Outcry for protectionism in the Vietnam coal segment heats up

Outcry for protectionism in the Vietnam coal segment heats up

Nguyen Khac Tho, who serves on the board of the General Directorate of
Energy of the Ministry of Industry and Trade, said that local utilities and
policy makers need to adjust to the new reality that the cost of coal
production must come down.

Imported is cheaper than domestic coal, he said. If the government followed
open market rules and purchased the lower priced imports that would result
in thousands of job losses at the Vietnam National Coal-Mineral Industries
Holding Corporation Limited.

This is going to play out of the next few weeks and months-maybe even years,
Mr Tho told the audience.

The country had decades of closed markets that stifled competition and the
drive for competitiveness and earnings in the market, now riddled with
production inefficiencies, cost ineffectiveness and mismanagement.

These problems aren't going to be reversed overnight, and may just result in
the phasing out of coal production in Vietnam entirely.

Nguyen Van Bien, who serves on the board of the Vietnam National Coal and
Mineral Group in turn agreed. Local coal producers haven't kept pace with
their international counterparts and can't compete on any level with them.

Imports of coal from Russia, Indonesia and China are on the rise because
costs of local production are out of control and management lacks the
ability to seize the helm and control spending.

Deputy Minster Do Hoang Anh Tuan of the Ministry of Finance also recently
noted that costs of domestically produced coal are pricing local producers
right out of the market and handing the segment over to foreigners.

As evidence, he cited an example of one type of coal that costs the National
Coal and Mineral Group US$88 (VND2 million) per metric ton to produce.
However, foreign companies sell that same dust at a profit for on average
US$22 per metric less.

If the government through its state-run power monopoly Electricity of
Vietnam made its purchasing decision based solely on cost- it would cancel
more than two million metric tons on order for later this year and replace
it with imported coal.

However, that would result in the National Coal and Mineral Group laying off
some 4,000 workers this year.

On the other hand, Minister and Chair of the Government Office Mai Tien
Dung, an avid protectionist, said he believed that the government should put
the 4,000 jobs first and foremost.

In a somewhat confusing statement, he said, that while abiding by open
market rules and the commitment made to the World Trade Organization to open
its markets, the government should still give a higher priority to
protection of the domestic economy and jobs.

Mr Dung added that his office had submitted requests of the National Coal
and Mineral Group to proactively take the necessary steps to reduce its
production costs and sales price to ensure they are competitive with
imported coal.

At the same time, he noted, that the Ministry of Industry and Trade had been
asked to look at long-term measures to protect domestic coal production,
while the group works through its internal problems to resolve its inept
management problems and inability to compete in its home market.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
https://www.vietmaz.com/2017/07/outcry-for-protectionism-in-the-vietnam-coal
-segment-heats-up/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%
3A+vietmaz+%28VietMaz%29

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com