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Call to protect ailing steel industry

Update: September, 11/2014 - 08:45
An Sung Gu, chief representative of Posco-South Asia Ha Noi.— VNS Photo

The steel industry is the key to the development of heavy industry, including car making and shipbuilding. However, the sector is facing many difficulties. Not only does supply exceed demand, there is also a lack of high quality product.

On top of this, as Viet Nam integrates more deeply into the regional and global economies, the local steel industry is expected to face stiffer competition from outside. Viet Nam News reporter Mai Huong interviewed An Sung Gu, chief representative of one of Viet Nam's largest steel producers, Posco-South Asia Ha Noi, about the issue.

The fact that the steel industry is facing troubles is not a new story. What are the solutions to boosting local consumption in this difficult period?

As everyone knows, Viet Nam's steel industry is struggling with excessive production while many steel products, such as cold-rolled stainless steel, are still being imported.

On top of this, industries and sectors that can consume a lot of steel, such as construction, car manufacturing and shipbuilding, are on the decline.

It's very difficult to push up demand at present. The Vietnamese Government needs to build a long-term strategic plan. First, it should take measures to protect the domestic market and limit imports of cheap and low quality products.

Second, the Government should make an overall strategic plan to develop mechanical engineering, car making and the electronics industries which use various steel products.

Third, the Government also needs to devise methods to overcome protectionist measures in foreign markets to enhance exports.

Exports could help reduce Viet Nam's mounting steel stockpiles. What are the key factors to increasing sales overseas?

Many people think Viet Nam should export steel to reduce its stockpiles, but in fact, it is very difficult to do this. Many countries in the world have a tendency to protect their markets by using protectionist measures, such as through anti-dumping regulations and non-tariff barriers, including customs procedures and technical standards.

Some Vietnamese products face anti-dumping charges in the United States and Canada. Thailand has also warned it may take steps to limit Vietnamese products. Thus, in the short term, it seems almost impossible to boost steel exports.

I think Viet Nam can also study ways to protect the domestic market. Last week, the Ministry of Industry and Trade decided to impose anti-dumping taxes for the first time on imported stainless-steel products from mainland China, Taiwan, Indonesia and Malaysia. The ministry also issued Circular 44 to better manage the quality of domestically produced and imported steel.

Viet Nam will integrate into the ASEAN Economic Community (AEC) by the end of next year. How will this affect the Vietnamese steel industry? Are domestic companies prepared to be more competitive in an expanding market?

It's certain that the domestic industry will be affected when Viet Nam participates in the AEC. Locally produced products will have to compete with products from Malaysia, Thailand or Indonesia.

The first thing Vietnamese businesses must do is to enhance their competitiveness in terms of quality and price. In addition, the Vietnamese Government still needs to carefully revise measures to protect the domestic market. Other countries participating in free-trade agreements also take measures to protect themselves.

Viet Nam is adapted to making steel for construction, but we still cannot produce high-quality products, such as flat steel used in car making and shipbuilding. Protection of the domestic market would also help Viet Nam develop heavy industry thanks to reliable supplies of such high-quality products and price stability.

As a big FDI company which holds a big market share, how do you assess the current Vietnamese investment environment?

The Vietnamese Government is active in attracting foreign investment. Its policies are very good and the granting of investment licences is also fast and convenient.

However, current market conditions are not favourable because domestic heavy industry is still underdeveloped. Unlike the electronics sector, which is labour-intensive, the steel industry is highly automated and requires huge investment. Therefore, if there is no market, foreign investors will not be keen to invest.

What are the prospects for the industry until the end of this year?

Domestic producers are trying to increase their competitiveness. Foreign companies from South Korea and Japan are also strengthening their investments in Viet Nam. Besides, the Vietnamese Government is improving the management of imported steel, which can help reduce the quality of imports and increase local consumption. We hope the industry will gradually recover early next year. — VNS

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