Foreign businessmen’s farm produce collections will be legalized

Foreign businessmen would be allowed to collect farm produce in Vietnam to export to other countries; if the draft circular guiding the goods trading activities have invested enterprises in Vietnam. The draft is now open for public opinions before being promulgated.

If the circular with the drafted regulations is issued, it will put an end to the prolonged dispute between domestic farm produce processors and foreign invested enterprises, for the activities of collecting farm produce for export.

The draft circular said that foreign invested enterprises, which have the licenses to export products can: 1) export the products allowed, 2) purchase goods from the businessmen, who have business registration certificates for trading or distributing these kinds of products for export, 3) follow customs procedures directly at the customs agencies.

The foreign invested enterprises which have the licenses to export products are not allowed to set up units in charge of collecting products for export.

As such, the draft circular paves the way for the legalization of the foreign businessmen’s right to collect farm produce in Vietnam

The dispute relating to the right to collect farm produce in Vietnam has been raised for many months, after Vietnamese export companies found out that foreign businessmen were trying to scramble for farm produce by paying higher prices.

The dispute has become more serious recently, when in 2010-2011, according to the Vietnam Coffee and Cocoa Association (Vicofa), less than 10 foreign invested enterprises collected up to 40 percent of the total coffee output, while 140 domestic exporters could collect the other 60 percent.

A lot of complaints have been lodged to state management agencies by coffee exporters and Vicofa, which said that “it is illegal for foreign businessmen to collect coffee materials directly from farmers.”

Chair of Vicofa, Luong Van Tu, has affirmed that the enterprises have been collecting farm produce without cooperating with domestic enterprises, and this must be seen as a violation of the World Trade Organization’s (WTO) rules.

Meanwhile, foreign invested enterprises have been keeping quiet, believing that they are still obeying Vietnamese laws.

A manager of a foreign invested enterprise has denied the coffee collection directly from farmers.

“No foreign invested enterprise can set up the networks to collect farm produce directly from farmers. They have been mainly purchasing from the enterprises with legal entities, or the households which have business registration certificates and can issue bills to collectors,” he said. “Only legal entities and households can issue red invoices – the things we must show to state officials when exporting products,” he explained. “Moreover, trading activities of foreign invested enterprises are always put under strict control”.

“Most of the coffee we purchased came from the contracts we signed with domestic trading units. We only purchased in small quantities from some households which have big coffee growing areas near our factory,” he added.

Vicofa has affirmed that under the current laws, foreign invested enterprises have the right to export coffee, but they do not have the right to develop the networks to collect goods in Vietnam for exporting.

Meanwhile, an official from the Ministry of Industry and Trade, said that under Vietnam’s WTO commitments, foreign invested enterprises do not have the right to set up units to collect farm produce in Vietnam, but they have the right to sign the contracts on purchasing products with domestic legal entities.

An expert said that in fact, the coffee industry has witnessed the involvement of foreign enterprises for the last ten years. Domestic and foreign businessmen have been competing with each other fairly, and there has been no unhealthy competition.-Thoi bao Kinh te Saigon

Tags: Vietnam farm produce