30 per cent of localisation ratio yet to be "made in Vietnam" goods

August 05, 2019 | 17:46

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Simply having a localisation ratio of 30 per cent is not enough to qualify as a “Made in Vietnam” product to circulate on the home market, according to the latest draft circular by the Ministry of Industry and Trade, companies will need to do at least simple processing here as well.

30 per cent of localisation ratio yet to be made in vietnam goods

Goods can evenn use only imported materials as long as the simple processing is done in Vietnam

The Ministry of Industry and Trade (MoIT) is gathering recommendations for its fresh draft circular. Accordingly, goods having a single country of origin like crop plants, products from crop plants, and minerals can be classified as “Made in Vietnam”.

Goods not having a single country of origin but being processed in Vietnam have to switch to the Harmonized Commodity Description and Coding System (HS Codes) and source 30 per cent of the value of input materials locally to be recognised as Vietnamese in origin.

Otherwise, goods can consist of 100 per cent imported materials but have to undergo at least simple processing in Vietnam.

For instance, regarding plywood, most firms use HS Codes to determine the good’s origin, because it is hard to inspect the origin of materials. Therefore, the goods, whose materials are imported and underwent simple processing in Vietnam still satisfy the “Made in Vietnam” standards.

The draft circular also stipulates that commodities temporarily imported for re-export and goods in transit are not “made in Vietnam”.

According to the MoIT's assessment, the draft circular will enable law-abiding companies to face false accusations of origin fraud. In addition, the regulations will steadily roll back the practice of putting the "Made in Vietnam" label on imported goods. In addition, the draft does not offer new procedures, so it will not add administrative expenses to companies.

Over the past time, it was companies' duty to add labels identifying the goods' origin based on their best knowledge, according to the Decree No.43/2017/ND-CP on the labelling of goods. However, this has lead to many cases of origin fraud like that committed by Khaisilk two years ago.