National food security policed
29-JUL-2008 Intellasia | Vietnam Investment Reviews page 3
Jul 29, 2008 - 7:00:00 AM
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The government has decided to impose absolute tariffs on shipped rice from early August to ensure national food security.
Decision 104/2008/QD-TTg stipulates that eight absolute tariff levels are imposed on rice exports. The tax levels have been calculated on the free on board (fob) price.
Vietnamese rice, fetching between US$600-US$700 per tonne will be hit with a 500,000 dong (US$29.76) tariff per tonne and US$700-US$800 per tonne will have to be subject to a tariff of 600,000 dong (US$35.7). The maximum tariff is 2.9 million dong (US$172.6) per tonne depending on increases in export prices of rice between US$800 and US$1,300 per tonne.
"Rice exporters will suffer terribly because the tariff levels are too high and enterprises' turnover will strongly decrease," said Le Hung Tin, HCM City representative office head of Dong Thap Foods and Agriculture Company, one of Vietnam's biggest rice exporters.
"When we are not sure of the number and value of our export contracts, we will have to find all ways to maximise our benefits to offset the imposed tariff we will have to pay," Tin told Vietnam Investment Review.
Pham Hoang Ngan, a rice specialist from the Ministry of Agriculture and Rural Development's Information Centre for Agriculture and Rural Development, said the decision could limit Vietnam's rice exports and affect the competitiveness of Vietnamese rice.
"The decision is alright for national food security. But, while suffering from the same tariff levels, exporters will have to compete more strongly to find foreign partners, who will have to buy Vietnamese rice at higher prices," she said.
Ngan added that Vietnamese rice farming had also suffered from rising production costs, resulting in higher sale price.
"For example, three months ago, China increased export tariffs on all types of fertilisers and some related raw materials from 35% to 135% until late September this year. This has caused bad affects to Vietnam's agricultural production," she said.
Vietnam's rice exports have been controlled by quotas. World rice demand and rice prices remain high. As a result, smuggled rice has become a major problem recently.
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