The hope and the despair
Under the tax cut roadmap in accordance with the ASEAN-China Free Trade Agreement FTA, since the beginning of 2012, a lot of import items from China have been enjoying the tax reductions of 5-10 percent. However, the sale prices of imports have been kept unchanged over the last two months, while the prices of some goods items have even increased.
The Ministry of Finance’s Circular No. 162/2011 stipulates that wooden furniture products, tableware, kitchen utensils, cosmetics, electrical appliances and fans imported from China, all bear lower tax rates.
At Metro Thang long, a 1-litre food container imported from China are still priced at 13,200 dong, a set of 4 BBQ tools costs 44,490 dong, while a set of knives at 110,000 dong. Electric fans, an item of the list of products enjoying tax cuts, are still selling at 230,000-500,000 dong, while electric cookers at 430,000 dong.
Chinese kitchenware has been flooding the domestic market. The owners of wooden furniture and kitchenware shops have confirmed that the prices have been kept unchanged or have increased slightly.
Right after the Tet holiday, suppliers informed the price increases for many household products, reasoning the input price increases by 5-7 percent.
Some electric fan suppliers have informed that the products priced at 500,000-800,000 dong have increased by 50,000 dong per product after the tax cut, while more expensive products have seen the prices increase by 100,000 dong.
Hanoians said that they heard about the tax cuts two months ago. Therefore, they decided to delay the purchase plan until early 2012 to be able to enjoy the price reductions.
It is estimated that with the tax reduction of five percent (from 20 percent to 15 percent, or from 15 percent to 10 percent), buyers can save hundreds of thousands dong per product. If someone plans to buy many products, he would be saving one or two million dong.
However, the expected price reductions have not been seen yet.
Sale prices up because input costs up
When asked about the retail pricing policy for 2012, distributors all said they cannot ease the sale prices despite the tax cuts, because the input costs have all increased rapidly--from sale expenses, to business costs and input material prices.
Phan Thi Huong, Business Director of Tien Phong Vietnam Company, which specializes in distributing household goods, said that the tax is hardly enough to offset the transport fee and electricity price increases. The sharp increases of a lot of business costs have influenced the sale policies.
“We just try not to raise the sale prices,” Huong said.
Meanwhile, Hung, the owner of a household electric appliance shop on Xuan Thuy Road of Cau Giay district in Hanoi, said that he has not thought of slashing sale prices, because he is still selling the products imported before Tet.
Chu Minh Hoang from DA Company, a supplier to supermarkets and home appliance centers in HCM City and Hanoi, has affirmed that no sale price reductions would occur because of the input cost increases.
In late December 2011, manufacturers warned about the price increases of 5-7 dollars per product for the fans valued at 50-55 dollars. With the taxable price increases, the VAT and import tax both would increase. DA has informed supermarkets and home appliance retail centers that the prices would rise by 50,000-90,000 dong per product.
Bao Han
Business & Investment Opportunities
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