Technicians of Kim Long Motor Hue Company assemble bus headlights on the production line

"Bottleneck" of rules of origin

At Vinatex Phu Hung Joint Stock Company, about 80% of raw fiber materials used in yarn production still have to be imported, mainly from China; only about 20% can prove their domestic origin or from the FTA region to enjoy tariff incentives. This makes it difficult for businesses to meet the rules of origin under the EVFTA.

Ms. Nguyen Thi To Trang, General Director of Vinatex Phu Hung Joint Stock Company, informed: “To enjoy a 0% tax rate when exporting to Europe, products must prove that the raw materials are of Vietnamese origin. While the domestic cotton supply chain has not yet been formed, we are forced to take advantage of regional FTAs ​​such as VKFTA, AJCEP, ACFTA - where the rules of origin are more flexible.”

In reality, the rules of origin are the “bottleneck” that makes it difficult for many Hue enterprises to take advantage of the FTA. This is a prerequisite for goods to enjoy tax incentives, but it is a complicated step that requires high management capacity.

Checking the quality of wood chips before exporting at Shaiyo AA Vietnam enterprise

At Billion Max Vietnam Export Processing Co., Ltd., the company has proactively replaced imported raw materials with domestic goods to increase the localization rate. However, when applying, problems arise in the stage of proving origin. "Many raw materials are purchased domestically, but VAT invoices are not enough to prove that the goods are of Vietnamese origin. The company has to add many documents and appendices to explain, leading to prolonged time and sometimes missed delivery schedules," said Ms. Xu Jia Ji, System Manager of Billion Max Vietnam Export Processing Co., Ltd.

Ms. Xu Jia Ji said that the declaration of electronic Certificate of Export (C/O) sometimes encountered technical problems, and the limited file capacity forced businesses to split and send multiple times. “Without timely support from customs authorities and the Department of Industry and Trade, it is very difficult for businesses to maintain export progress, while the international market changes every day,” Ms. Xu Jia Ji added.

According to Thuy An Customs - the unit that manages most of the city's import-export enterprises, the rate of enterprises using C/O to enjoy tariff incentives has only reached 51.37%, meaning that nearly half of enterprises have not yet accessed the benefits of the FTA. Ms. Hoang Thi Mai Lan, Deputy Head of Thuy An Customs, said: "The biggest difficulty is that many small enterprises do not fully understand the rules of origin, while raw materials are imported from many different countries. Many documents are erroneous due to mismatched product descriptions or lack of documents proving origin."

Mr. Truong The Khanh Quynh, Captain of Chan May Port Customs, added: “A common mistake is inconsistent declaration between invoices, manifests and customs declarations. If just one HS code is incorrect or the description of the goods does not match, the enterprise may lose the right to enjoy tax incentives and have to pay additional import tax.”

To meet the criteria, enterprises are forced to increase the localization rate, while many raw materials such as textile fibers, electronic components, and automobile engines still depend on imports. Many enterprises, although having export orders, are not eligible to enjoy FTA incentives.

Not really in the game

Although the FTAs ​​have opened a "golden door" to help Hue goods penetrate deeper into the global supply chain, not all enterprises are ready to step through that door. According to the Department of Industry and Trade, in the period of 2021 - 2025, the rate of C/O usage by export enterprises in the area reached about 55.5%, but only about 200 enterprises actually accessed and exploited it effectively. This number is still modest compared to nearly 6,400 operating enterprises, showing that there is still a lot of room to take advantage of FTA incentives.

Mr. Phan Hung Son, Deputy Director of the Department of Industry and Trade, said: Most enterprises in Hue are small and medium-sized, with limited resources and a lack of a specialized department for international integration, so understanding and meeting the rules of origin is difficult. "A large number of enterprises are still indifferent or do not pay due attention to the regulations of the FTA. Some enterprises only know about the trade agreement but do not understand it deeply enough to apply it, or are afraid to complete the documents and procedures for granting C/O because they think it is complicated and time-consuming," said Mr. Son.

This “lack of enthusiasm” attitude puts businesses at a disadvantage in the context of major markets such as the US and EU continuously increasing technical barriers, applying reciprocal taxes or trade defense measures. The US’s recent imposition of a 20% tax on some Vietnamese products is a clear warning. If businesses do not proactively take advantage of FTAs ​​to diversify their markets, they will soon lose their advantage at home.

In addition to rules of origin and internal capacity, logistics infrastructure and administrative procedures are still “bottlenecks” that make it difficult for businesses to fully take advantage of incentives. Despite improvements, the electronic filing system still has limited capacity and is prone to errors when the number of applications increases. Some businesses have reported that even though they have been granted electronic C/O, they still have to supplement paper documents, causing overlap and wasting time.

This reality shows that, in order for the FTA to promote its value, Hue enterprises not only need appropriate support policies from management agencies, but more importantly, they need to change their mindset and proactively integrate, because opportunities do not wait for those who are slow.

Lack of human resources, missing the FTA

Integration requires not only machinery and technology, but first of all, people. However, the human resources knowledgeable about import and export, international law, and technical barriers in Hue are still lacking and weak. Many businesses have to figure out tax schedules, regulations of origin, or have their employees take short-term online courses, leading to errors in documents, slow customs clearance, and loss of opportunities to enjoy incentives.

Mr. Truong The Khanh Quynh acknowledged: “Many enterprises still consider FTA as a story of corporations and large enterprises, but in fact, it is small enterprises that need to take advantage of FTA to survive and expand. To help enterprises access better, it is necessary to have the accompaniment of functional agencies in providing information, training skills and guiding rules of origin.”

According to Mr. Phan Hung Son, although the industry and trade sector regularly organizes training courses, the number of participating enterprises is still very limited. “Many enterprises send their employees to attend training courses just for show, learning to cope, without applying them in practice. Partly because they do not have time, partly because they think that knowledge is not needed immediately; but it is this indifference that causes enterprises to miss out on benefits and integration opportunities,” Mr. Son said.

From the reality of Vinatex Phu Hung, Ms. Nguyen Thi To Trang affirmed: "Enterprises must proactively update information and invest in human resources. When we understand the rules, we see that FTA is not too far away. The important thing is to dare to change, dare to invest and persistently pursue international standards." Currently, the company has established a specialized department for import and export, in charge of declaring and implementing procedures to request C/O issuance, while promoting digital transformation in administration, retrieving production data in real time, creating a transparent foundation for the origin of goods.

Mr. Phan Hung Son said: The Department is stepping up support for businesses to digitalize in online declaration and issuance of C/O, and increasing training on technical barriers and regulations of importing countries. “We do not just issue C/O but accompany businesses from start to finish, helping them understand, prepare and take advantage of opportunities,” Mr. Son said.

Accompanying businesses, the Customs Branch of Region IX has deployed many practical support solutions. Mr. Nguyen Dinh Chien, Deputy Head of the Customs Branch of Region IX, said: "Customs teams in Hue have established a consulting team consisting of officers with expertise, responsibility and good communication skills, directly guiding businesses in determining commodity codes, declaring and processing documents on the spot, helping to reduce errors and shorten customs clearance time". At the same time, online support channels via phone, email, zalo... are also maintained 24/7, helping businesses reflect, access information and promptly resolve any questions businesses encounter. "Previously, a complex set of documents took 5 days to complete, now thanks to administrative reform and technology application, many stages are processed before the goods arrive at the port, helping businesses shorten customs clearance time to just a few hours", Mr. Chien shared.

FTA is not a door that opens automatically. It is a challenge that businesses must overcome with their own capacity and courage. For Hue, this journey is gradually being recognized and acted upon. Limitations in scale, human resources or logistics can be completely resolved if there is the determination of businesses and the right support of the government. At that time, FTA will not only be a tariff incentive, but also an opportunity to elevate Hue businesses on the global trade integration map.

(continued)

HAI THUAN

Source: https://huengaynay.vn/kinh-te/bai-2-no-luc-vuot-rao-can-xoa-nep-nghi-tho-o-159168.html