Connect with us +84 (28) 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 Queen’s 91st Birthday Party - Sapphire Jubilee

 

QBP_2017.jpg

British Ambassador to Vietnam Giles Lever giving welcome speech

 

The BBGV staff had the honour to join The Queen’s 91st Birthday Party – Sapphire Jubilee on Tuesday, 06th of June 2017, along with representatives from Her Majesty's Armed Forces, British Embassy Vietnam, other diplomatic missions in Vietnam and the community of honorary enterprises.

 

The ceremony began by a moment of silence to commemorate the victims of the incidents happened in Manchester and London, and followed by the national anthems of The UK and Vietnam. The attendants then welcomed with the speech from the British Ambassador to Vietnam Giles Lever, the British Consul General Ian Gibbons and HCMC Deputy Chairman Le Thanh Liem, highlighting fruitful achievements in economic and other social aspects from the friendship between UK and Vietnam governments.

 

Also mentioned in these speeches the Incubator Unit concept which The BBGV Business Centre is on the way to put into practise. Our aim is that British and Vietnamese companies can trade together in an accessible and equitable manner… The BBGV Incubator would provide flexi-desk arrangements, meeting rooms and facilities for UK businesses as an additional service for those companies requiring physical office support and services.

 

Clients of the Incubator would benefit from the professional support of the BBGV Business Centre team and network in order to facilitate their business goals in Vietnam. BBGV would assist in connecting to the right individuals and organisations and form partnerships with the Vietnamese business and governmental sectors.

 

The structure - which would require a business visa to be issued – would allow UK companies a quick and cost-effective set up and licensing path in order to identify and meet key business contacts, and deliver business success.

Read more
A brief on Healthcare sector of Vietnam

healthcare_sector_June_2017.jpg

 

Vietnam’s health system is a mixed public-private system, in which the public system plays the key role, especially in policy, prevention, research and training. In 2015, Vietnam had approximately 1,316 hospitals with 2.89 beds per 1,000 populations. The private healthcare sector has grown steadily and the number of private hospitals has grown dramatically in recent years, representing 13.2% of hospitals and 4% beds nationwide. This number highlights opportunities for investors to enter the healthcare market.

 

Healthcare expenditure in Vietnam reached a value of USD13.9bn in 2015 and increased to USD14.9bn in 2016, marking a year-over-year growth of 9.6% in local currency terms. By 2025, healthcare expenditure is expected to reach USD33.7bn, more than doubling over the decade. A large and expanding population, rising incomes and improved access to healthcare services will act as key drivers of healthcare sector growth over the forecast period.

 

In addition to State funding, Overseas Development Assistance (ODA) and private sector funding, PPP is increasingly seen as a potentially important mechanism for Vietnam to improve its growing healthcare system.

 

The medical device market in Vietnam is considered as one of the Asia's fastest growing medical device markets, with a 2015-2020 CAGR of 9.0%. It ranked as the ninth largest market in the APAC region, valued at USD781.8mn in 2015. Most modern health equipment in hospitals is imported as the quality of domestic health equipment in Vietnam has yet to meet the national and international standards. Local production accounts for only 5% of the market. Domestic production is limited to basic items such as consumables. Some multinationals (B Braun, United Healthcare, Mediplast, etc...) have set up plants, attracted by low manufacturing and labour costs.

 

Only local companies can distribute medical devices in Vietnam, foreign companies must therefore sell their products through appointed local distributors and agents. VINAMED (Vietnam Medical Equipment Corporation) is one of the country's leading distributors. Vietnamese buyers, especially in the public sector, generally expect to deal with a local distributor to handle all aspects of distribution, from delivery to after sales service and provision of spare parts.

Read more
Free UK- Import Inquiries Service for Vietnamese Companies

UK_import_inquiries_June_17.jpg

 

The Business Centre provides a free service to Vietnamese companies, in the form of first-line confidential inquiries issue on the UK government’s portal: https://opportunities.export.great.gov.uk/.

Import & partnership demand from Vietnamese companies are raised on this portal. The portal targets UK businesses who are keen on exporting to specific countries including Vietnam. Business Centre then connects interested UK businesses to the respected Vietnamese companies.

For the past three months, we have posted 25 inquiries and connected around 18 Vietnamese companies with around 80 UK prospects.

 

Details of inquiry service:

Step 1: Vietnamese companies can submit inquiries to the BBGV Business Centre via phone, email or in person, following the template .
Step 2: BBGV Business Center will upload the inquiries onto the portal within 3 working days
Step 3: Additional quality control measurement will be applied and managed by the UK government (maximum 10 working days)
Step 4: UK companies start bidding within the deadlines. BBGV will assess the capability of interested UK companies and connect the suitable ones to the Vietnamese side.

The service is expected to deliver excellence connection between Vietnamese companies and potential UK exporters, enabling Vietnamese companies to broaden their product portfolios and seek sustainable operational solutions in order to improve their competitive advantages and satisfy customers.

For more information, please visit our website: https://opportunities.export.great.gov.uk/

 

Read more
UK Export Finance (UKEF) Chief Executive Officer visits Vietnam

Chief Executive Officer of UKEF Louis Taylor, during his three-day visit to Vietnam, brought goodwill to foster infrastructure development with a credit financial support package of up to 1.5 billion GBP.

 

UK_Export_finance_April.jpg

 Louis Taylor together with HCMC Deputy Chairman Le Thanh Liem at their meeting. (Source: HCM City People’s Committee Website)

Mr. Taylor held discussions on competitive long-term packages with public and private project sponsors in Hanoi. On the third day of his visit, Louis Taylor travelled to Ho Chi Minh City and held several meetings, including one with Mr. Le Van Liem – Deputy Chairman of HCMC People’s Committee.  Mr. Liem appreciated the offer from UKEF for the infrastructure progress of Vietnam and looked forward to further investment from UK companies in different sectors, in particular for Healthcare and Education projects. Mr. Taylor expressed a firm belief in the significant progress made by  Vietnam’s economy and, expressed his hope that the with UKEF support that the UK could continue to support the development made to date. 

Louis Taylor also met with UK business leaders in HCMC including the Urban Development Working Group, Mr Kenneth Atkinsion  - Executive Chairman of Grant Thornton Vietnam and Mr Tom Vaizey - Legal Counsel of the Dragon Capital Group. 

Read more

Advertise with BBGV