asian and EU Bureau of the Trade Ministry's Multilateral Department.
Under pressure, the Ministry of Finance has said the tax reduction between 2003 and 2005 should be implemented immediately and scattered during the three years, to avoid a last-minute crunch on local firms.
The government will still have to issue a yearly schedule to list which goods will be affected that year. Import tariffs will continue as always until the government plans are solidified and the price shifts take effect each new year.
Tam also explained that the MoF is producing a list of 350 agricultural items on which tariffs will be eliminated completely between 2004 and 2008 in order to meet the requirements of the already signed ASEAN-China Free Trade Area agreement.
The expected results of AFTA are still a mixed bag. On the one hand, Tam explained, the country could wipe out local firms that cannot keep up with the speed of integration.
But on the whole, AFTA preparatory measures have proven successful thus far, as the volume of Vietnamese exports around ASEAN has increased considerably with the lower tariff barriers. Domestic consumers and producers have also enjoyed the cheaper prices of commodities and production materials from other ASEAN countries.
