Vietnam's special preferential import tariff clearly states the 0% AKFTA tax rate for many types of goods. (Source: Customs Newspaper)

Amendment of Vietnam's special preferential import tariff schedule to implement the AKFTA Agreement

The Government has just issued Decree No. 81/2024/ND-CP amending and supplementing a number of articles of Decree No. 119/2022/ND-CP dated December 30, 2022 of the Government promulgating Vietnam's special preferential import tariff schedule to implement the ASEAN - Korea Trade in Goods Agreement (AKFTA) for the period 2022 - 2027.

Accordingly, the Decree promulgates the Schedule of special preferential import tariffs of Vietnam (the special preferential import tariff rates hereinafter referred to as AKFTA tariff rates) and the List of goods subject to special preferential import tariff rates outside the quota of Vietnam to implement the new ASEAN - Korea Trade in Goods Agreement for the period 2023 - 2027.

Vietnam's special preferential import tariff schedule (the special preferential import tariff rate hereinafter referred to as AKFTA tariff) clearly states the 0% AKFTA tariff for many types of goods such as: Live animals; meat and edible meat by-products after slaughter...

AKFTA tax rate of 5% for certain types of mineral or chemical fertilizers containing phosphate (phosphate fertilizer), cosmetics or make-up preparations and skin care preparations (excluding pharmaceuticals), including sunscreen or suntan preparations; preparations for fingernails or toenails.

In particular, in the Decree, the Government supplements the List of goods subject to special preferential import tax rates outside Vietnam's quota to implement the ASEAN - Korea Trade in Goods Agreement for the period 2023 - 2027.

In addition, according to the provisions of Decree No. 119/2022/ND-CP: Column "AKFTA tax rate (%)": Tax rate applied from December 30, 2022 to December 31, 2027. Decree No. 81/2024/ND-CP amends to: Column "AKFTA tax rate (%)": Tax rate applied from November 28, 2023 to December 31, 2027.

In addition, the Decree clearly states: For imported goods subject to tariff quotas, including a number of items in groups 04.07, 17.01, 24.01, 25.01, the AKFTA tax rate within the quota is the tax rate specified in the Special Preferential Import Tariff issued with this Decree, the AKFTA tax rate outside the quota is the tax rate specified in the List of goods subject to special preferential import tax rates outside the quota issued with this Decree.

The import tax rate outside the quota for goods not included in the above List shall be applied according to the provisions of the Export Tariff, Preferential Import Tariff, List of goods and absolute tax rates, mixed tax, and import tax outside the tariff quota of the Government at the time of import.

List and annual import tariff quotas as prescribed by the Ministry of Industry and Trade.

Durian exports forecast to hit record in 2024

According to preliminary statistics from the Vietnam Fruit and Vegetable Association (Vinafruite), in June 2024, fruit and vegetable exports reached about 800 million USD, an increase of 20.84% ​​over the same period. Accumulated from the beginning of the year to the end of June 2024, fruit and vegetable exports brought in 3.5 billion USD, an increase of 30.6% over the same period. Notably, durian accounted for 1.5 billion USD.

Secretary General of the Vietnam Fruit and Vegetable Association Dang Phuc Nguyen said that this year Vietnam aims to achieve revenue from durian of 3.5 billion USD, an increase of 55% compared to last year.

China is the largest market for durian from Vietnam. (Photo: LC)

China is the largest market for durian from Vietnam. In the first quarter of 2024 alone, Vietnam surpassed Thailand to become the number 1 exporter of durian to the Chinese market with a volume of 32,750 tons, worth 161 million USD, 2.4 times higher in volume than the same period last year. Vietnam's durian market share in China in terms of turnover has increased from 32% in 2023 to 57%.

Currently, the authorities of Vietnam and China have completed technical negotiations to sign a protocol for exporting frozen durian and fresh coconut to China, and will then agree and sign the protocol. If China agrees to officially import frozen durian, the export value of durian will increase sharply. Because a container of frozen durian exported to China will have a value many times higher than that of fresh fruit.

In 2023, China will spend about 1 billion USD to import frozen durian, so in the first year of entering the Chinese market, Vietnam can export 300 - 500 million USD/year.

Many imported goods recorded double-digit growth

According to the report of the Ministry of Industry and Trade, the import turnover of goods in June 2024 is estimated at 30.15 billion USD, down 7.9% compared to the previous month. Of which, the domestic economic sector reached 10.95 billion USD, down 8.9%; the foreign-invested sector reached 19.20 billion USD, down 7.2%. Compared to the same period last year, the import turnover of goods in June increased by 13.1%, of which the domestic economic sector increased by 15.5%; the foreign-invested sector increased by 11.8%.

In the second quarter of 2024, import turnover is estimated at 93.4 billion USD, up 19.8% over the same period last year and up 9.7% over the first quarter of 2024. In the first 6 months of 2024, import turnover is estimated at 178.45 billion USD, up 17% over the same period last year, of which the domestic economic sector reached 65.74 billion USD, up 22.3%; the foreign-invested sector reached 112.71 billion USD, up 14.1%.

In the first 6 months of 2024, there were 33 imported items with a value of over 1 billion USD, accounting for 88.1% of total import turnover (there were 5 imported items with a value of over 5 billion USD, accounting for 50.2%) .

The structure of our country's goods imports in the first 6 months of the year showed positive signs when up to 88.8% of the total import turnover was the group of goods that needed to be imported (including machinery, equipment, tools, spare parts and raw materials for domestic production), with an estimated turnover of 158.2 billion USD, an increase of 18.1% over the same period in 2023, showing a positive recovery signal of production and export when the demand for importing machinery, equipment, tools, spare parts and raw materials for production increased quite high.

Of which, the import turnover of computers, electronic products and components alone is estimated at 48.8 billion USD, up 26.7% over the same period in 2023 and accounting for 27.4% of the total import turnover of the country; at the same time, the import of machinery, equipment, tools and spare parts reached 22.3 billion USD, up 14.6%.

In addition, import turnover of most other items also recorded high double-digit increases such as: Phones of all kinds and components increased by 21.9%; steel of all kinds increased by 24%; electric wires and cables increased by 30%; plastic raw materials increased by 14.7%; textile and footwear raw materials increased by 17.5%; fabrics of all kinds increased by 10.8%...

Import turnover of goods subject to import restrictions in the first 6 months of the year increased slightly compared to the same period last year, estimated at 9.5 billion USD, up 2.1%. However, some items had high import turnover such as: household electrical appliances and components, up 19.2%; vegetables and fruits up 13.7%.

According to the Ministry of Industry and Trade, due to the strong recovery of production and exports, leading to increased demand for imported machinery, equipment and raw materials for domestic production, our country's imports in the first half of 2024 from most key markets increased.

Of which, China continues to be our country's largest import market with an estimated turnover of 67 billion USD, up 34.7% over the same period last year and accounting for nearly 37.6% of the country's total import turnover; followed by imports from the Korean market estimated at 26.2 billion USD, up 7.4%; the ASEAN market estimated at 22.56 billion USD, up 12.3%; Japan estimated at 10.39 billion USD, up 1.7%; the EU estimated at 7.5 billion USD, up 5.2%; the United States estimated at 7.06 billion USD, up 2.8%.

Taking advantage of FTA, Vietnam has trade surplus with this market for the first time

According to data compiled by the Vietnam Trade Office in Australia from the General Department of Vietnam Customs, bilateral trade between Vietnam and Australia in the first five months of the year reached more than 1.19 billion USD, of which the export value from Vietnam to the Australian market reached more than 622.4 million USD; import value reached more than 567.7 billion USD.

Bilateral trade turnover has recovered positively, increasing by 19% in May 2024 compared to the same period last year and by 5.3% in the first 5 months of the year compared to the same period last year. In particular, export turnover has grown strongly (up 66.2% in May and up 31.1% in the first 5 months of the year). Notably, in the first 5 months of 2024, Vietnam had a trade surplus of 54.7 million USD; while the trade deficit in the first 5 months of the year also decreased sharply (-66.1%), showing that trade relations are becoming more and more balanced.

Vietnam's top 5 key export items all witnessed strong growth in the first 5 months of 2024. Specifically, machinery, equipment and spare parts reached 405.4 million USD, up 121.5%; Telephones of all kinds and components reached 362.7 million USD, up 25.2%; Crude oil reached 317.2 million USD, up 24.5%; Computers, electronic products and components reached 223.3 million USD, up 13.5%; Textiles reached 209.6 million USD, up 20.6%.

Exports of machinery, equipment and spare parts to Australia in the first 5 months of 2024 reached 405.4 million USD, up 121.5%. (Source: Industry and Trade Newspaper)

Vietnam's agricultural, forestry and fishery products exported to Australia also grew positively. Specifically, seafood exports reached 125.7 million USD, up 7.7%; Wood and wood products reached 59 million USD, up 27%; Fruits and vegetables reached 41.3 million USD, up 36.2%; Cashew nuts reached 37.6 million USD, up 30.6%; Coffee reached 27.9 million USD, up 108.7%; Rice reached 9.97 million USD, up 20%; Pepper reached 3.67 million USD, up 17.1%.

On the contrary, Vietnam's import of goods from Australia decreased in the first 5 months of the year, in most major import items (coal, cotton, wheat, iron and steel of all kinds, etc.). The reason is that Vietnam's production and export situation in late 2023 and early 2024 also encountered many difficulties, lacking orders, leading to the demand for imported input materials also being affected, including imported goods from Australia, causing import turnover to decrease compared to the same period last year.

The Vietnam Trade Office in Australia said that the bilateral relationship between Vietnam and Australia is currently developing positively in all areas, especially politics, economics and trade. In March 2024, the two countries officially upgraded their relationship to the level of Comprehensive Strategic Partnership, opening up prospects for further promoting trade in the coming time.

The effectiveness of Free Trade Agreements, especially the three important FTAs ​​(CPTPP, RCEP, AANZFTA) when Vietnam and Australia are both members, with special tariff incentives when the tax rate of most exported goods to Australia has reached 0%.

Vietnamese products are rich and diverse, some Vietnamese products have reached the market and affirmed their brand and quality such as shrimp, basa fish, cashew nuts, pepper, etc.; other products have also begun to affirm their quality and import value to Australia is increasing.

However, the Australian market has very strict regulations and technical barriers, some standards are even higher than those of the United States and the EU.

On the other hand, Vietnam is not Australia’s only FTA partner. Currently, Australia has 11 FTAs ​​in effect with 20 partners, 9 other FTAs ​​are under negotiation or have not yet come into effect with 14 new partners (including the EU). These FTA partners also enjoy preferential commitments from Australia and therefore will compete with Vietnam when accessing this market. Notably, many direct competitors with Vietnam in terms of export structure such as China, Thailand, Indonesia, etc. all have many advantages in terms of potential and experience.