Environment Law Should be more Practical

 

At the round table “Environment law, Decree 12/2006/ND-CP and practical issues” organized on August 22 in Hanoi by Dien Dan Doanh Nghiep (Business Forum) and the Legal Department of VCCI, many enterprises expressed their concern on the prohibition of the import of used machines, parts and motors.

 

The director of a Haiphong company engaging in the import of scrap steel said that his company had 7 containers kept in Haiphong port for a dozen days last August as they contained some old machines. According to the Environment Law and related Decree, the containers are subjected to inspection. However, the inspection may take from several days to several months. Regardless of the conclusion of the inspection, the delay would cause enormous expenses for the enterprises especially the storage fee costing up to US$40/container/day. In case, the enterprises are forced to re-export the containers, bankruptcy is almost evident.

 

The company has sought assistance from the Customs Office as there are only some rusty machines in three out of seven containers. However, the order was to demolish all the machines. It would take the company some VND40 million and two more days for the demolition. And even worse, the company may be fined for the delay in the implementation of business contract.

 

The fluctuation of steel ingot price causes headache for steel producers and negative impact on the steel and construction sectors in Vietnam. Meanwhile, the import of scrap steel has been an important supply to steel plants in Vietnam. According to Mr. Nguyen Van Mao, Director of Ngo Quyen Ship Building Company, the processing of scrap steel requires only one production phase and can recover 98 per cent of the steel. While the processing from iron ore needs several phases and can get only 40 per cent. Big investment is also needed for the extraction and processing of iron ore.

 

Presently, the ship demolition enterprises are supplying 80-85 per cent of scrap steel the steel plants. The import of scrap steel helps stabilize the steel price and create a lot of jobs. Every year, the enterprises in Haiphong alone can demolish 30-40 ships with 12,000 tonnes in total. Each ship requires some 100 – 300 workers working in 3-4 days. Furthermore, the imported ships, machines and equipment often contain 90 per cent and sometime 100 per cent in steel.

 

According to Mr. Nguyen Tien Nghi, Vice-Chairman, Vietnam Steel Association, the Vietnamese steel sector is still young with high growth rate only in downstream and less advanced technology and equipment. The production capacity of construction steel is 6 million tonnes, but the production and consumption is only 50 per cent. The imported steel ingots make up 75-85 per cent. The imported scrap steel is ranging from 160,000 to 260,000 tonnes a year. In response to the call of the Prime Minister, many enterprises are building electric furnaces to process scrap steel with a production capacity of over 3 million tonnes a year. The processing of imported scrap steel will play an important role from 2007 onwards.

 

As businesses see it, the Law and Decree have in fact blocked the import of scrap steel and cut off the supply of materials to the steel sector. It also endangers the employment of tens of thousands of workers. Far from helping the production, the Law has caused difficulties to both enterprises and workers. It should not stand in the way of business activities.

 

According to Dr. Nguyen Quang Tuyen, Hanoi Law School, the Ministry of Natural Resources and Environment should have specific list of used machines and equipment to be imported for scrap steel as well as specific regulations for enterprises engaging in processing scrap steel. Obviously, a joint circulation by related ministries and agencies is needed for the import and processing of scrap steel.