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In Vietnam, duty-free supermarkets now become customer-free venues

Friday, April 24, 2015, 12:26 GMT+7
In Vietnam, duty-free supermarkets now become customer-free venues
Two shoppers walk among the empty shelves at the GC duty-free supermarket in Moc Bai Border Economic Zone in Tay Ninh Province, located in southern Vietnam, on April 23, 2015.

Gone are the days when people eagerly rushed to supermarkets along Vietnam’s border with Cambodia to buy duty-free goods.

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Shoppers no longer find the commodities available in that area attractive, whereas supermarket operators said some policy changes have stripped them of all the preferential treatments that used to help them woo customers.

The Moc Bai Border Economic Zone, located in the area bordering Cambodia in the southern province of Tay Ninh, and Tinh Bien, its counterpart in An Giang Province in the Mekong Delta, used to be the most famous destinations to buy tax-free products, with a number of busy supermarkets there.

But GC, the largest duty-free supermarket in Moc Bai, only 62km from Ho Chi Minh City, will temporarily shut down on May 5, while other nearby facilities are too on a knife edge as shoppers are nowhere to be seen.

People can easily go to Moc Bai from Ho Chi Minh City by motorbike or via a nonstop bus service that departs from the Ben Thanh Bus Station.

Nguyen Thi Vinh, who took such a bus to Moc Bai along with some friends on April 23, was shocked to see a deserted scene upon her arrival at GC.

The venue was full of empty shelves and booths, and only a few brands of dye, supplementary diets, and cloth softeners were on sale behind “great sale-off” banners, she recalled.

Only one of the 30 checkout counters there was in operation.

“The cashier in charge of that counter told me this was all left at the supermarket as they would be closing down soon,” Vinh told Tuoi Tre (Youth) newspaper.

GC has been offering discounts of up to 70 percent to empty its stock before the deadline, according to the cashier.

Vinh said she had expected to buy luxury imports at these duty-free supermarkets, but all she found there were Chinese products.

“A handbag was available at a 70 percent discount rate, but it was covered with dusk and in bad condition,” she said.

“I’d rather go to the supermarket near my house.”

While GC already has a closing date, other venues such as Smiling, Satra Tay Nam, and Song Chau are struggling to find buyers.

Policy changes

The Ky Vang Co. Ltd., the operator of the GC supermarket, attributed the future shutdown to some amended policies that have put it and other businesses into a disadvantaged position.

Since January 5 last year, shoppers have been no longer allowed to buy duty-free beer or alcoholic beverages at Moc Bai, a change the company said has driven away a huge number of customers.

In October 2014, businesses operating in the economic zone were also required to pay taxes, including import duty, special consumption and value-added taxes, on their imports upon the shipments’ arrival, instead of settling them later like before.

“These regulations have almost removed all the preferential treatments businesses in Moc Bai used to be entitled to,” company director Le Quang Vinh told Tuoi Tre.

Vinh said his firm incurred more than VND3 billion (US$139,808) in losses in the first quarter of this year alone, plus an unsold stock of beer and wine worth VND19 billion ($885,451), which is why it will have to temporarily cease operations.

Tran Thi Bich Huyen, director of Song Chau Co. Ltd., which operates the Song Chau supermarket in Moc Bai, said even though the facility remains open, the number of goods has been more than halved compared to last year.

The company is facing the same problems as The Ky Vang, Huyen told Tuoi Tre.

“We have to pay taxes in advance and only get the refunds once we have managed to empty the stocks,” she said, adding it takes at least a year to “sell out of a batch of hundreds of items.”

Only 14 out of 38 businesses licensed to operate in the duty-free zone in Moc Bai now remain active, said Pham Van Son, deputy head of the management board of the economic zone.

“The number of businesses halting operations is expected to increase if the tax policies remain unchanged in the future,” Son said.

The official added the management board can provide no help because the policies were “promulgated by the central government.”

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