Ministry of Industry and Trade

Ministry of Industry and Trade






Independence- Freedom- Happine



- Time:09:00, Friday, 20th November 2009

- Location:Ministry of Industry and Trade, 54 Hai Ba Trung, Hanoi

- Content:Public hearing with related parties of the investigation of applying safeguards measures on imports of floating glass to Vietnam.

- Chairmanship:

+ (Mr) Nguyen Duc Thanh, Deputy General Director, Vietnam Competition Authority, Ministry of Industry and Trade

+ Investigators, staff of Vietnam Competition Authority, Ministry of Industry and Trade

- Participants:

1. Domestic producers

- Representative of Vietnam Floating Glass Ltd. Company (VFG)

- Representative of Viglacera Floating Glass Company (VIFG)

2. Importers

- Representative of Quang Vinh Trading – Services - Manufacturing Ltd. Company

- Representative of Phu Phong Manufacturing -Trading–Services Jointstock Company

- Representative of Hong Quy Manufacturing - Trading – Services Ltd. Company

- Representative of Thuan Thanh Glass Jointstock Company

3. Exporters

- Representative of Guardian Industries Corp Ltd (Thailand)

- Representative of AGC Flat Glass Asia Pacific Pte

- Representative of ASE EUROPE Company

- Representative of Indonesian Flat & Safety Glass Association (AKLP)

- Representative of Thailand Embassy to Vietnam

4. Other related parties

- Vietnam Glass Association


Part I Opening

 Aim

Vietnam Competition Authority (VCA) – Ministry of Industry and Trade (MoIT) (“Investigation Authority”) held a public hearing for related parties to express their points of view directly on the case. The organisation of public hearing was stipulated at Arcticle 10, Decree No.150/2003/ND-CP dated 8th December 2003 of the Government giving detailed provision on the implementation of Ordinance on safeguards measures for imports to Vietnam. The public hearing for related parties is also an activity to ensure a transparent, objective investigation process, ensure legitimate interests of related parties.

Summary of Investigation process

- 5/5/2009 The investigation authority received a petition requiring for applying safeguards measures filed by Viglacera Corporation representing 02 floating glass domestic producers: VIFG and VFG. On the basis of initial assessing documents and evidence submitted by the petition and the proposal of Investigation authority, on 1st July 2009, Minister of MoIT determined to initiate the investigation.

- After the Minister of MoIT’s investigation initiation decision, the Investigation Authority has notified Investigation Decision and provided the Questionaire to domestic producers, importers and exporters, representative offices to Vietnam of related countries.

- During the investigation process, Investigation Authority has received information, evidence and feedback comments from related parties (domestic producers, importers and exporters) and comments from several agencies and Government of related countries.

- On the basis of analysing documents submitted by parties, VCA has issued Initial Notice on 30th October 2009 and provided related parties as well as published to mass media.

- Pursuant to the law on safeguards measures applied to imports to Vietnam, the investigation period is 6 months from 01st July 2009. If extended, the investigation period will be extended one time not longer than 02 months.

Part II

Views of related parties

I – Views of Domestic producers

Production and trading circumstances during investigation period

During the investigation period (2006, 2007, 2008 and first Quarter of 2009), the production, trading circumstances, the difficulties encountered by domestic producers have all been consolidated and initially analysed in the recent Initial Report dated 30th October 2009. The above- mentioned situation is summarised as follows:

- The volume of imported glass has increased dramatically within short period of time. In 2007, the imported floating glass to Vietnam reached 9,779.5 MT. In 2008, the number was 33,765 MT, which equal to an increase of 245.3%. In the first quarter of 2009 alone, the number was 14,696 MT.

- Domestic producers have been experiencing a big loss due to the decrease in sales volume and prices. The domestic market in 2008 decreased 23.39% compared with that of 2007 and the sales revenue at domestic market in 2008 also decreased 1.87% compared with that of 2007.

- To compete with imported glass, at the same time maintain the capacity of floating glass production line, domestic producers had to reduce domestic price and sometimes almost get no profit. However, stockpile is still very high, notably VIFG’s stock pile was twice more than usual.

Adjustment measures and plans

- For VIFG, the goal is to reduce cost, improve products’ quality and broaden products’ structure to meet the market’s demands.

Applied measures: keep updated with the changes in domestic and overseas market at all times in order to have appropriate business strategy; use substitute input materials to reduce production costs; apply modern manufacturing technology and measures to increase the efficiency of energy usage; increase the manufacturing of high- quality products; improve production line and technology; seek for new customers and markets; cooperate with distributors flexibly and actively.

- For VFG: the goals are to reduce costs and boost competitiveness.

Applied measures: usually review costs and reduce costs at maximum; keep updated with the changes in domestic and overseas market at all times in order to have appropriate business strategy.

To sum up, domestic producers currently are using different methods to maintain furnace usage capacity (about 90%) (non-stop) and make good use of different measures to reduce production costs in order to compete with imported.

Production and trading situations from 1st Quarter of 2009 up to now

At the moment, domestic producers basically can meet the demand for certain products, except for some specific products or products with low economic gains due to small demand or costly to switch product types. Recently, some enterprises have increased prices due to the increase in input materials (which account for more than 30% of cost structure). Some glass processors said that there were certain periods when domestic producers couldn’t meet the demand, this fact can be explained because glass processors are likely to acknowledge the time that prices are likely to go up therefore they have increase their orders, which cause a significant change in demand.

However, in the context of soar-up of imported products to Vietnam since 2008 and 2009, a continuous increase in the world’s oil price, high production cost and domestic producers have to bear the pressure of the economic downturn therefore the pressure from foreign exporters to Vietnam were very high.

II – Views of exporters

- Producers’ marketshare: though decrease compared with 2008, in the 1st quarter of 2009, the marketshare of domestic producers accounted for more than 70% of domestic market, which is a big share with the fact that there were only 2 glass domestic producers.

- Domestic industry’s competitiveness: the usage capacity of domestic producers (more than 90%) is quite high now.

- Change in energy, input materials: Other producers from exporting countries all face these issues, not only in Vietnam therefore can’t be considered as the explanation for difficulties encountered by domestic producers.

- Production capability: In the period from 2007 to 2008, because the total domestic supply couldn’t meet the market demand, therefore it is understandable that there were an increase in import to meet the shortage of supply.

- Production technology: Vietnamese producers only use F.O oil as burning fuel whilst 100% factories in Indonesia apply gas production technology, therefore the production cost is lower and the products’ competitiveness are better.

- Management: In the crisis, Vietnam producers still keep very high sales prices, whilst overseas producers have flexibly adjusted the price to reduce stockpile and maintain the cash flow.

- Injury of Vietnam glass producers: The data showed that after 5- year operation, VIFG has made a loss of 80 billion VND (equivalent of 5 millions USD). Therefore, domestic producers not only made a loss recently but also in the whole production period.

- The current production and trading situation of domestic producers: The production state of Vietnam is much better. Together with the good signal of Vietnam economy: GDP and construction index all increase, oil price also get back to normal, the glass business also recovered and got back to normal after the recent difficul time.

Consequences of applying safeguards measures

- Product shortage: when there is a shortage in supply, the illegal import and product fraud will be more severe. Clearly, it will have big influence on glass processors.

- Besides, it also have impact on consumers, real estate investors, constructors because they have to pay high price for glass.

- Moreover, exporters really concern about prospective monopoly. If Nippon Sheet Glass (NSG) Corporation buy back VIFG, the ownership of NSG in the Vietnam glass industry will be too big.

- From the exporters’ point of view, Vietnam and Indonesia should cooperate closely because at APEC meeting, Vietnam and Indonesia have had a joint statement to go against protectionism.

III – Views of importers

- Product under investigation: there are certain products that importers proposed to exclude from investigation, which are products that domestic producers can’t produce. Because assume that safeguards measures are applied to imports that domestic industry can’t produce, it will have big influence on consumers.

- Domestic producers’ marketshare: According to Initial Report, the petitioners’ marketshare accounted for about 88%. This is a good number for domestic producers. With such a marketshare, whether safeguards measures can boost competitiveness or it will reintroduce monopoly position.

- Prices of products under investigation: During the past 4 months, 2 floating glass domestic producers have increased the price 6 times, with the increase equalled to 33%. At that time, the oil price only increased about 3 - 4%, and to produce 1 m2 glass, fuel cost only accounts for 35%.

- Product types and quality: currently VFG and VIFG don’t differentiate their products like that of exporters. VFG and VIFG only produce under 12mm glass, the glass specifications also have not yet met the market demand. Therefore, the production and business of glass processors cant be ensured. The plans of domestic producers are to improve products’ quality but from the importers’ point of view, this is difficult to implement because currently the furnace has come to final phase.

- Labour: The labor of VFG and VIFG account for about 20% the labor of glass producers. Besides, since 2008, all enterprises have to bear the changes in labor force, therefore the decrease in labour force of VFG and VIFG was a completely normal fact.

- Stockpile: One of the methods to reduce production volume is to maitain the usage capacity of the furnace at 60-70% only. Whilst, domestic producers still maitain capacity at 90%, which make the stockpile become bigger. Besides, VGI has operated from June 2008 – February 2009 and VGI products are labelled under VFG, so, is VGI’s stockpile included in VFG’s stockpile? Besides, eventhough VFG reduce production volume, VIFG increase stockpile but currently it is not convenient for importers to buy VFG and VIFG products.

Consequences of applying safeguards measures

- If applying the margin of 0.6 USD/m2QTC and increase import duty 40%, importers will have to cease business activities.

- According to importers, this is a safeguards measure, not an antidumping measure, therefore, Vietnam may have to compensate other countries through another product. Therefore, how the impact on that product (if any) will be whilst that product doesn’t relate to the glass industry. Besides, import turnover of floating glass is not big, less than 20 millions USD.

IV – Views of other related parties

* Vietnam Glass Association

- Floating glass supply and demand: The important reason that led to an increase in imported glass was the domestic supply didn’t meet the market demand. It is estimated that the demand for glass in Vietnam will increase in the upcoming time,because 2 big factories with capacity of 500 Ton/day and 700 ton/day, more than doubled the capacity of the 2 current floating galss factories, are being constructed.

- As for the issue of VGI’s closing down: VGI started operation in May 2008, that time the crisis was very prominent and Japan was also not out of the crisis, so why they still decided to start operation at that time? In the VGA’s view, VGI was established to substitute VFG’s input supply because VFG started their maintainance period.

The public hearing concluded at 11h30 same day.