The Vietnam Fertilizer Association proposed to reduce the export tax on urea fertilizer to zero in order to improve export competitiveness.
In the first six months of this year, the volume and price of Vietnam's fertilizer export market have declined.
Phung Ha, general secretary and vice chairman of the Vietnam Fertilizer Association, said the price of fertilizer in Vietnam fell sharply in the first six months of this year, especially urea, due to falling prices of input materials such as natural gas and coal for production.
In addition, China relaxed the export of 29 types of fertilizer, a move that greatly increased the supply of fertilizer on the world market and put downward pressure on prices to boost consumption.
As a result, the price of various fertilizers has fallen by 60% to 65% from the beginning of last year and has tended to stabilize at current low levels.
In addition, as it is not the peak season, the demand for fertilizer has also fallen, which has also pushed prices down.
Ngo Van Dong, general manager of Binh Dien Fertilizer in Vietnam, said many Thai and Chinese companies are coming to Cambodia to invest and buy agricultural production materials, and fertilizer is a traditional export market for Vietnam, which is a challenge for local manufacturers.
To address these challenges, in addition to the traditional markets of Japan, South Korea, Malaysia, Cambodia and Laos, many domestic fertilizer manufacturers are also looking to expand their exports to other markets such as Taiwan, Brazil, India, Southeast Asian countries and Europe.
While companies are working to expand the market, the Vietnam Fertilizer Association recently sent an official notice to the government office on solutions to support fertilizer companies in promoting exports through preferential tax policies.
Specifically, the association proposed a 0% export tax rate for superphosphate instead of the 5% set out in Decree No. 26/2023/ND-CP of May 31 this year.
According to the association, the total production capacity of superphosphate fertilizer in Vietnam's factories is about 1.5 million tons per year, while less than 500,000 tons of fertilizer are consumed annually in the country. Statistics from Vietnam's General Administration of Customs show that the country's exports of superphosphate are small, less than 100,000 tons per year in 2022. With excess capacity compared to domestic demand for superphosphate, exports should be encouraged to increase the value of national products, create jobs, earn foreign exchange for the country, and increase local tax revenues.
In addition, fierce competition from Chinese products and low prices have made Vietnamese superphosphate products less attractive for export compared to other countries such as China, Morocco and India, especially as the export tax rate is maintained at 5%.
As for urea, Vietnam has a production capacity of 2.5 million tons and a demand of less than 1.8 million tons, so companies must export to ensure efficiency.
If export taxes are imposed, they will lose business opportunities and risk a decline in production and efficiency.
Brunei entered the fertilizer market with 1.8 million tons of urea supply per year, mainly targeting Southeast Asian markets including Vietnam, which further increased the competitive pressure.
Therefore, the Vietnam Fertilizer Association proposed a zero export tax on urea fertilizer.
