Construction Glass Market: As Fragile as…Glass

According to Vieglass, one of the major reasons for such a high inventory level of glass construction is the ever increasing illicit trade in importing glass construction into Vietnam. Since the beginning of the year, on average, there are over two million square metres of glass imported. The main illicit trade form being used by enterprises is to make a false report of value to be taxed and the thickness of glass so as to lower import tax.

The Anti-smuggling Investigation Bureau (Vietnam Customs) reflects the illicit trade situation in importing glass via stating the import price below the true price in order to evade import tax of some certain enterprises. Accordingly, glass for construction with origin in China has entered Vietnam in a large volume via Lang Son border gate and Hanoi customs clearance gate. These types of glass all get their prices stated 50 percent lower than their true price. If recalculated, four million square metres of glass of all types imported in the first two months of this year can cost the state many billions of dong.

Another reason for the high inventory level of construction glass lies in the fact that the production cost of one square metre of glass domestically produced is higher than that of the same type which is imported. It is known that one square metre of 3mm white glass imported from China is RMP8 (equivalent to VND20,000). Meanwhile, one square metre of the same type produced by Dap Cau Glass Company amounts to VND35,000. In the production cost of glass, FO makes up 30 percent. However, the current price of FO in Vietnam is still 20-30 percent higher than that of regional countries. In December 2008, it was even 50 percent higher. The price of domestically manufactured glass is, therefore, higher than that of imported glass, which makes domestic consumption fall dramatically, etc.

One of the main reasons is the cost of FO, the major energy in glass production, in Vietnam is at a much higher level compared to that of global and regional countries. As such, lots of enterprises propose to reduce the import tax of FO in order to reduce the production cost of construction glass, and thereby push market demand.

 

Glass enterprises are even more worried that old technology makes oil account for over 50 percent of product price. It, therefore, can be said that this is really a challenge for enterprises which have long been fighting with old technology.

 

In glass production, there exists a fact that once the kiln gets started, every parameter is fixed. The production volume, therefore, cannot be adjusted. As such, some enterprises have accepted to stop their kiln to focus on having their already produced products consumed, including good brand names.

In front of above “gaps”, according to glass producers and traders in Vietnam, right from now, it is necessary that the state have a suitable policy and more importantly, a “technical barrier” true to its meaning to “bar’ the penetration of imported glass into the domestic market which has already been stormy.

 

Mr Le Minh Tuan, Secretary General of Vieglass, General Director of Viglacera EXIM, states that every type of imported glass needs to have specific quality standard and needs to be closely controlled. It is also necessary to have standards on installment and execution, etc., since in advanced nations; quality management is put on top. The technical barrier is not against WTO commitments at all.

 

Analysts believe that at this time, in order for the glass industry to escape the dilemma, it is vital that a technical barrier be set up. Furthermore, strong actions need to be taken against illicit trade in production and import. Another necessary action is to put glass into the list of products which can cause dangers for consumers to protect consumers’ right as well as guarantee safety for construction works using glass in Vietnam.