Vietnam News

Proposed hike in paper tariff sparks controversy

date 04/04/2018 view 556
The Ministry of Industry and Trade’s proposal to increase the import tax on paper products within the ASEAN region from 3 to 5 per cent has stirred controversy among domestic printing houses, paper importers and producers.

 The Ministry of Finance has already raised import tariffs on newsprint from 20 per cent to 29 per cent, and on printing and writing paper imported from non-ASEAN countries from 25 per cent to 29 per cent, in an effort to protect struggling domestic producers.

Viet Nam Paper Corporation general director Vo Sy Dong said his company was coping with large stockpiles and floods of imports, alongside a fall in consumer demand.

The company has cut production since late last year and slashed prices of paper products, but business performance had not significantly improved, he said.

The import tax increase would help domestic paper producers overcome these difficulties, Dong said.

Tran Tat Duc from Tan Mai Corporation, a leading domestic paper producer, agreed. He described the tariff increase as the Government’s most effective move to support paper producers in the current economic context, helping them avoid bankruptcy. Smaller producers had already halted production, he noted.

But representatives of the printing industry were crying foul.

"It’s really unreasonable that, with such large quantities of paper in stock, paper producers keep product prices unchanged and petition the State to increase the paper import tax," said Kim Dong Publishing House deputy director Bui Tuan Nghia.

Increasing import tariffs might help to deal with the large volume of unsold paper but was not an effective measure in the long-run, Nghia said. Rather, domestic paper producers needed to adjust the price of their products to acceptable levels.

Higher costs for imported paper would push printing and publishing enterprises to raise their costs with consumers, in turn, ultimately taking the hit, Nghia added.

Pham Trung Thong, deputy head of the Printing Management Division under the Ministry of Information and Communications, noted the burden on the 11 million households – nearly a fourth nationwide – with children in school. Many would be unable to buy notebooks or published textbooks for their children if paper prices continues rising, Thong said.

"I don’t think that we should use administrative tools like tariffs to deal with problems in the paper industry," he added, noting that large stocks were not a new problem in the paper industry. A similar situation occurred in the 1990s, he said.

"Oversupply, unmarketability and somtimes shortage are traditional problems of the industry."

The main reason for the surplus was that producers and distributors had failed to tailor production and sales policies to market and economic conditions. In early 2008, before the global economy fell into recession and prices skyrocketed, domestic paper prices had increased 4-5 times but the supply of paper still could not meet demand, and enterprises had to queue up to purchase paper. The Government had to create favourable conditions to import paper to serve the domestic demand.

However, despite a large amount of unsold paper, the price of paper on the domestic market was over VND1 million (nearly $60) per tonne more expensive than imports.

"There is a problem that imported paper is subject to a tax of 3 per cent but is still cheaper than locally-made products," Thong said.

The paper industry should stand on its own feet and face challenges in the market to become more competitive, rather than rely on the State’s supports, Thong said.

Business development strategies for different times and improved customer service were essential, he said.

"Vietnamese-made goods will be welcomed if they are sold at competitive prices and at a quality equal to those of other countries," Nghia added. — VNS

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