return icon

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.



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.


Vietnamese banks that 'disappear' from the market

Some banks used to be very popular, with hundreds of thousands of customers, but they gradually disappeared from the market because of many reasons.

Discovering Hanoi’s famous incense making village

The craft village with a tradition of more than 100 years impresses visitors for its space that is filled with vibrant colors such as blue, red, yellow, etc. of beautifully shaped bouquets of incense.

Vietnam to reassert its position on the world coffee map

Vietnam is the world's second largest coffee exporter, but its impact on the world coffee market is not commensurate with its position, experts say.


Coffee exports to Netherlands enjoy three-digit growth

Youngest female Vietnamese Associate Professor receives Kovalevskaia Awards 2022

Prof. Dr. Le Minh Thang on March 7, 2023 was presented the 2022 Kovalevskaia Awards 2022 by Prime Minister Pham Minh Chinh.

Third pedestrian street opens in Hue City

The Hai Ba Trung Pedestrian Street was opened on Sunday evening in Hue City, becoming the third walking street in the central province of Thua Thien-Hue.

Entertainment and cultural events of the week (March 27-April 2)

Entertainment and cultural events in Vietnam's major cities on March 27-April 2.


Vietnam wins 17 prizes at International Robothon 2023

K'Duong breaks three youth weightlifting world records

Vietnamese weightlifter K'Duong broke three youth 55kg world records during the 2023 International Weightlifting Federation (IWF) World Youth Championships on March 26 which is taking place in Albania.

Struggling hoteliers seek Government support to revive from COVID-19 crisis

Small- and medium-sized hotels in HCM City are struggling with low occupancy rates and labour shortages, and are in need of support to recover from a COVID-19-induced slump, according to the municipal Department of Tourism.

Lion Championship MMA returns, first fight in Hanoi on April 1

The second season of the Lion Championship mixed martial arts will be back with great fighters and frightening fights in April.

Driftwood space launches in Hoi An

The first ever wood recycle space – driftwood village’s studio – has been launched in the ancient’s Cam Ha Commune on the most favourite bicycle riding road connecting the Old Quarter and An Bang beach.

Hoi An to host International Choir Competition

The event has received registrations from 20 teams representing nine countries and territories, and will feature 13 events with eight grades held at the city’s theatre.

Big race for investment in e-commerce logistics

An increase in online sales has put pressure on the logistics system, thereby triggering the race to invest in Vietnam's e-commerce logistics, according to insiders.

Banks underwriting bonds should buy back bonds: VN central bank

Commercial banks that underwrite and sell corporate bonds have to buy them back if investors so demand, the central bank has said.