HCM CITY — The EU has lifted the anti-dumping tax that broke the back of Vietnamese bicycle manufacturers after it was imposed five years ago, but this is unlikely to revive the fortunes of the once-successful industry.
In its heyday between 2000 and 2005, the Vietnamese bike manufacturing industry held 11.7 per cent of the European market, exporting up to 1.1 million bikes a year.
But in July 2005, the EU slapped a 34.5 per cent anti-dumping tax and things have been going downhill since. Last year, Vietnamese exports were down to a mere 21,000.
"To develop again, Viet Nam should get the 3.5 per cent import tax under the EU's Generalised System of Preferences (GSP)," Chau Vinh Chi, export director of Asama Yu Jiun International Viet Nam, said.
Even though the anti-dumping tax was lifted last month Vietnamese bicycle exporters still pay 10 per cent import tax plus other taxes.
In the past, Asama used to export 400,000 bicycles each year, employed 1,500 workers, and outsourced to 20 contract manufacturers. "Customers are discussing new contracts with us. If we get the GSP, we can return to past levels within three months," Chi said.
But there is a catch: only countries on which the EU has never imposed anti-dumping tariffs qualify for the GSP.
While enterprises worry about the GSP, the Ministry of Industry and Trade is anxious about a return of anti-dumping taxes because of the rampant fraud committed in the country by foreign manufacturers trying to take advantage of the lower taxes on Vietnamese bicycles.
"If we do not have strong and efficient measures to stop illegal bicycles from nations affected by anti-dumping tax entering the country, the EU might resurrect the tax within six months," Vu Ba Phu, head of the ministry's Competition Management Department, warned.
"Companies should not make bicycles for foreign partners to avoid tax fraud."
He urged relevant authorities to work closely with the Viet Nam Chamber of Commerce and Industry, which grants certificates of origin (C/O) to manufacturers, and organise workshops regularly to keep the companies informed.
The Department has written to all investment and planning departments to carefully check new cycle manufacturers to see if they meet C/O requirements, especially for manufacturing bodies.
The department said there could be three common ways in which fraud is committed.
The first could be by manufacturers from countries suffering anti-dumping tariffs who simply fake the origin as being Vietnamese.
Others could bring their products into Viet Nam and affix a "made in Viet Nam" label.
The third method could involve setting up a basic plant in Viet Nam, importing most parts from outside, and assembling in the country to get the C/O.
Phu said if the illegal projects were detected and eliminated, Viet Nam could avoid anti-dumping tariffs.
"It is the best way to protect our businesses' rights as well as Viet Nam's image," he said. — VNS