Facilitating coal imports from Australia to Vietnam

Vietnam's economic growth and industrial expansion have led to an increasing demand for energy, particularly coal. The nation has been ramping up its coal imports as part of efforts to avoid power cuts that could hamper its industrial and economic activities. 

The urgency to bolster coal imports is further highlighted by Vietnam's National Energy Master Plan (NEMP) for 2021 to 2030. According to an article Vietnam Briefing, the plan anticipates coal imports to peak at about 85 million tonnes in 2035, then gradually decrease to 50 million tonnes by 2045. This strategic approach aims to balance immediate energy needs with long-term sustainability goals, ensuring a reliable energy supply.

In order to meet these plans, Vietnam will be looking to import even more coal from Australia. An article by Vietnam Briefing showed coal as Australia’s leading export to Vietnam, valued at approximately US$4.3 billion in 2022. 

As the Vietnam and Australia coal trade looks set to grow in the near future, businesses involved with or looking to enter the market must familiarise themselves with the intricacies of the import procedures in Vietnam. This includes questions like “What is the duty on imports and exports from Australia to Vietnam?” as well as up-to-date knowledge on customs clearance in Vietnam. 

This article delves into the procedures, regulations, and logistics involved in facilitating coal imports from Australia to Vietnam, providing a comprehensive guide for all stakeholders.

Exporting coal from Australia to Vietnam

The thriving Vietnam-Australia trade relationship has paved the way for coal exports and imports, which are vital for meeting Vietnam's growing energy demands. Before we look at the import procedure in Vietnam, we must first understand how to export from Australia. 

Australia’s export declaration process

The first step in exporting coal from Australia is the export declaration process. All shipping from Australia is subject to customs control, and an export declaration or exemption code is required for all goods leaving the country. The Australian Border Force (ABF) must be notified of goods that:

• Have a value of more than AU$2,000.
• Require an export permit.
• Are dutiable or excisable goods where the duty or excise duty is unpaid.
• Have a duty drawback that is being claimed.

The ABF will assess the goods to ensure they meet all necessary export requirements. Once the goods are determined to be compliant and cleared, an export permit for Australia is issued.

Export documentation

Businesses will need to prepare seven documents to fulfil Australia’s export requirements. These documents ensure that the shipment complies with both Australian and Vietnamese regulations, facilitating a hassle-free export process. 

1. Export declaration: Required for all goods leaving Australia, ensuring compliance with customs regulations.
2. Import license: Necessary for import of goods into Vietnam, with specific requirements varying by country.
3. Commercial invoice: Provides detailed information about the shipment, including a description of goods, total value, and Harmonised System (HS) Code.
4. Bill of lading: A legal document listing the items being shipped, the names of the sender and shipping company, and transportation terms.
5. Air waybill: A type of bill of lading used for air shipments, including details about the shipment and instructions for handling.
6. Certificate of origin: Certifies that the product is obtained, produced, manufactured, or processed in a specific country.
7. Insurance certificate: Provides proof of insurance coverage for the shipment, protecting against loss or damage.

Import procedures in Vietnam

To successfully import coal from Australia into Vietnam, businesses must navigate several regulatory and logistical steps. Understanding the import procedures is the first step of shipping to Vietnam and is essential for ensuring compliance and to avoid running afoul of customs regulations.

Registration and establishment of legal entities

To engage in import activities in Vietnam, businesses must have an established trading company in the nation. Unlike some countries, Vietnam does not mandate a separate import or export licence, allowing businesses to freely participate in import and export, as well as domestic distribution.

However, if an importer intends to sell imported products directly to Vietnamese consumers, they must obtain an additional trading licence. Establishing a trading company typically takes around three months, while acquiring a trading licence can take one to three months.

Importer of record services

Companies that wish to import coal from Australia into Vietnam without setting up a local legal entity can use an importer of record (IOR) service. This strategy is particularly beneficial for businesses with time constraints, businesses looking to test the market, or businesses planning to import only occasionally. Importers of record handle the complexities of logistics, regulatory compliance, and language barriers, making the import procedure in Vietnam more manageable for foreign businesses.

Customs regulations in Vietnam

The customs clearance process in Vietnam ensures that all import goods, including coal, meet the country's standards and regulations. Here's a detailed look at Vietnam’s customs procedures:

1. Submission of customs declarations: Importers must submit a customs declaration form for import goods like coal. This form includes detailed information about the shipment and must be presented in its original form.
2. Inspection of goods: Customs authorities determine whether to examine the goods based on various factors, including the importer's history of compliance and the risk level associated with the shipment. Vietnam uses a system of minimum customs inspection, relying more on post-entry audits.
3. Examination exemptions: Certain goods may be exempt from actual customs inspection, including goods imported by entities with a good compliance record, machinery and equipment for investment projects, and humanitarian aid goods.

Customs documents for import into Vietnam

To facilitate customs clearance in Vietnam, importers should prepare the following documents: 

• Customs declaration form: This is required for all imported goods and must be submitted in its original form.

• Commercial invoice: Provides detailed information about the shipment, including the value of the goods.

• Purchase and sale contract: A copy of the contract or equivalent documents related to the transaction.

• Import permit: Required for goods that need specific import permits, as mandated by Vietnam’s Ministry of Industry and Trade. 

• Bill of lading: A copy of the bill of lading, which details the shipment and terms of transportation.

• Detailed packing list: An original packing list that itemises the contents of the shipment.

• Certificate of origin: An original certificate certifying the country of origin of the goods, necessary for preferential tariff rates.

• Certificate of registration for quality inspection: Issued by an inspection organisation or a note on exemption from state quality control by the competent authority.

Customs authorities will review the submitted documents and determine whether an inspection of the goods is necessary. If the goods meet all regulatory requirements and the necessary duties and taxes are paid, the goods will be cleared for import. Generally, according to the Vietnam Embassy, no more than 5% of merchandise is subject to random inspection. For high-risk shipments or entities with poor compliance records, more thorough examinations may be conducted.

Duty on Imports and Exports in Vietnam

Understanding the various taxes and duties applied to coal imports in Vietnam is crucial for businesses to effectively manage costs and comply with regulations. Here is an overview of the relevant taxes and duties:

• Import duty: Import duties are applied to goods imported into Vietnam, including coal. The rate varies depending on the type of coal and its classification under the Harmonised System (HS) Code.

• Value-added tax (VAT): VAT is applied to most goods and services in Vietnam at a standard rate of 10%. This tax is calculated based on the cost, insurance, and freight value plus any applicable import duty.

• Special consumption tax (SCT): SCT is generally imposed on goods considered luxury items or those that may have environmental impacts. While coal is not typically subject to SCT, it is important to verify this based on specific coal types and their uses.

Green taxes in Vietnam

Coal imports into Vietnam are affected by green taxes that were implemented for environmental protection purposes. Some examples are:

• Natural Resource Tax (NRT): This tax is payable by industries exploiting natural resources in Vietnam. The rates vary depending on the resource and range from 1% to 40%. Coal, as a natural resource, is subject to NRT, which is calculated based on production output and taxable value.

• Environment Protection Tax (EPT): This indirect tax applies to the production and importing of goods deemed detrimental to the environment, including coal. The EPT rates for coal are determined per kilogram and vary according to the type of coal and its usage.

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