High export taxes are a hard sell for titanium firms

A representative of the Ministry of Industry and Trade (MoIT) made the statement at last week’s first Vietnam-Kansai economic dialogue after Daiichi Kigenso Kagaku Kogyo Corporation, amongst other Japanese firms, raised concerns over the issue.

“If Daiichi Kigenso Kagaku Kogyo’s production creates high added value, the firm should propose an export tax reduction to us. As regulated, if no proposal of this kind is made, we will possibly impose the highest export tax on titanium,” she said.

Currently, the export tax on titanium is varied, depending on the kind of titanium being produced. The highest export tax on the metal is 40 per cent.

According to Daiichi Kigenso Kagaku Kogyo Corporation, its zirconium (a kind of titanium) deep processing plant, located in the southern province of Ba Ria-Vung Tau, has been suffering from high export taxes, resulting in high prices.

“We do not oppose the Vietnamese government’s policy on imposing a high export tax on titanium to prevent the export of natural resources at low prices. However, the policy causes difficulties for businesses operating in the industry,” said Tsuyoshi Inoue, president of Daiichi Kigenso Kagaku Kogyo.

Dao Cong Vu, general secretary of the Vietnam Titanium Association (VTA), told VIR that, “There are some kinds of titanium on which export tax can be reduced a little. They include deeply-processed titanium products.”

Daiichi is not the first firm to make this kind of proposal. Many domestic firms have sought a cut in the titanium export tax but have failed.

Recently, VTA submitted this proposal to the prime minister, the MoIT, and the Ministry of Finance in a move to help businesses which have scaled down their production activities due to the policy. However, the proposal was turned down again.

According to VTA, Vietnam is estimated to have total reserves of around 650 million tonnes of titanium, accounting for five per cent of the world’s reserves, just behind Canada, the US, Norway, India, and Australia.

Besides Daiichi Kigenso Kagaku Kogyo, which has four deep processing plants in Japan, many foreign investors, including those from Japan, China and Russia are very interested in Vietnam’s titanium industry.