Steel sector’s plea for an iron hand

“Authorities recently took some actions to cope with steel imports. However, they are not strict enough to deal with the problem, which has pulled local producers into a very competitive environment and contributed to the country’s trade deficit,” said Pham Chi Cuong, chairman of the Vietnam Steel Association (VSA).

VSA statistics showed that the country imported up to 3.1 million tonnes of steel products in the first five months of the year, 3.6 times more than last year’s corresponding period. The import value also grew by 4.3 times on-year to $1.8 billion during January-May.

A large proportion of imported products is building, cold rolled and zinc-plated and coloured steel, for which Vietnamese producers have a manufacturing capacity of one and a half times higher than the local demand.

In late May, the Ministry of Industry and Trade (MoIT) proposed the central bank limit foreign-currency loans for steel imports, which along with other kinds of goods including sugar, salt and NPK fertiliser had negatively affected local producers and the trade deficit.

The MoIT also requested for the first time the application of an automatic import licence mechanism for some kinds of steel products to have better control over the quantity and quality of imported steel. For many years, steel products were freely imported into the country without any quotas, licences or registration. They were carried out under bilateral contracts of domestic buyers and overseas sellers.

Under Circular No. 22/2010/TT-BCT dated May 20, the MoIT listed products that needed to get licences, including those temporarily imported for re-export, non-merchant goods and materials for local production and manufacturing.
The circular, which will take effect from July 5 to December 31, defines that each licence has a 30-day duration.

“It is really an administrative procedure to help the authorities have better control over these imports,” Cuong said. “It is, however, not concrete and specific enough to prevent the importers from taking advantage of some gaps in the regulation to push forward their imports,” he noted.

According to the VSA, the definition of “imported steel [as material] for local production and manufacturing” is not clear, since cold-rolled and building steel and steel pipes imported into the country can be explained for the production of zinc-plated steel, steel composition and some other kinds of products.

“The circular’s duration is also short, which will have limited impacts on importers,” Cuong said.