Connect with us +84 (8) 3829 8430

info@bbgv.org

Founding Sponsor

All Retail Lifestyles Environment ICT Financial Services Creative Industries Chemicals Agriculture Doing Business in Vietnam
Vietnam’s agriculture sector at a crossroads Oxford Business Review

By Rey Davis-Tuplano

 

Vietnam_31.10.2016.png

 

New trade agreements, as well as a push for value-added processing, should help sustain export growth in Vietnam’s agriculture sector.

A World Bank report released in late September highlighted the need for Vietnam to revamp its agricultural sector to meet demographic, economic and environmental challenges.

The report, entitled “Transforming Vietnamese Agriculture: Gaining more from less”, suggests that the sector needs to boost value-added content and diversify its offerings to increase the country’s market access opportunities.

The recommendations are timely, given that Vietnam’s export market is expected to grow by some 500m people through the recent formation of the ASEAN Economic Community and the forthcoming EU-Vietnam Free Trade Agreement, to take effect in 2018.

From primary production to processing

As one of the mainstays of the Vietnamese economy, agriculture accounted for 17% of GDP in 2014 and currently employs nearly half of the workforce.

However, increasing urbanisation, which is forecast to reach 50% of the population within a decade, combined with a burgeoning middle class, is expected to result in a shift in consumption and employment trends in the sector.

Employment in the primary agricultural sector is predicted to decrease from its current 47% to between 25% and 30% by 2030, although much of this loss should be offset by a strong rise in jobs in the value-added component, with employment rates of up to 40%.

Domestic sales of snacks, processed and ready-to-eat foods have gained momentum in the last decade while Vietnam’s agricultural trade – which has traditionally been dominated by raw commodities – is starting to see a shift as well.

As a result, primary agriculture’s contribution to GDP is expected to decline by 0.5% annually, while agro-industry’s share could nearly double to account for roughly one-fourth of the country’s GDP by 2030, according to the World Bank report.

To this end, Vietnam is also looking to consolidate and scale its operations to meet the needs of agribusiness.

The small scale of most Vietnamese farms makes it difficult for agribusiness to make the most from local production, according to Nguyen Van Khai, CEO of Pan Group, an integrated agriculture and food manufacturer.

“Instead of dealing with one large producer, as is often the case in Western countries, companies operating in Vietnam have to deal with multiple small landholders,” Nguyen told OBG. “If you are dealing with 300 ha in Vietnam, you have to work with 300 people.”

Improving quality for export

While Vietnam’s agricultural exports are on the rise – recording a 11% year-on-year (y-o-y) increase to $10.2bn in the first quarter of 2016, and are expected to grow by between 4% and 6% annually – its products are perceived as being of lower value and quality.

The government is already looking to take suggestions from the World Bank report on board to overhaul the agricultural sector through the greater use of advanced technology and techniques for value-added processing.

According to Nguyen Xuan Cuong, the minister of agriculture and rural development, broadening the base of its export market is also a priority.

“In the long run, we should focus more on official trade with China while expanding our foreign trade with Japan, the US, Australia, the EU and others,” he told local media in September. “This is the right path for agricultural development.”

Currently, some 35% of Vietnam’s agricultural shipments are destined for the Chinese market, a level likely to rise this year, with exports to its northern neighbour rising 47% y-o-y in the first four months of 2016, according to ministry data.

At the end of September, the Asian Development Bank (ADB) lowered its forecast for Vietnam’s economic growth, projecting GDP to expand by 6% this year, down on its initial estimate of 6.7% made in March. The bank also revised its outlook for next year to 6.3% from earlier estimates of 6.5%.

One of the key reasons for the downward revision was the weaker performance of Vietnam’s agriculture sector, with the ADB citing recent drought conditions in the Mekong Delta and Central Highlands regions, along with falling global commodity prices impacting export returns.

Environment for change

In addition to the effects of climatic conditions on output, the environmental impact of poor agricultural practices is also becoming a growing concern for the sector, as Vietnam looks to expand its industry for export.

‘“Business-as-usual’ is no longer an option for the sector – growth has slowed down, it is vulnerable to climate hazards and leaves a large environmental footprint,” Ousmane Dione, country director for Vietnam at the World Bank, said at a press conference in September.

In early October, for example, tonnes of fish washed ashore at West Lake, Hanoi’s largest freshwater lake, while in April an incident at Formosa Ha Tinh Steel’s plant led to fish deaths, local media reported.

In a bid to address environmental issues, a joint delegation from the Ministry of Industry and Trade and Ministry of Environment and Natural Resources is planning to look into factories’ production and waste treatment facilities, which pose a risk to water contamination, according to press reports.

At the same time, the private sector is also looking to boost efforts in this area.

“Resources and waste management are key sectors in which foreign firms are able to contribute to Vietnam’s development,” Guillaume Crouzet, general director of the French Chamber of Commerce in Vietnam, told OBG. “One of the elements that helps a foreign firm decide to invest in Vietnam is access to proper resources.”

This Vietnam economic update was produced by Oxford Business Group.

>

Read more
The Training Gateway 2017 – Export Opportunity and Cooperation for Development

training_-_Copy.PNG

 

The Training Gateway, which is held annually, is the occasion for UK delegates to visit Vietnam and work on Education and Corporate Training Trade Mission. This year, the Business Centre of BBGV is honoured to support this event.


The content of the training programmes delivered will cover many outstanding sectors, such as: teacher training, vocational training in hospitality and catering, oil and gas engineering, leadership and management training, English Assessment, etc.,. During the first 2 days in Ho Chi Minh City and another 1 day in Hanoi, the delegates would have the opportunities to introduce their training programmes to key participants, who are mostly Human Resource directors and educational buyers in the region, through Master class/ workshops, mini exhibitions along with B2B meetings and site visits.

 

Prior to the main event, there will be a pre mission webinar on Thursday 27th of April between 8:30 and 9:30 am (UK time) as a great opportunity to find out more about the mission and raise any questions. To register for the webinar, please Click here
For more information about the scope and schedule of the event, please find it here



If you would like to join as a delegate, please contact Ms. Amanda Selvaratnam by Amanda.Selvaratnam@york.ac.uk

Read more
Consultancy field trips program with CASS Business School of London (CASS)

CASS_2017_receptionfdsafasf.jpg

 

On 29th of March, BBGV had the pleasure to once again welcome the MBA students from CASS to Vietnam for consultancy field trips, as a co-host annual activity since 2009.

 

CASS is located in the financial centre of London, educating MBA and Executive MBA students. Their two-year programme is ranked as one of the world’s best. CASS students are professionals and managers in their 30’s and represent the best institutions in the City of London and other European business capitals.

 

During their one-week stay in Vietnam, around 50 students are divided into groups and worked intensively on business development projects at Vietnamese companies. The projects are specialised in new marketing or cost cutting strategies, company restructuring, new distribution strategies or the possibility of entering new markets. The hosting companies benefited from working with experienced executives come from over 30 countries and different industries. For this year visit, they were Vietnam Airlines, Le Bros, Viglacera, Maritime Bank, Vietcombank, Canifa, IDC Group, Hanoia and PYS travel.
This program also gives the local senior management teams opportunities to utilise their skills and knowledge of international business to grow beyond the border of Vietnam.

 

Read more
Doing Agri-Business in Vietnam Webinar


The webinar Doing Agri-Business in Vietnam was successfully held by BBGV on February 17, 2017. The invited experts, in the role of stakeholders, have provided valuable information on overview of agri-business in Vietnam, updates on recent legal frameworks for registering new agri-tech items (machinery & equipment), agricultural stuffs (animal feeds, feed additives, and fertilizer); and practical experiences in doing agri-business in Vietnam.

Please click download the full Audio and Presentation

Read more
SCC – New Global Delivery Centre opened in Ho Chi Minh City

16992007_10154303928050544_6627351475331135170_o.jpg

source: UKINVIETNAM


With the key support from The Business Centre- British Business Group Vietnam (BBGV), SCC has successfully launched its second Global Delivery Centre in Ho Chi Minh City on February 24, 2017. The inauguration ceremony welcomed the participation of Dr Liam Fox - UK Secretary of State for International Trade, along with SCC founder - Sir Peter Rigby.

SCC, with 40 years of development, is the largest independent IT group in Europe, which not only provides businesses with quality IT infrastructure solutions and services, but also contributes to UK national charities and heritage.

After the earlier approach to Vietnam with a Preferred Partner framework agreement signed with Vietnamese software giant FPT Software in September 2016, SCC’s operation expansion to Vietnam has marked its “another important strategic milestone for the business”, said CEO James Rigby. The new operation also contributes to enhance the business partnership between two countries.

In his speech, Sir Peter Rigby sent great appreciation to the organizations, including BBGV, for the enthusiastic assistance to SCC expansion plan. With £32m revenue generated in fiscal year 2016, the new Centre aims to deliver great support to clients in both Eastern and Western areas.

Read more

Advertise with BBGV