Rice trade becomes conditional business, what will be next?

Dec 13th at 13:11

13-12-2012 13:11:51+07:00

More and more business fields have been set as the types of conditional business. This would do more harm than good.

Manufacturers’ associations, one after another have repeatedly asked the government to add their industries onto the list of conditional business, i.e. that only the enterprises which can meet some certain requirements, would be able to join the industries.
Rice first, and then coffee, seafood and cashew nuts

Vietnam earned 25 billion dollars from the export of its leading farm produce in the first 11 months of the year, which was equal to ¼ of the total export turnover

Vietnam has become the biggest rice exporter in the world with 7.5 million tons of rice exported by the end of November, an increase of 10 percent in comparison with the same period of the last year. However, the export turnover was two percent lower.

Rice export is a type of conditional business, stipulated in the government’s Decree No. 109 which took effects on January 1, 2011.

Some years ago, the Vietnam Food Association (VFA), when lobbying for putting rice trade as a conditional business field, said that this would help heighten the competitiveness of the Vietnam’s export rice, and that this would help prevent incapable enterprises from entering the export market and dumping Vietnam’s rice in the world market.

Some days ago, the Vietnam Association of Seafood Exporters and Producers (VASEP) suggested that seafood export also should be considered a conditional business field.

At the same time, the Vietnam Cashew Association (Vinacas) sent a dispatch to the Ministries of Agriculture and Rural Development, and Industry and Trade, suggesting a similar thing for the cashew nut export.

A deputy chair of VASEP said that at present, only 50 out of 400 seafood export companies have processing factories which make up more than 90 percent of exports. Meanwhile, the remaining 350 enterprises always try to offer low export prices to dump Vietnamese products in the international market, thus causing losses to the whole seafood industry.

As for the cashew industry, Vinacas has complained that small enterprises have been trying to scramble for clients by offering surprisingly low export prices, giving foreign importers more reasons to force the export prices down.

Vinacas has suggested that strict requirements would be set on cashew nut exporters. For example, they need to have the processing workshops with the capacity of 2500 tons per annum at minimum to be able to export the products.

If the suggestion is approved, it is estimated that 150 operational export companies would have to leave the market. However, this is not the final goal Vinacas aims to. It wants the number of cashew exporters to reduce by another 50 percent.

In mid-2012, the Vietnam Cocoa an Coffee Association (Vicofa) has also proposed to set up requirements on coffee exporters. The proposal has been advocated by the relevant management ministries.

It is expected that enterprises must meet some requirements to be able to export coffee. For example, they have the export amount of 5000 tons a year, have storehouse big enough, and the minimum processing capacity of 5000 tons a year.

Meanwhile, legal experts have warned that setting up requirements on businesses which aims to weed out enterprises from the market is a behavior that comes contrary to the Enterprise Law.

The law stipulates that businesses in all business fields have the right to do the types of business which are not prohibited by the laws.