HO CHI MINH – The Vietnamese government’s policy to grant a generous package of incentives and the imposition of high tariff walls against imports have been key in attracting huge steel foreign investments that eventually reversed the steel import-reliant economy into an export-oriented country.

Le The Binh, senior manager of Sumitomo Corporation Vietnam LLC told visiting journalists that under normal circumstances Vietnamese government grants tax exemption in the first two years of operation of an investor, but huge investors have special set of incentives from the government.

The government also is very protective of local industries that they raise tariffs on imports once a company starts an operation. Vietnam has been able to implement this without earning the ire of ASEAN and its other partners in regional and multilateral trading bodies.

For instance, Binh said that tariff for cold rolled coils is at 8 percent and galvanized iron sheets at 15 percent. Tariff on hot rolled coils (HRC) is expected to be raised to 8 to 10 percent once the ongoing HRC projects start commercial operation.

Comparatively, the Philippines has lifted tariffs on steel products when its lone HRC/CRC producer Global Steel Philippines Inc. has stopped operating regularly. Philippine incentives are also on a uniform basis whether a project is big or small.

“We used to import from the Philippines,” Binh said noting that they imported Galvalume from Steel Corp. before. That situation has been reversed. Now, Vietnam exports coated steel or pre-painted roofing materials to the Philippines.

Binh cited the Philippines as having a mature steel industry already in Asia way ahead of Vietnam because of the establishment of the National Steel Corp. “But Vietnam grew rapidly,” he said. (BCM)