VietNamNet Bridge – The aim of the Ministry of Science & Technology’s Circular No 44 was to tighten control over steel imports and prevent low-quality imports from entering Vietnam. However, it has turned out to be a hindrance to domestic manufacturers.

Le Phan Duc, general director of Viet Duc Steel, said that since the day it took effect, Circular No 44 has not helped to restrict steel imports.

Viet Duc Steel JSC specializes in importing hot-rolled coil (HRC) products, which still cannot be made domestically. The import tariff on Boron-containing products is zero percent.

The circular, which took effect on June 1, aims to create a healthier market for domestic steel manufacturers. It stipulates that domestic steel importers have to clarify steel product standards when signing import contracts.

After just three months of application, the Vietnam Steel Association (VSA) and some other steel manufacturers have complained that the circular does more harm than good.

VSA believes there was no need to apply strict regulations to steel products which still cannot be made domestically, including steel plates, hot-rolled and cold-rolled coil, but it was necessary to set requirements on Boron-containing rod, wire products used in construction.

VSA’s chair Ho Nghia Dung, in a dispatch to the Ministry of Industry and Trade and the Ministry of Science and Technology in May, proposed not adding Boron-containing HRC and CRC (which bear the harmonized system (HS) codes 7225 and 7226) onto the list of items to be covered by Circular No 44.

If not, importers would declare the imports as normal HRC (which is HS code 7208), in order to enjoy the zero percent import tariff, the preferential tariff applied to import products which cannot be made domestically.

Analysts commented that the regulation as written is inadequate, and cannot protect domestic production and help domestic enterprises develop, while it has also placed major difficulties on import companies that make goods that cannot be made in Vietnam.

The director of a steel import company noted that the steel import volume over the last three months did not decrease as expected and domestic enterprises still have not gained a bigger market share, while importers have had to spend more time and money on each consignment of imports.

Under the new regulation, enterprises have to register to have their product quality examined by management agencies. This work alone takes them three to 20 days more on average. To date, only four institutions have been authorized by the Ministry of Industry and Trade to examine quality.

“The more complicated procedures have pushed capital costs up, slowed down deliveries and therefore, weakened enterprises’ competitiveness,” the director said.

When asked about the “additional costs” for every consignment of imports, the director declined to give exact figures, but said he would not complain “if the additional cost is just several hundred thousand dong or several million dong”.

DNSG