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VN should stay with ITA despite tax losses - experts

Update: June, 08/2013 - 09:13

HA NOI (VNS)— Viet Nam should continue participating in the Information Technology Agreement (ITA) in order to give a boost to its fledgling IT industry, experts said on Monday.

Experts agreed that while Viet Nam would continue to lose taxes from IT product imports, the ITA would help local firms learn production technologies from world leading IT firms.

"The ITA will also help local customers access the world's newest IT products for more reasonable prices, while the quality of life for local labourers will be improved," said Bui Manh Hai, chairman of the Viet Nam Association for Information Processing (VAIP).

ITA, effective since 1997, is a trade liberalisation agreement that was concluded in the framework of the WTO.

In accordance with the ITA, the contracting parties will eliminate customs duties as well as similar duties and charges on information and communications technology products.

Viet Nam's IT industry saw robust growth since it joined the ITA in 2007, according to the Ministry of Information and Communications. Export value reached US$23 billion in 2012, compared to $1.3 billion in 2007, mostly thanks to FDI firms.

However, as the agreement eliminated import taxes for IT products, domestic firms could not compete with imports of world leading IT products from US, Japan and South Korea. Many of them collapsed or shifted from production to services.

In addition, as a member of the ITA, the country lost some $3 billion in 2007 and $200 billion in 2012 from the lack of tax revenue.

"Viet Nam should consider the disadvantages of quitting the ITA. The country should learn from countries that have similar economic situations such as Thailand and Indonesia," said Naoki Sigiura, Business Planning and Brand Development Director of Panasonic Viet Nam.

Viet Nam has cut import taxes on 300 IT products. According to the ITA's requirements, from 2014, only 100 products can be taxed. — VNS

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