Under the petition, the VSA asked responsible authorities to carefully consider the issuance of licences for steel projects at localities.
Licenses that fail to comply with regulations and planning approved by the government must be withdrawn.
For projects that produce steel for construction, licences must not be issued for the next five years. The VSA said this request was due to the oversupply of construction steel.
Before issuing licences, localities should strictly conform to regulations regarding capacity of steel plants and sustainable development requirements for steel projects, which are set by the Ministry of Industry and Trade.
In addition, it asked authorities to give priority for projects that manufacture the kind of steel that is mostly imported. This would narrow the steel trade gap.
The VSA also asked ministries and sectors to supervise and urge completion of delayed foreign direct investment (FDI) projects, especially projects that are financially weak.
It asked that businesses be prevented from acquiring land and transferring to others to earn profits instead of developing steel projects.
According to the VSA, the country should export excess steel by giving Vietnamese businesses favourable export taxes.
In addition, it should help connect them with the world's steel export market through trade-promotion programmes.
Challenges
Viet Nam has about 30 large steel businesses and about 100 small to medium sized businesses, according to the VSA.
Most small- to medium sized businesses still use outdated technologies that use more power, which results in low quality products.
A number of steel projects were not conforming to the planning and regulations set by the Ministry of Industry and Trade, which has resulted in an oversupply of steel, said the VSA.
Pham Chi Cuong, VSA chairman, said most steel plants had low capacity, between 200,000 – 300,000 tonnes per year.
Only two or three had capacity of over 500,000 tonnes per year.
Only two plants had capacity of over 1 million tonnes per year, but both were still under construction.
Most products were of low quality, thus failing to compete with other producers in the regional or world market, he added.
Other challenges also facing the industry included a 20-30 per cent increase in prices of raw materials compared to last year, high inflation and tighter government controls over bank credit, especially for real estate projects. These factors have affected all steel projects in the country.
Because of low demand, the price of steel is expected to continue to drop next month, according to the VSA.
Steel and cement
After scrutinising recommendations from relevant associations, the Ministry of Finance yesterday said it would not impose the previously proposed export tax of 3 per cent on steel and 5 per cent on cement at this time.
The ministry last month submitted a proposal to the Government concerning export taxes on steel and cement, saying that neither currently had taxes governing their export, while the industries were benefiting from low domestic electricity prices.
However, after closely reviewing the difficulties that steel and cement producers face due to higher input costs and low domestic demands, the ministry changed its mind. It decided not to tax the products at this time so as to facilitate exports of the domestic producers.
The ministry reported that the Government's measures to control inflation result in many construction works delaying their projects, which then cause the cement and steel industries to burden a large product volume in stock.
VSA Deputy Chairman Nguyen Tien Nghi said steel producers this year suffered a stockpile of roughly 420,000 tonnes, double that of previous years.
According to Nghi, July's steel consumption volume hit roughly 270,000-300,000 tonnes, a decline of more than 100,000 tonnes against May.
"Steel purchasing power is forecast to continue decreasing next month due to tightened monetary policies and the rainy season," Nghi said.
A similar situation occurred with cement producers, said head of the Viet Nam Cement Association's Administration Office Nguyen Van Diep. He added that cement supply had far exceeded demand and that cement producers were dealing with large volumes of stock.
VNS