FIEs reason with MOIT on their right to collect materials
FIEs reason with MOIT on their right to collect materials
Foreign invested enterprises (FIEs) have complained that they bear the discriminatory treatment when they are prohibited to purchase materials from farmers.
FIEs put on tenterhooks
The Ministry of Industry and Trade, in a newly released legal document, reaffirmed that foreign invested enterprises can buy Vietnamese goods for export, but they must not collect materials directly from Vietnamese farmers. They have to do this through Vietnamese licensed businessmen.
“We are a business which operates under the licensing of the government of Vietnam. However, the Circular 08 restricts our business scale and badly affect our business performance,” said the director of a foreign invested seafood company.
The director complained that his company may be pushed against the wall once the circular takes effects in some days, slated for early July 2013, because he would not be able to collect materials to process seafood products for export.
He went on to say that the State should not intervene too deeply into the material market, but should let it operate its way. The State should only set up the rules for the market, encourage enterprises to re-invest in the agriculture production and material growing area on the basis of the benefit harmonization of domestic enterprises, FIEs and farmers.
“The circular may lead to the monopoly. Domestic enterprises, which are the only buyers, may set up their rules on the market and force the prices down, thus making farmers incur loss,” he said.
The monopoly, of course, would also make FIEs suffer, because they would have to depend on the domestic suppliers. “The material prices may be pushed up because of the monopoly mechanism,” he said.
The problem may be more serious than initially thought, because the majority of the domestic enterprises which can collect materials directly from farmers, are the exporters as well. In order to compete with FIEs and obtain more export contracts, they may play tricks to prevent FIEs to access material supplies sources.
Some other foreign businessmen have also complained that the newly released legal document comes contrary to the rules of a market economy, because it generates the monopoly.
Officials say Vietnam does not violate the laws
Nguyen Dinh Bich, a well-known trade expert, when highly appreciating the new circular, said that if foreign businessmen can continue collecting materials directly from farmers; they may damage the material area development program.
Over the last few years, when foreign businessmen compete with domestic enterprises to buy farm produce from farmers, the farm produce prices have been pushed up, which has made the domestic enterprises’ production costs higher.
“If Vietnam does not set up strict regulations to control the farm produce market and take drastic measures to ensure the enforcement of the law, foreign businessmen would swallow the whole Vietnamese production system,” Bich said.
Secretary General of the Vietnam Coffee and Cocoa Association (Vicofa), Nguyen Viet Vinh, has denied the opinion about the discriminatory treatment, saying that the regulations applied in other countries are much stricter.
Indonesia, for example, stipulates that FIEs can only buy materials from farmers when they are licensed by local authorities. The FIEs have to prove that they invest their money to develop the material areas to be able to get the license for material collection. They would have the licenses revoked if they do not invest to develop material areas and don’t have export products for 3years.
vietnamnet
