Conformity certification and export taxes hinder fertilizer industry

The workshop "Inadequacies of the Law on Crop Production and Related Legal Documents in the Fertilizer Sector", jointly organized by the Viet Nam Fertilizer Association, the General Association of Agriculture and Rural Development of Viet Nam, the Viet Nam Pesticide Business Association, and the Viet Nam Seed Trade Association, provided an opportunity for experts and enterprises to discuss and propose solutions to address the shortcomings and limitations of the Law on Crop Production.

Chairman of the Viet Nam Fertilizer Association Phung Ha said that the Law on Crop Production was passed by the National Assembly in 2018 and came into effect on January 1, 2020, providing an important legal framework for production, business, and management in the crop sector, especially fertilizer management.

The law classifies fertilizers as conditional goods, requiring enterprises to obtain a circulation approval decision and comply with quality standards according to national technical regulations.

However, after more than five years of implementation, many experts and businesses believe the law has revealed limitations that need to be amended to suit practical conditions and international integration trends, particularly in the context of scientific and technological innovation, digital transformation, and national innovation leading the country into a new era.

Duplicated administrative procedures, farmers bear all costs

"Enterprises have to wait up to three months to obtain a circulation approval decision for fertilizers, valid for only five years. All costs related to these administrative procedures are added to the product price, causing farmers to bear the burden", Mr. Ngoc emphasized.

He also noted that this regulation is costly and ineffective, while fake and low-quality fertilizers continue to circulate widely.

Based on this, Mr. Ngoc proposed removing the fertilizer circulation approval decision in Viet Nam from the Law on Crop Production and related decrees. Instead, enterprises that meet production and business conditions and comply with QCVN regulations should be allowed to trade. In particular, for fertilizers containing macro, medium, and micro nutrients, the registration and approval procedure should be completely eliminated.

He also highlighted the shortcomings of conformity declaration. Mr. Ngoc noted that the current conformity declaration is formalistic, duplicated, and has little practical management value.

He suggested that this formality should not be applied in current regulations or in the draft amendments to related laws, as it only increases costs, hinders import and export activities, and can lead to negative outcomes.

Questioning the effectiveness of quality certification, Hoang Van Tai, a member of the Viet Nam Fertilizer Association, expressed concern: "Many products have been granted conformity certification, yet still fail quality checks. Certificates are valid for three years but are based on a single product sample at a given time. Can the product maintain standards throughout that period? He argued that if frequent checks are still required, the purpose of the conformity certificate becomes questionable."

Although the Government approved the Fertilizer Development Plan for 2010-2020, no agency under the Ministry of Agriculture and Environment has proposed a plan for 2020-2030 and beyond. According to Mr. Truong Hop Tac, this has caused the Viet Nam fertilizer sector to develop without clear direction, lacking an understanding of the current situation and a defined strategy for future growth.

0% export tax to boost fertilizer exports

Regarding tax policy, enterprises are also facing many challenges. Do Duc Hung, Deputy General Director of the Vietnam Agro-Materials Corporation (Apromaco), stated that the 5% export tax on superphosphate (under Decree 26/2023/ND-CP) is unreasonable.

The cost of raw materials and energy for superphosphate production accounts for only 35-40% of the total cost, lower than the previous 51% threshold that allowed a 0% tax rate. Mr. Hung proposed that the Government amend this decree to set the export tax at 0% to protect domestic production and encourage exports.

Similarly, representatives of the Fertilizer and Chemicals Corporation of PetroVietnam (Phu My; PVFCCo) also proposed reducing the export tax on urea from 5% to 0%. This would help enterprises maintain stable operations, utilize plant capacity, increase competitiveness, and contribute foreign currency to the economy.

According to Prof. Nguyen Van Bo, former Director of the Viet Nam Academy of Agricultural Sciences, stricter regulations are easier to manage and amend when practical circumstances change.

He emphasized that over the past five years, the Law on Crop Production has constrained fertilizer enterprises, causing them to lose many development opportunities, especially since fertilizers need to be updated very quickly.