Trade tariff reductions to hit treasury where it hurts

Vice Minister of Finance Tran Xuan Ha said that nearly 4,000 items would see tariff reductions over the next five to 12 years. According to MoF’s schedule, the average tariff of 17.4 per cent at present will drop to 13.4 per cent for some brands of automobiles, beer and electronics.
According to MoF, the state will lose VND4,800 billion ($300 million) over the next five years as a result of the amendments. Specifically, the tariff on imported new automobiles will drop from the current 90 per cent to 70 per cent and as low as 52 per cent. Tariffs on televisions, air conditioners and washing machines will drop from the current 40-50 per cent to as low as 20 per cent, while taxes on beer will drop 45 per cent and wine 20 per cent.
Ha said that Vietnamese consumers would see larger profits from the tariff reductions, but that local enterprises would also have to enhance their competitiveness and cut production expenses in order to roll out cheaper products to compete with imports.
Vice Minister of Trade Luong Van Tu said: “It is the right time to balance the benefits of both consumers and producers. In reality, tariffs on motorbikes and automobiles remain quite high to protect local producers, but then consumers are suffering.”
Nguyen Van Viet, general director of the Hanoi Beer, Alcohol and Beverage Corporation, said that only a few local breweries would survive the tariff reductions announced by MoF.
“With new tariffs for the beer sector, most local beer producers won’t be able to cope with losses and will have difficulties in business production and investment for development,” he predicted.
The Ministry of Industry has also said that there are 300 beer producers nationwide totalling designed capacity of 1.7 billion litres per year. But most of them will obviously face difficulties with the tariff reductions.
MoF also said that tariffs on agricultural products, shoes and leather, garments and textiles, and informatics would drop with WTO membership.



No. 787/November 13-19, 2006