VietNamNet Bridge - Some foreign investors come to Vietnam not because they want to expand their business, but because they find the country a good place to commit trade fraud.

State management agencies have recently warned against trade fraud committed by foreign-invested enterprises. 

They said the fraud caused Vietnamese businesses to suffer. Importing countries suspected of trade fraud have decided to impose anti-dumping tax on Vietnam’s exports as well.

Take Vietnam’s bicycle exports to the EU. The problem was only settled when the EU later decided to remove the countervailing duty on the products, which then helped Vietnamese enterprises resume their exports to Europe.

However, the Ministry of Industry and Trade’s Competition Administration Department (CAD) warned that Vietnam’s bicycles may once again face antidumping tax by the EU, if the country cannot find a reasonable solution to the problem.

The ‘reasonable solution’, according to analysts, is taking timely action to protect the advantages Vietnam has, and prevent bicycle products made in other countries, especially China, from entering Vietnam and being exported to the EU as products of Vietnamese origin.

Vietnam, as a member of many bilateral and multilateral free trade agreements, now can enjoy preferential tariff when penetrating some important markets. This is why foreign manufacturers try to illegally declare Vietnamese origin on their export products.

A senior official from CAD noted that many foreign investors enter Vietnam not to expand business, but just to avoid tax. Angang and Quyki Yanglei are two of them.

The two companies are believed to make hangers in China and transport them to Vietnam, where the products are simply processed before they are exported to the US.

The problem lies in the fact that the US is now imposing a countervailing duty on Chinese hangers. 

They decided to set up business in Vietnam in order to export the China-made hangers to the US under names of Vietnamese manufacturers, which helps them avoid tax.

Importers have found after an investigation that Angang and Quyky Yanglei are subsidiaries of two Chinese companies that pay an anti-dumping tax of 170 percent when exporting hangers to the US.

The case has been clarified, but analysts warned it has badly affected Vietnam’s hanger production. Vietnamese businesses have been accused of being an accessory to trade fraud.

Analysts warned that trade fraud committed by FIEs will have negative impact on Vietnam’s economy. Therefore, they said, preventing FIEs’ illegal behavior is a way to protect Vietnam’s production.

In 2014 alone, Vietnam faced 13 trade remedy lawsuits.

NCDT