Vietnam Steel Industry Faces Risks of Bankruptcy

Vietnam’s steel industry will go into bankruptcy if the government does not take measures to protect domestic steelmakers timely, Pham Chi Cuong, chairman of Vietnam Steel Association has warned.

 

Cuong said in the current context of economic crisis, the world’s steel giants will adopt “unfair” measures to sell their inventories to other countries including Vietnam. World steel prices will plunge when a series of enterprises come into bankruptcy, they will sell steel at any prices to have money for debts and bank loans.

 

He said the most concern of Vietnamese steel enterprises is that China, the world’s biggest steelmakers, cut export tax on steel to 0 per cent from December 1, 2008.

 

Cuong said the VSA has learned experiences from regional countries, adding Malaysia imposes 50 per cent tax on steel imports in order to protect domestic steel manufacturers.

 

In fact, Vietnam, in the past time, has not used all tax levels that it has committed to the WTO. Adjusting the tax tool to protect the domestic steel industry is very slow. To deal with a large volume of steel in stock, enterprises have to sell their products at prices lower than production cost of VND7 million-VND8 million/ton to compete with imported ones.   

 

The Ministry of Industry and Trade suggested raising import tax on finished steel to 20 per cent from 8 per cent and on steel ingots to 10 per cent from 2 per cent two months ago but it has not received any move from the Ministry of Finance.

 

“If the government is late in several days more, cheap imported steel will crush the domestic steel industry, and a series of Vietnamese steel enterprises will surely go into bankruptcy,” Cuong warned. (Labor)