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Vietnam: Cheap imports undercut local glass

Post Time:May 09,2009Classify:Industry NewsView:400

HA NOI — The construction glass industry, already facing a dramatic downturn in demand, is being undercut by cheap imports, pinching the profits of some firms and causing others to close down or reduce output, manufacturers say.

The Viet Nam Glass Association said two construction glass companies - Truong Phong in the southern province of Binh Duong and Cam Pha in the northern city of Hai Phong - had already folded; one of the biggest construction glass manufacturers in the country, the Viet Nam Float Glass Company, had also temporarily stopped operations.

Float Glass’s inventory was reported to be worth about VND1 trillion (US$56.18 million).

Other big companies - including Dap Cau Glass, Nippon Sheet Glass and Ky Anh Glass - were working at half capacity.

Association secretary Le Minh Tuan said, "the precarious situation" had been caused by reduced demand and high oil taxes and electricity costs.

Manufacturers could not find a way out by themselves, he said. The association had called on the Ministry of Construction to issue technology standards and increase the tax on imported glass.

The country’s construction glass industry was capable of producing 70 million sq.m of glass a year, but now is selling only half of its output, Tuan said.

While other industries could temporarily stop their operations to avoid losses, the construction glass industry could not do that.

When a glass furnace is put into operation, it can not be turned off until the process is finished. If it is stopped, the product can not be re-used.

The industry had fallen into its situation, mostly because domestic and international demand had fallen dramatically.

In previous years, the 70 million sq.m of construction glass produced did little more than satisfy the domestic demand. Glass products were exported to Thailand, India, Singapore, Laos and Cambodia.

However, since the end of last year, exports had dried up and cheap imported glass was undercutting the domestic product.

Glass manufacturers argued they could not cut prices, because their costs had risen. The import tax on fuel oil was 35 per cent, 30 per cent higher than elsewhere in the region.

This combined with high electricity costs had played a big part in preventing companies from being competitive.

"It has sent many companies broke." Tuan said.

Source: Viet Nam NewsAuthor: shangyi

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