Hyosung Vina Chemicals Co., Ltd., a South Korean-invested chemicals company with about $1.3 billion investment in Vietnam, is waiting for the Ministry of Finance’s approval to remove the 2 per cent import tax on propane, a material used for propylene production.
|Hyosung Vina Chemicals argues the import tax on propane hampers domestic production |
Hyosung Vina Chemicals has sent the proposal to the Ministry of Finance (MoF) to remove the import tax on propane, which it uses as input material to produce propylene, a major ingredient for plastic resins for the domestic market and exports.
According to the company, imported propylene materials are subject to zero tariffs but propane that would be used for domestic production of the same is subject to 2 per cent. As the investment and operating costs of Hyosung Vina Chemicals are quite large, the higher import tax rate makes it extremely difficult for the company to compete with imported propylene products.
“Moreover, the government has specially granted an enterprise in the same industry in Ba Ria-Vung Tau an import tax rate of 0 per cent on propane, which is unfair among enterprises in the same industry,” the document noted.
It is not the first time that Hyosung Vina Chemicals submits this proposal to the authorities. The company submitted two official letters in October 2019 and 2020 and another in this May requesting the MoF to submit a proposal to this effect to the government.
to the May request, the MoF replied that the import tax on propane is necessary to ensure fair competition for domestic propane sources. However, the company also explained that currently Vietnamese producers can only make liquefied petroleum gas (a mixture of propane and butane) and cannot produce pure propane. Meanwhile, in order to produce propylene, Hyosung Vina Chemicals needs pure propane, which it has to import 100 per cent.
The company added that this is a relatively new industry in Vietnam, so the import tax would not affect the state budget because propane used as civil and industrial fuel will still be subject to 2 per cent import tax.
Last month, Hyosung Vina Chemicals officially took into operation its PP5 manufacturing facility in Ba Ria-Vung Tau with an annual capacity of 300,000 tonnes. With its first PP plant in the region kicking off operations in last April, the company’s combined annual output of PP in Vietnam jumped to 600,000 tonnes, making it the biggest PP supplier in the country.