Foreign firms securing coffee exports illegally

The Viet Nam Coffee and Cocoa Association (VICOFA) has asked government authorities in coffee growing provinces to clamp down on foreign businesses setting up illegal buying networks.

Chairman of the association, Luong Van Tu, told Viet Nam News that coffee prices had surged in recent months, creating fierce competition among buyers.

This had affected less cashed-up domestic buyers because illegal foreign companies were not following regulations.

Tu said that the Government’s policies only allowed foreign companies to invest in coffee growing, processing, and preserving for export – and the transfer of advanced technology. They were not permitted to use their networks to buy coffee.

Last October, VICOFA sent a letter to the Ministry of Industry and Trade (MIT) questioning the rights of foreign businesses.

In response, the ministry said that under Government Decree 23/2007/ND-CP and Ministry Circular 09/2007/TT-BTM on Viet Nam’s commitments to the World Trade Organisation, foreign invested enterprises licensed for coffee exports were not allowed to buy coffee directly from farmers. Instead, they must purchase product through domestic companies. Therefore, Tu said foreign enterprises had acted illegally by establishing buying agents in provinces.

At the moment, foreign invested enterprises make up 40 per cent of coffee exporters.

A group of 20 Vietnamese coffee exporters controlling about 80 per cent of coffee export turnover have also asked VICOFA, the ministries of Industry and Trade, and Agriculture and Rural Development to clarify the rights of both foreign and domestic businesses involved in the coffee industry.

General Secretary of G20 Nguyen Nam Hai said about 10 foreign businesses had set up agencies to purchase coffee directly from farmers in Dak Lak, Dac Nong, Lam Dong and Gia Lai in the Central Highlands. The agents are alleged to have bought up to 60 per cent of the total domestic coffee volume.

“Domestic businesses have been facing many difficulties. Now they find it difficult to compete because of a shortage of capital and high lending interest rates of 18 to 20 per cent,” Hai said, adding foreign enterprises had abundant capital and were now taking advantage of further devaluation of the Vietnamese dong against US dollar.— VNS

Tags: Vietnam Coffee, vietnam coffee exports