Vietnam- Cotton and Products Annual Commodity Report

An Expert's View about Textiles, Apparel and Accessories in Vietnam

Posted on: 8 Apr 2013

Due to limited cotton production -- less than two percent of total cotton demand -- Vietnam relies heavily on cotton imports to feed its growing textile and spinning industry.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 4/1/2013 GAIN Report Number: VM3017 Vietnam Cotton and Products Annual Commodity Report Approved By: Dwight Wilder and Michael Ward Prepared By: Truong Minh Dao and Bui Thi Huong Report Highlights: Due to limited cotton production -- less than two percent of total cotton demand -- Vietnam relies heavily on cotton imports to feed its growing textile and spinning industry. Post maintains Vietnam's 2012/2013 cotton production estimate at 4,590 metric tons (mt) or 21 thousand bales. The cotton import reliance is revised to increase by 14 percent in Marketing Year (MY) 2012/2013 with imports reaching 405,000 mt, thanks to strong exports of yarn. In CY 2012, Vietnam imported 416,000 mt of cotton, a year-on-year increase of 27 percent. U.S. cotton accounted for 30 percent (despite recent contract defaults) of total imports that year. Due to a strong increase of U.S. cotton exports to Vietnam in the first 6 months of this MY 2012/2013, post believes U.S. cotton exports this MY will likely lead to a bigger market share. Current trade data on value-added cotton products (mainly yarns) is also provided. Although it is still early to provide a forecast on Vietnam’s cotton production and trade for the next MY (2013/2014), post’s initial production forecast has been set at the same level of 2012/2013, due to no changes to Vietnam’s biotechnology policy. MY2013/2014 cotton imports are projected to increase slightly. 1 SITUATION AND OUTLOOK Textile Industry Vietnam is now ranked among the world’s top seven textile, garment, and apparel-exporting countries. Despite the global economic downturn, Vietnam’s 2012 textile, garment, and apparel exports still met the government’s target, reaching a value of $16.9 billion -- an increase of 7 percent over 2011 (Source: Vietnam Customs Office). This growth is mainly due to the sector maintaining its traditional export markets (USA, EU, Japan), while also expanding to new export markets (China, Turkey, Korea, the Middle East, Africa etc.). Vietnam has set ambitious targets for the textile industry, with exports targeted by the Vietnam Ministry of Industry and Trade (see table 2) to reach $25 billion by the 2020. The Trans-Pacific Partnership Agreement (TPP), if finalized, would help Vietnam achieve this target. The United States remains the largest market for Vietnam’s textile industry, and accounted for nearly 45 percent of total sector exports in 2012. This represented a year-to-year increase of nearly 7 percent. Vietnam is one of very few countries in Asia that have expanded their yarn spinning sector in recent years. From only 2 million spindles in 2000, Vietnam’s spindle capacity reached over 5.1 million spindles (equivalent) in 2012, creating the potential for voracious demand for imported cotton. Due to strong demand for yarns from international markets, especially China and Turkey, Vietnam exports of yarn in 2012 continued growing, and reached 415,000 metric tons, a year-on-year increase of 8 percent. Vietnam exports over 60 percent of the yarn (including cotton yarn) that it produces. Main export markets for Vietnamese cotton yarn are China, Turkey, Korea, Indonesia, and Thailand. Table 1 and table 2 below illustrate an overview of the Vietnam textile/spinning industry: Table 1: Vietnam Textile/Spinning Industry Overview 2010 2011 2012 Total Number of Spindles 3,650,000 4,500,000 5,100,000 Total Number of Rotors 103,348 103,348 103,348 Yarn Production from cotton and polyester/rayon (Unit: MT) 514,000 620,000 680,000 Yarns Exports (Unit: MT) 336,000 384,000 415,000 Fabric Production (billion m2) 1.0 1.0 1.0 Not Not Fabric Imports (billion m2) available available 6.0 Source: Vietnam Spinning Association (VCOSA) Table 2: Vietnam’s Projections for the garment and textile industry to 2020 Description Unit 2010 2015 2020 1. Export value $ million 12,000 18,000 25,000 2 2. Number of employees Thousand persons 2,500 2,750 3,000 3. Key products - cotton lint 1000 mt 20 40 60 - Fiber, polyester yarn 1000 mt 120 210 300 - all kind of yarn 1000 mt 350 500 650 - all kind of fabrics million m2 1.000 1.500 2.000 - Garment products million pieces 1.800 2.850 4.000 Source: Ministry of Industry and Trade Cotton Market Post maintains the forecast for MY 2012/13 cotton lint production at 21 thousand bales, an 11.4 percent decline compared to MY 2011/12, as low cotton prices and strong competition from other agricultural crops (i.e. corn and soybeans) will reduce planted area slightly. Due to current low cotton trend and the delay in allowing BT cotton seed cultivation, the production in MY 2013/14 is forecast to be the same as the current crop. Vietnam’s plan of having a domestic cotton growing area of 76,000 hectares by 2020 seems to be overly ambitious (Vietnam planted around 10,000 ha in 2012). In all likelihood, Vietnam will continue to rely heavily on cotton imports to fulfill its cotton needs. Post revises the MY 2012/13 cotton imports to 405,000 mt or 1,858 thousand bales, an increase of 14 percent over MY 2011/12. This growth is attributed to the expanding cotton spinning sector and continued strong exports of Vietnamese cotton yarns to overseas markets, especially China and Turkey. In 2012, China became the biggest buyer of Vietnamese yarns (mainly low-count cotton yarns) with its imports reaching 198,000 mt -- an increase of nearly 70 percent over 2011. In 2012, Vietnam imported 416,000 mt of cotton, a year-on-year increase of 27 percent, thanks to strong demand for cotton yarns in international markets. For the sixth consecutive year, the United States remains the largest supplier of cotton to Vietnam. Vietnam sourced 126,600 tons (about 30 percent) of its total cotton imports in 2012 from the United States, making it the 4th largest market for U.S. cotton at a value of $248 million. In fact, in terms of value imported U.S. cotton, Vietnam has just jumped from the 7th largest market in 2011 to the 4th largest market in 2012, surpassing Indonesia, Korea, and Thailand. Table 3: Vietnam’s Cotton Production, Supply and Demand (PS&D Table) Cotton 2011/2012 2012/2013 2013/2014 Vietnam Market Year Market Year Market Year Begin: Aug 2011 Begin: Aug 2012 Begin: Aug 2013 USDA New USDA New USDA New 3 Official Post Official Post Official Post Area Planted 0 11 0 10 10 Area Harvested 10 11 10 10 10 Beginning Stocks 341 341 339 309 388 Production 23 24 23 21 21 Imports 1,625 1,624 2,150 1,858 1,914 MY Imports from U.S. 0 521 0 Total Supply 1,989 1,989 2,512 2,188 2,323 Exports 0 0 0 0 0 Use 1,650 1,680 2,100 1,800 1,908 Loss 0 0 0 0 0 Total Dom. Cons. 1,650 1,680 2,100 1,800 1,908 Ending Stocks 339 309 412 388 415 Total Distribution 1,989 1,989 2,512 2,188 2,322 Stock to Use % 21 18 20 22 22 Yield 501. 475. 501. 457. 457. TS=TD 0 0 0 Comments Source: FAS, Official USDA Estimates, post estimates Note for unit measures: Planted area/Harvest area: 1,000 ha Stocks/Production/Imports/ MY imports from U.S/ Total Supply/Exports/Use/Total Domestic Consumption/Ending Stocks/Total distribution: 1,000 bales (480-lb bale equivalent to 218-kg bale) PRODUCTION (see Tables 4 and 5 for details) - Vietnam’s Cotton Production in 2012/2013 and 2013/2014 Post maintains the forecast for MY 2012/13 cotton lint production at about 21 thousand bales, an 11.4 percent decline compared to the previous year as low cotton prices and strong competition from other agricultural crops (i.e. corn and soybeans) resulted in a reduction of planted area. It is still quite early to provide a forecast for the next Marketing Year (August 2013- July 2014). However, with current low cotton price trends (compared to other agricultural crops, i.e. corn and soybeans) and the delay in allowing BT cotton seed cultivation, Vietnam cotton production forecast for MY 2013/14 is initially set at the same level of the current crop. Vietnam’s plan of having a domestic cotton growing area of 76,000 ha by 2020 seems to be overly ambitious, as planted area only reached 10,000 ha in 2012. In all likelihood, Vietnam will continue to rely heavily on cotton imports to fulfill its cotton needs. Table 4: Vietnam’s Cotton Production (from 2010/11 to 2013/14) 2011/12 2012/13 % change 2011/12 vs 2013/14 2012/13 (Projected) Crop area (THA) 10.6 9.84 -7.0 9.84 Crop yield (MT/HA) 1.34 1.28 -4.5 1.28 Seed cotton production (TMT) 14.2 12.58 -11.4 12.58 4 GOR (%) 36.5 36.5 36.5 Cotton fiber production (TMT) 5.18 4.59 -11.4 4.59 Bales Equivalent Quantity (1,000 bales, 218kg/bale) 24 21 -11.4 21 Source: MARD, GSO, other trade sources and Post’s projection Table 5: Vietnam’s cotton production by region, 2010 – 2012 2010 2011 2012* Growing Regions Area Yield Prod. Area Yield Prod. Area Yield Prod. THA MT/HA TMT THA MT/HA TMT THA MT/HA TMT North East 0.82 1.2 0.98 0.90 1.24 1.12 0.80 1.30 1.04 North West 1.80 1.2 2.16 1.90 1.16 2.20 1.80 0.80 1.44 North Central Coast 0.12 1.1 0.13 0.12 1.20 0.14 0.12 0.80 0.10 South Central Coast 0.80 1.6 1.28 1.70 1.63 2.77 1.40 1.40 1.96 Central Highlands 3.90 1.34 5.23 4.12 1.35 5.56 3.90 1.40 5.46 South East 2.40 1.3 3.12 1.85 1.3 2.41 1.80 1.40 2.52 Mekong River Delta 0.00 0.00 0.00 0.00 0.00 0.00 0.02 3.00 0.06 Total Vietnam 9.8 1.31 12.90 10.6 1.34 14.20 9.84 1.28 12.58 Source: MARD; General Statistics Office (GSO); and other trade sources. Note: Prod.: Production THA: Thousand Hectares MT/HA: Metric Ton per Hectare TMT: Thousand Metric Tons (*): estimates Cotton production in Vietnam is highly susceptible to weather conditions and can fluctuate widely from one year to the next. More than 90 percent of the cotton production area in Vietnam is rain-fed, with planting initiated in the rainy season (May/June – August) and harvesting taking place from October - December. In areas where irrigation is possible, cotton may be planted in the dry season (November/December), thereby allowing for harvesting from March through May. TRADE As a result of strong demand for cotton yarns from international markets, especially China, Vietnam cotton imports in calendar year 2012 saw a significant increase -- 27 percent over 2011. Its imports reached a record of 416,000 mt or 1,908 thousand bales with a value of $870 million. U.S. cotton exports to Vietnam during 2010-2011 remained relatively stable, between 132,900 and 133,200 mt. However, exports in 2012 dropped by 5 percent reaching 126,600 mt. - Vietnam’s Primary Cotton Suppliers According to Table 6 and the pie chart below, in 2012, Vietnam imported about 416,000 tons of cotton, a year-on-year increase of 27 percent. The United States remains the number one cotton supplier to Vietnam, with more than a 30 percent share of Vietnam’s total cotton imports (note: this marks the sixth consecutive year that the U.S. is the leading supplier of cotton to Vietnam). Brazil ranked second and India was the third largest supplier. Other major suppliers include Pakistan, African countries, and Australia. 5 Table 6: Import Trade Matrix Country: Vietnam Commodity: Cotton Unit: Metric Ton Time Period Imports for: 2010 2011 2012 U.S. 132,900 U.S. 133,200 U.S. 126,600 Others Others Others Africa 71,339 Africa 50,000 Brazil 60,200 India 65,917 India 43,000 India 57,000 6 Brazil 14,893 Brazil 29,000 Pakistan 53,850 Australia 10,364 Pakistan 17,400 Africa 25,000 Pakistan 10,300 Australia 10,800 Australia 24,700 Malaysia 4,647 Malaysia 10,000 Malaysia 10,000 CIS 4,030 Argentina 5,800 Argentina 4,350 Argentina 2,537 China 2,700 China 676 Mexico 1,070 Mexico 1,850 Mexico Taiwan 950 Taiwan 1,100 Taiwan 2,240 Total for Others 186,047 171,650 238,016 Others not Listed 33,953 22,150 51,384 Grand Total 352,900 327,000 416,000 Source: Vietnam Customs Department; MARD; World Trade Atlas, Traders & Post’s Estimates U.S. Cotton Exports to Vietnam In 2012, U.S. cotton exports to Vietnam totaled 126,600 tons for a value of $248 million, a year-on-year decrease of 5 percent in quantity and 31.5 percent in value due to slump in international cotton prices. While table 7 shows the growth of U.S. cotton exports to Vietnam during the last 6 years, table 8 and table 9 will provide the details of U.S. cotton grades exported to Vietnam in volume (thousand metric tons) and in value (thousand USD). Table 7: U.S. Cotton Exports to Vietnam 2007 2008 2009 2010 2011 2012 % change in compared with the same period 2011 Quantity 66.7 125 141.3 132.9 133.2 126.6 -5 (1000MT) Value 88.2 192.6 165.1 248.8 362.3 247.8 -31.5 ($ mil.) Table 8: U.S Cotton Exports to Vietnam by Grades (Quantity in thousand metric tons) Aug 2011 - Jan Aug 2012 - Jan Aug-Jan 2009 2010 2011 2012 2012 2013 Period Product Qty Qty Qty Qty Qty Qty % Change 5201001090 - CT 113.3 101.6 82.2 80.9 37.4 44.9 20 ,>25.4,<28.58 5201009000 - CT,NT PMA,> 24.4 25.4 46.5 42.5 9.8 28.2 187 28.58 5201001025 - RAW CTTN,<2 2.3 3.7 2.5 3.0 1.0 1.0 -5 5.4 5201002030 - PIMA,ETC,>2 1.2 2.2 1.9 0.2 0.2 0.5 211 8.58 Total 141.3 132.9 133.2 126.6 48.4 74.6 54 Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics 7 Table 9: U.S. Cotton Exports to Vietnam by Grades (Value in thousand US dollars) Aug 2011- Jan Aug 2012- Jan Aug-Jan 2009 2010 2011 2012 2012 2013 Period Product Value Value Value Value Value Value % Change 5201001090 - CT 129,851 184,070 184,844 153,539 80,313 73,818 -8 ,>25.4,<28.58 5201009000 - CT,NT PMA,> 29,958 51,299 162,321 85,214 28,840 49,381 71 28.58 5201001025 - RAW CTTN,<2 3,520 8,784 7,612 8,423 3,775 2,633 -30 5.4 5201002030 - PIMA,ETC,>2 1,779 4,597 7,563 651 683 1,338 96 8.58 TOTAL 165,108 248,750 362,349 247,826 113,616 127,169 12 Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics According to table 8, U.S. cotton exports to Vietnam during August 2012-Janurary 2013 shows a sharp increase of 54 percent in comparison with the same period of 2011/12. Post believes U.S. cotton exports to Vietnam in MY 2012/13 will likely lead to a bigger market share in Vietnam. In MY 2011/12, Vietnam imported 354,000 tons (or 1,623 thousand bales) of cotton, valued at $871 million, a slight increase of 3 percent in quantity but a sharp decrease of 18 percent in value over the previous year due to plummeting world cotton prices (see table 10 below). According to table 11 below, cotton imports in the first 6 months of MY 2012/13 (August-March) reached a record of 316,000 mt, a year-on-year increase of 49 percent in quantity. Due to high imports and strong demand of Vietnamese cotton yarns in international markets, especially China, cotton imports for MY 2012/13 are forecast to reach 405,000 tons (or 1,858 thousand bales), a sharp increase of 14 percent. It is still early to provide a forecast for Vietnam’s cotton imports for the next marketing year (2013/2014). However, given the expanding cotton spinning sector, strong exports of yarn, and low price trends (relatively lower prices in comparison with prices in the last 18 months), initially, Vietnam’s cotton imports in 2013/14 are forecast to continue increasing slightly, by 3 percent, to reach 417,000 tons (or 1,914 thousand bales). Table 10: Vietnam’s Monthly Cotton Imports (MY2010/11 and 2011/12) August 2010-July 2011 August 2011-July 2012 Value Value Qty (1000MT) ($ million) Qty (1000MT) ($ million) Aug 32 64 21 58 Sep 31 59 14 53 Oct 24 50 30 80 Nov 23 49 33 93 Dec 30 76 25 63 Jan 37 104 18 47 Feb 29 85 33 77 Mar 38 131 38 86 8 Apr 29 107 32 73 May 29 121 38 84 Jun 21 82 35 75 Jul 20 78 37 83 TOTAL 343 1007 354 871 Sources: Vietnam General Statistic Office, Vietnam Customs Department, and other trade sources. Table 11: Vietnam’s monthly Cotton Imports (August 2012-March 2013) 2011/2012 2012/2013 Qty Value Qty Value % Change in % change in (1000MT) ($Million) (1000MT) ($Million) Qty value Aug 21 58 34 65 Sep 15 55 32 62 Oct 30 80 44 85 Nov 33 93 40 77 Dec 25 63 36 68 Jan 18 47 51 98 Feb 33 77 36 67 Mar 37 83 43 82 212 555 316 604 49 9 CONSUMPTION Vietnam’s domestic cotton consumption continues to increase in order to meet strong demand from its expanding textile industry. Demand for yarns is strong, both for export and domestic markets. Vietnam is currently home to 100 spinning mills with 5.1 million spindles (equivalent) for a total capacity of 680,000 tons of cotton-man-made fiber yarns. Vietnam’s cotton consumption has been increasing at an average rate of 7-8 percent, per year, for the last five years. Post revises estimated domestic cotton consumption for 2012/13 to 392,400 tons, equivalent to 1,800 thousand bales (note: the previous Post’s estimate was 1,680 thousand bales). Please see the PS&D Table (table 3) for more details. This revision reflects the stronger exports of cotton yarn to overseas markets, especially China and Turkey. STOCKS In 2012, Vietnamese businesses suffered from high interest rates on bank loans. The average interest rate was about 16 percent, which is among the highest in Asia. As a result, cotton users and traders tried to minimize cost by reducing carry-over stocks of cotton. Ending stocks in 2011/12 were 309 thousand bales, with a stock-to-use ratio of 18 percent. As cotton prices and bank interest rates have gradually softened during MY 2012/13, cotton users and traders have taken on a larger inventory (388 thousand bales), creating a slight increase in the stocks-to-use ratio (22 percent). PRICES Table 12 and the chart below illustrate a decline in monthly cotton import prices in 2012. The average import price for 2012 was $2.09/kg, a decrease of 35 percent in comparison to the average import price in 2011. Table 12: Cotton Average Import Price in 2010-2012 9 Country: Vietnam Commodity: Cotton Price in USD per Kg 2010 2011 2012 Jan 1.58 2.81 2.58 Feb 1.64 2.93 2.31 Mar 1.67 3.42 2.24 Apr 1.55 3.69 2.27 May 1.78 4.17 2.19 Jun 1.88 3.98 2.14 Jul 1.97 3.89 2.00 Aug 2.00 2.76 1.91 Sep 1.90 3.67 1.94 Oct 2.08 2.67 1.93 Nov 2.13 2.84 1.93 Dec 2.53 2.52 1.89 Calendar Year Average Price 1.88 3.24 2.09 Exchange Rate 20,900 Local Currency/US$ Source: Vietnam Customs Department and Vietnam Ministry of Industry & Trade Chart: Monthly Averaged Cotton Import Price in 2012 10 Domestic Prices: Presently, the Vietnam Cotton Company (VCC) is buying seed cotton at an average price of VND 12,000/kg, equivalent to $0.574/kg (or 26.0 U.S. cents/lb), a decrease of 29.4 percent in comparison with the previous crop (note: in the previous crop, VCC bought seed cotton at VND 17,000-18,000/kg). VCC is currently selling ginned cotton to mills at $1.99-2.04/kg (90.3-92.5 US cents/lb). However, it is quite difficult for mills to accept these price levels due to the current slump in international cotton prices. CONSUMPTION OF VALUE-ADDED COTTON PRODUCTS Cotton Yarns Vietnam produced 680,000 mt of yarns in 2012, an increase of 9.7 percent over 2011. It is quite difficult to determine the exact breakdown of yarns made from cotton in the total production due to the complexity of cotton content in cotton lint-polyester/rayon fiber blended yarns. From discussions with various trade sources, post estimates that yarns with 100 percent cotton accounts for 45 percent of its total production; yarns blended of polyester fiber and cotton accounts for 30 percent; and yarns made from 100 percent polyester fiber and rayon accounts for 22 percent. Vietnam exports over 60 percent of its yarn production. From its total production of 680,000 mt of cotton-fiber yarns in 2012, Vietnam exported nearly 415,000 mt of yarns, a year-on-year increase of 8 percent. The yarns staying in the domestic market accounted for 39 percent, or 264,000 mt. The main markets for Vietnamese yarns are: China (198,000 mt or 29 percent of its total production); Turkey (90,000 mt or 13 percent); and Korea (71,000 mt or 11 percent). See table 13 below for more details of Vietnam exports of yarns in the last three years (2010-2012). The average growth rate of Vietnam exports of yarns during 2010-2012 is 11 percent per year. 11 According to the Vietnam Spinning Association, most of the exported yarns from Vietnam are cotton yarns (either 100 percent cotton yarns (mainly) or cotton lint-polyester/rayon fiber blended yarns). Table 13: Yarn Export Trade Matrix Country: Vietnam Commodity: Yarn Unit: Metric Ton Time Period Jan-Dec Exports for: 2010 2011 2012 U.S. U.S. U.S. Others Others Others China 90,500 China 116,500 China 198,000 Turkey 37,500 Turkey 82,000 Turkey 90,000 Korea 80,700 Korea 79,600 Korea 71,500 Thailand Thailand 30,000 Thailand 19,000 Malaysia 21,000 Malaysia 12,000 Malaysia 10,500 Taiwan 14,900 Taiwan Taiwan Brazil Brazil 9,500 Brazil 9,000 Total for Others 244,600 329,600 398,000 Others not Listed 91,400 54,400 17,000 Grand Total 336,000 384,000 415,000 Source: Vietnam Cotton Spinning Association, Vietnam Customs Department; Traders & Post’s Estimates According to the World Trade Atlas, in 2012, Vietnam exported about $785 million of cotton yarns (mainly the products under Harmonized System Codes 5205 and 5206) to overseas market. China, Korea, and Turkey are the three biggest importers accounting for over 93 percent of the total export value. Table 14 shows details of Vietnam export value of yarns by countries. Table 14: Countries importing cotton yarns from Vietnam - 2012 Unit: thousand US dollars Reporting Total 785,000 12 China 613,142 South Korea 94,011 Turkey 24,793 Malaysia 20,708 Thailand 10,096 Hong Kong 9,602 Taiwan 3,700 United States 1,869 Japan 1,866 Sri Lanka 961 Guatemala 907 Australia 787 Germany 384 Source: World Trade Atlas, (HS code 5204, 5205, 5206, 5207) Although Vietnam is a sizable exporter of yarns (mainly cotton yarns), Vietnam also imports yarns for domestic use. According to Vietnam Cotton Spinning Association, Vietnam imports of yarns in 2012 are estimated at 120,000 mt. It is difficult to estimate the quantity of cotton yarn in the total imports as there is no official statistic figure on Vietnam imports of cotton yarns. According to the World Trade Atlas (table 15 below), in 2012, Vietnam imported about $293 million of cotton yarns from overseas markets, mainly from China, South Korea and India. The three suppliers accounted for 95 percent of the total import value. Table 15: Countries exporting cotton yarns to Vietnam - 2012 Unit: thousand US dollars Reporting Total 292,918 China 198,214 South Korea 41,383 India 38,755 Taiwan 7,810 Thailand 2,867 Hong Kong 2,215 Malaysia 520 Japan 482 United States 220 Turkey 83 Source: World Trade Atlas, (HS code 5204, 5205, 5206, 5207) Vietnam imports of fabric: 13 With the limited dyeing capacity, Vietnam is able to produce about 1-1.2 billion square meters of fabric. To feed the growing apparel sector (for exports), Vietnam has to rely on imported fabrics. In 2012, Vietnam imported over 6 billion square meters of fabric, mainly from China. MARKETING/POLICY Tariff on Cotton Cotton lint (HS code 5201 and 5203) has a zero tariff but a 5 percent value added tax is assessed. Tariff on Cotton Yarn Cotton yarn (HS code 5204-5205-5206-5207) has a 5 percent tariff and a 10 percent value added tax. Biotech Policy and Cotton Production Currently, the regulatory framework to evaluate and approve the cultivation biotech crops and for utilization of biotech agriculture for food and feed use are under development. The Vietnamese Ministry of Natural Resources and Environment (MONRE) has been working on the Circular on the Procedure to issue Bio-Safety Certificate for Genetically Modified Organisms (GMO) since last year. The Circular provides legal frame for agricultural biotechnology to be legally cultivated in Vietnam following successful field trials conducted by the Ministry of Agricultural and Rural Development (MARD). MONRE’s Circular will permit the legal cultivation of biotech corn, cotton, and soybeans, once a biotech trait receives the Bio-safety Certificate from MONRE. MARD is also developing the Circulars on the approval of GMO products allowed for feed and food use. The Feed Circular was notified to the WTO for comments by trading partners. MARD is now reviewing comments. In addition, MARD also plans to have the Circular on Approval of GMO products allowed for food use issued by the end of 2013. For more information on agricultural biotechnology in Vietnam, please refer to VM2071. 14
Posted: 08 April 2013

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