Posco hardens its tax stance

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Posco Group, a major manufacturer of cold-rolled stainless steel in Vietnam, last week voiced its proposal at a meeting with the Ministry of Industry and Trade. The group said it had to compete fiercely with imported cold-rolled stainless steel which was exempt from import tariffs.

“The Philippines, Indonesia and Thailand are applying import tariffs at between 3 and 7.5 per cent while Vietnam is the only country in the region offering tax exemptions. Moreover, domestic production is sufficient to meet domestic demand for this product,” said a Posco representative.

Previously, the Vietnam Steel Association (VSA) proposed the Ministry of Finance impose a 10 per cent import tax on cold rolled stainless steel products to protect domestic production.

In 2010, approximately 140,000 tonnes of stainless steel were imported into Vietnam from mainland China and Taiwan and sold at a much lower price than domestically manufactured products, seriously hurting Vietnamese steel makers, according to VSA.

Posco also used its meeting to request a tax exemption on stainless steel scrap to support the company’ export activities as well as avoid raising the price of cold rolled stainless steel on the domestic market.

The firm currently pays a 25 per tax on this scrap. Posco first invested in Vietnam in 1992 with its Posvina project and has since invested in 13 projects capitalised at $1.2 billion.

Recently, its second stainless steel plant in Vietnam came on the stream. This will help boost the Korean firm’s sales in the South East Asian country. The plant has an overall capital of $130 million and is invested by Posco Vietnam Stainless Steel, a subsidiary of the Pohang-based Posco Company, the world’s third largest steel maker.  

Locating in the Nhon Trach 1 Industrial Park in southern Dong Nai province, this plant which is capable to produce 150,000 tonnes of stainless steel a year will help increase Posco VST’s overall capacity to 235,000 tonnes of stainless steel annually.

In May 2010, Posco SS-Vina, another subsidiary of Posco, received an investment licence for the building of a shape steel manufacturing plant in the Phu My 2 Industrial Park in southern Ba Ria-Vung Tau province.

This plant has an overall investment capital of more than $620 million and has a production capacity of one million tonnes of steel per annum.

Posco also operates a cold rolled steel plant in Ba Ria-Vung Tau with capacity of 1.2 million tonnes a year.