Origin fraud threatens local exporters

After a local silk importer was recently found to be disguising Chinese products as Vietnamese to sell them in India, experts have warned of the risks of losing out on exports and preferential tariffs due to intellectual property (IP) violations.

Origin fraud threatens local exporters

The Department of Post-Customs Clearance Inspection from the General Department of Customs revealed that it had recently discovered a company in HCM City using its certificate of origin (C/O) to pass off Chinese silk products as Vietnamese and export them to India.

Customs officials said the firm imported finished silk from China to Cat Lai Port in HCM City, then labelled them as 'Made in Vietnam' in a local warehouse.

Customs officials deemed the move tax evasion as silk exported from Vietnam to India are only taxed at 5 per cent, while products shipped from China have a tax rate five times higher.

Each year India imports from 2,200 to 2,500 tonnes of silk from China with a value of US$750 million to $800 million. According to an India market insider, the Indian Khadi and Village Industries Commission (KVIC), the Karnataka State government and the Silk Association of India (SAI) recommended banning silk imports from China to support domestic producers, which should help Vietnamese silk enterprises gain a stronger foothold in the Indian market.

However, the insider told a Vietnamese newspaper: “Such a case has swept the hope further away.”

“It is also a sign that some Chinese silk exporters have taken advantage of the lower tax position of Vietnam to export their products,” he added.

Deputy director of the Trade Remedies Authority of Vietnam under the Ministry of Industry and Trade (MoIT) said: “If Vietnam does not take active measures to deal with the problem of evading trade remedies, especially through origin fraud, those activities will affect businesses and industries first. In the long run, it will have a negative impact on the competitiveness of the whole economy, especially in the context of joining a series of high-demand free trade agreements (FTAs)."

The problem doesn't lie with silk products alone and from the beginning of the year, customs officials have uncovered at least 77 cases where they discovered 24 violations of origin in exporting. Customs said bicycles, solar batteries and wooden items accounted for the majority of cases.

The trade remedies authority said origin frauds have a great impact on trade defence lawsuits. In the first eight months of 2020, Vietnamese exporters faced 27 investigations for fraud of origin, greater than the figure for the entire of 2019.

 

Nguyen Thuy Duong, a lawyer from the Hanoi Law University said: “The risk of evading trade remedies and origin fraud has been increasing, especially in the context of the escalating US-China trade conflict and Viet Nam participates in many new FTAs such as the comprehensive and progressive Trans-Pacific Partnership Trade Agreement (CPTPP) or the Europe-Vietnam Free Trade Agreement (EVFTA).”

To make matters worse, regulations for dealing with origin fraud and illegal transhipment are not very strong. For example, the firm that evaded tax when exporting the Chinese silk only faced an administrative sanction of VND60 million ($2,588) and another VND550 million of illegal profit (it is the profit they gained from the Chinese exporter) for the trading.

Lawyer Duong said when origin fraud helps violators enjoy tax incentives, countries suffer losses in tax revenues, affecting domestic industries and reducing the benefits of joining FTAs.

“If there is a suspicion of fraud or inaccuracy of the C / O issuance, in the CPTPP for example, if the importing country discovers a series of similar acts by the exporter or the manufacturer regarding fraud or counterfeiting of goods to enjoy preferential tax, they may decide to stop granting tax incentives for similar goods until it is proven those goods meet preferential conditions," he added

To deal with the problem, Nguyen Cam Trang, deputy head of the Import-Export Department, MoIT said: “Together with more investigations and checking products and export activities, we are educating and providing information to local enterprises, warning them not to join hand with foreign exporters (to commit fraud).”

Recently, the Trade Remedies Authority built an early warning system for many industries and products at risk of being sued for trade remedies.

The customs officials considered it necessary to add regulations on calculating illegal profits for local firms which outsource some of the work to help foreign exporters take advantage of tax incentives.

Customs also said the MoIT needed to have specific guidance documents on all relating C/O activities for products with labels 'Made in Vietnam' so that they could investigate fraud more easily.  VNS

Vietnam Customs Agency vows to combat origin fraud

Vietnam Customs Agency vows to combat origin fraud

The Prime Minister has given instructions to fight against origin fraud and illegal transshipment to protect brands and the prestige of Vietnamese goods.

Vietnam takes serious measures to block exports with origin fraud

Vietnam takes serious measures to block exports with origin fraud

Amid the US-China trade war, the US is paying higher notice to Vietnamese products. As a result, enterprises have had to change business practices to adapt to new circumstances.

 
 

Other News

.
The trio of ‘petrol tycoons’ in prison
The trio of ‘petrol tycoons’ in prison
BUSINESSicon  15/09/2020 

They are ‘Phat Oil’ in Hai Phong, ‘Son Iron’ in Thanh Hoa, and Trinh Suong in Soc Trang.

Vietnam ranked world’s second M&A attractive market: Euromonitor
Vietnam ranked world’s second M&A attractive market: Euromonitor
BUSINESSicon  15/09/2020 

The country is set to score 102 and 94.6 out of the maximum of 250 in 2020 and 2021, staying behind only the US with its respective scores of 108.9 and 112.5.

Vietnam needs to act quickly in the competition to lure foreign multinationals: economists
Vietnam needs to act quickly in the competition to lure foreign multinationals: economists
BUSINESSicon  15/09/2020 

The Indian government has spent $30 billion to support enterprises investing in the country. If Vietnam cannot act promptly, it will miss the opportunity to lure foreign investors amid competition with other countries.

Stagnated construction leads to large steel inventories
Stagnated construction leads to large steel inventories
BUSINESSicon  14/09/2020 

The COVID-19 pandemic has led to many construction and real estate projects being delayed, resulting in large inventories of construction materials, especially steel.

VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 14
VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 14
BUSINESSicon  14/09/2020 

Strong liquidity in Vietnam stock markets boosts stock exchanges revenue

Hanoi considers allowing overnight services to boost night-time economy
Hanoi considers allowing overnight services to boost night-time economy
BUSINESSicon  14/09/2020 

Authorities in Hanoi are seeking feedback for a pilot scheme to allow recreational establishments in Hoan Kiem area to stay open past midnight.

Export price peaks, Vietnam’s rice advances towards the EU
Export price peaks, Vietnam’s rice advances towards the EU
BUSINESSicon  14/09/2020 

The rice price in the world market, which is at a nine-year high, helped Vietnam earn $2.2 billion from rice exports in the first eight months of the year.

Registration fee cut does little to revive VN auto market
Registration fee cut does little to revive VN auto market
BUSINESSicon  14/09/2020 

In June Prime Minister Nguyen Xuan Phuc issued a decree cutting registration fees for domestically manufactured cars and other vehicles by half for the rest of the year.

Predicted consumer resets to shape Vietnam FMCG market: Nielsen
Predicted consumer resets to shape Vietnam FMCG market: Nielsen
BUSINESSicon  14/09/2020 

The news cycle related to Covid-19 transmission no longer influences trends on the FMCG market in Vietnam and Southeast Asia.

Revenue soars, but casinos in VN still taking a loss
Revenue soars, but casinos in VN still taking a loss
BUSINESSicon  14/09/2020 

Casinos are considered a ‘sensitive business’ in Vietnam. Though regulations have been loosened, they are still very strict.

Incurring crushing losses, café owners rush to sell shops
Incurring crushing losses, café owners rush to sell shops
BUSINESSicon  14/09/2020 

Losing patrons and having no money to pay for rent, the owners of many coffee houses have had to shut down.

Drug retailers in fierce compettion for bigger share of $16 billion market
Drug retailers in fierce compettion for bigger share of $16 billion market
BUSINESSicon  14/09/2020 

The long queues of people standing and waiting for their turn to buy face masks show the great potential of the drug and medical equipment market.

Warm welcome to eagles, not to tigers or snakes
Warm welcome to eagles, not to tigers or snakes
BUSINESSicon  13/09/2020 

The author of this article received a request to write about his contributions to policies on foreign direct investment (FDI) attraction.

How to attract high-quality foreign direct investment
How to attract high-quality foreign direct investment
BUSINESSicon  13/09/2020 

Industrialization requires high-quality foreign direct investment (FDI). Many issues must be addressed, including how to developed a skilled workforce.

Vingroup rejects rumour about selling stake in Vinmec and Vinschool
Vingroup rejects rumour about selling stake in Vinmec and Vinschool
BUSINESSicon  13/09/2020 

Vingroup rejects rumour about selling its stake in Vinmec and Vinschool, reiterating that these two systems play a crucial role in the group’s ecosystem.

Multi-story buildings left idle, trillion-dong dream collapses
Multi-story buildings left idle, trillion-dong dream collapses
BUSINESSicon  13/09/2020 

More and more highrises have benn built in recent years, but many of them have been left idle.

Hung Yen longan farmers reach out to world market
Hung Yen longan farmers reach out to world market
FEATUREicon  13/09/2020 

Hung Yen’s farmers are proud of Hung Yen longan, the ‘fruit of the King’ which satisfies strict requirements on food safety and is exported to many countries, bringing revenue of trillions of dong a year.

VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 13
VIETNAM'S BUSINESS NEWS HEADLINES SEPTEMBER 13
BUSINESSicon  13/09/2020 

Vietnam home to nearly 50,000 rooftop solar projects

Lam Dong halts agricultural tourism projects
Lam Dong halts agricultural tourism projects
TRAVELicon  13/09/2020 

Despite keen interest from businesses to invest in agricultural tourism in the Central Highlands province of Lam Dong, the provincial government is not granting an approval to such projects for the time being.

Chubb Life Vietnam honored 'Top Insurance Workplaces 2020'
Chubb Life Vietnam honored 'Top Insurance Workplaces 2020'
BUSINESSicon  14/09/2020 

Insurance Business Asia, a world-renowned insurance publication, has just named Chubb Life Insurance Vietnam Company Limited (Chubb Life Vietnam) among the “Top Insurance Workplaces 2020” in Asia.

 
 
 
Leave your comment on an article

OR QUICK LOGIN