Right after being an official member of the Association of Southeast Asian Nations (ASEAN) in July 1995, the Vietnamese Government acceded to the Agreement on Common Effective Preferential Tariff (CEPT), having committed to gradually reduce the import tax rates for the ASEAN commodities. The import tax reduction as committed began in 1996 and is expected to be completed by the year 2006, including: gradually reducing then abandoning the non-tariff protection measures; promoting the customs cooperation in order to create the most favorable conditions for the goods exchange, trade and investment relations among the member countries, and building the ASEAN Free Trade Area (AFTA).

The Government has adopted Vietnam�s import tax rate reduction schedule with the ASEAN for a ten-year period (1996-2006) and promulgated the lists of commodities for the CEPT implementation up to the end of 1998. However, after nearly 3 years� effecting the tax reduction under the CEPT, the ministries, branches and localities throughout the country, especially the enterprises, have failed to fully realize the difficulties, challenges and severe competition posed by the opening of domestic market for its integration into the regional economy, and to make necessary readjustments for the implementation of the import tax reduction schedule with the ASEAN, while continuing their investment and production activities under the old mechanism; and many enterprises have asked for protection as before.

In order to raise the efficiency and competitiveness of the economy, actively penetrate into and take up the market in the circumstances that we have been gradually reducing the import tax rates for ASEAN commodities, the Prime Minister hereby instructs:

1. The ministries, branches and localities throughout the country should organize the thorough study of the State�s policies on the import tax reduction schedule in all enterprises; promptly announce the annual lists of commodities subject to CEPT tax reduction to every enterprise, so that the latter can set its own targets; and clearly determine that to reduce import tax with the ASEAN is not only the obligation of its member countries, but also the opportunity for us to penetrate into and expand the markets and integrate into the regional and international economies.

2. The ministries, branches and localities, when approving or submitting for approval investment projects (both domestic investment and foreign investment); and enterprises, when considering and deciding their investment scale and production-business plans, besides carefully calculating techno-economic factors, should also base themselves on the schedule of import tax reduction with the ASEAN to study the feasibility of their projects, with special attention paid to their products� sale capability and competitiveness as compared with the ASEAN products of the same types according to the import tax reduction schedule set for such products.

3. The enterprises should clearly understand and firmly grasp the import tax reduction schedule and the annual lists for CEPT implementation; actively penetrate into the domestic market as well as the ASEAN market; consider and decide changes in production scale and investment structure; renew technologies and change product models, patterns and designs; diversify business and service types; and strive to dominate the domestic market and gradually reach the ASEAN and world markets.

4. Basing themselves on the import tax reduction schedule and the lists of commodities for CEPT implementation promulgated by the Government, the ministries performing the State management over economic and technical branches, the Vietnam Chamber for Commerce and Industry, the Central Council of the Vietnam Cooperatives� Union; the People�s Committees of the provinces and centrally-run cities, and the local industry and commerce societies shall guide and provide information on the commodity lines and products with competitive advantages; or switch to produce or trade in other commodity lines or products if they deem that the import tax reduction may adversely affect the existing goods items or products of their respective enterprises or localities.

5. The Ministry of Trade shall assume the prime responsibility and coordinate with the concerned ministries and branches in expeditiously formulating and finalizing the overall strategic integration plan, including the schedule for reducing non-tariff measures in implementation of the CEPT Agreement.

6. The Ministry of Planning and Investment shall assume the prime responsibility and coordinate with the Ministry of Trade, the Ministry of Finance and the Vietnam Chamber for Commerce and Industry in devising specific plans, periodically organizing the meetings with enterprises, firmly grasping the feedback and quarterly reporting to the Prime Minister.

For the Prime Minister
Deputy Prime Minister
NGUYEN MANH CAM