Vietnam coffee exports may stay under pressure despite tax pledge

Vietnam coffee exports may stay under pressure despite tax pledge

HANOI - Vietnam's coffee exports may struggle to recover in coming months from two-year lows forecast for October, traders said, hit by a plunge in prices and despite authorities pledging to cut the time it takes to provide tax refunds for shipments.

Vietnam is trying to restore confidence among local and foreign exporters after a scandal involving the arrest of some company officials accused of being involved in tax frauds.

Some exporters in the world's biggest robusta producer have also complained that their business has been hit by delays in processing rebates in value added tax after the scandal.

Coffee companies with a good track record of tax payments and sound assets could now get refunds within six days after they submit their refund application, said a Finance Ministry document issued on Oct. 15.

Others could get refunds in a period of no longer than 40 days after their submission, Deputy Finance Minister Do Hoang Anh Tuan said in the document, which amended the tax refund procedures issued first in June 2013.

"I think this could help companies get their confidence back, but farmers may want to wait until prices have improved before they sell their crop," said a dealer in Singapore, referring to the measures.

Domestic coffee prices were trading on Tuesday at the lowest in nearly three years at 33,400 dong (S$2) a kg on the prospect of a record crop and in line with weak London robusta futures.

Increased tax inspections had been slowing domestic purchases, a trader at a foreign firm in Ho Chi Minh City said.

Another trader in Buon Ma Thuot, the capital of Vietnam's largest growing province, Daklak, said a gap in local prices had narrowed in recent days after arrests tied to the VAT scam.

This should make it is easier for exporters to buy coffee from farmers because in the past some suppliers took the opportunity of a tax refund to offer and buy beans at higher prices than exporters were prepared to pay.

Traders said, however, farmers were likely to hold back supply from the new harvest with prices at three-year lows.

Vietnam is forecast to export 50,000-60,000 tonnes (0.83 million to 1.0 million bags) of coffee this month, the lowest since October 2011, traders have projected.

Purchase this article for republication.



Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.