Vietnam 3/27/2015M5017 Exporter Gui

Vietnam
3/27/2015
M5017



Exporter Guide


2015




Wilder


Vo Thanh Kiet, Tran Quoc Quan, Bui Huong, Micheal Ward

Report Highlights:
This report serves as a practical guide for U.S. exporters wishing to initiate or increase exports of U.S. consumer-oriented agricultural products (fresh or processed animal & plant products; beverages; other snack foods) to Vietnam. It provides key updates on Vietnam’s policies and regulations that may affect exporters’ choices about how to approach this dynamic market. Although Vietnam’s maze of regulations has occasionally resulted in troublesome trade barriers, the country is making progress in reducing import tariffs per its WTO obligations and adopting more business-friendly practices. Vietnam
is a participant in the Trans-Pacific Partnership (TPP) negotiations, through which the United States and 10 other Asia-Pacific partners are seeking to establish a comprehensive, next-generation regional agreement to further liberalize trade and investment.


Post:
Hanoi

Executive Summary:
This report serves as a practical guide for U.S. exporters wishing to initiate or increase exports of U.S. consumer-oriented agricultural products (fresh or processed animal & plant products; beverages; other snack foods) to Vietnam. It provides key updates on Vietnam’s policies and regulations that may affect exporters’ choices about how to approach this dynamic market. Although Vietnam’s maze of regulations has occasionally resulted in troublesome trade barriers, the country is making progress in reducing import tariffs per its WTO obligations and adopting more business-friendly practices.

A number of factors have spurred a tremendous increase in Vietnam’s food imports over the last five years; these include steady population growth, strong economic growth, greater disposable income, and expansion in the retail, food service, and food processing sectors. Vietnam’s food and beverage import sector was relatively insulated from the global economic recession of 2008-09, and total imports continued to climb in 2010-2014

In particular, U.S. exports of consumer-oriented agricultural products to Vietnam have grown at an astonishing rate in recent years. From 2004 to 2010, the year-end figure increased over 1,000 percent. In 2014, the United States exported a record $879 million in consumer-oriented agricultural products to Vietnam, putting the country to 14th on the list of U.S. export markets for this sector. Overall, prospects for continued growth in Vietnam’s food import market remain strong.

Author Defined: Disclaimer:
This report was prepared by the Offices of Agricultural Affairs of the USDA/Foreign Agricultural Service in Hanoi and Ho Chi Minh City, Vietnam for U.S. exporters of domestic food and agricultural products. While every possible care was taken in the preparation of this report, information provided may not be completely accurate either because policies have changed since its preparation or because clear and consistent information about these policies was not available. It is highly recommended that
U.S. exporters verify the full set of import requirements with their foreign customers, who are normally best equipped to research such matters with local authorities, before any goods are shipped. FINAL IMPORT APPROVAL OF ANY PRODUCT IS SUBJECT TO THE IMPORTING COUNTRY'S RULES AND REGULATIONS AS INTERPRETED BY BORDER OFFICIALS AT THE TIME OF PRODUCT ENTRY.

Section I. Market Overview:
This report provides U.S. exporters with basic information on exporting high-value consumer-oriented foods and beverages to Vietnam.

Vietnam’s near to medium-term economic forecast indicates relatively stable but slower growth than experienced during 1995 – 2011. The country’s economy grew 5.42% in 2013; modestly better than 2012 when its growth registered just 5.2%, the lowest level since 1999 and well below the 7% annual average achieved during the previous decade. The government initially estimated growth of 5.8% in 2014, however, ended up revised estimate was 5.98% in the new year of 2015 (the Vietnam’s Government Website), reflecting modestly improving business conditions and strong growth in FDI particularly by Japan and South Korea. However, this growth rate is widely viewed as insufficient to keep pace with the country’s growing population.

A young population, rising middle-class incomes and female labor force participation are driving Vietnamese consumerism. 42 percent of Vietnam’s population, which is estimated 91.6 million in 2014 and is growing by 1 percent annually, is under 25 years of age. Vietnam also has a large female working population (49 percent in 2014), making the female consumer ever more important. Over the past decade, the number of middle class households (defined as number of households with income in excess of $20,000 constant 2005 U.S. PPP$), has nearly doubled from 1.2 million in 2003 to 2.3 million in 2012 (Source: Global Insight).

Vietnam’s steady global economic integration and market-oriented reform has driven broad development gains over the past two decades, raising per capita income from $260 in 1995 to over
$1,900 in 2013, dramatically reducing poverty levels and propelling Vietnam to join the ranks of lower middle income countries. Total U.S.-Vietnam bilateral trade has grown steadily from $1.5 billion in 2001 to $34.9 billion in 2014, making Vietnam one of the important trading partners and 12th largest destination for agricultural exports. Vietnam General Department of Customs reported that the United States and the EU remains Vietnam’s two largest export markets, taking $28.6 billion (up nearly 20% over 2013) and $27.9 billion (up 14.7%), respectively in 2014. In contrast, the United States exported just $6.28 billion to Vietnam, but that was up 21% versus 2013. Vietnam continued to enjoy a trade surplus of about $2 billion overall in 2014, the consecutive second surplus in a number of years. China remains the largest exporter to Vietnam; at $43.8 billion in 2014 (up 18% vs. 2013). South Korea was second with exports of $21.7 billion to Vietnam, up 4.9% over 2013

The 2014 economic growth was led by the services sector, which represented 39.7% of the total GDP. Travel and tourism displayed much lower growth, just 4% against 10.6% in 2013 with the number of foreign visitors to Vietnam up to 7.9 million, and those arriving for tourist purposes numbering 4.76 million, up 2.6%. The largest sources of international arrivals included China, South Korea, Japan, Cambodia, Malaysia, European countries and Australia. The number of Chinese visitors did not increase as much as in past years due to the tension on East Sea between China and Vietnam. Data released by General Statistics Office reported that 1.95 million Chinese tourists came to Vietnam in 2014 (up just 2% over 2013), while visitors from the Europe increased to 1.2 million, up 14.6%. Crude oil, textiles and apparel, footwear, and more recently cell phones are among the key drivers of Vietnam’s export-oriented industrial and manufacturing sector.

Despite this amazing growth, doing business in Vietnam can be a challenge for exporters. At times, the maze of seemingly conflicting regulations may present a formidable barrier to trade, yet at the same time, the country is evolving and becoming more business-friendly in other respects. The improved economic environment owes much to Vietnam’s integration into the global trade community. Vietnam is an active member of ASEAN and became the 150th member of the World Trade Organization (WTO) in January 2007. The Government has recently concluded negotiations for Free Trade Agreements (FTAs) with many important trading partners, including ASEAN, ASEAN-China, ASEAN-Korea, ASEAN-Japan, ASEAN- New Zealand-Australia, and ASEAN-India. Through these efforts, Vietnam has pledged not just to lower import tariffs and eliminate quotas, but also to increase market access for goods and services, strengthen IPR protection, enhance legislative and regulatory transparency, and improve its commercial dispute settlement and trade facilitation processes.
Regionally, Vietnam is a participant in the Trans-Pacific Partnership (TPP) negotiations, through which the United States and 10 other Asia-Pacific partners are seeking to establish a comprehensive, next- generation regional agreement to further liberalize trade and investment.

The market for high-value food products is substantial and is growing across a wide variety of categories. Trade data indicate that Vietnam imported over $10.2 billion in consumer-oriented agricultural products in 2014, this includes more than $4.4 billion in edible fishery products which was the single largest category. Total 2014 imports in agricultural, fish and forestry products are estimated exceeding $30.5 billion. (Note: Given Vietnam’s porous borders and endemic under-invoicing, it is difficult to estimate the actual level of consumer-ready imports.)

U.S. food products are favored by consumers for their high quality, safety, innovation and consistent supply. Exports of high value and consumer-oriented U.S. agricultural and food products to Vietnam have seen rapid growth in recent years. After hovering around the $20 million mark for several years in the early 2000s, these exports grew to an astonishing $535 million in 2010, then $879 million in 2014. In the coming years, these exports should continue to increase.

FAS Vietnam‘s best prospects for consumer-oriented agricultural products include dairy products, chilled and frozen meat (beef & pork), frozen poultry, fresh fruits, dried fruits and nuts, snack foods, confectionary foods, packaged foods (canned fruit & vegetables, canned meat), condiments, juices, and alcoholic drinks (wine, beer, spirits). See Section IV: Best High-Value Product Prospects for more information on the outlook for these products.