Rice exporters face foreign competition

Vietnamese rice exporters have been warned that they will meet big difficulties in 2011, because Vietnam has to open the food market to foreign enterprises.

According to Truong Thanh Phong, Chair of the Vietnam Food Association, until now, foreign food enterprises had to set up joint ventures with Vietnamese enterprises, if they wanted to trade rice. However from this year, all enterprises, Vietnamese and foreign, will “play in a level field”, as Vietnam has to open the food market to foreign enterprises under the international commitments.

Phong warns that small rice traders are very likely to fall into the hands of foreign companies. There are hundreds of Vietnamese enterprises which export rice, but about 30 which export regularly. Other enterprises operate on a small scale, each exporting several containers of rice a year.

Phong says that the biggest problem that Vietnamese enterprises have to face now is the lack of capital. In principle, they can take bank loans. However, are unable to pay the high interest rates.

“While foreign enterprises can borrow money at the interest rate of 4.5 percent, domestic enterprises have to pay 16.5 percent per annum. Thisputs Vietnamese enterprises in a hugely disadvantaged position,” Phong says.

some experts suggest that Vietnamese enterprises should team up with foreigners to set up joint ventures in order to become stronger. However, according to the Vietnam Food Association VFA, setting up joint ventures is not the optimum solution. At present, a domestic enterprise is teaming up with a Hong Kong’s partner to produce rice. The output is about 500 tons per day. The Hong Kong’s partner is responsible for providing fertilizer and is responsible for the outlet. However, an official from VFA says that such production models had failed in the past.

Experts say that the newly issued Decree No. 109 is the effective “technical barriers” that help prevent the entering of foreign enterprises when Vietnam officially opens the rice export market. Under the decree, foreign enterprises have to have storages and husking factories like domestic enterprise, in order to be eligible for exporting rice.

The Ministry of Industry and Trade has issued the Circular No. 44 guiding the implementation of the Decree 109 on the rice export management.

One of the most important new provisions says that all enterprises which can meet the set requirements, have the right to bid for exporting rice under the rice export contracts signed at the Government level. Until now, exporting rice under this mode has been the privilege of the members of VFA.

The new regulations have also set higher requirements on rice exporters. the companies which meet the requirements on depots, husking factories and processing capacity, can export rice. The new regulations are believed to open a new development stage in rice export. In the past, there were too many small enterprises in the market. Though they did not have rice in stocks, they still signed export contracts with foreign partners. then they tried to collect rice on the market, thus pushing the rice prices up.

Therefore, experts have described the new regulations as a filter which allows to eliminate small and incapable enterprises. the strongest and most capable enterprises will be able to export rice.

Under the Decree 109, rice export companies must have at least specialized depot with the capacity of 5000 tons, and at least husking factory with the minimum capacity of 10 tons of rice per hour.

However, experts say that the first months of 2011 will not see big changes in the rice export. Enterprises will have nine months more to upgrade their material facilities to meet the stipulated requirements. from October 1, 2011 to September 2012, enterprises will have to show the certificate on meeting the requirements for exporting rice. However, during that time, they will still be able to rent depots and husking factories. after September 2012, they will have to stop rice export activities if they do not meet the requirements.

From VietNamBusiness

Newer Articles
  • Vietnamese software firms consider Japan as the major market
  • Vietnam’s import spending on oil and gas in Aug at over $820m
  • Pepper futures show mixed trend amidst aggressive spot buying
  • Vietnam’s Handicraft Exports Target $1.6 Billion by 2015
  • Economic crisis hits leather, shoe exports
  • Footwear exports go up 26.4%
  • Export value surges 35.7% in first four months
  • Pepper price reaches record high
  • ‘Green’ farming key to exports of tra fish
  • Vietnam experiences surge in export to RoK
Older Articles
  • Key industrial products aid capital’s growth
  • VN to export 6 mln tons of rice in 2011
  • Coffee prices exceed VND38,000/kg
  • Apparel product export targets $18-20b in 2015
  • MoIT grants 140,000 tons of sugar quota to 7 July 2011
  • Vietnam says shrimp exports jumped, thanks in part to gulf of Mexico oil spill
  • Vietnam remains largest pepper exporters
  • Garment sector looks to boost world export standing
  • Tax cut by up to 6% on 1,000 imports
  • Salt and sugar import quotas for 2011
Latest News
  • Vietnamese software firms consider Japan as the major market
  • Despite problems, 2011 FDI spending equals 2010
  • EVNTelecom asks for government’s approval to sell 12pct stake for VTC
  • Vietnamese enterprises expanding into international markets
  • Ernst & Young Vietnam role to be examined
  • Vietnamese firms invest over $24.5b in foreign countries as of July-end
  • Vietnam Insurance Market: Keeping Double-digit Growth
  • Vietnam’s economy looks grim with ADB’s forecast
  • Ministry rejects import-export tax changes
  • Government okays anti-dumping suit against US
For Foreigners
  • Adb: policy tightening will lower inflation
  • HSBC, Barclays to advise Vietinbank’s planned overseas dollar bond sale
  • Vietnam govt to service debt for troubled cement projects
  • Calm heads prevail as the forex market to remain cool
  • Further fiscal & monetary tightening in coming months
  • IMF cuts Vietnam’s inflation forecast to 9.5pct in 2011
  • Vietnam’s dong has best week since 1997 after dollar rates curb
  • Vietnam tightens control over state-bank partnership
  • Foreign investors list problems in Vietnam
  • Foreign invested enterprises complain about customs procedures

BusinessTradeVietnamGovernmentFDIWorld economyVietnamese PartyEconomyEconomicMarketState managementPrime MinisterHCM cityHanoiHo Chi MinhCPIAsianWorldAmericaEuropeNguyen Tan DungHau GiangMekong DeltariceStandingMekongCambodiausajapanchinakoreaLai ChauHoa BinhHoi AnChu LaiQuang NamDa nangCan thoSon LaPower PlantMinistry of IndustryDung QuatOilSingaporeThailandMalaysiaIndonesiaLaosVietnameseFDI capitalinvestorsforeign investorNetherlandsUSservicetransportationinfrastructuretourismVNPostExpressSpainGoldTra fishexportcontractstouristMiddle AreaConstructionShipbuildingIndustryCompanyIndustrial ZonebudgetDong NaiBinh DuongVung TauTay NinhBinh PhuocTay NinhLong AnTien GiangUS investorshydropower plantQuang NinhNha TrangStock ExchangeHNXIndexcapitalAgricultureDong ThapAn GiangExport-Processing ZoneYen BaiLao CaiLai ChauDien BienSon LaHoa BinhPhu ThoHa GiangTuyen QuangBac KanLang SonCao BangmanufacturersAseanRussiadevelopmentAviationinflationHong KongAmericanChamber of CommerceSeafoodODAWBIMFFEDAsia-PacificAssociationcountriesEuropeanmarine economyThanh HoaNghe AnNam DinhHa TinhPhu LýVinh PhucBac NinhBac GiangHung YenHai DuongBinh ThuanBinh PhuocLam DongGia LaiKon tumQuang NgaiQuang BinhQuang TriNinh ThuanCa MauBac LieuSoc TrangTra VinhKien GiangVinh LongBen TreincomespoliciesLawassetsNatural GasBuildingstatisticsstrategyDa Latmineral exploitationprocessingindustrieselectricitywatersupplyEnterprisesforestryfisherycommunicationsreal estatetransportationCorruptionbauxiteSecuritiesInsuranceBankFinanceAccountgoodsTrade BalancecoffeeCoalfestivalHa NamNinh BinhHoa BinhUniversityArtsBooktravelVietnam VisaVisaPagodaCommitteePeople's CommitteeVinashincompaniesHoa PhatHSBCACBvietcombankvietinbank

Copyright 2010 © 
Powered by: CIINS Design by: