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  Policy & Strategy

Import tax imposed on electronic products to be adjusted

Vietnamese electronics manufacturers are afraid that they will lose out to imports from other Southeast Asian countries when the new tariff rates under the Asean Free Trade Agreement take effect next year. Vietnam now applies import tax rates of 15-20 percent on audio-video products.

The agreement will reduce the rate to five percent for electronics from other Asean countries in 2005. Import tax on electronics components for local assembly will also be reduced to zero - five percent, but only for Asean - manufactured items. Taxes on components imported from non-Asean nations will remain as high as 20-30 percent.

Now domestic manufacturers are afraid that their assembled products with components imported from non-Asean countries will not be able to compete with cheaper imports from Asean manufacturers. Because the profit margin in the electronics industry is so small, such a difference in tax rates might mean huge losses for Vietnamese electronics manufacturers. Even joint venture electronic companies say they will have trouble staying afloat when import tax rates for components become higher than for assembled products.

At a meeting between the Prime Minister Phan Van Khai and business people last week, electronics manufacturers proposed that import tax rates be cut to zero-five percent across the board both for Asean and non-Asean electronics components. Even the Ministry of Finance admitted that the import tax rates should be adjusted and promised changes before January 2005.

VNCG-VDC1 - (18/10/2004)

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