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Firms must adapt to the market

Update: September, 27/2012 - 09:09

Nguyen Dinh Cung, deputy director of the Central Institute for Economic Management, spoke with Tuoi Tre (Youth) about the request by the national coal group to reduce taxes on exported coal.

The Viet Nam National Coal–Mineral Industries Holding Group (Vinacomin) has recently claimed that the group will suffer if the export tax is not reduced from 20 per cent to 10 per cent. Besides, around 20,000 workers might lose their jobs. What do you think?

Solving the group's losses should not be the responsibility of the Prime Minister nor any other government official. The group's management board and its CEO need to recognize that taxes and fees are necessary parts of the business environment that they have to adapt to.

It is normal for a group to complain. They know what the Government and local authorities are concerned about so they can take advantage of those issues to put pressure on them.

Ensuring a stable job for labourers is the enterprise's responsibility as the enterprise is the one who signs contracts with labourers. The group must take responsibility for its own workers once the contract is terminated.

The State, as the owner of the group, just has to assign the group's heads to achieve business goals. When the heads fail to meet those goals, they should be replaced.

Vinacomin is now exploiting coal without having to pay for materials. Coal is being sold at VND1.9 million (US$90.5) per tonne. So the tax of 20 per cent is not high, is it?

We should not discuss whether the tax is high or low because the tax is fixed by the State. All companies bear the same tax so they must calculate well to survive.

In addition, the tax is believed to be reasonable because the State's policy is to limit the export of raw materials. Natural resources exploiters need to figure out how to survive even with higher taxes.

Vinacomin has claimed to the Prime Minister that the coal's export price had been reduced to 25-40 per cent. However, they continue asking for a lower tax. Are they trying to sell natural resources for a cheap price?

Reducing prices is necessary in order for State-owned enterprises (SOEs) to restructure their business. SOEs must adapt to severe conditions when operating in a market economy. It is unacceptable when they only ask for support from the State instead of finding a way to survive.

Every company wants to make a profit. The State should be consistent in sticking to its goals, especially since Viet Nam is forecast to have to import coal in 2015. In the coming years, we might have to import coal with much higher prices.

Do you think that we should allow other investors to join in coal exploitation?

There were shortcomings when petrol, oil and electricity were run on a monopoly mechanism and some thought that people's rights were neglected.

Auctioning coal is imperative. The State will get maximum benefits when approving such auctions, and this method will also lead to transparency in price and management. This is the best way to create equality among companies and economic sectors under the State's policies.

Moreover, the State not only mobilises the capacity of Vinacomin but also other companies. We should choose whatever strategy brings the biggest benefits to the country. We should not fall into the default position that only Vinacomin can do the job. The Ministry of Industry and Trade's Energy Department has to find ways to mobilise many companies rather than depending on one company alone.

Market mechanisms should be given to many companies rather than only one to create competitive pressure. The coal-mining sector cannot reach full capacity if run on monopoly mechanism.

Vinacomin said that they do not have enough capital to invest, so why have we not allowed private and international companies to take part in coal mining? Coal is not a goods which only a State-owned company can exploit. — VNS

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