18 categories of commodities now enjoy a 50% VAT reduction. These include wholly-assembled cars and car components, engines, gear boxes, coal, basic chemicals and hotel and tourism services.
The tax reduction went into effect on February 1 and will run till the end of the year.
Businesses talk about the possible impacts of the decision on their operations in particular and the national economy in general.
Vo Truong Thanh, Chairman of Truong Thanh Furniture Corporation: The opportunity to expand markets has come
The exemption from export tax on woodwork exports made of imported wood materials will serve as a catalyst, helping enterprises push up production. Before, as the state collected export tax, woodwork exporters fell into big difficulties, many of them did not have money to pay labourers. Meanwhile, the high production cost due to the tax threatened to keep partners away.
Currently, we are trying to expand markets and negotiate with partners. In 2009, Vietnamese enterprises have favourable conditions to compete with foreign companies, especially Chinese ones.
Do Duy Thai, General Director of Viet Steel: The construction material market will heat up
The government’s decision to slash the VAT to the old rate of 5% will be the driving force for the stimulation of demand. Enterprises will have to slash sale prices when the tax rate is lowered if they want to boost sales, which will benefit customers.
Right after the VAT reduction decision was released, Viet Steel had to slash the sale price by 5% to VND11.7mil/tonne (including VAT). With such prices, the construction material market will recover soon and will see the increase of 30% at least in the time to come, right in February 2009.
Nguyen Van Vu, General Director of the Southern Engines and Agriculture Machinery Corporation
Farmers will benefit as they will not have to spend as much money to buy machines for agricultural production, while enterprises will not have to spend time thinking of measures to boost sales in the current difficult period.
In February, when the VAT rate rose from 5% to 10%, sales of agricultural machines saw a sharp decrease. This forced the company to apply a lot of measures to retain clients, but these were unfeasible.
However, as the VAT has been cut to the previous level, the consumption of 80,000 engines and machines proves to be within reach, which has helped lift the concerns of the corporation.
Tran Do Liem, Chairman of Rach Gam Cooperative
The 50% VAT cut helps clients save 5% on cargo transport fees, which will help stimulate the demand for water transport. The 5% tax reduction means that clients can save VND2,500 for every tonne of cargo transported within 80-100 km.
Vo Dang Canh, Deputy General Director of Mai Linh Group
We began considering costs to slash the transport fees right after the decision took effect. Detailed fee reductions have not been drawn up, but we will have to slash fees in order to raise our competitiveness.
Vo Anh Tai, Director of Saigontourist: Tourism products will become more competitive
Foreign partners have urged Vietnamese travel firms to slash tour fees to improve competitiveness at the time when travellers are reducing their travel budgets. We are considering reducing tour fees in order to attract more foreign travellers to Viet Nam. (Tuoi Tre)
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