Millions lost through free-trade fraud

The General Department of Customs (GDC) said recently that it had discovered several consignments of goods made in non-Asean countries labelled as being of Asean-origin to avoid tariffs.
Fraud to the tune of millions of dollars has undermined local business and production, raising the alarm for the survival and development of legitimate firms, according to GDC.
Vietnam has cut taxes from 40-60 per cent to 0-5 per cent on 21 categories of electronics and refrigeration products sourced from ASEAN nations under AFTA.
“The low tax rates have prompted smugglers to change the origin of products they import into Vietnam in order to avoid taxes,” said a GDC report recently.
A Ministry of Trade’s mission on an inspection tour to the Cau Treo border gate in Ha Tinh Province recently discovered 23 consignments of imported goods with fake or erroneous Form D certificates of origin (COs). The goods were labelled as being from Thailand with minimum local content of 40 per cent, which would win them preferential tariffs under AFTA. They included TV sets, refrigerators, electric cookers and microwave ovens, and all came from the only exporter in Thailand, Chokchaimukdahan Import-Export.
But the products all had Sony, Panasonic, Hitachi or Sharp labels, and according to Sony Vietnam, Sony products made in Thailand do not meet local content required for a CO Form D. The television sets alone were worth $730,000, of which Sony models accounted for $557,000.
If the owner of the consignment presented a CO Form D, it must have been either fake or was issued in error. One GDC official, who declined to be identified, said that using CO Form D to evade taxes is a new tactic in the post AFTA period, as Vietnam imposes low taxes on Asean imports.
The Ministry of Trade is cooperating with Thai agencies to fight trade fraud to ensure the deal legitimate. GDC has just released a decision to collect tax in arrears on imported goods with duties of 50 per cent of the imported price, applicable to electronic products made in non-Asean countries.
Experts warn that electronic products, especially Chinese handsets, are common at the Cambodia–Vietnam border gate, waiting for smuggling into Vietnam and Vietnamese customs officers acknowledge that it is very difficult to control the flow.
of smuggled goods.


No. 759/May 1-7, 2006