Thanhnien News reported that Vietnam’s domestic steel investors anticipate industry wide bankruptcy as the government prepares to lift export tariffs on over a hundred products from Russia

Between September 15 and 19 2014, Vietnamese officials will engage in their seventh round of talks on a pending free trade agreement with the Russia, Belarus and Kazakhstan Customs Union.

An executive from the Hoa Phat Group, Vietnam’s biggest steel producer by market value, said the Ministry of Finance is preparing to eliminate taxes for Russian steel and iron products. The businessman said that “If the agreement includes that point, I’m sure 70 percent of Vietnamese steel businesses will die in a year. We will try, but only to die last, since it’s impossible to compete with an industry as grand and powerful as Russian steel.

Mr Chu Duc Khai, general secretary of the Vietnam Steel Association, said that Vietnamese construction steel will suffer extremely awful competition. Russia was the world’s fifth largest raw steel producer in 2013 and produced 68.7 million tonnes to 23.6 million of which went abroad.

He believes “Russia will have a much bigger impact on Vietnam's market than Chinese steel, which is already causing problems for domestic firms due to preferential taxes of 57% to 10%. Vietnamese factories produce 5.6 million tonnes of raw steel a year.”

Mr Khai said that “Local steel producers will face bankruptcy when the agreement is signed. His association has suggested the Ministries of Finance and of Industry and Trade reconsider the tax by, for example, reducing it to zero in ten years according to the country’s World Trade Organization commitment. Immediate tax clearance will be harsh and eliminate the young steel industry at home.