Investment in technology: Key for agricultural exports to AEC

Challenges

Thanks to the establishment of the AEC, opportunities for agricultural exports have increased. In addition, the near geographical distance has also helped increase the competitiveness of agricultural products. Moreover, Vietnam has joined the ASEAN one-door mechanism, which helps minimize the clearance time for cargo in order to facilitate export businesses.

A tariff reduction roadmap for the AEC has also contributed to increasing the competitiveness of products. Following the commitments, by the end of last year, 1,434 among the 1,539 tariff lines in agriculture and fisheries were reduced to zero percent, while the remainder were set at five percent or had no scheduled reductions. By 2018, only 55 tariff lines would be set at five percent. Almost all tariff lines in the forestry and furniture sector dropped to zero percent, while nine furniture tariff lines would fall to zero percent by 2018. Sugar, eggs, salt and tobacco would have to give up quotas within ASEAN from 2018 to apply the tax rates ranging from zero to five percent.

Coffee is one of typical examples. ASEAN’s coffee import turnover from Vietnam currently accounts for nearly 21 percent of total turnover. High demand and lower prices are helping Vietnamese coffee improve competitiveness.

However, major challenges for Vietnamese agricultural products exist. A tariff reduction roadmap was made for the entire region, creating opportunities for agricultural products from other countries to enter the Vietnamese market. According to the Ministry of Industry and Trade, the value of fruit and vegetable imports from Thailand reached nearly US$163 million in the first seven months of 2016, accounting for 38.7 percent of total fruit and vegetable imports putting Vietnamese agricultural products at risk even in the domestic market.

Promoting investment

The Ministry of Agriculture and Rural Development’s International Cooperation Department Director Tran Kim Long said that with current farming methods, Vietnamese agricultural products are hard to compete with other countries both in terms of price and quality.

To tackle the problem, Deputy Minister of Agriculture and Rural Development Le Quoc Doanh emphasized the need to invest in science and technology to improve productivity and reduce costs.

Phuong Lan