CCM: Vietnam’s new tariff policy for imported MSG 04-11-2016

In March, the Vietnamese Ministry of Industry and Trade announced new tariff policy for imported monosodium glutamate (HS code: 29224220). The new policy may have negative influence on China’s exports of MSG, as Vietnam is the second largest export destination. However, Chinese exporters may choose to export MSG coded 21039010 to ease the influence.

 

On 10 March, 2016, the Vietnamese Ministry of Industry and Trade (VMIT) released the No.920/QD-BCT Document about its new tariff policy for imported monosodium glutamate (MSG, HS code: 29224220), aiming to protect local producers. In detail, on imported MSG:

  • 25 March, 2016-24 March, 2017: a tariff of USD197/t (VND4.39 million)
  • 25 March, 2017-24 March, 2018: a tariff of USD178/t (VND3.95 million)
  • 25 March, 2018-24 March, 2019: a tariff of USD160/t (VND3.56 million)
  • 25 March, 2019-24 March, 2020: a tariff of USD144/t (VND3.20 million)
  • After 25 March, 2020: reduce to 0

 

*Exchange rate: VND1.00=USD0.000045, sourced on hexun.com.


Prior to this, the VMIT announced the investigation into safeguard measures against imported MSG (HS code: 29224220) in its No. 9269/QD-BCT Document on 1 Sept., 2015, in response to the application by Vedan Vietnam Enterprise Co., Ltd., a branch of Vedan International (Holdings) Limited. This investigation lasted for 6 months. From 2011 to 2014, import volume of MSG to Vietnam rose by 550%+ due to the low import price, which largely depressed the local sales of MSG, according to VMIT's No. 920/QD-BCT Document.

 

China is the largest MSG producer around the world, 60% of the global supply. Large quantity of China’s low-priced MSG has been exported to Vietnam, which may be a critical factor pushing Vietnam to set heavier tariff.


Vietnam has become the second largest export destination for China’s MSG. According to China Customs, from 2011-2014, the export volume of MSG (HS code: 29224220) rose by 156% from 16,390 tonnes to 42,000 tonnes. Its proportion to China's total export volume went up from 6% to 12%. Meanwhile, China has also been the leading import origin of MSG to Vietnam, taking up 70% of the total imported MSG.


On the contrary, China’s average export price of MSG to Vietnam is going down, due to excess capacity and intense competition among producers in recent years. The average price fell by 19% from USD1.51/kg in 2011 to USD1.22/kg in 2014.


 China's annual exports of MSG (HS code: 29224220) to Vietnam, 2011-2015


Note: MSG stands for monosodium glutamate.

Source: China Customs

 

Vietnam’s heavy tariff on imported MSG (HS code: 29224220) may reduce the export from China, or may further push Chinese exporters to export MSG coded 21039010.


Altogether there are two HS codes for MSG in China: 21039010 and 29224220. In 2015, 80%+ of the 51,000 tonnes of MSG to Vietnam were exported coded 29224220.



Chinese MSG exporters prefer to choose a more favorable HS code. In 2015, the MSG exported to Vietnam, coded 21039010, rose from zero in 2014 to 9,000 tonnes. On the contrary, the export volume under HS code 29224220 fell by 17% YoY to 34,960 tonnes.


This decrease was mainly affected by China’s export rebates. Since 1 Jan., 2015, the export rebate of HS code 21039010 has risen from 0% to 13%, whereas HS code 29224220 remained 0%. Thus, more enterprises prefer to export MSG coded 21039010.


Although the export rebate of HS code 21039010 was reduced to 0% again since 1 Jan., 2016, it will still be more profitable to export under this HS code, given Vietnam’s heavy tariff on HS code 29224220.



 

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.


Tag: MSG


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