USDA Export Credit Guarantee Progra

USDA Export Credit Guarantee Program (GSM 102):
The GSM 102 Program provides credit guarantees to encourage commercial financing of U.S. agricultural commodity exports, thereby assisting U.S. exporters in making sales that might not otherwise occur. The GSM-102 program guarantees credit extended by the private banking sector in the United States (or, less commonly, by the U.S. exporter) to approved foreign banks using dollar- denominated, irrevocable letters of credit for purchases of U.S. food and agricultural products by foreign buyers. USDA’s Foreign Agricultural Service (FAS) administers the program on behalf of the Commodity Credit Corporation (CCC), which issues the credit guarantees.

Potential benefits from the GSM 102 to importers include access to credit from the local bank; increased buying capacity because of access to trade credit; longer repayment terms and lower cost of buying on credit; and ability to purchase more U.S. agricultural products.

For more information about GSM 102, please visit: http://www.fas.usda.gov/excredits/exp-cred-guar-

new.asp

Vietnam is eligible under the Southeast Asia regional program, which covers Cambodia, Indonesia, Laos, Malaysia, Papua New Guinea, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam.

FAS has currently approved the following seven banks in Vietnam to be eligible under the GSM 102:
• Asia Commercial Bank (ACB)
• Bank for Investment and Development of Vietnam (BIDV)
• Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank)
• Military Commercial Joint Stock Bank (MB Bank)
• Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank)
• Vietnam Export Import Bank (Eximbank)
• Vietnam Joint Stock Commercial Bank for Industry & Trade (VietinBank)
• Vietnam Technological and Commercial Joint Stock Bank (Techcombank)

Note:
• Vietnamese banks are currently eligible for a maximum tenor of up to 1 year.
• Approved banks in Southeast Asia may issue L/Cs for sales to Vietnam and other regional destinations.

(7) Supermarket Tips & Cold Chain Woes
Supermarkets in Vietnam carry a wide range of goods, including food and drinks, cosmetics, clothing, shoes, home appliances, kitchen utensils, and even furniture. Most supermarkets devote about 40-50 percent of their physical space to food; the rest is divided among other goods.

Increasingly, consumers are inclined to buy food from supermarkets because they are viewed as cleaner and more sanitary than traditional markets. There is also a growing acceptance of processed, packaged, and frozen food products, including meat and fish. Though local food products continue to be strong sellers because of a lower price, quality control has not yet reached international standards. Local consumers are beginning to pay closer attention to food quality and food safety, and this new trend will help promote U.S. quality products. Supermarket managers report that consumer demand for imported foods is steadily increasing.

Modern retail stores still only account for 20% of total food sales to Vietnamese consumers, but sales through such outlets have grown considerably over the last six years, with an annual average growth rate of 20 percent. One should not, however, totally overlook the open-air or enclosed traditional markets, often referred to as “wet” markets. Many case-lots of imported goods (canned goods, nuts, wine, beer, and shelf-stable products) are sold through these markets, particularly in areas not yet served by modern supermarkets. According to major U.S. food importers, sales volumes to supermarkets are increasing, but are still under 50 percent of their total sales. To reach all Vietnamese consumers,

exporters need to have a local partner capable of supplying both the modern channel (department stores, wholesale outlets, hypermarkets, supermarkets, convenience stores) and traditional channel (wet markets and “mom and pop” shops). Please refer to VM3062 for further details about Retail Food Sector in Vietnam.

The requirement for food quality registration to the Vietnam Food Administration (VFA) is a constraint for supermarket chains to directly import U.S. foods and beverages. Because supermarket chains are usually interested in mixed containers of many items of packaged foods, it is very costly and the paperwork is burdensome to register each food item with VFA.

The cold chain - the system for preserving fresh, chilled, and frozen commodities from producer to final consumer - is not good in Vietnam, though it is improving. Most of the larger modern shops have freezers and refrigerators, but smaller shops do not. Vietnam has developed a fairly good cold chain for frozen seafood for exports, and the imported and locally-made cold chains for domestic market have been much improved since 2011. Comtrade data reported that exports of refrigerating equipment, belonging to HS 841810 – 841850, to Vietnam have kept on rising during the past few years, from USD 181 million in 2011 to USD 254 million in 2013. However, fresh produce suppliers have found that many Vietnamese importers do not adequately supervise the temperature and humidity in their chillers, thereby shortening the shelf life of perishable commodities.

(8) General Inspection Procedure for Imported Products (Entry Point Inspection/Testing) Step 1: Before importing food products into Vietnam, the importer must obtain Receipt(s) of
Announcement on the Conformity to Technical Regulations and/or Announcement on the Conformity with the Food and Safety Regulations. Please see VM4010 for detailed information regarding these formalities.

Step 2: At least 24 hours prior to the arrival of the consignment, the importer must register for food safety inspection with the competent authority. Imported food products are only permitted to be transported to warehouses for preservation and pending customs clearance after the importer registers for food safety inspection. Customs clearance will only be effective once the Notice of Satisfaction of Import Requirements is granted. Together with food safety state inspection, products of animal/plant origin will be subject to animal quarantine or plant quarantine formality.