Vietnam: VPA challenges proposal to increase import duty on PP

According to local media reports, Hyosung Vina Chemicals has proposed to the Vietnamese Ministry of Finance to lift import duties on two PP grades under HS codes 3902.10 and 3902.30 to 6% and 6.5% respectively from the current 3%. 

The proposal immediately faced resistance from the Vietnam Plastics Association (VPA), who submitted a series of data showing that Hyosung Vina Chemicals currently only meet one-seventh of the local demand, and the country depends heavily on imports even with all domestic producers running at full capacity.

The Association said that although Vietnam has three local PP plants with a nameplate capacity of 850,000 tons/year, Nghi Son Refinery and Petrochemical has the commitment to export 300,000 tons/year, leaving only 550,000 tons of production output to meet local demand. In 2020, PP consumption in Vietnam reached 1.85 million tons, data showed. 

Lifting import duties would seriously hurt importers, the Association added. Vietnamese importers could turn to non-dutiable cargoes; however, it is just a matter of time before these suppliers adjust prices to reflect the import duties differential. These potential price adjustments do not result in higher revenue for the government, instead reduce Vietnamese manufacturers’ competitiveness in the end-product market.

The Ministry has yet to announce its final decision.

Hyosung plans to bring its No. 2 PP plant online in mid-August 2021, bringing the total capacity to 600,000 tons/year, making it the biggest PP producer in the country.