Prices of consumer goods will not drop en mass after Vietnam implements its WTO commitments to slash import tariffs on over 1,800 categories of goods, Vietnamese economists said.
Tariff cuts will have a small impact, but changes in supply and demand will create new price levels, said Deputy Trade Minister Luong Van Tu.
Vietnam will split its market opening process into many phases, lasting from three to seven years, and even up to 10 years for the service industry, therefore, prices will not be quickly lowered, Tu noted.
Experts from the Trade Ministry’s Information Centre also warned that people should not have high hopes for lower prices resulting from the nation’s WTO commitments for import tax cuts.
Turnover of imported goods from WTO members only account for around 20 per cent of the country’s total import value, thus causing only a small impact on domestic market.
The majority of commodities affected by WTO commitments are consumer goods with an average tax cut of up to 23 per cent compared with the current export tax rate of over 30 per cent.
During the period Vietnamese businesses will be able to diversify their products and improve their capacity to produce high-quality products, Tu said.
Furthermore, the quantity of foreign goods penetrating Vietnam’s market also depends on the distribution network. The prices of goods imported from WTO members into Vietnam are forecast to fall considerably by 2010.
Vietnam’s tax revenues will shrink to around VND2 trillion (US$125 million) due to WTO commitments in the future, Tuyen admitted, but pointed out the figure is rather small, accounting for only 1 per cent of the total budgetary revenue and the average duration will take at least five years. (VNA, Vietnam Panorama)
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