Dec 13, 2012

Vietnam - Sky high road tax kill logistics industry

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VietNamNet Bridge – The Ministry of Transport has raised the existing fees and set new kinds of fees, heaping logistics enterprises with big difficulties.

Tran Huy Hien, Secretary General of the Vietnam Logistics Association, said transportation fees account for 50-60 percent of the total expenses in logistics activities.

The car transport costs are relatively high in comparison with other countries. Meanwhile, the road transport system remains in poor conditions; therefore, businesses and people have been burdened with fees and taxes.

“We have to pay some 15 kinds of fees and taxes. At present, road transport means have to bear very high fees when using the transport items developed by BOT projects (built, operation, transfer). This kind of fee is expected to account for 20 percent of the total goods transport costs.

Meanwhile, the vehicles have been told that they would also have to pay the road use fee as well. Transport firms said they cannot find any difference from the two kinds of fees.

Le Hieu Dang, former Deputy Chair of the HCM City Fatherland Front, has also expressed his worry about the decision to charge the road use fee.

Dang, who is a lawyer, said that the fee increases by 1.5-3.5 times are too sharp, which would put a heavy burden on people.

He stressed that such a sharp increase proves to be unreasonable in the current context, when businesses and workers all have to struggle to survive.

“This is really not a good solution, which may kill enterprises’ production and make people’s lives more miserable,” Dang said.

Mai Hoai Nam, Deputy General Director of OOLC Vietnam, a logistics company, also thinks that it’s not the right time to think of raising road tax. Most enterprises are now in big difficulties because of the low demand. If the road taxes increase, enterprises would have to stop doing business, while transport firms would have no jobs. If so, the national economy would suffer heavily due to the production and business stagnation.

According to the HCM City Cargo Transport Association, the fees collected for BOT projects include the road maintenance fee already. Therefore, if the State collects the road use fee from every vehicle, vehicle owners would have to pay this kind of fee twice.

Bui Van Quan, Chair of the HCM City Cargo Transport Association, said the association on December 3 sent a petition to the government office, the Minister of Transport and Minister of Finance, saying that the road use fee policy is not suitable to the current conditions and that the fee collection, if applied as of January 1, 2013, as planned, would put made the burden on logistics firms heavier.

It seems that the policy makers do not have deep knowledge about vehicles. The legal document says the subjects to the road use fee are tractors; trailers, semi-trailers pulled by cars or tractors. As such, the owner of the complex of tractor and semi-trailer would have to pay fee twice for the two parts. Meanwhile, there are the two parts of a complex which are both needed to carry goods.

Meanwhile, it is unreasonable that even unused vehicles (the vehicles seized by competence agencies for less than 29 days, or the vehicles under the maintenance services) would still have to pay fees.

This comes contrary to the fee and charge ordinance which says that people don’t have to pay fees if they don’t use services.


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