The decision by the Competition Administration Department (CAD) under the Ministry of Industry and Trade (MOIT) on applying anti-dumping measures against the steel imports from four markets–has put Vietnamese manufacturers on tenterhooks.
In late May 2013, CAD received a petition from Posco VST and Inox Hoa Binh JSC, requesting to take a probe and apply anti-dumping measures against the cold rolled stainless steel imported from China, Taiwan, Malaysia and Indonesia.
The imports from China, Malaysia and Indonesia bear the import tariff at zero percent.
The two plaintiffs suggested applying the anti-dumping duties of 20-40 percent, affirming that the stainless steel imported from the four markets was cheaper by 25 percent than domestic products of the same kind.
The two cited the imports statistics in 2009-2011 to show that the Vietnamese steel industry was inferior to the rivals’. In the three years alone, the imports increased sharply by 34 percent.
CAD, after taking the probe, has proposed MOIT to impose the preliminary anti-dumping tax for 120 days.
Posco VST and Inox Hoa Binh can now sigh with relief that their products would be protected with the tax, but tens of other enterprises, which make products from stainless steel imports, now feel worried stiff.
The representatives from the 20 enterprises have released a statement showing the strong opposition against the CAD’s decision.
They said that if the taxation is approved by MOIT, this would put big difficulties on Vietnamese manufacturers. It is foreseeable that the more expensive import materials would make the production costs higher, which means consumers would have to pay higher for finished products.
This is also believed to block the access to cold rolled stainless steel materials at competitive prices.
Le Tan Quoc, a senior executive of Minh Huu Lien JSC, warned that Vietnamese manufacturers would have two choices – scaling down the production, thus paving the way for the imports to flow to Vietnam, or raising the selling prices of finished products.
In both scenarios, neither the manufacturers nor customers can benefit: the former cannot sell products while the latter have to buy products at high prices.
Quoc went on to say that though the anti-dumping taxation is just temporary, manufacturers would suffer from it because they cannot find alternative material sources.
“We’ll get troubles with the signed contracts, because the input material cost is higher than out estimates,” he said.
SunHouse Group’s President Nguyen Xuan Phu affirmed that CAD and MOIT, when considering applying the measures to protect local production, need to consider the expected benefits for the whole national economy instead of the benefits of just one or two enterprises.
The import tariff on cold rolled stainless steel has increased continuously recently from zero to five, and then 10 percent. If the tax rates are raised further as suggested by the enterprises holding the biggest market share, tens of other enterprises would face big difficulties because of the overly high material prices.
The 20 manufacturers have warned that the steel manufacturers, which now hold 81 percent of the market share, would control the market prices once the tax barrier is installed against the imports from China, Malaysia, Taiwan and Indonesia.