Soybean Meal and Soybeans
Imports of soybeans and soybean meal have risen significantly over the last four years in response to much lower tariff rates (as a result of WTO) and increased demand from the food processing, livestock and aquaculture feed sectors. Expectations are that the demand for soybean meal (SBM) will continue to increase, particularly given that Vietnam has no industrial-scale crushers to produce SBM locally. The United States is not as competitive as India and Argentina in this market segment, due mainly to cost factors.
Vietnam’s imports of SBM emphasize the shortage of protein sources in the country. Despite the government’s efforts, growth in oilseed production has fallen far short of fulfilling the country’s protein needs. In the longer term, this could bode well for U.S. soybean exports. Under the current tariff structure, SBM has zero import duty, unrefined oil has a 5 percent duty, refined oil has a 15 percent duty, and soybeans enjoy a reduced tariff rate of zero percent for imports from WTO member countries. The reduced tariff rate for soybeans may now make building crushing plants a more attractive investment. In that case, soybean imports could increase considerably, and the United States is more competitive in soybean exports than SBM exports.
Vietnam now has three deep-water ports including Phu My Ba Ria Serere port; Cai Mep Interflour port- both located on Thi Vai River of Ba Ria Vung Tau Province (about 30 miles from Ho Chi Minh City); and Quang Ninh port in Cai Lan, Quang Ninh Province. Unlike the ports in Ho Chi Minh City, these ports can handle Panamax vessels (50,000+ tons), which will lower freight costs for U.S. commodities shipped to Vietnam.
Vietnam still has no large-scale crushing facility, most of the soybeans are used for food processing (soymilk beverages, tofu, soy flours, soy sauce, and is used for full-fat soy meal (for feed industry). Reportedly, Vietnam has had a vision to build soybean crushing plants, but to date no plant has materialized. Foreign investors from Taiwan, Hong Kong and the United States have also explored the possibility for investment in oilseed crushing in Vietnam.
Marketing efforts in Vietnam are supported by the American Soybean Association – International Marketing (ASA-IM) office in Hanoi.
Vietnam has a rapidly growing and vibrant textile industry, largely based on imported raw cotton or synthetic fiber. Textiles continue to be one of Vietnam’s top foreign exchange earners, with an estimated $9 billion in exports in 2009, a year-on-year decrease of 1.3 percent. Local cotton production currently meets less than 10 percent of total demand. Estimated U.S. cotton exports in 2009 were $176.4 million, a year-on-year decrease of 10 percent.
Marketing efforts are directed by the Cotton Council's International Regional Office in Hong Kong, and U.S. technical information is provided by Cotton Incorporated’s Regional Office in Singapore.
Wheat and Wheat Flour
Vietnam is moving swiftly from being a wheat-flour to a wheat-grain market, as a result of increased investments in new mills. Present milling capacity is estimated at 1.8 million metric tons per year. Compared to “wealthier” neighboring countries, per capita wheat consumption in Vietnam is low. However, given the prospects for increasing incomes in this fast-growing economy, demand will likely increase, particularly since Vietnam does not produce wheat, but nonetheless has a strong culture of bread, cake, and other wheat product consumption. Wheat from the United States will also benefit from infrastructural improvements such as the expansion of grain handling facilities and the new deep water ports.
Forest Products, Hardwood Lumber
Prospects are bright for U.S. exports of hardwoods and other forest products to Vietnam. Vietnam’s furniture exports in 2009 reached $2.6 billion, a year-on-year decrease of 9.9 percent, while estimated U.S. exports of forest products to Vietnam in 2009 dropped by 9 percent to reach only $102 million. Of this total, over 85 percent are hardwoods (lumber, logs and veneers).
Hides and Skins
Market reforms have led to sharp increases in investment in Vietnam’s leather industry, as local wage rates and an efficient labor force make it a competitive export industry. This, in turn, has led to sharp increases in Vietnamese hides and skins imports in recent years. Vietnam imports of hides and skins in 2009 were estimated at $900 million, a year-on-year decrease of 20 percent, due mainly to the current Vietnam Government campaign to inspect all tanneries which could be harmful to the environment.
U.S. exports of hides and skins to Vietnam in 2009 are estimated at $26 million, a drop of 66 percent over 2008 due to the environment issue. The potential for further strong growth is significant.
Fresh Fruit and Vegetables
According to unofficial data, Vietnam’s 2009 imports of apples and table grapes totaled $30 million and $26 million, respectively. Vietnam also imports many other types of fruits and vegetables; however, official trade data are unavailable. The U.S. exports of table grapes and apples to Vietnam in 2009 are estimated $12.6 million, a year-on-year increase of 35 percent and $6.5 million, an increase of 10 percent over 2008, respectively, with China as the main competitor.
Marketing efforts are directed by the California Table Grape Commission and the Washington Apple Commission, both with a representative in Ho Chi Minh City.
Current import duties on apples and table grapes are 15 percent. In keeping with its WTO commitments to reduce import tariffs, Vietnam should gradually lower tariffs on fresh grapes and apples to 10 percent by 2012. Similarly, the import tariff on dried grapes (raisins) should be reduced to 13 percent by 2012.
Snack Foods, Packaged Foods, Canned Foods
Rising incomes in Vietnam have resulted in a higher demand for a variety of imported consumer-ready foods. Dairy products, snack foods and packaged foods are popular among retail consumers and hotel, restaurant, and institutional (HRI) customers. Prospects for growth in this sector are directly linked to increases in the number of new supermarkets, hotels, and resorts in Vietnam as well as reductions in tariffs. Current tariffs for snack foods, packaged foods, and canned foods range from 25 percent to 35 percent.
In November 2005, Vietnam began allowing imports of U.S. boneless beef from cattle less than 30 months old, and in August 2006, the country lifted the ban on imports of U.S. bone-in beef and offal as part of the Vietnam-United States Agreements made during negotiations for Vietnam’s accession to the WTO.
Prospects for U.S. beef exports to Vietnam are excellent. Given Vietnam’s limited available pastureland and tropical climate, it is unlikely that the country can develop a large enough beef industry to satisfy more than a small proportion of what is expected to be a significant increase in domestic demand for beef over the medium-to long-term. To date, sales of these products have mostly gone to high-end outlets such as luxury hotels and restaurants aimed at expatriates and well-to-do Vietnamese, but supermarkets have recently been offering US and other imported beef.
The import duties on beef meat boneless and bone-in are now 20 percent and 15 percent, respectively.