Facing up to proposals on reduction in import duties for electronic components of some businesses, the Ministry of Post and Telecommunications has recently approved reduction in electronic components in the information technology sector and it is scheduled the new import duties will be applied by early 2005.
According to Legal Document 390/CVDT-KHKD applying for adjustment of the import duty policy for electronic products and components, Vietnam Electronics and Informatics Corp (VEIC) said that domestic electronic producers are encountering many difficulties, domestic production cost is high due to high increase in prices of input materials, and services.
Additionally, Vietnamese businesses have to import many non-Asean electronic components and are imposed a high most favoured nations (MFN) rate of duty averaging from 15% to 20% while the import duty rate for complete products imported from Asean is only 5% or less. Therefore, many Vietnamese electronic businesses said that despite they reduce production cost, prices of domestically-produced items cannot be cut down equally to imported products. Foreign investors also have to suspend or to terminate production of joint ventures to become distributors.
According to the information technology industry department under the MPT, in order to attract more investment, it is required to have appropriate protection policies via import duties for electronic components. The MPT absolutely agreed to reduce Cept and MFN duties for electronic components to 0%, partly reducing cost, promoting competitiveness capacity of domestically-produced electronic items.