Socialist Republic of Vietnam

November 10, 2003

HCM CITY — The planned entry of Viet Nam into the ASEAN-China Free Trade Area (ACFTA) in early 2004 would provide both opportunities and tough challenges for the agricultural sector, the Ministry of Agriculture and Rural Development said.

By entering ACFTA, Viet Nam would be well placed to develop new markets for its products, especially crops such as coffee, pepper, cashew nuts, vegetables and tropical fruits, which it could produce more cheaply than its ASEAN neighbours.

Another advantage was Viet Nam’s geographical proximity to China’s huge market, which would help to keep transport costs low.

But ministry experts warned that Viet Nam’s farming sector still faced huge challenges caused by poor processing technology and its lack of competitiveness on the world market as a result of selling most farm produce either unprocessed or semi-processed.

Only 15 per cent of Viet Nam’s vegetables and fruit, and 20 per cent of latex production, are processed.

Meanwhile, relatively high transport, telecoms and handling costs have pushed up market prices, making many Vietnamese farming goods less competitive in regional markets.

Agricultural experts said Viet Nam was now implementing a protection policy for some processed farm products and foodstuffs by imposing import tariffs of up to 50 per cent on some kinds of processed vegetables, fruit and meat, and 40 per cent on fruit such as pears, apples, orange and tangerines.

But they were concerned that membership of ACFTA would force Viet Nam to slash import tariffs on farm produce, resulting in fiercer competition for domestic farm produce entering the new free trade area in 2004.

To facilitate the entry of Viet Nam’s farming sector into ACFTA, they proposed that the State should invest further in improving agricultural productivity and quality; provide assistance to help the farming sector expand in overseas markets; and give training to farmers, since only 15 per cent of the agricultural labour force is skilled.

They said the agricultural sector should also upgrade its irrigation and processing equipment to help produce high-quality agricultural products for export.

The sector was also urged to follow international trade practices such as anti-dumping taxes, build trademarks for farm produce and observe international standards on quality and sanitation to make inroads into global markets. — VNS