The steel industry's problems like high inventories and declining production are being exacerbated by the large volumes of various kinds of steel that are being imported despite the domestic capability to manufacture them.

A report from the General Department of Customs said in the first half of 2012, nearly 1.1 million tonnes of steel worth USD 996 million were exported while 5.7 million tonnes valued at USD 4.2 billion were imported.

Mr Nguyen Tien Nghi deputy chairman of Viet Nam Steel Association said that "Import and export are normal for an industry. The country needs many kinds of steel [but] the industry cannot produce all of them because of the lack of advanced technologies and capital."

But he was alarmed by the fact that many kinds of steel that could be produced in the country were being imported.

He said that for instance, domestic manufacturers could fully meet the demand for construction steel, but 103,000 tonnes were imported in the first half of this year. He added that "Companies imported construction steel under another label to enjoy low import tax. This illegal import severely affects the steel industry."

The VSA, which fears this will continue for a long time, has asked the Government to carefully manage investment in the steel industry.

Mr Nghi said that "The government should limit issuing investment licenses for steel projects to prevent inventories from piling up."

He said that it should put up quality and other non tariff barriers against steel from ASEAN member countries. Steel that can be produced domestically must not be allowed to be imported.

He said that customs should carefully examine the origin and quality of imported steel, adding trade promotion programs should be organized to widen the market for Vietnamese steel.