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In sectors subject to competition when Vietnam signed the free trade agreement (FTA), opening and deeper integration with the world, the iron and steel industry fall under the larger affected at all. Foreign steel landing free trade agreement Vietnam - Korea (VKFTA) recently signed two countries. While many export sectors: textile, footwear, seafood, furniture ... cheer for export will be "open" when the tax reduction, the iron and steel industry are worried because competition even snoring popular with customers imports landings. According to the Ministry of Industry and Trade, Vietnam will reduce tariffs for 92.7% of imports, accounting for 89.2% of all tariff lines, mainly for industrial commodities like textile raw materials, textiles, plastic materials , iron and steel products, power cables ... imports from Korea as committed VKFTA. Bui Huy Son, director of the Department of Trade Promotion (Ministry of Commerce), who is also chief negotiator VKFTA said, according to opening commitments of Vietnam, the sector under pressure when first opening the group iron and steel products. No need to wait until the effective VKFTA, steel imports from South Korea were very available in the domestic market. Only the first quarter / 2015, Vietnam has imported nearly 400,000 tons of steel Korea, up 17.6%, worth more than $ 400 million. Steel imports from Korea just behind China and Japan.
Meanwhile, the free trade agreement between Vietnam and the Customs Union of Russia, Belarus and Kazakhstan (VCUFTA) has now concluded negotiations and signed just waiting, with a commitment to reduce import tax to 0% for with steel products from third countries of, supposedly terrible domestic steel industry.
Based on what the greeting when negotiations VCUFTA, Vietnam will cut more than 167 stocks of steel products to 0%, in 3-5 years when VCUFTA route effective.
Mr. Nguyen Van Phong, deputy general manager Bluecope Steel Company said that the steel construction sector will be affected most from the FTA, because domestic supply is greater than demand. Following the galvanized sheet sector by domestic production is 3 times higher than the demand.
It should be noted, Russia's steel enterprises have so many competitive advantages large. With a total output of nearly 70 million tons / year, No. 5 worldwide, owns modern production technologies, with 70% produced in blast furnaces, is available on the market share of 8.1% of products Export in Asia and production costs are very competitive, just VCUFTA adopted, Russian steel will rapidly increase in Vietnam.
Internal steel produced in moderation
According to the Vietnam Steel Association (VSA), 2014, although the steel industry has a high growth rate compared to 2013, but the actual capacity of many businesses is 60% compared with the design.
The inability to run 100% of design capacity can not be guaranteed due to the output of steel imports due to increase to 11 million tons, up 21.7% compared with 2013.
In fact, no need to wait until the FTA was signed into effect with commitments falling import tariffs, the domestic steel enterprises are struggling to compete with a large number of steel imports from China .
Representative JSC Hoa Phat Steel said China Steel's current main rival steel enterprises in general, Hoa Phat particular. Because China Steel has many avenues both official and unofficial to in Vietnam.
Imports of steel into Vietnam in the first 4 months 2015 increased by 30% in volume, up 12.5% in value, and at the same time, imports of steel products rose 62.3% in value.
Talking to reporters Investment, Mr. Ho Nghia Dung, Chairman of VSA said that difficult to run at full capacity of steel enterprises have many causes, including the subjective factors.
In recent years, the steel industry has hot growth, oversupply, the market affected by the economic crisis, consumption decreases, the output is naturally low. Dung cites the capacity of construction steel products amounted to 11 million tons, while consuming less than 6 new million tons. This situation is the fact with most other types of steel.
Before the tariff cuts in the FTA, Mr. Ho Nghia Dung said that the reduction under the accession commitments will happen sooner or later, the steel industry could only attempt to survive themselves.
"During the integration process, the domestic manufacturing enterprises will be protected for three years of tax in the first few, the import tax rates of 0% should not right, it's time to restructure businesses , preparing and competitiveness. Therefore, enterprises must make good use of this time period. These businesses do not penetrate to develop, then being eliminated is inevitable and necessary to develop real sector in the future, "Dung said.
(Source guide: Construction)
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