Vietnam spends $5 million daily on chemical imports
If Vietnam continues importing chemicals from China, it will have to rely on Chinese imports and accept low-quality products, experts have warned.
A GDC report showed that in 2016 alone, Vietnam imported $1.8 billion worth of chemicals, including $1.02 billion worth of products to make other compounds. This means that Vietnam spent VND112 billion daily to import chemicals.
The imports were mostly from China, while imports from countries with developed chemical industries such as India, the US, Canada, Israel, Japan and South Korea were modest.
According to Ngo Tri Long, there are three reasons for Vietnam to import chemicals from China. First, Vietnam has high demand for chemicals, but it still cannot produce chemicals domestically. Second, Vietnamese enterprises prefer importing chemicals from China to other countries because Chinese products are cheaper. Third, Vietnam, like other countries neighboring China, want to import chemicals across the border gates instead of through official channels in order to avoid tax.
Le Cao Doan from the Central Economics Institute has also expressed concern about imports from China, especially in the context of Vietnam’s high trade deficit and the risks of relying on Chinese imports.
The high imports from China are problems to many countries including Vietnam, which imports low-quality and dirty products.
“If Vietnam continues importing chemicals from China, it will become the place containing low-quality products and relying on Chinese imports,” he said.
Doan said that Vietnam is facing two big problems.
If continuing to rely on China, the Vietnam economy would lag behind, because the economy would be based on industrial production, similar to what China once experienced in the past. In addition, Vietnam would see the damage to the environment and the platform for development.
What does Vinachem do?
Vinachem, or the Vietnam Chemicals Group, is known as the largest domestic chemicals producer which regulates big fertilizer and chemical factories in Vietnam.
However, the big factories put under Vinachem’s management are incurring huge losses of trillions of dong.
Meanwhile, Vu Dinh Duy, a member of Vinachem’s board of directors, has left Vietnam for medical services and has been unreachable for many months.
In the latest news, Vinachem has set up a steering committee to solve existing problems at fertilizer plants which are incurring big losses.
Besides the chemicals companies in which the state holds the controlling stakes, Vietnam also has many privately run companies in the field.
However, an analyst said domestic chemical output remains modest and Vietnam still has to rely on imports.
Kim Chi, VNN