The Secret to Laos’ Success: How a Small Country Exports Hundreds of Thousands of Tons of Tax-Free Goods to Vietnam, a Market That Consumes Over 10 Million Tons Annually

Preliminary data from the General Department of Vietnam Customs indicates that in April 2025, Vietnam imported nearly 500,000 tons of fertilizer, valued at 159 million USD. This represents a slight increase in volume but a 2.8% decrease in value compared to the same period last year.

For the first four months of 2025, fertilizer imports totaled over 1.84 million tons, equivalent to 587 million USD. The average import price stood at 319 USD per ton, reflecting a modest 0.3% increase.

China remained Vietnam’s largest source of fertilizer imports, accounting for 770,000 tons, or 192.82 million USD. This marks a significant 16.8% volume increase and a 15.3% value increase year-on-year. However, the average price decreased by 1.3% to 250.4 USD per ton. China-sourced fertilizers comprised 41.8% of total import volume and 32.9% of import value for Vietnam.

Russia was the second-largest market, with imports of 248,334 tons valued at 127.98 million USD, indicating increases of 2.6% in volume, 10.6% in value, and 7.8% in price.

Imports from Laos, the third-largest market, totaled 153,356 tons, valued at 40.88 million USD. While volume and value increased by 41.4% and 39.9%, respectively, the average price decreased by 1.1%, to 266.6 USD per ton.

Fertilizer is the most critical agricultural input for Vietnam’s agricultural production and constitutes the highest proportion of crop production costs. Notably, crop production currently accounts for 64-68% of the total output value of the entire agricultural sector.

The Vietnamese fertilizer industry is projected to experience robust growth in 2025, driven by several positive factors. Domestic demand remains stable as farmers continue to rely on fertilizers to enhance crop yields, particularly in rice and fruit cultivation.

Additionally, the industry holds significant export potential, given the anticipated surge in fertilizer demand from international markets such as India, the US, and African countries. This presents vast export opportunities for Vietnamese businesses.

According to experts, the Vietnamese fertilizer market in 2025 is likely to attain a better supply-demand balance than in 2024. Total supply is expected to reach approximately 11.5 – 12 million tons, while estimated consumption is projected at 10 – 10.5 million tons, including various types such as urea, DAP, NPK, and potash.

Urea holds the most substantial production share, with an estimated total capacity of 3 million tons per year, primarily sourced from domestic gas fields like Bach Ho and Nam Con Son. However, Vietnam’s fertilizer application rates are significantly higher than those of many other countries and triple the global average.

Regarding fertilizer import taxes, the current preferential tax rates range from 0% to 6%, depending on the HS code. Common fertilizers are taxed as follows: Urea – 6%, SA – 0%, Phosphate – 6%, Potassium Chloride – 0%, Potassium Sulphate – 0%, DAP – 6%, MAP – 0%, and NPK – 6%. Imports from countries with free trade agreements may benefit from special preferential tax rates if they meet the agreements’ conditions.

Consequently, the revised Value-Added Tax (VAT) Law, which the National Assembly passed in late 2024 and will take effect on July 1, 2025, introduces a 5% VAT rate for fertilizers. Experts believe this measure will ensure a competitive environment for both domestically produced and imported fertilizers.