Consumers have recently been shocked by the soaring prices of plastic bags, which are now subject to a steep tariff under the Environmental Protection Tax Law, which took effect earlier this year.
As of January 1, 2012, a tax rate of up to VND50,000 (US$2.4) is imposed on every kilogram of plastic bags, with the government aiming to reduce the use of this product at supermarkets and shopping centers nationwide by 40 percent by 2015.
This has driven prices of the commodity up dramatically, shocking small traders, who consume the majority of plastic bags, which they use for wrapping their goods for buyers.
Khai, a plastic bag wholesaler for small traders at Pham Van Hai, Tan Binh, and An Dong markets in Ho Chi Minh City, said [plastic bag] prices have more than doubled over the last few days.
“Prices for one type of bag have more than doubled to VND70,000 a kilogram, up from VND31,000 a kilogram, which small traders are complaining is too expensive,” Khai said.
“But they have no choice, since they cannot sell goods without plastic bag wrapping.”
Long, who runs a fashion store in District 1, said he used to buy plastic bags in Cho Lon, but had to switch to Binh Tay wholesale market in District 6 when prices soared.
But even there, prices amounted to VND80,000 a kilogram, but traders still have to buy in large quantities.
Traders said that most plastic bag types have seen prices surge by 70 percent compared to the end of last year.
A small trader in Binh Tay market said he had to cut the use of plastic bags, otherwise “profits will not be enough to recoup for the bag costs.”
Even environmentally-friendly bags are taxed
Nguyen Phuoc Dong, director of packaging manufacturer Vafaco Co, which specializes in supplying plastic bags for supermarkets and retail stores citywide, said that even the self-dissolving plastic bag, whose cost price is 10 percent higher than the ordinary ones, is taxed the same amount as its ordinary counterparts.
According to the law, such eco-friendly bag should be exempted from the environmental protection tariffs, Dong said.
“But since the Ministry of Natural Resources and Environment has yet to issue any specific standards regarding this kind of bag, taxes are still applied to it,” he said.
“We need guidance from the authorities on the standards of the environmentally friendly plastic bags for our production.”
Saigon Co-op, the country’s largest retail chain, said it has piloted the use of eco-friendly bags in some supermarkets under the chain, with average monthly consumption of nearly 60 tons.
“But we still had to pay taxes for these bags,” the company’s representative said.
A sales director of a packaging company said that no manufacturer has so far been exempted from the environmental protection tax thanks to the lack of specific standards required for the eco-friendly bags.
Meanwhile, some retailers are seeking ways to adapt to the change.
Co-op Mart, for instance, has been limiting the use of plastic bags in its supermarkets by encouraging customers to use non-plastic bags.
“When the standards on eco-friendly bags have been completely developed, we will no longer use the ordinary plastic bags,” said Quynh Trang, director of public relations of Big C.
Insiders said there are currently four to five manufacturers in HCMC capable of making self-dissolving plastic bags, which is enough to ensure supply once the entire public begins using this kind of bag.
“Manufacturers will join hands with each other on technological changes to meet demand,” said Dong of Vafaco.
