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August 6, 2007

Govt cuts import duties to curb inflation
Vietnam will reduce import duties on steel ingots to 2% from 5% this week as part of measures to curb rising inflation, Reuters reported, citing state media which quoted a Finance Ministry directive on August 6 as saying.

The duty on construction steel products would be cut to between 5-10 percent from 10-12%, the on-line VNExpress ( newspaper quoted the directive signed by Deputy Finance Minister Truong Chi Trung as saying.

The newspaper quoted Trung as saying the lower duties, to come into effect on Wednesday, would help "cool the price fever" on domestic markets but the government would not use such means often in future.

"In the time to come, the state would not interfere much with administrative measures but will let the market self-adjust based on supply and demand," VNExpress quoted Trung as saying.

Vietnam's annual consumer price inflation accelerated to 8.4%t last month from 7.8% in June due to the higher costs of food, housing and medicine, the government said.

Food prices, which make up 42.8% of Vietnam's consumer price basket, spiked 15% in July from a year earlier. Housing and construction material prices jumped 10.93% from July 2006 after a 10.95% annual rise in June.

The Finance Ministry directive also reduced duties on food and diary products, feed, home appliances and cars. Fresh and frozen beef and buffalo meat tarrifs would be cut to 12% from 20%, while pork would carry a 12% duty instead of 30%.

The import duty on unmilled corn would be cut to 2% from 5% while the tax on milled corn would be 5-10%, down from 10-20%. The new duty on imported feed would range between 2% and 5%, down from 5-10%.

The tariffs on cosmetics, electric fans, air-conditioners, refrigerators and sewing machines would ease to 30% from 40%, while fully assembled cars will be subject to a 70% duty, down from 80%.

Imports of steel and ingots jumped 24.3% to 4.08 million tonnes in the first seven months of this year while their import value soared 52.4% to $2.45 billion, leading to higher housing costs, the government has said.

Vietnam imports most of the steel ingots and steel products it needs from China. Reuters


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