Vietnam Food Association (VFA) has been established since the end of 1989, which was previously known as Food Export Association with over 40 State enterprises as members.
VFA is expected to be “the extended arm” of the Government in rice management especially in the period of intense price competition.
However, in recent time, VFA is experiencing some criticisms, which states that: VFA only focuses on protecting the interest of State enterprises instead of representing the whole business community especially, private enterprises.
Additionally, the Decree 109/2010/ND-CP about the trading of rice production, which VFA is involved, also experiences many opposing views that considered the decree as a barrier and an unfairness to enterprises exporting rice.
In order to clarify this issue, TheLEADER had a meeting with economist Dr. Nguyen Duc Thanh, Head of Vietnam Institute For Economic and Policy Research.
How would you assess the role of VFA in the rice export when it is a requirement to go through VFA before exporting?
Dr. Nguyen Duc Thanh: This is a requirement in the Decree 109 and the stamping process is very troublesome.
I think in the future, this process should be removed, otherwise VFA will definitely become an actual Government Administrative Department, as without the red stamp of VFA, no matter how many terms required by the Custom or Ministry of Industry and Trade (MOIT) enterprises can meet, it is still unable to export.
This policy is previously carried out by VFA’s own action, so VFA can play a role in it, creating a trading condition, which is also very worrisome.
What is your view on the opinion considering there is an unfairness between small enterprises and large enterprises in rice exportation?
Dr. Nguyen Duc Thanh: This unfairness, considering the trading aspect is the ability to penetrate the market as well as the right to export directly.
This unfairness occurs due to the Decree 109, and due to the role of VFA in the market.
State enterprises or very large private enterprises, that already meet all of the terms, are completely authorised to do so i.e infiltrate the market and export directly.
For small enterprises, they are simply unable to meet given trading terms, even when they want to or have that ability, it is still a very long and complicated process.
This is a very large inequality in business, causing disadvantages for small enterprises even when their product is good and has added value. In my opinion, this is the future of the rice industry in Vietnam
If we cannot change this unfairness, the exportation of rice in Vietnam will be stuck in the position of large scale export with very normal quality.
Then in your opinion, what need to be changed in the Decree 109?
Dr. Nguyen Duc Thanh: The Decree 109 sets the terms for enterprises to directly export rice to the world and a lot of those terms are placed together, making it very difficult for enterprises to meet. For instance, having annual quantity of few tons of rice or requiring a certain size of warehouse.
Consequently, more and more small enterprises, even with very special product and highly added value, are still unable to export due to small output.
For that, small enterprises are forced to export through others qualified enterprises causing trouble for small enterprises as they have to pay part of a fee as well as facing the risk of revealing their business secret.
Even importers are not satisfied when they have to buy their products from an individual A when actually, B is the one who sells.
A lot of small to medium enterprises have exceptional product but are unable to join the export market.
Currently, I understand that Ministry of Industry and Trade (MOIT) has modified the Decree 109 significantly, removes a lot of terms as well as removes the role of VFA. Previously, VFA is very impactful in the Decree 109, today removing the role of VFA has placed its position back to an actual sector association, not “an extended arm” of the Government.
What do you think will be the future of the rice industry in Vietnam ?
Dr. Nguyen Duc Thanh: "I think Vietnam is a country with advantages in rice exportation but the role of rice exporting in export, generally speaking will reduce.
For overall development of the nation, lots of goods, even in agriculture like seafood, fruits, vegetables, will increase with higher added value. Besides, others industries will also grow, which narrows down the rice industry.
In this context, we should focus on smaller markets, which have higher added value with more specialized and purer rice types, creating a brand rather than mass exportation."
Thank you very much..