(VietnamNet) – Vietnam Steel Association sent Prime Minister correspondences concerning imported China-made steel rods under Vietnam - Italy trademark sold in Vietnam.
 
The association says that due to its abundance, China is applying a policy which encourages exporting steel products to other countries in the area by reducing 8% VAT while limits exporting steel ingots by increasing VAT on steel ingots from 5% to 10%.

As a consequence, prices of steel exported to Vietnam are lower than those of steel ingots creating enormous difficulties for Vietnamese domestic steel producing industry. Chinese rolled steel imported into Vietnam is cheaper and easy to mix up with made-in-Vietnam one. The problem has forced several plants to stop manufacturing steel rolls.

Chinese steel bars, in particular, have not enter Vietnamese market yet since they are required to have origin labels, and that home consumers who are familiar to Vietnamese brand steel bars do not trust their quality. Grabbing that fact, the Vietnam – Italy Steel Joint Stock Company (VISCO) belonging to Song Da Corporation under Ministry of Construction, a member of Vietnam Steel Association, has recently ordered a Chinese mill to produce, in the first period, 5,000 tons of C3 steel bearing VIS trademark to sell in Vietnam.

This movement raised reactions from all steel producers in Vietnam Steel Association and led to the meeting on March, 5th 2007 where directors of those companies discussed and analyzed short-term as well as long-term effects on the home steel industry. Most joint venture and 100% foreign capital companies have shown their worries on having invested in Vietnamese steel industry, too.

After consulting opinions of all steel producing companies and some law advisory companies, Vietnam Steel Association has sent correspondences to Ministry of Industry, Ministry of Trade, Ministry of Science and Technology, Vietnam Chamber of Commerce and Industry and concerning authorities including National Office of Intellectual Property, General Department of Vietnam Customs, Directorate for Standards and Quality (Stameq), Vietnam Competition Administration Department and Market Management Agency to ask for guidance to stop VISCO’s move for the following reasons:

- This is the first time a Vietnamese steel company has sold its trademark to a Chinese manufacturer for profits. Because of this action, Vietnam has to consume Chinese cheap steel, consequently helping intention of China: selling steel ingots at more expensive price than that of finished products to dominate markets of other countries in the area, including Vietnam.

- Domestic production will surely come to a standstill since there will be other companies, following the move of Vietnam – Italy Steel Joint Stock Company, stop producing to import and sell Chinese steel products. This has happened to rolled steel for several months. As a result, workers of the steel industry, especially those of big companies like Thai Nguyen Iron and Steel Corporation, Southern Steel Corporation will face serious laboring hardness. The issue, in turn, will create a considerable social pressure.

- Consumers will be confused between Vietnamese and Chinese steel as there will not be origin information on each bar. Vietnam – Italy Steel Joint Stock Company only issues etiquettes for the whole bunches of steel imported, leading to confusions afterward. This has breached the stipulation of merchandise labels, badly affecting consumers’ rights.

- In short-term, Vietnam – Italy Steel Joint Stock Company could sell steel at cheaper prices than other domestic companies could but in the long-term, once the domestic production is brought to a standstill, Vietnam would become a pure consumer of foreign steel companies and the price would be set by foreign sellers. Vietnam – Italy steel joint company’s action could become a bad precedent for other domestic producing industries like textile, leather, etc.

At the moment, the steel industry has been investing generously for domestic ingot production. In 2006, we produced 1.4 million tons satisfying 40% domestic demands. The number is expected to reach 2 million in 2007, self-supplying 50% of domestic needs. It will be raised to 3.5 – 4.5 million tons by 2010. After Vietnam’s WTO accession, investments of FDI and joint ventures whose investments range from $500 millions to $1 billion have been licensed. At the moment a conjugating steel project and Thach Khe mine exploiting project whose investment is between 4 and 5 millions US dollars have been actively discussed to get started.

Therefore, protecting the domestic steel production during the very first years in the integrating roadmap is extremely important to call for home and foreign investments. Up to now, Vietnam Steel Association has not received any guidance from concerning authorities to solve the problem of Vietnam Italy Steel Joint Stock Company.

Vietnam Steel Association would like the Prime Minister to notice the issue, and then instruct related bodies to answer the steel industry’s petition to stop the above action of Vietnam Italy Steel Joint Stock Company and propose protective solutions for home production, enabling domestic steel industry to develop in the international integration.