Many foreign firms have penetrated the Vietnamese market to benefit from the preferential tariffs in line with the country’s commitments in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Vietnam’s seafood products will face fiercer competition in local market
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From November this year, for example, import taxes applied for grape wine and champagne from Canada will be reduced from the current 56 percent to 41 percent and 36 percent in early 2020.
Vietnam will erase all import tax for seafood products such as frozen crab and fish from Canada and Australia, while cutting down tax for Canadian salmon from 18 percent to zero percent, and that for Canadian lobster from 35 percent to 15 percent.
To seize opportunities from the tax incentives, many foreign food firms, including those from Japan, Australia and Chile, have come to Vietnam to exploit the local market.
Nakajima Hayato from Japan’s Middis Inc. said the firm has partnered with three Vietnamese businesses to introduce the milk trademark Bean Stalk to Vietnam since 2017. The company will increase the sale of the product in Vietnam when the CPTPP takes effects, he said.
Meanwhile, a representative from Oitaken, a Japanese provider of Kosui pears, said that the company will also ship more fruit to Vietnam.
Le Van May, CEO of Lotus Group, a Japanese nappy, formula milk and food distributor, said that Japanese firms will continue joining the Vietnamese market to optimize the opportunities in the outlet.
Big changes in local market
However, the presence of more foreign businesses in Vietnam will cause considerable changes in the domestic market next time, experts warned.
Nguyen Viet Dung, a National Assembly deputy from Ho Chi Minh City, said Vietnamese investment to the farming sector should be carefully calculated as similar products from CPTPP markets are very competitive.
Dung stressed the need to develop large-scale production to facilitate the application of technology, thus enhancing the competitiveness of domestic products.
Trinh Quoc Dung, executive director of dairy firm Vinamilk, said that if Vietnamese firms fail to make careful preparations, they will lose right in the domestic playground.
In the context of strong competition from foreign firms, restructuring themselves to reduce costs and improve the quality of their products is the only way for Vietnamese breeding companies, meat processing and milk businesses, he stated.
However, Dung said, products which are internationally competitive in the domestic market will have an easier way to foreign markets.
Sharing the same view, expert Le Dang Doanh said though the competition within domestic markets will rise, the trade agreement will also open up export trade for Vietnamese firms.
However, local firms will have to meet many regulations on technical barriers and social responsibility in order to take full advantage of the trade agreement, he said, adding to be eligible for tax exemption, for example, Vietnamese goods must follow rules of origin whereby a certain ratio of goods’ materials or processing must originate from CPTPP countries.
“Vietnamese firms will also have to satisfy technical barriers to trade such as quality specification, consumer safety standards, labor and social responsibility regulations and environmental protection standards,” he said.
Many agricultural goods and seafood firms are still struggling with technical barriers like food safety, so they need to work on brand building and improving production processes to adhere to the regulations, he said.
