VietNamNet
Bridge – Seacooking and garment companies have called on the government to lower
the tariffs on import materials in order to help them become more competitive
on the domestic market.

Though orders
from foreign partners have been coming continuously since the beginning of the
year, seafood and garment companies are not happy. Le Nguyen Ngoc, Director of
Viet Thang Garment Company, said that companies have to struggle to seek input
material supply sources to fulfill the orders. The cotton fiber price from
domestic sources has increased by 50-60 percent, while companies can only
purchase a volume of fiber that is enough to meet 50 percent of the demand.
Meanwhile, import input materials are subject to a high tax of 12 percent.
Therefore, it is not profitable for enterprises to make products for domestic
consumption.

“That
explains why Viet Thang has stopped making products for domestic consumption
since the beginning of the year,” Ngoc said.

Representative
from the Vietnam Textile and Apparel Association (Vinatas) said that in 2010,
garment companies had to spend nine billion dollars to import materials. In
2010, garment companies gradually regained the domestic market with the growth
rate of 20 percent, but the growth proves to be unsustainable.

The
representative has confirmed that since the beginning of the year, since the
material price has been increasing sharply, many garment companies have
narrowed the production for domestic consumption, while focusing on making
products for export. It is because when making products to export, companies
can enjoy the zero tax rate on import materials.

Garment
companies have warned that it is very likely that Chinese garment products will
return to “reoccupy” the domestic market, especially if garment companies still
have to pay high tax on import materials.

Similarly,
seafood processing companies are also facing big difficulties due to the
material shortage. Nguyen Hoai Nam,
Deputy Secretary General of the Vietnam Association of Seafood Exporters and
Producers VASEP, said the biggest worry of seafood export companies is not the
lack of orders, but the lack of materials. Meanwhile, seafood companies have
warned that the material shortage may last until September 2011.

The material
shortage has forced many seafood companies, including Cuu Long Seafood
Import-Export Company, An Xuyen Joint stock Company and Nam Viet Group, keep
production at moderate level. Meanwhile, the import tariffs are overly high
which makes them hesitant to import materials for local production.

Ngoc from
Viet Thang Garment Company said that the State should reduce the tariffs on
import materials to the lowest possible levels in order to help garment
companies more competitive on the domestic market. VASEP has also proposed reducing
the import tariff on import materials to zero percent, stressing that the tax
reduction is very necessary at this moment in order to boost exports. The
association said that other leading seafood exporters in the world such as China, Thailand,
India and Malaysia are
importing seafood materials in large quantities since their enterprises can benefit
from low tax rates of 0-0.5 percent. Meanwhile, Vietnam is imposing 10-20 percent
on seafood material imports.

Nevertheless,
doubts have been raised that the tariff reductions may lead to the fact that
enterprises would rather import materials than making investment to grow
material areas themselves or purchasing materials from domestic sources.

In reply,
seafood companies said there is no need to worry about preferring importing
materials over domestic materials.  The
companies always prefer purchasing materials from domestic sources because the
prices are always lower than the prices of import materials. As for the
products which are the advantages of domestic production, such as tra fish, the
government still can apply high import tariff to encourage enterprises to use
domestic materials.

C. V