Domestic businesses run after profit, increasing imports, killing local production

Though the government has many times announced that it is following a policy on encouraging local production, Vietnam still runs after profits by increasing imports, thus killing the local production.

The General Department of Customs has finished the investigation over the import of salt made by three enterprises. Frauds have been found from the investigation which caused damages to the national economy, to the salt industry and made thousands of salt workers suffer.

The Southern Basic Chemicals Company got seven licenses from the Ministry of Industry and Trade to import industrial salt with the total import volume of 221,740 tons. The salt was planned to be put into industrial production which enjoyed the preferential tax rate of 15 percent instead of the normal tax rate of 50 percent.

However, in fact, the enterprise only sold a part of the imports to partners for industrial production, while the remaining part was retained for making white salt for household use to be sold on the domestic market.

Meanwhile, the partners, who purchased salt for industrial production, also sold the salt on the market as white salt for profit. The thing has been lasting five years.

The investigation has discovered the loss of 20 billion dong in the case, which is not an overly high loss. However, the problem here is that the preferential policy has been taken unfair advantage.

More importantly, the imports have harmed the domestic salt industry and salt workers. Vietnamese enterprises still import salt for profit, while refusing to purchase salt from domestic salt workers, leaving domestic products unsold.

Over the last many years, the Ministry of Agriculture and Rural Development and farmers have been violently protesting the policy on salt import. However, the Ministry of Industry and Trade emphasized that importing salt was necessary, because Vietnam needs the salt products for industrial production, which cannot be provided by the domestic production.

Therefore, even when farmers cry about unselability and a miserable life, hundreds of thousands of tons of salt are still imported every year. Analysts many times raised doubts about the overly high import volume and the purpose of the salt import deals. However, the opinions had been ignored by the state management agencies until the problem was clarified after an investigation.

Refusing domestic products and preferring imports have not only happened in the salt production, but in other fields as well, from animal feed to vegetable and processed food. Vietnam, an agricultural economy, still has to import maize for animal feed. It also imports vegetables and fruits, though domestic vegetables and fruits remain unsold. Especially, Vietnam can make fresh food of different kinds, but it does not process food itself, but imports canned and frozen food.

The overly high imports not only cause to the waste of money, but hinder the development of local production. In many cases, imports compete fiercely with domestic products, thus step by step, killing local production.

It is now obvious that the enterprises committed frauds. However, it is also necessary to blame the watchdog agency which granted licenses for salt import though it could not find out the real domestic demand. It also could not control the domestic enterprises, thus doing harm to the domestic production.

The story of the mechanical engineering industry development is another typical example. Though the State is determined to develop domestic mechanical engineering, the industry still cannot develop.

It is because domestic investors still prefer choosing foreign contractors who offer low prices, to choosing domestic contractors. In fact, the low price means the low quality, which cannot ensure the required high quality of construction works.

In the real estate market, Vietnam welcomed foreign real estate developers, who promised the multi-billion dollar projects. However, in fact, the foreign investors do not bring foreign investment to Vietnam. They come to the country and mobilize capital here to develop their projects.

Tags: Vietnam business