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The workshop.

Why is the value-added content 30 percent?

At the Workshop for consultation on the draft Circular regulating how to identify products and goods that are Vietnamese goods or manufactured in Vietnam held by the Ministry of Industry and Trade on September 25, in Ha Noi, regarding concerns about the -value added content of more than 30% must be labelled Made in Vietnam, the representative of the Ministry of Planning and Investment raised a questions that why is 30 percent but not 40 percent? Is this regulation in line with international regulations? In fact, some enterprises only take charge of a certain number of stages, what information is shown on the label for products which do not have value added content of 30%?

In this regard, Tran Quang Trung, Chairman of the Vietnam Dairy Association, gave a specific example: In the production of infant formula milk, powdered materials are imported but the formula to create the nutrition products suitable for Vietnamese children requires researchers. The gray matter content is high, but the input material content is probably not over 30%.

“In addition, when an enterprise invested in farming of dairy cows in Laos and Cambodia, that material was transported to Vietnam. Those cows are considered as imported cows to Vietnam for producing milk and the management process is in Vietnam. Do such goods originate from Vietnam, Laos or Cambodia? This is very difficult,” Trung said.

Before the above comments, Deputy Minister of Industry and Trade Tran Quoc Khanh said that currently, 100% of exported goods are stipulated on how they are considered as products originating from Vietnam (Decree No. 31/2018 / ND-CP of the Government on guidelines the for Law on Foreign Trade Management in term of goods origin and Circular 05/2018 / TT-BCT regulating origin of goods). When exporting goods, the domestic content only accounted for 30 percent, such goods are considered as goods originating from Vietnam.

The regulations on how goods made in Vietnam for domestic consumption can be considered as a missing “gear”. The drafting committee said that this "gear" must match the remaining "gears", avoiding conflicts. If this circular stipulates value added content higher than 30 percent, it will lead to the situation that exports are considered Vietnamese goods, but the same goods for domestic consumption are not considered Vietnamese goods.

“In free trade agreements to which Vietnam is a signatory, the rate of 30 percent is applied. Goods with a value created in the territory of a country reaching 30 percent or more are considered to be goods made by that country. That is the reason to choose the 30 percent figure,” Deputy Minister Tran Quoc Khanh said.

Regarding the comment of the Vietnam Dairy Association, the leader of the Ministry of Industry and Trade said if importing raw materials, the value added created in Vietnam is less than 30 percent, the origin shall be according to the guidance in Decree 43 / 2017 / ND-CP of the Government on goods labels (allowing enterprises to self - identify and self-state their origins to the best of their knowledge). If in the future, the regulations are expanded, products can be written as manufactured in Vietnam from imported material milk from a foreign country.

Talking about the value of grayintellectual property to calculate the value added content, Khanh said that "gray matter is very difficult to evaluate and identify". Therefore, products with valuable gray matter will usually register copyright. After the copyright and ownership for that patent have been registered, the value of that gray matter must be calculated.

Talking about general gray matter is very difficult. Therefore, this draft circular stipulates the value of gray matter in the value added content in the territory of Vietnam, but provided that "the value of that gray matter is calculable.”

Which unit will help enterprises in identification?

In addition to the issue of 30 percent value added content, enterprises paid attention to which unit will help them to identify their goods being labelled as made in Vietnam or Vietnamese goods.

Chu Dinh Hoang, Devyt Joint Stock Company said that for export goods, there have been regulations clarifying criteria and units in charge of determining whether the goods meet Vietnamese origin or not. However, for domestically consumed goods, which unit will assist enterprises to determine whether the goods originate from Vietnam and is labelled as "Made in Vietnam" for sale on the domestic market?

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"We want to import pistachios and cashews for classification, roasting and processing to suit Vietnamese tastes. But up to now, we have not dared invest because we do not know if our products are labelled made in Vietnam. If there is a unit to help us to determine this, we are ready to invest immediately,” Hoang said.

Acknowledging that the circular has still specified this content, Deputy Minister Tran Quoc Khanh said the process of finalizing this circular will clarify this.