The Ministry of Finance (MoF) has proposed a 5-10% tax rate cut for imported steel products so as for the market prices to cool down.

Steel prices have been rising in Vietnam for the past few months. Photo: The Hanoi Times

The move was part of the MoF’s ongoing revision of decree No.57/2020/ND-CP to amend import-export tariff schedules.

According to the MoF, the fact that prices for steel products in the local markets have been rising for the past months was due to hiking prices of input material for steel production and the dependence of the local steel industry for input materials abroad.

“Increasing steel prices, nevertheless, have impacted construction progress of infrastructure projects, especially those financed by public funds, and production costs of certain economic sectors,” stated the ministry.

In this regard, the MoF argued the most-favored-nation (MFN) tariffs imposed on steel products of between 15-25% are high, which require revision to reduce steel prices and help firms to lower operational costs.

In the government’s resolution 63 issued on June 29, which details measures to boost economic growth in late 2021 and early 2022, the MoF is tasked with revising MFN tariffs for imported products that are much higher compared to those stipulated in free trade agreements with Vietnam as a member to stabilize domestic prices.

While an import tariff cut may partially impact state budget revenue, the MoF said the loss is insignificant as demand for steel import is not high at the present.

“Moreover, local firms are capable of producing products similar to those imported,” it added.

Another factor that the ministry pointed out is the move would put local steel companies under pressure to expand production and upgrade technologies to reduce costs and compete with imported products.

In line with the above measure, the MoF also plans to raise the export tariff for steel billet from 0% to 5% to ensure sufficient supply of such products for the local market and ensure the long-term development of the steel industry.

In the first five months of 2021, Vietnam exported 4.85 million tons of steel, surging 60% year-on-year. This resulted in an export turnover of US$3.6 billion, representing an increase of 113% year on year.

Meanwhile, the country imported 6 million tons of steel for $4.79 billion during the period, up 8% in quantity and 39% in value. Of the total, imported steel billet made up a modest portion of $252,000.