The zero per cent tax on Chinese agricultural products exported to Viet Nam and ASEAN has increased domestic concerns about market domination, though others are optimistic, seeing competition as an opportunity for Vietnamese agriculture to change and rebound.
The zero per cent tax on Chinese agricultural products exported to Viet Nam and ASEAN has increased domestic concerns about market domination, though others are optimistic, seeing competition as an opportunity for Vietnamese agriculture to change and rebound.
According to agreements under the ASEAN–China Free Trade Agreement (ACFTA) for the 2016 to 2018 period, thousands of commodities from the ACFTA member countries will enjoy an import tax of zero per cent in Viet Nam if they have certificates of origin that coincide with the industry and trade ministry’s regulations.
The ACFTA member countries include China, the Philippines, Thailand, Singapore, Myanmar, Malaysia, Laos, Indonesia, Cambodia, Brunei and Viet Nam.
The Vietnamese Government issued Decree 128/2016ND-CP on September 1, 2016 to clarify the implementation of the special preferential import tariff schedule for the ASEAN-China Agreement 2016-18. Accordingly, many products, including vegetables, fruit and food, will be taxed at zero per cent during this period.
Statistics from the General Statistic Office showed that China was Viet Nam’s largest importer during the first nine months of this year, with a turnover of US$36 billion. Also, China’s excess of imports over exports was reported to reach $21.3 billion.
Meanwhile, Viet Nam imported seafood and vegetables from China valued at US$45.3 million and $146.9 million, respectively, according to Viet Nam’s General Department of Customs.
With the import tariff of zero per cent, goods from China and ASEAN members will put pressure on domestic goods, especially agricultural products, as many products from such countries have already flooded the Vietnamese market.
A number of Chinese products, which are on the list of enjoying zero per cent tax, have prices that are cheaper than those of local products. Meanwhile, a number of Thailand’s fruits, have high quality, though their prices are more competitive than the Vietnamese fruits.
Many economic experts have expressed their concerns that Vietnamese agricultural products may suffer in the domestic market if businesses do not change.
Deputy Chairman of Viet Nam Gardening Association Vo Mai told enternews.vn that Chinese products, such as potato, onion, cauliflower, orange, mandarin and grapes, would be in fierce competition with similar Vietnamese products.
The same could apply to other Chinese products, such as mangos, jack-fruit, plums, grapes and peaches, which have more opportunities to compete with domestic fruits, said Mai.
A representative of a breeding farm in the southern province of Dong Nai said a very large volume of chicken legs and wings from China, were temporarily imported to Viet Nam for re-export, but many batches had not been re-exported but consumed in the domestic market – causing many difficulties for Vietnamese chicken farmers, while affecting local consumers because of their low quality.
“With the door-open for free-duty products, Chinese low-price products, such as meat and chicken by-products, will have more of a chance to enter Viet Nam – causing difficulties for local animal breeding,” said the representative.
Maintaining market share
Chairman of Viet Nam Farmers’ Association Lai Xuan Mon said the importing of Chinese fruit to Viet Nam with free duty would bring about both opportunities and challenges to Vietnamese businesses.
“The important thing is how to turn such challenges into opportunities,” said Mon.
To maintain its market share, it will be necessary to increase the quality of products. Yet the challenge for Vietnamese agricultural products is not small, said Mon.
Mon noted that the country’s capacity for quarantine and food safety examinations was still limited, so it must pay attention to tightening the management of imported products from China, noting that they should be checked by the inspection bodies of both countries.
Economic expert Pham Chi Lan said that competitive pressures included not only competition on prices, but also quality. It was necessary to provide information to farmers and consumers, because they needed sufficient information about the market and the product quality, including those who take responsibility for ‘dirty’ products appearing in the market.
(Source:VNS)
