The Vietnam Fertiliser Association proposed to reduce the export tax on urea fertilizers to zero to increase the competitiveness of exports.
The fertilizer export market declined in both volume and price in the first six months of this year.
Phung Ha, general secretary and vice chairman of the Vietnam Fertiliser Association, said that the prices of fertilizers fell sharply in the first six months of the year, especially urea fertilizer due to the price of input materials such as gas and coal for production falling.
In addition, China has no longer restricted the export of 29 types of fertilizers. This move has greatly increased the supply of fertilizer on the world market, putting downward pressure on prices to promote consumption.
Accordingly, the prices of all kinds of fertilizers have gone down by 60-65 percent compared to the beginning of last year and tend to be stable at the current low level.
In addition, the demand for fertilizer also declined as it is not the peak season, which also contributed to pushing prices down.
Many Thai and Chinese firms are coming to Cambodia to invest and buy ingredients for agricultural production, said Ngô Văn Đông, General Director of Bình Điền Fertiliser Joint Stock Company.
This is a challenge for Vietnamese fertilizer manufacturers in this traditional export market, said Đông.
To cope with these challenges, besides the traditional markets of Japan, South Korea, Malaysia, Cambodia, and Laos, many domestic fertilizer manufacturers have sought to expand their exports to other markets such as Taiwan (China), Brazil, India, Southeast Asian countries, and Europe.
Along with the efforts of enterprises to expand the market, the Vietnam Fertiliser Association recently sent an official dispatch to the Government Office on solutions to support fertilizer firms in boosting exports through favorable tax policies.
Specifically, the association proposed the superphosphate export tax rate be 0 percent as before, instead of the 5 percent rate as prescribed in Decree No 26/2023/NĐ-CP dated May 31 this year.
The association said that the total production capacity of superphosphate fertilizers in factories in Vietnam is about 1.5 million tonnes per year while the amount of fertilizer consumed domestically is less than 500,000 tonnes per year.
On the other hand, statistics from the General Department of Customs show that the amount of exported superphosphate is very small, with less than 100,000 tonnes per year in 2022.
With the excess production capacity compared to the domestic demand for superphosphate fertilizer, exports should be encouraged to increase the value of national products, create jobs, earn foreign currency for the country, and grow tax revenue for the locality.
In addition, the fierce competition from Chinese products and cheap prices makes Vietnamese superphosphate products less attractive as exports compared to other countries such as China, Morocco, and India, especially if the export tax rate is kept at 5 percent.
As for urea nitrogen fertilizer, its capacity is 2.5 million tonnes and demand is less than 1.8 million tonnes, therefore, enterprises must export to ensure efficiency.
If the export tax is imposed, they will lose business opportunities and production and efficiency will risk being dampened.
Brunei's entry into the fertilizer market with a supply of 1.8 million tonnes of urea per year, mainly targeting the Southeast Asian market, including Vietnam, has further increased competitive pressure.
The Vietnam Fertiliser Association proposed to apply a zero percent export tax on urea fertilizers.