Business | Markets
Vietnam to tax rice and fertiliser exports
Vietnam, the world's second-biggest rice exporter, will introduce its first tax on shipments of the grain and on fertiliser to ensure sufficient domestic supplies.
- Bloomberg
- Published: 00:03 July 23, 2008
Hanoi: Vietnam, the world's second-biggest rice exporter, will introduce its first tax on shipments of the grain and on fertiliser to ensure sufficient domestic supplies.
The tax will be as much as 2.9 million dong ($173) for rice that costs $1,300 a metric tonne, according to Prime Minister Nguyen Tan Dung. The release did not say when the charge would take effect.
Rice-producing nations have curbed shipments this year amid concern there may be a shortage, triggering increased competition for supplies.
Vietnam is battling the fastest inflation in more than 16 years, spurred by surging food and energy costs.
The tax on rice shipments "would tighten the supplies available from the world market", David Cohen, director of Asian economic forecasting at Action Economics, said.
"Soaring prices of rice from Vietnam had been a key contributor to inflation accelerating in the region."
Rough-rice futures in Chicago have dropped 30 per cent from a record in April. The most active contract for delivery in September, which touched the all-time high of $25.07 per 100 pounds on April 21, fell 0.5 per cent yesterday at $17.52.
Vietnam barred the signing of new rice-export contracts between April and June, contributing to the surge in prices. China, the world's largest grain producer, also boosted export duties on fertiliser shipments from April.
Vietnam is taxing rice and fertiliser exports for the first time "so that we can ensure supply and demand within the country", said Mai Thi Thu Van, head of tax at the Ministry of Finance in Hanoi. The country is currently only meeting about 60 per cent of its fertiliser needs, she said.
The charge on the so-called SA and DAP types of fertiliser will be 4,000 dong per kilogram, while urea and kali will be taxed at 5,000 dong per kilogram. DAP stands for diammonium phosphate.
Higher rice prices are making food more expensive for the Vietnamese. The consumer price index rose 26.8 per cent in June from a year earlier.
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