VietNamNet Bridge – Is there the existence of the interest groups’ power in building up the important policies for the national economy?

The stories about the coal export tariff cut in early September and about the tax payment delay of some big conglomerates--have raised the worry that Vietnam has been building the policies on the basis of the interests of some powerful influences.

The Circular No. 124 of the Ministry of Finance stipulated that since September 1, 2013, coal exports of some kinds bear the export tariff of 10 percent instead of 13 percent, the tax rate applied in July and August.

Why was a legal decision valid for two months only?

Explaining this, the Vietnam Coal and Mineral Industries Group (Vinacomin) said after two months of applying the 13 percent export tariff, the exports decreased by 2 million tons. And if the 13 percent tax rate is maintained, the decrease would reach 20 million tons in 2013, which means that Vietnam would export 37 million tons this year.

Meanwhile, the Ministry of Finance said the export tariff cut aims to share the difficulties with the coal producer and help Vinacomin overcome difficulties.

However, the explanations are unconvincing in the eyes of economists.

It is true that Vinacomin is meeting great challenges. Local newspapers in July and August 2013 repeatedly reported the news about the difficulties the economic group is facing.

Vinacomin also gave a warning that if the export tariff is not cut, the inventories may reach to 10 million tons by the end of the year, and if the coal selling price is not raised, it would incur the loss of VND6 trillion from selling coal to power plants.

However, it is obvious that other enterprises would not dare to be so vocal about the loss and difficulties, even though their problems are even more serious than Vinacomin’s.

It is simply because the other enterprises are private businesses, while Vinacomin is a state owned economic group which is the only supplier of coal in Vietnam.

The Ministry of Finance explained that the tariff cut aims to help Vinacomin ease the difficulties. If so, why did it release the decision to raise tax from 10 percent to 13 percent just two months ago? Did it aim to increase the sources of income for the state budget, or aims to restrict the export of natural resources?

If the Ministry of Finance actually wants to “share enterprises’ difficulties,” it should do the same thing with other enterprises in difficulties as well.

People now keep curious about how the Ministry of Finance would treat the proposal by the Vietnam Rubber Association on not raising the export tariff on natural rubber products, which now enjoy the zero percent tax rate. The association said that the sales have been going very slowly due to the price reductions in the world market.

Analysts have pointed out that the changeable policies have made the investment environment distorted in the eyes of investors. They want to see the same rules to be applied to all businesses, which means a leveling playing field for all players.

The question about the interest groups was raised to Minister of Justice Ha Hung Cuong at the National Assembly’s Standing Committee in late August.

However, Cuong denied this, affirming that there must be the interest groups’ influences in promulgating legal documents.

DNSGCT