Paper shortage leads to import tax cut

Hanoi (VNA) - The Government has sharply reduced the import tax on paper by 7 to 12 percent, depending on the paper type.

Under Decision No71/2008/QD-BTC issued earlier this week by the Ministry
of Finance, the tariff on imported paper for printing newspapers will drop
from 32 percent to as low as 20 percent.

The import tax on printing and writing paper, and uncoated cartons will
see a reduction of 7 percent, falling from 32 percent to 25 percent. The tax
rate on other paper remains unchanged at 5 percent.

The tax cut, which will take effect on September 15, came in the wake
of a proposal from the Vietnam Paper and Pulp Association. According to the
association, despite a year-on-year increased of 15 and 30 percent in the
production of writing pads and printing paper, respectively, there has been
a shortage of paper in the domestic market.

In the first seven months of this year, the country had to spend around
471 million USD importing 585,000 tonnes of various kinds of paper products,
an increase of 24 percent in quantity and 40 percent in value.

However, the demand for printing and writing paper was not fully met, said
the country's biggest paper producer, the Vietnam Paper Corporation.

Since the domestic supply can meet only 60 and 78 percent of local demands
for printing and writing paper, respectively, the association estimated
the country would have to import some 1 million tonnes of paper this year,
roughly 200,000 tonnes higher than last year.

In addition to the import tax cut, the association also expected the
Government to issue incentive policies to encourage domestic investment in
the paper industry. The country currently imports expensive pulp and paper
products while it exports wood at low prices.

It is expected that domestic paper production would rise sharply as of
2010 due to the expansion of several existing paper plants, including Bai
Bang and Tan Mai, and a number of new plants, such as Thanh Hoa and Quang
Ngai, to go into operation soon.-