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Huge upside for Vietnam’s organic products in Europe

Swiss daily Tribune de Gèneve has recently published an article hailing Vietnam as a new destination for foreign companies.

The article said Vietnam recorded the strongest economic growth in Asia in 2022 following a period of closure due to the COVID-19 pandemic. Switzerland is well-positioned to leverage advantages brought about by the Vietnamese economy. Two-way trade between Switzerland and Vietnam hit about 3.2 billion USD in 2020.

Hundreds of Swiss companies have been among the most important European investors present in Vietnam. In particular, the Swiss industrial equipment sector should fully tap the growing trend of “Made in Vietnam” products.

According to the article, the industrial boom in Vietnam could be clearly felt when entering the Van Trung Industrial Park, which is an hour’s drive to the north of Hanoi. Early in the morning, many people were lining up in front of recruitment office of Foxconn – the most famous subcontractor for Apple. In front of a large dormitory for workers, there is also a large poster with a notice that Foxconn is recruiting 10,000 employees with favourable working conditions.
Foxconn is not the only factory hiring a large number of workers. Not far away, LuxShare, a competitor, is announcing that it will recruit 13,000 new employees. An automobile supplier is seeking 700 eligible positions while a solar panel manufacturer is announcing the recruitment of 6,000 positions.

Large industrial zones are being built and taken over by advanced electronics manufacturers, said the article.

The Republic of Korea’s electronics conglomerate Samsung inaugurated a brand new research and development centre in Hanoi in December 2022. It also plans to invest around 3.2 billion USD to produce semiconductors in a neighbouring province. The US’s semiconductor equipment company Amkor Technology will soon open a factory near the airport. And Pegatron of Taiwan (China) that produces components for electric carmaker Tesla and assembles iPhones, has recently begun operations near Ha Long Bay.

The article attributed Vietnam’s above-said attraction to various factors such as a stable investment environment, 15 free trade agreements, including one signed in 2020 with the European Union (EU), helping Vietnam become a hub of industrial production at affordable costs.

Vietnam is being rated by foreign investors as a top priority for investment. Therefore, the country will continue to witness the emergence of super factories in the future, it concluded.

Ministry assists exporters in optimising foreign distribution channels

The distribution systems of foreign retailers have become an effective and sustainable export channel, and the Ministry of Industry and Trade (MoIT) will continue to support domestic firms to make the most of this channel, said Deputy Minister of Industry and Trade Do Thang Hai.

Speaking at a conference in Hanoi on February 22 to seek ways to speed up the implementation of a project to promote Vietnamese businesses’ direct participation in foreign distribution channels until 2030, Hai said that since the first phase of the project was conducted in 2015, Vietnamese products have reached millions of consumers across the world through the networks.

In order to effectively implement the project, the MoIT will continue to work to expand the network of strategic partners of the project, especially foreign retailers who are now present in Vietnam or show interest in the transition of the supply chain to the Vietnamese market, he said.

Hai added that the ministry will also coordinate with localities and trade associations to select key businesses to receive support from the project, while designing suitable policies to encourage exporters to directly export their products, helping them optimise cross-border e-commerce, and calling on banks to assist them in financial solutions.

The official said he hoped that foreign distributors and importers will continue to promote their roles as strategic partners of the project and help Vietnamese firms expand their export markets and join more deeply in the global supply chains.

Ta Hoang Linh, Director of the MoIT’s Europe-America Market Department, said that so far, 50 ministries, sectors and localities have submitted their action plans and coordination units to the ministry, showing their high awareness of the importance of this distribution channel.

Linh said that in 2023, the ministry plans to call for more distributors and importers, while organising training courses for local firms and conferences to connecting them and foreign distributors.

Vietnamese goods’ weeks will also be held abroad to introduce Vietnamese products to consumers across the world, he said, adding that a database on Vietnamese reputable exporters and foreign distributors will also be built and published at the project’s website.

Linh revealed that Vietnam International Sourcing 2023 will be organised within the project’s framework.

A representative from Thai-invested Central Retail Vietnam advised local enterprises to ensure their supply capacity and continuity in trade activities.

Nguyen Thanh Huan, Vice Director of An Giang province’s Department of Industry and Trade, proposed the Europe-America Market Department and the Vietnam Trade Office in France help the province to organise a conference to receive a French delegation to explore the partnership opportunities with their local peers.

An Giang businesses also hoped for assistance, guidance and consultancy from market, export, marketing and branding experts, Huan said.

EXPORT-IMPORT IN 2022

Sweden exports to Vietnam

Sweden imports from Vietnam

Denmark exports to Vietnam

Denmark imports from Vietnam

Norway exports to Vietnam

Norway imports from Vietnam

EVFTA

Enterprises urged to enhance competitiveness to benefit more from EVFTA

Enterprises should focus on enhancing competitiveness by strictly complying with regulations on traceability and building brands to get more benefits from the EU – Việt Nam Free Trade Agreement (EVFTA) and promote sustainable exports to the bloc.

Hoàng Quang Phòng, Deputy Chairman of the Việt Nam Chamber of Commerce and Industry (VCCI), said at a conference on reviewing the two-year implementation of the EVFTA on Thursday that the first two years of EVFTA implementation was the time when the world and Vietnamese economies faced unprecedented fluctuations from the COVID-19 pandemic, disruption of supply chains, Russia – Ukraine conflict to the crises of food and energy.

He stressed that in that context, the trade deal played an important role in mitigating the adverse impacts of unprecedented fluctuations and helping improve the trade and investment relations between the two sides.
Việt Nam’s exports to the EU averaged $41.7 billion per year in the August 2020 – July 2022 period, 24 per cent higher than the average of the 2016-19 period when the EVFTA had not come into force. The proportion of export products that enjoyed preferential tariffs under the trade deal increased from 14.8 per cent in 2020 to 20.2 per cent in 2021 and 24.5 per cent in the first half of this year.

The FDI flow from the EU to Việt Nam was nearly $1.38 billion in 2020, a drop of 8.6 per cent against 2019, however, it saw a slight increase of 2.2 per cent in 2021 to reach $1.4 billion, making the EU the fifth largest foreign investor in Việt Nam.

Still, the EU’s investment in Việt Nam remained modest, accounting for just 0.35 per cent of the total investment abroad of the EU.

Nguyễn Cẩm Trang, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade, said that the EVFTA contributed significantly to promoting exports of Việt Nam. Many products saw impressive growth in exports to the EU such as steel and iron by 739 per cent, cameras and components by 260 per cent, machinery and equipment by 82.3 per cent, rice, bamboo and rattan products by more than 50 per cent, ceramic and porcelain products by over 25 per cent, and vegetables and fruits by over 15 per cent.

There was still significant room for export expansion, Trang said, pointing out that Việt Nam’s export now made up for just 1 per cent of the EU’s imports.

Việt Nam had many products with advantages for export to the EU such as fruits, shrimp, tuna and other seafood products.

The report on the review of the EVFTA carried out by VCCI and FNF Institute on more than 500 enterprises found that nearly 41 per cent of enterprises said they enjoyed at least a benefit from EVFTA, Nguyễn Thị Thu Trang, Director of the VCCI’s WTO and Integration Centre, said.

The most common benefit was preferential tariff for import-export goods and positive effects in increasing orders, revenues and profits.

The report also found an improvement in enterprises’ understanding of the agreement with nearly 94 per cent having heard or known to different degrees about the EVFTA, the highest among existing FTAs.

Three out of every 10 enterprises know quite well and one very well about the EVFTA commitments related to their business operation. Looking to the future, 76 per cent expected that the EVFTA and other agreements would have impacts on their business prospects in the next three years and most were optimistic that the impacts would be positive.

Enterprises also pointed out obstacles that made it difficult for them to benefit from the EVFTA and other FTAs, including market fluctuations and uncertainties, limited competitiveness, lack of information about commitments and how to take advantage of these commitments.

VCCI also found nine legal documents were amended and issued to implement the EVFTA commitments, but the issuances were mostly slower than expected, which affected enterprises in the process of taking advantage of the EVFTA in the early phase.

Cao Xuân Phong from the Institute of Legal Studies said that it was necessary to hasten institutional reforms to implement the EVFTA and other new-generation FTAs more efficiently.

According to Trang, enterprises should be active in taking advantage of the EVFTA commitments through keeping a close watch on market developments, global economic fluctuations, Russia – Ukraine conflict and inflation risks to have production and business plans.

At the same time, it was necessary for enterprises to renovate production and business methods, and increase the application of technologies to create high-quality products and meet the requirements of the EU markets, Trang said.

Lê Xuân Sang, Deputy Director of the Việt Nam Institute of Economics, said trade promotion activities must be enhanced together with removing obstacles to enable enterprises to diversify export products and markets and participate in the EU’s supply chains.

Enterprises should also get prepared to cope with trade defence lawsuits, he said.

OTHER NEWS

Int’l trade fair for construction, mining, transport to take place in April

The Vietnam International Trade Fair for Construction, Mining & Transport – Machinery, Equipment, Technology, Vehicle & Material (Contech Vietnam 2023) will take place in Hanoi from April 21-24, the organisers announced on February 21.

The Vietnam International Trade Fair for Construction, Mining & Transport – Machinery, Equipment, Technology, Vehicle & Material (Contech Vietnam 2023) will take place in Hanoi from April 21-24, the organisers announced on February 21.

The fair is expected to draw the participation of exhibitors and brands from Germany, Spain, Japan, Sweden, the US, the Republic of Korea, China, Taiwan (China), Thailand, Australia, Singapore and Vietnam.

Le Anh Duc, a representative of the organisers, said that the event will not only offer a venue for businesses to introduce and promote their brands, but also create conditions for investors and businessmen to exchange information, seek partners, and boost trade promotion.

On the sidelines of the fair, there are several seminars and business matching activities.

Huge upside for Vietnam’s organic products in Europe

With the strong development of organic farming, Vietnam has extensive opportunities to boost the export of organic agricultural products to Europe, where those products are in high demand and fetch top dollar.

Tran Ngoc Thanh, Vice Chairman of the Vietnam Organic Agriculture Association (VOAA), said after three years of implementing the organic agriculture plan, organic farming has grown strongly in the country.

Organic farm produce has brought home 335 million USD in annual export value and is present in over 180 countries and territories. Europe is the main importer of those products from Vietnam, he noted.

To introduce Vietnamese organic products to more European consumers, the VOAA has arranged a trip for 10 businesses to participate in BIOFACH, the world’s leading trade fair for organic food, in Nürnberg, Germany, from February 14 to 17.

Thanh said this is the sixth straight time the VOAA has assisted Vietnamese firms to take part in this event, a chance for them to explore business opportunities, seek partners, and enter global organic food markets.

Joining the enterprises at BIOFACH, Nguyen Van Chi, Deputy Chief of the Hanoi Coordinating Office for the new-style rural area building programme, said that in 2022, inflation, surging energy prices, the COVID-19 pandemic, and the Russia – Ukraine conflict forced consumers in Germany and Europe at large to reduce buying more expensive organic products.

However, this was just a temporary situation, and the consumption of organic products is still a strong trend around the world, he added.

Lai Ngoc Thanh, Director of the HANUTI JSC based in Hanoi’s Dong Anh district, said the German Government pays great attention to organic farming, highlighting organic agricultural products from Vietnam, including Hanoi, to enter the European market.

Echoing the view, Do Viet Ha, a representative of the Vietnamese Trade Office in Germany, said that consuming organic products is an increasingly popular trend in this country and Europe.

With this trend and advantages created by the EU – Vietnam Free Trade Agreement (EVFTA), opportunities are increasing for organic farm products from Vietnam, she noted, recommending enterprises to maximise those chances, seize the consumption trend, and grasp import markets’ food safety rules and other requirements.

Dong Nai province to export over 500,000 tonnes of fresh bananas in 2023

The southern province of Dong Nai has planned to export 500,000 tonnes of fresh bananas to overseas markets this year.

Dong Nai shipped its first batch of fresh bananas to China on February 22 at a ceremony held by the provincial People’s Committee and the provincial Department of Agricultural and Rural Development (DARD)

Banana is one of the main crops of the province. Banana trees are cultivated throughout the province but are concentrated mainly in Trang Bom, Thong Nhat, and Dinh Quan districts. The average yield is 40-50 tonnes of bananas per hectare and the output of 450,000 tonnes per year. Up to 80% of banana production is for export.

According to DARD, Dong Nai’s fresh bananas have been exported to a number of countries, including China, the Republic of Korea, Japan, and Malaysia.

Last year, the province shipped over 400,000 tonnes of fresh bananas.

Nguyen Thi Hoang, Vice Chairwoman of the provincial People’s Committee, said Dong Nai has the largest banana cultivation area in the country with an area of more than 13,100 hectares, accounting for 70% of the total banana-growing area of the Southeastern region.

It is also the leading region in the country with 30 banana growing area codes covering nearly 5,700 hectares, she said.

Hoang asked the Department of Agriculture and Rural Development, the Department of Industry and Trade and localities to support and remove difficulties for enterprises and farmers so that Dong Nai’s agricultural products meet the requirement of importing countries.

Addressing the ceremony, Consulate General of China in Ho Chi Minh City Wei Huaxiang said his country wants to enhance cooperation to increase China’s import of fresh bananas.

The diplomat pledged to support the promotion of Vietnam’s fresh bananas to the Chinese market. However, he suggested the Vietnamese side to further improve the packaging and the preservation process to ensure the best quality of the fruit.

Bac Giang puts science and technology to the test in agricultural production

The northern province of Bac Giang is stepping up the application of science and technology in agricultural production to improve its value and increase farmers’ income.

The northern province of Bac Giang is stepping up the application of science and technology in agricultural production to improve its value and increase farmers’ income.

The province hopes that its quality rice area will reach 55,000 hectares, and the output will be nearly 357,500 tonnes, meeting both domestic consumption and export demands.

The total area of fruit trees will be about 55,000 hectares, with focus on growing lychee, citrus (orange, pomelo), longan, custard apple, pineapple and guava following VietGAP and GlobalGAP standards.

By 2030, the province will also expand its vegetable production area to 28,000 hectares, which can produce an output of about 554,400 tonnes. Of the total, the area of safe vegetables grown according to VietGAP standards will be 12,500 hectares, with an output of around 272,500 tonnes.

At the same time, the locality will maintain the breeding of 1-1.2 million pigs, and 22-25 million poultry.

To that end, Bac Giang will promote the transfer and application of scientific and technological advances in agricultural, forestry and fishery production. Accordingly, the province focuses on applying good agricultural practices (VietGAP, GlobalGAP), clean production technology and biotechnology; develop organic agriculture; ensure food safety and hygiene; and protect the environment.

The locality will encourage the building of ecological and environment-friendly agricultural models such as organic agriculture and closed-loop circular agriculture.

In addition, Bac Giang will strengthen mechanisation in production, harvesting, preservation and processing to improve the productivity, quality and competitiveness of agricultural products. The focus is to connect with other sectors and fields to form smart agricultural production adaptive to climate change and diseases.

Since 2021, Bac Giang has paid attention to applying science and technology to agricultural production. The province has researched and piloted the plantation of new pure rice species with high yield and good quality suitable to the growing areas and ecology of the province. The idea behind the move is to select two species with the best yield and quality for both domestic consumption and export.

In addition, the province has transferred, received and mastered 14 techniques for growing vegetables. Notably, it has successfully built a model of growing vegetables in simple net houses following VietGAP standards. It has also established a product quality safety monitoring system, issued VietGAP certificate for safe vegetables, and built a model to preserve vegetables using environmental control technology, with a scale of 100-200 tonnes per store.

Bac Giang has also developed animal husbandry by expanding the application of high technologies, developing environmentally friendly farms, and ensuring disease safety and traceability.

The provincial science and technology sector has consulted the provincial People’s Committee and the Ministry of Science and Technology to out scientific and technological research and application tasks at the national and provincial levels on the conservation and development of precious livestock breeds with high economic value. These include the six-claw chicken in Son Dong; snakehead in Hiep Hoa; trionychidae turtle in Viet Yen district, Lang Giang district, Bac Giang city, and white horse in Luc Ngan.

The province also boasts 80,000 hectares of production forests. Bac Giang will promote the mechanisation and application of science and technology; improve productivity, quality and efficiency of production forests in the direction of optimising the production system, and the value chain of forest products.

Bac Giang will invest in intensive farming and apply techniques to improve the productivity and quality of forests, and plant new varieties with high yield and quality.

In 2022, the production value of the agriculture, forestry and fishery sector in Bac Giang province increased by 2.1% compared to the previous year to reach nearly 37.70 trillion VND.

Vietnam’s trade value reaches 72 bln USD by mid- February

According to the General Department of Vietnam Customs, from the beginning of this year to February 15, the country’s total trade valued topped 72 billion USD, with export turnover standing at 37 billion USD and a trade surplus of nearly 1.7 billion USD.

Notably, in the first half of February alone, the country’s export turnover reached 13.44 billion USD.

Phones and components; computers, electronic products and components; machinery, equipment, tools and spare parts; and textile and garment were the four groups of exports which enjoyed a turnover of “billion dollars” in the reviewed period.

In the meantime, import turnover was 12.38 billion USD. Two groups of imports of the “billion dollars” group were computers, electronic products and components; machinery, equipment, tools and spare parts.

In 2022, the country’s total trade value reached a record high of USD 730.2 billion USD.

Businesses increasingly embrace sustainability

Businesses are starting to deploy circular economic value chains for their products as green growth and circular economy are becoming global trends as part of efforts to reduce greenhouse gas emissions and achieve carbon neutrality.

Nguyễn Thị Liên, deputy general director of PPJ Group, a leading textile and garment manufacturer and exporter, said green consumption has become a trend in the global market, and manufacturers such as her company have made drastic changes to fall in line.

The company has a sustainability programme based on the 4Rs (reduce water, energy and chemical; reuse water and energy; recycle raw material; and respect ethical labour practices), she said.

“By using the latest technological advances in the production chain, not using harmful chemicals, implementing energy saving programmes, and reducing emissions, we are able to make products that are sustainable and consumer- and environment-friendly.

“In the past the company had to use 40 litres of water to produce a pair of jeans. Today, with modern machinery and technology, we need only 4 per cent of that to make a similar product.”

Sustainable production also enables her company to “create a better working environment for employees, meet the rising demand of and gain credibility with customers, especially high-end brands, improve competitiveness and get more orders,’’ she said.

In 2022, though the textile and garment industry was mired in difficulties due to a lack of export orders, PPJ achieved growth of 20 per cent, she added.

Dairy giant Vinamilk has invested more than VNĐ3 trillion (US$128 million) in its three ecological dairy farm chain, Green Farm, which has embraced the circular economy, regenerative agriculture and technologies to minimise its environmental footprint and emissions.

Vinamilk has said it plans to make its 13 other farms also green in the near future.

Other businesses are starting to deploy circular economic value chains for their products.

Thanh Bình Co., Ltd. in Đồng Tháp Province, for instance, uses the straw left after harvesting rice to grow straw mushrooms, rice husk to make pellets to be used as fuel for export and rice bran to make cooking oil and animal feed.

The fisheries sector too had seen many sustainable programmes, Trương Đình Hòe, general secretary of the Việt Nam Association of Seafood Exporters and Producers, said.

Kiên Giang Province has approved a sustainable fisheries development project in Hòn Đất District on an area of around 5,500ha to be implemented over the next three years.

Businesses in Cà Mau Province are promoting high-value aquaculture using the shrimp-forest farming model, which does not use drugs or chemicals, and helps protect forests.

The province has more than 27,500ha of shrimp-mangrove forests, of which 19,000ha meet international quality standards (Naturland, EU Organic, Canada Organic, Selva Shrimp, ASC, BAP…).

“Their products are popular in many markets,” Hòe said.

But certain issues are preventing many firms from going green.

Liên listed the high cost of investment in technology and equipment and need for qualified technical personnel hurdles to achieving sustainability.

But Hòe said: “The development of agricultural production towards green economy is an inevitable trend that must be followed sooner or later. Therefore, we must convince and mobilise farmers and enterprises to embrace the green economy.”

Inevitable trend

Speaking at the Vietnam Export Promotion Forum late last year, Minister of Industry and Trade Nguyễn Hồng Diên said green growth and circular economy were becoming global trends as part of efforts to reduce greenhouse gas emissions and achieve carbon neutrality.

Major import markets were imposing high taxes on products with large “carbon footprints” and many developed economies had set strict environmental regulations for imports, he said.

So exporting countries like Việt Nam needed to change their mindset and pay more attention to the “greenness” of their supply chain and trade, he added.
Jean-Jacques Bouflet , vice chairman of the European Chamber of Commerce in Vietnam, said Việt Nam had taken advantage of free trade agreements to diversify and increase exports.

The trade deals, especially the EU-Việt Nam FTA, have commitments both in terms of trade and social responsibility for sustainability, including the creation of environment-friendly products, he said.

“Consumers around the world, particularly in Europe, are focusing more and more on values that go beyond product quality such as green and sustainable manufacturing processes,” he said.

Therefore, Việt Nam’s exporters would have to restructure to meet the social responsibility and environmental standards, he said.

Bartosz Cieleszynski, deputy head of the trade section, EU Delegation to Vietnam, said: “The results of the EVFTA are already very significant. With widespread coverage of full dismantling of nearly all tariffs for 71 per cent of Vietnamese exports to the EU and 65 per cent of the EU’s exports to Việt Nam, the advantage of market access is unquestionable.”

“On one hand, such tariff elimination promotes two-way trade. On the other, and more importantly, the full elimination of tariffs together with commitments in the chapter of Trade and Sustainable Development should enable stronger trade flows of green products.”

Assoc Prof Dr Nguyễn Hồng Quân, director of the Institute for Circular Economy Development at the Vietnam National University – HCM City, said a survey done by McKinsey found that 63 per cent of consumers consider the sustainability of brands when making purchase decisions.

According to a Nielsen market report, the global market for “green” products is growing faster and more profitable than its “brown” counterparts, he said.