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E-Malt.com News article: Vietnam: State may tighten control over brewing industry
Brewery news

It is highly possible that Vietnam’s breweries would be listed as a conditional business field, which means that it will pay high taxes and will be put under strict control of state management agencies, VietNamNet Bridge reported on November 24.

While social organizations concerned about the public health have called for tighter control over beer production, economists have warned that breweries and consumers will suffer.

A report on the role of the brewery industry in economic development, made by the Institute for Industry Policy and Strategy (IPSI), Regioplan (RP) and a policy research firm and Ernst & Young (EY), has shown a decline in the brewery industry, starting from 2014.

Consumption reportedly decreased by 7.5 percent in comparison with the same period last year, while output decreased by 8.2 percent.

RP and EY attributed the sharp decrease to the luxury tax increase imposed in January 2013, which has pushed selling prices up and lowered beer consumption.

RP, which analysed the figures released by breweries, has found decreases in the total added value (by 1 percent) and other indicators that reflect the beer output and consumption.

The workforce in the industry has decreased by 5 percent, the VAT collected from services fell by 10 percent, and the VAT from retailing by 3 percent.

These all have led to a drop of six percent in revenue for the state’s coffers.

Analysts predicted that even if the beer market recovers when the consumer price index (CPI) recovers, the domestic brewery industry will still be in danger because it has to compete with cheap imports.

If this happens as predicted, the domestic beer output will be decreasing, which means fewer jobs for distributors and intermediary service providers.

If luxury taxes on beer products are raised, purchasing power will decrease. If so, Vietnam would repeat the mistake Europe once made, when it raised the luxury tax on beer and later realized that the revenue for the state had fallen, despite the higher luxury tax.

The Ministry of Industry and Trade (MOIT), which is drafting a legal document on beer production and consumption management, plans to prohibit the sale of beer to consumers under 18 years old.

Meanwhile, Trinh Thi Hang Nga, director of the legal department of the Ministry of Transport, believes the tentative regulation is unfeasible. “Will MOIT require people to bring identity cards with themselves when going to beer shops?” she said.

MOIT once intended to prohibit sales of beer at pavement shops, and is now planning to propose the sale of beer through electronic channels. However, the suggested measures have not been warmly received.

26 November, 2014

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