The ministry said that Vietnamese enterprises still do not care much for the preferential tariff and do not have enough information to consider their production cost, though Vietnam has joined ASEAN for 10 years and it has applied AFTA’s policies for two years.

A recent survey conducted by the Multilateral Trade Policy Department under MoT shows that only 5% of Vietnamese enterprises use the certificate of origin (C/O) form D, which is used for the goods subject to the preferential tariff applied within AFTA (ASEAN Free Trade Area). The AFTA tariff has the tax rates of between 0% and 5%.

The figure shows that only 5% of Vietnamese enterprises can enjoy the preferential tariff, while the other 95% still cannot take full advantages of the tariff to boost sales.

After Vietnam joined AFTA, it imports more from ASEAN than it exports to other markets. In fact, with the tax rates down, Vietnam’s exports to the ASEAN market have been increasing considerably. However, the export growth rate of Vietnam proves to be lower than the import growth rate.

MoT has advised Vietnamese enterprises to pay more attention to the ASEAN market as they can enjoy low tax rates when exporting to those markets.

Nguyen Thi Hong Thuy, an official from the MoT’s Multilateral Trade Policy Department, said that by 2010, the tariff barriers would be removed, but the non-tariff barriers would be installed in order to protect local production. By that time, the non-tariff barriers would be the biggest challenge Vietnamese enterprises have to face.

The non-tariff barriers are erected by developed countries, which try to cite scientific basis to protect the barriers. Therefore, it is very necessary for Vietnamese enterprises to have a thorough grasp of the legal framework to economise production costs and raise competitiveness for their products.

Regarding the tax lowering under the framework of AFTA, the Ministry of Finance has recently promulgated the tariff on the imports from the countries belonging to the ASEAN – Republic of Korea free trade area. A preferential tariff on imports from the countries belonging to the ASEAN – China free trade area was also released by the ministry one month before.

Source: VietnamNet 12/06/2007