Changes proposed to steel, cement export taxes

The Ministry of Finance has submitted a proposal to the Government aimed at imposing export taxes on steel and cement while raising the export duty on timber products from 5 to 20 per cent.
The Ministry has suggested a tax of 1.3-2 per cent for construction steel and 3 per cent for steel ingots, also proposing a 5.3 per cent tax on cement and a 5 per cent tax on clinker.
The Ministry confirmed that both steel and cement currently had no taxes governing their export, adding that the steel and cement industries were already benefiting from low electricity prices.
According to the Ministry, electricity producers currently had to sell power at a below production cost price according to a Governmental law controlling inflation. It has been suggested that a Kwh of power be VND1,777 in stead of VND1,242 in order to avoid power producers losing out.
Similar to the cement industry, which benefits from low electricity prices by around $2.4 per tonne, steel producers receive an estimated VND214,000 (US$10) per tonne using modern furnaces and VND321,000 ($15) per tonne using older furnaces.
Both steel and cement producers have commented that supply had far exceeded demand and that they were dealing with large volumes of stock, necessitating tax exemptions in order to encourage the export of surplus stock.
The head of the Viet Nam Cement Association’s Administration Office, Nguyen Van Diep, said that profits from cement exports were low due to costly transport prices.
He added that, despite a cement surplus, industry production was still required to grow annually in order to meet a rising cement demand due to rapid economic growth.
Cement mills were not capable of supplying less than what they were designed for as it would be extremely ineffective and wasteful, Diep said.
Vice Chairman of the Viet Nam Steel Association Nguyen Tien Nghi agreed that electricity costs accounted for only 5 per cent of the total costs involved in steel production.
As part of its proposal, the Finance Ministry has called upon the Government to increase the export tax on wood and wood products from 5 to 20 per cent. Exports of railway crossties and wooden tram rails increased by 300 per cent during 2010, the Ministry confirmed. — VNS

Tags: Vietnam steel exports, Vietnam steel industry, Vietnam steel market

Posted by VBN on Jun 7 2011. Filed under Cement, Steel. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry