Electronic product prices remain unchanged

The electronics and refrigerating market had come to a standstill before Vietnam joined the World Trade Organisation. Consumers were then awaiting a sharp decline in prices. However, there has been almost no change after the country’s joining the global trade body.

The electronics and refrigerating market had come to a standstill before Vietnam joined the World Trade Organisation. Consumers were then awaiting a sharp decline in prices. However, there has been almost no change after the country’s joining the global trade body.

Under the commitments to the WTO, Vietnam will not slash import tax on electronic products till 2008. By 2012, import tax levied on TVs and DVD players will be cut by five percent from the current rate to 35 percent and that hifi stereos will be slashed by 10 percent to 30 percent. Meanwhile, by 2009 the tax on digital cameras will be 15 percent or five percent higher than the current rate.   

This means the price of electronic products will almost remain unchanged in the next two years despite the commitments. Most electronic products are supplied by domestic enterprises and the world’s renowned groups which locate their factories in ASEAN countries such as Thailand, Malaysia and Indonesia. Therefore, there is no sign of importing the products from the non-ASEAN region.

According to big electrical and electronics centres, the recent reduction in the price of electronic products mostly stemmed from manufacturers’ programmes to stimulate market demands and expand production and business activities. Over the past year, the price of electronic products fell by 25-35 percent due to a tax cut roadmap under the ASEAN Free Trade Agreement (AFTA).

Nguyen Xuan Chau, head of LG Vietnam Showroom, said there is little change in the price of the products. Import tariffs imposed on electronic products under WTO commitments are much higher than Vietnam’s current rates, some are even double. Therefore, there is no change in business strategies of Vietnam-based electric and electronics companies, said Mr Chau. 

According to Mr Chau, the biggest difference is that large showrooms and centres with a variety of electronic products will replace smaller shops. Much attention will be paid to post-sales services. In addition, Vietnam will import similar products from Europe, the US and other markets. As a result, the price of these products will be cheaper, in line with WTO commitments. However, the market will be dominated by locally-made products or those imported from ASEAN countries thanks to low import tax and transport costs.

According to economists, the price of electronic products will remain stable as many world renowned electronics groups have manufactured and assembled their products in Vietnam. They say Vietnam’s electronic products now can compete with those from Singapore and Thailand – both are WTO members - as many of them are cheaper than in Singapore, Malaysia and the Philippines although a little higher than in Thailand.

The Vietnam Informatics and Electronics Association says Vietnamese consumers will benefit from tax cuts imposed on information technology (IT) products in the next five years under WTO commitments.

The Ministry of Finance is considering amending preferential tax rates on accessories from the engineering, electrical and electronic sectors to iron out snags for manufacturers when the localisation rate is abolished under WTO commitments.

(Source: VOV)