Thanhnien News reported that while trade officials and steel producers argue over the effect of lifting duties on Russian steel imports; investors worry the local industry is as good as dead.

Vietnams’ Ministry of Trade officials are engaged in the seventh round of talks on a pending free trade agreement with the Russia, Belarus and Kazakhstan Customs Union between September 15th and 19th 2014. Among other things, the union would eliminate taxes on some 170 Russian steel and iron products starting in 2015.

Last Friday, the ministry's European Market Department issued a statement saying such worries are groundless. According to the department, Russia's steel and iron plants are concentrated in its central region and in the long haul Vietnam will leave them less competitive than domestic products. Thus, all concerns about the steel industry going bankrupt when the deal is signed are completely groundless.

Domestic steel investors say they won’t survive once the world’s leading steel producer is let loose on the local market.

An executive from the country’s biggest steel producer, Hoa Phat, estimated that 70% of Vietnam's steel businesses will be dead in a year and others will follow soon.

Mr Pham Chi Cuong, former chairman of the Vietnam Steel Association said that “Chinese products are already weighing heavily on the sale of local products. For many years, steel and billet products from Russia have been sold in Vietnam at such a low price that some Ho Chi Minh City businesses can actually profit by reselling them.”

The association said that the distance from the Russian plants to Vietnam is roughly the same as from South Korea and China. As such, removing the existing duties will make Russian steel stand out. Shipment from Vladivostok port to Vietnam takes 12 to 15 days, roughly the same amount of time and money it costs to ship steel here from Chinese plants.

The association’s statement also said there won’t be mutual benefits when a young and weak industry is set to compete with the world’s fifth largest steel producer in volume one that already occupies 8.1% of the Asian steel market.