VietNamNet Bridge – Nguyen Van Nam, former director of the Trade Research Institute, under the Ministry of Industry and Trade, speaks to the Hai quan (Customs) newspaper on challenges in setting up retail chain stores in Viet Nam.

Nguyen Van Nam

Many people have complained that most profits in supply chains go to middlemen. What’s your opinion?

I couldn’t agree more. It is a matter of fact, supply chains in our country are much like the old subsidisation system with many middlemen. As a result, goods prices are above their true value.

I myself was a member of an investigation team on rice exports. I was told that traders went directly to the rice fields to buy paddy during harvest. The paddy was then transported to threshing mills. From the mills, rice was graded into high, middle or low quality rice. The best rice was for export while the middle or low quality rice was transported to dealers to sell on the domestic market. In the end, rice consumers have to pay higher prices for the rice they eat.

In short, most of the profits go to middlemen.

In my opinion, it is time for us to create a goods value chain, just like the model from farm to fork so that we can cut down product costs while still keeping quality high.

Do you mean that a lion’s share of the profits goes to middlemen due to the tradition of small scale production?

I didn’t mean that. Our farmers are hard working and they know that most of the profits from their products go to middlemen. But they can’t do anything.

I’m sorry to say that we lack a good trading system from goods procurement to distribution.

In the past, we had many State enterprises operating under the system of state subsidisation. Their key objective was not to make profit, but to serve the people.

But now, those State enterprises have been dissolved and the distribution channel is in the hand of private commercial enterprises. One thing I have to admit is that many private enterprises have put profits top of their priority list.

Large agricultural production fields have been formed in many localities. But our distribution system remains small and scattered. This has caused problems to farmers when the harvest season comes but traders are not interested in buying from them.

Who is to blame?

Agriculture production in our country has experienced many changes in recent years. But the consumption and distribution systems have not been up to scratch. Which ministry is responsible? The question remains.

It is high time for Viet Nam to set up distribution systems like in other countries. Such systems operate in a loop, from farm to fork. I’m sure that if we can organise good distribution systems, it will be good news for farmers.

However, we need the State to act as midwives for the systems to help them operate smoothly initially.

Many retail markets in our country are dominated by foreign firms. What do you think of this?

I have to admit that Vietnamese enterprises are in much weaker positions than their foreign peers in terms of capital, technology, management and more.

In such a situation, in my opinion, the Ministry of Trade and Industry should play the role of the “midwife” to help reorganise the domestic commercial system and support Vietnamese enterprises to establish stores nationwide. If the current situation drags on for 5-10 years, I’m pretty sure that our domestic market will completely fall into the hands of foreign enterprises.

In my opinion, at the start, the Government should adopt lucrative policies to support private enterprises, including low interest loans, land to build factories or shops and others.

VNS