MARKET DEVELOPMENT
VN Firms Urge Trade Remedies For Cooking Oil
VN Firms Urge Trade Remedies For Cooking Oil
09/04/2013 (Tuoitrenews) - Vietnamese cooking oil makers are calling on the government to impose remedial actions against imported cooking oil products, which are causing material injury to the domestic industry thanks to their cheap prices and zero import duties.
Imported cooking oil brands originating from Malaysia, Indonesia, and Singapore have increasingly made their way onto the shelves of major supermarkets around Ho Chi Minh City.
Sailing Boat, Knife, Cooking Kudu, Omely, and Capri are now popular names to local consumers. These products are imported and distributed by several companies, including Lam Son VN Co. Ltd., Loc Thai JSC, Global Connection JSC, and InterFood JSC.
Local importers have rushed to make such products available on home soil because they bear much cheaper costs than their locally manufactured counterparts while having similar retail prices.
Soybean oil imported via border gates to HCMC in 2012 had an average price of VND13,000 a liter, while palm oil was VND12,700 a liter, according to the city’s customs department.
Most of the imported cooking oil products are from ASEAN countries, as exporters in the region are subject to 0 percent taxes, the department said.
These products are then marketed at retail prices ranging from VND38,000 to VND45,000 a liter, equal to local products such as Tuong An, Neptune, or Meizan.
The zero import tax is the main cause of the recent wave of imported cooking oil in Vietnam, according to industry insiders.
While there were only 69 tons of soybean oil imported to the city via Cat Lai port in 2011, the figure rose to 1,520 tons, or 22 times as much, just a year later. Meanwhile, 1,105 tons of palm oil coded HS 15119092, and 5,815 tons of the HS 15119099 product were imported in 2012 respectively, while import volume was zero in 2011.
Domestic Industry Hurt
Although the cheap, zero-tax products have quickly taken most of the market share, local consumers do not benefit much from them, as retail prices are similar to domestic products. Meanwhile, the local cooking oil production sector has been severely hurt, insiders said.
Vietnamese cooking oil manufacturers have thus lodged an anti-dumping lawsuit with the Competition Management Agency under the Ministry of Industry and Trade, calling to levy import tariffs on the products.
Eight local cooking oil companies, including Vocarimex, Tuong An, Cai Lan, and Golden Hope Nha Be, have signed a letter of accusation, according to Vocarimex, which represents the plaintiffs.
Imported products from Malaysia, Indonesia, and Singapore rose 132 percent in import volume in 2012 compared to 2011, while fetching prices 1.84 – 2.24 percent lower than those of local cooking oil makers, the plaintiffs stated in the letter.
Prior to the lawsuit, Vocarimex held 17 percent of the local cooking oil market share in 2011, the company said. Other local makers held 40 percent, and imported products accounted for 43 percent.
However, in 2012 imported products dominated the market with 86 percent, while shares of Vocarimex and other local companies dropped to 4 percent and 10 percent, respectively.
With importers increasing import volumes and cutting retail prices, Vocarimex also had to reduce prices to maintain competitiveness even though its production costs were rising, the company said.
“If things remain unchanged, Vocarimex and other local cooking oil makers may have to cut production and even declare bankruptcy,” the company pressed.
While waiting for the review results from the Ministry of Industry and Trade, the plaintiffs demanded that the ministry impose a 2 percent import duty on imported soybean and palm oil products between 2013 and 2018.
Imported cooking oil brands originating from Malaysia, Indonesia, and Singapore have increasingly made their way onto the shelves of major supermarkets around Ho Chi Minh City.
Sailing Boat, Knife, Cooking Kudu, Omely, and Capri are now popular names to local consumers. These products are imported and distributed by several companies, including Lam Son VN Co. Ltd., Loc Thai JSC, Global Connection JSC, and InterFood JSC.
Local importers have rushed to make such products available on home soil because they bear much cheaper costs than their locally manufactured counterparts while having similar retail prices.
Soybean oil imported via border gates to HCMC in 2012 had an average price of VND13,000 a liter, while palm oil was VND12,700 a liter, according to the city’s customs department.
Most of the imported cooking oil products are from ASEAN countries, as exporters in the region are subject to 0 percent taxes, the department said.
These products are then marketed at retail prices ranging from VND38,000 to VND45,000 a liter, equal to local products such as Tuong An, Neptune, or Meizan.
The zero import tax is the main cause of the recent wave of imported cooking oil in Vietnam, according to industry insiders.
While there were only 69 tons of soybean oil imported to the city via Cat Lai port in 2011, the figure rose to 1,520 tons, or 22 times as much, just a year later. Meanwhile, 1,105 tons of palm oil coded HS 15119092, and 5,815 tons of the HS 15119099 product were imported in 2012 respectively, while import volume was zero in 2011.
Domestic Industry Hurt
Although the cheap, zero-tax products have quickly taken most of the market share, local consumers do not benefit much from them, as retail prices are similar to domestic products. Meanwhile, the local cooking oil production sector has been severely hurt, insiders said.
Vietnamese cooking oil manufacturers have thus lodged an anti-dumping lawsuit with the Competition Management Agency under the Ministry of Industry and Trade, calling to levy import tariffs on the products.
Eight local cooking oil companies, including Vocarimex, Tuong An, Cai Lan, and Golden Hope Nha Be, have signed a letter of accusation, according to Vocarimex, which represents the plaintiffs.
Imported products from Malaysia, Indonesia, and Singapore rose 132 percent in import volume in 2012 compared to 2011, while fetching prices 1.84 – 2.24 percent lower than those of local cooking oil makers, the plaintiffs stated in the letter.
Prior to the lawsuit, Vocarimex held 17 percent of the local cooking oil market share in 2011, the company said. Other local makers held 40 percent, and imported products accounted for 43 percent.
However, in 2012 imported products dominated the market with 86 percent, while shares of Vocarimex and other local companies dropped to 4 percent and 10 percent, respectively.
With importers increasing import volumes and cutting retail prices, Vocarimex also had to reduce prices to maintain competitiveness even though its production costs were rising, the company said.
“If things remain unchanged, Vocarimex and other local cooking oil makers may have to cut production and even declare bankruptcy,” the company pressed.
While waiting for the review results from the Ministry of Industry and Trade, the plaintiffs demanded that the ministry impose a 2 percent import duty on imported soybean and palm oil products between 2013 and 2018.