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Vietnamese Exports Drop Amid Higher Tariff Regimes

by Mary Swire,, Hong Kong

12 December 2008

The tightening of tariff regimes on Vietnamese exports has resulted in a significant decline in trade for a number of the country's companies, it has emerged.

Concerns were raised at a meeting between Vietnam's Ministry of Industry and Trade, the Ministry of Finance, the General Department of Customs and several foreign companies with investments in the country, where criticism was cast over the sudden implementation of higher export duties and tighter customs regulations.

These companies say exports have declined by around 40% throughout the course of the year, and it has been argued by the businesses in question that the imposition of higher taxes by the Ministry of Finance (MoF) earlier this year is doing little to help or encourage growth in trade.

For some companies, these taxes were imposed without warning, significantly affecting the way in which they traded goods with other countries. Further to this, in September of this year the MoF also made the decision to introduce export duties on goods made from imported raw materials. This decision has resulted in many companies having to close down production plants after the cost of exporting started to outweigh the cost of production. Many companies have also been stung with large back-payments of tax on exports.

The way in which Vietnam has managed its customs and tax administration systems has come in for harsh criticism from a number of struggling export firms, who argue that government bureaucracy has been especially unhelpful during the global economic downturn.

In light of the criticism though, the MoF has started to decrease export taxes, beginning with duties on wood and rice. The ministry has also pledged to look at ways of extending the time companies have to pay tax bills.

It is estimated that Vietnam will earn USD9.4bn from exports in the last two months of this year, which is a 1.3% decrease compared to the same period in 2007. However, foreign invested firms reported that the outlook for 2009 is grim, with some predicting that exports will fall by 50-60% next year.

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