VietNamNet Bridge – The amount of plastic bags used every year in Vietnam has been increasing rapidly, even though they have been heavily taxed since 2012.

Ngo Nguyen Ngoc Anh, deputy director of the HCM City Environmental Protection Fund, said 9 million non-biodegradable plastic bags, or 50-70 tons, are used every day at traditional markets and supermarkets in the city.

According to Anh, the amount of normal plastic bags used in Vietnam has been increasing steadily, though the Environmental Protection Law, which took effect on January 1, 2012, imposes high taxes on plastic bags.

Under the law, every kilo of plastic bags bears a tax of VND40,000. If a kilo of plastic bags is sold at VND30,000, and the value added tax and environmental protection tax are added, then plastic bags would be priced at over VND70,000 per kilo.

However, merchants at traditional markets still can buy plastic bags at around VND30,000 per kilo, because plastic bag manufacturers can evade the environmental protection tax.

Therefore, they would rather use this kind of plastic bag, which is cheaper, than biodegradable bags. The State encourages the use of the latter, which are more expensive.

Ironically, while non-biodegradable plastic-bag manufacturers can evade tax, and can sell products at low prices, environmentally-friendly bag manufacturers still have to pay tax.

Le Sanh My of Vafaco, a company which makes biodegradable bags, said that after the environmental protection law took effect in early 2012, his company still had to pay tax for one year before it could enjoy a tax exemption.

An official of the HCM City Taxation Agency explained that the law does not point out when enterprises can begin enjoying the tax exemption after they get product certificates.

Nguyen Thi Thanh My, deputy director of the HCM City Department of Natural Resources and the Environment, said there are 11 environmentally-friendly bag manufacturers in HCM City. However, while the products can be easily sold abroad, they are not welcomed in Vietnam.

My noted that very few consumers have heard about this kind of bag and they cannot tell the difference between normal plastic bags and biodegradable bags due to poor information dissemination.

Le Loc, director of Phuc Le Gia Company, one of the biodegradable bag manufacturers in HCM City, admitted that sales in the domestic market remain modest.

“Our products can be sold to supermarkets only, while they are not popularly used at traditional markets, though the products are only five percent more expensive than non-biodegradable bags. Our factory still cannot run at full capacity,” Loc said.

Alpha Tan Binh, which spent millions of dollars on a modern biodegradable bag factory, has been exporting most of its products, rather than selling domestically.

While Alpha Tan Binh’s bags are sold in the US, Japan and France, they have not been accepted in Vietnam because the prices are 5-10 percent higher than the more commonly used plastic bags.

Plastic bag consumption up despite high tax

The local consumption of plastic bags that take many years to break down has increased year by year though a high tax has been levied on their use since 2012, heard a seminar in HCMC last week.

Ngo Nguyen Ngoc Thanh, deputy director of the HCMC Environment Protection Fund, told the seminar on the challenges to cut the use of plastic bags and solutions that around nine million plastic bags (or 50-70 tons of bags) are consumed at supermarkets and wet markets in the city a day.

Notably, the consumption of such bags has grown steadily since 2012 when the law on environmental protection took effect, Thanh said.

She did not clarify how much the volume has increased but said the law imposes a VND40,000 tax on each kilogram of plastic bags.

Those bags are priced at VND30,000 per kilo and enterprises should sell these bags at more than VND70,000 per kilo if the tax is included. However, the prevalent market price is VND30,000 per kilo as many producers evade the tax, Thanh said.

It is unfair, according to representatives of the plastic bag enterprises participating at the seminar, which was organized by the HCMC Department of Natural Resources and Environment. They attributed the problem to tax agencies which have not fulfilled their duties of collecting the environmental protection tax.

Loose enforcement of the law has discouraged traders and consumers from using environment-friendly bags.

Le Sanh My, a representative of Vafaco Packaging Joint Stock Company in HCMC’s District 8, said his firm makes the biobags free of environmental protection tax as regulated but the company still had to pay the tax of VND40,000 for every kilogram it turned out almost all of 2012 before enjoying the tax exemption.

In response, the city tax department said the law did not regulate a specific time to apply the tax exemption to the producers of biobags after their items are recognized as eco-friendly.

Nguyen Thi Thanh My, deputy director of the environment department, said there are 11 producers of environmentally-friendly bags in the city. But, just a few consumers are aware of those biobags on the market or can distinguish them from normal bags as they have not been well informed.

My noted the Government has approved a plan of enhancing control on environment pollution caused by the use of plastic bags until 2020 with an aim to reduce their consumption by 40% at supermarkets and commercial centers and by 20% at traditional wet markets by 2015 compared to the volume consumed in 2010 - SGT