Tuesday, July 7, 2009

Duty-free stores closed

A change in the duty-free shopping laws has resulted in the closure of several supermarkets and shops at the Moc Bai Border Economic Zone at the Vietnam-Cambodia border.

Much to the surprise of shoppers, 46 of the 48 businesses in the zone in southern Tay Ninh Province have shut their doors this month. The remaining two are struggling to survive on their remaining customers, mainly Cambodians.

Winmart, the third and largest duty-free market in Moc Bai which opened on May 17, was open for business last week but with a complete lack of customers.

Moc Bai Economic Zone Authority Deputy Chief Le Van Tuong told Tuoi Tre the retailers had stopped trading in the wake of a government decision to only allow foreign visitors to buy duty-free goods. The ban on Vietnamese passport-holders buying duty-free goods in border economic zones took effect on July 1.

Before the ban took effect, Vietnamese shoppers were the main customers at the zone’s duty-free stores, Tuong said.

When duty is imposed on the goods sold in the zone, they actually cost more in Moc Bai than in other places because of transportation costs, on top of the import tax, special consumption tax and value-added tax (VAT).
he Winmart superstore is completely deserted after the government changed its duty-free policies.

“How can we attract customers with that policy?” a company director asked.

A Vietnamese-Canadian businessman said he invested some US$12 million in his store at the Hiep Thanh Trade Center in the Moc Bai Border Economic Zone but business had been getting worse over the past three years.

“At first, each buyer was allowed to buy VND500,000 ($28) of duty-free items per day, then the limit was reduced to VND500,000 each week and now there’s a ban,” he said. “If the situation continues, I will be forced to shut down my store.”

At the request of Moc Bai economic zone authority, Tay Ninh Province People’s Committee has asked the government to reconsider the policies that apply to the zone.

The government’s decision has also affected businesses in the duty-free economic zone at the Tinh Bien Border in southern An Giang Province, which are now on the verge of bankruptcy.

“The previous duty-free policies boosted investment in infrastructure and trade at border gates,” said An Giang Border Economic Department Deputy Chief Le Huu Trang.

“The decision (to change the duty-free rules) will surely put a halt to all licensed projects,” Trang said.

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